






Markets


Senegal: An Opportunity for Private Equity
While Anglophone countries in Africa have traditionally attracted more attention from foreign investors, the Francophone countries are entering the radar of many asset managers. Côte d’Ivoire has led the pack as the largest economy in Francophone West Africa and the fastest growing on the continent, while Senegal is also experiencing its own rapid economic development.

Zimbabwe’s Rough in the Diamond
Less than a decade after the first, Zimbabwe has experienced its second economic contraction, with the effects of round two being conspicuously similar to those demonstrated in the first round. Supermarket shelves have once again started to empty, some public and even private sector salaries remain unpaid, banking hall queues are getting longer and hospitals are short of basic supplies. Whilst the humanitarian state of affairs is critical we find the socio-economic structures persistently durable, where businesses continue to open their doors and survive, albeit under enormous difficulties. Thankfully many of these surviving businesses (those which remained following the first contraction) have retained their skills and chiselled business physique to survive an economic depression and continue to make profits in a difficult environment.

Ghana: from posterchild to posterchild
Ghana has often been a bit ahead of its time, once known as the Gold Coast and the first country in Africa to gain independence from colonial rule in 1957. According to the World Bank, Ghana leads in Africa consistently ranking in the top three for freedom of press and freedom of speech. Politics in Ghana after years of single party states and military dictators has for the past couple of decades been characterised by two main parties. The main opposition was once in power and is large enough and popular enough to be a serious contender at any elections. In fact, the two parties are neck and neck in popularity. The current governing party the National Democratic Congress (NDC) won the last two elections with 50.2% of the vote in 2008, in an election that went to a second round and 50.7%% in 2012. But the 47% the New Patriotic Party (NPP) won makes them a real contender to be in power again as they were when they won the 2004 election with 52% of the vote. And these results are for the Presidential election at Parliamentary level the NDC and NPP are neck and neck with neither over 50%.

Egypt: a new Investment era?
Egypt and the International Monetary Fund (IMF) signed a preliminary agreement on a $12bn 3-year loan facility on August 11. If approved, the loan will support government reforms, which are required to support the Egyptian economy. The reduction of the public deficit that is above 12%, adjustment of the Egyptian market and foreign reserves’ increase, which have reached a critical level - are short term milestones.

Tunisia: Strategic area for PE investors
The North African country will continue to be a very important geographical area for PE funds investing in the Maghreb region, says Albert Alsina, CEO & Managing Partner, Mediterrania Capital Partners

Nigerian diversification
Agriculture, mining and services are key to a more stable and prosperous future in Nigeria, says Bolatito Ajibode, Head, Conglomerates & Industrials, Stanbic IBTC

Zimbabwe Investment Notes
Whilst the private sector has spent the last six years reducing costs, improving efficiencies and boosting their competitiveness, Government has been making little headway in cutting its own costs. In the early years of the Unity Government, budgets were set on a cash receipt basis with no recourse to borrowing. Since 2013 however there has been a growing issuance of treasury bills initially as a means to repay private sector debts, but then to cover the historical debts of the Reserve Bank and latterly ZAMCO. With rapidly declining tax receipts and no simultaneous spending cuts, Government have been issuing treasury bills to the banks in order to fund itself and pay civil service salaries. The net result is that as at April, treasury bills now represent 30% of total bank deposits (source: RBZ) having been below 10% only one year ago.

Angola: What’s next for bonds?
For investors looking at African fixed income opportunities, Angola might not be on the investment radar. The fixed income market in the Africa's second largest crude exporter remains at an early stage of development with only a handful of instruments trading. AGF looks closely to identify investment opportunities and risks

BRVM: Power of integration
West Africa’s Regional Stock Exchange, the Bourse Régionale des Valeurs Mobilières de l’Afrique de l’Ouest (BRVM) came to New York in May this year to attract US investors on the market, promote investment in countries of the West African Economic and Monetary Union (WAEMU) and ensure maximum visibility for the BRVM and regional businesses on the world stage. AGF had a unique opportunity to meet with Edoh Kossi Amenounve, BRVM’s Chief Executive Officer, to discuss BRVM’s performance, its strategic plan and why the Exchange is initiating dialogue with US frontier funds.

Kenya: Taking over the crown
For a very long time Nigeria has been the dominant stock market in Sub-Saharan Africa excluding South Africa. This was mostly because of its sheer size and depth of the market. However as limitations on USD expatriation reduce investor appetite for Nigeria, more and more investors are lured to Kenya, a country that never had the luxury of easy oil revenues. Nigeria’s total market capitalization is still much bigger. However, with international investors refusing to trade in Nigeria until its currency is devalued it may be only a matter of time before Kenya will become the most traded Sub-Saharan Africa market after South Africa.

South Sudan: High hopes betrayed
Since 2000, five new sovereign nations have been created, the most recent being South Sudan (2011). The country has, however, enjoyed effective autonomy from Sudan since 2005. The plight of the country since independence has been tragic: civil war broke out in late-2013, resulting in the deaths of tens of thousands of people and the displacement of at least two million. There was much optimism when South Sudan gained its independence. Africa had gained a new oil-producing nation at a time when prices were much higher than those currently prevailing. In 2011, South Sudan was producing 350,000 barrels per day. The onset of civil war has lowered this figure to the current paltry level of 150,000. Furthermore, the collapse in oil prices since July 2014 has shaken government finances to the core. Roughly 95% of tax receipts are derived from oil. The government’s dire financial problem is also compounded by the type of oil that South Sudan produces, namely Dar Blend. This oil grade normally sells at a discount of $6-$12 per barrel to Brent. This meant South Sudan sold its oil at a loss whenever Brent crude traded below $35 per barrel. How was this possible? Under an agreement between the governments of South Sudan and Sudan, the latter received Dar Blend at $24.1 per barrel for transporting the oil across her territory to the Red Sea for export. The charge consisted of two components: 1) a transit fee of $9.1 per barrel, and 2) a Transitional Financial Arrangement (TFA) of $15 per barrel as compensation for the loss of resources in the former part of the country that became South Sudan.

Zambia: agriculture sector
Zambia’s agriculture sector takes aim at exciting new growth markets as resilient farmers, innovative funding models combine to provide a strong underpin, writes Leon Kotze, Head of Agri Business for Stanbic Bank, a member of the Standard Bank Group

Zambia: Hanging in there
Type Zambia into google and one of the first news stories that comes up is about people hanging off the edge of a massive waterfall in Zambia. The waterfall in question is the Victoria Falls, where calm pools at the top allow people to sit in the water and literally hang over the edge of a massive drop. With the general mood of investors in the emerging markets and in Africa sometime it feels that hanging in a pool a tiny space away from a massive drop is exactly where markets are, despite the drops we have already seen.