We live in a world where debt has become a part of life. As much as we are certain that the sun will rise in the morning, we know that we will fund high value items using long-term debt. The same applies to our governments which we rely on to make sensible and considered decisions on our behalf.
After months (if not years) of speculation and debate, the US Federal Reserve (Fed) has left the financial markets in a holding pattern once again, deciding to keep its benchmark short-term interest rate steady at near zero. In our view as investors in emerging markets, this isn’t necessarily positive news, because we are still left with the uncertainty that has been plaguing the market for some time. We know that the markets dislike uncertainty, so we could also be left with continued volatility through year-end.
There has been much commentary about the amount of private equity capital being raised for investment in Africa and whether in fact there are sufficient investment targets available to deploy this flow of capital, say Cindy Valentine (top), Partner in International Funds, Barri Mendelsohn (middle), Managing Associate and Ofei Kwafo-Akoto (bottom), Associate in Corporate Finance at King & Wood Mallesons
Indian infrastructure operators have been through the golden era for infrastructure in India from 2000 onwards and are able to see the same opportunity in Sub-Saharan Africa, argue Somdatt Kurdikar (left) and Anhad Narula (right), Partners at DSC Investment Partners
Midway through 2015, the JSE All Share Index has taken a huge knock and the hunt for stable income sources for annuity investors continues. And it seems to be increasingly challenging. Most investors now face the task of matching their income needs with asset classes that provide stable income yields. In addition, investments need to keep pace with inflation and retain their capital value. Is this possible, given the volatility in the market today and that reported inflation does not always seem to reflect what the man on the street experiences? And what of the possible risk underlying these asset classes?
In the past few years the African consumer has become one of these shadowy facts that people like to quote, everyone wants to expand their business in Africa to reach the African consumer. There are over a billion people in Africa and around 25% of these are defined as consumers in some manner, even though many people in America and Europe would not readily identify these people as consumers as it’s not all about the two cars in the driveway and the weber braai [grill] next to the pool.
Structural factors, recent news and upcoming events give reason to believe that Nigeria is about to take a liberal turn on policy. The most important structural factors are the catastrophic state of public finances and the naira’s unsustainable strength on the official currency market. Important recent news has included President Muhammadu Buhari’s sacking of the governing bodies of a number of federal agencies and parastatals, and the recommendations of Ahmed Joda’s transition committee. And the main event is the president’s current visit to the US, and his meetings with top US officials in Washington.
The news out of Zimbabwe remains dismal, but a subtle shift in the ruling party’s rhetoric has awakened some contrarian interest in the global investment community. It may be time to take some cautious steps back onto the beleaguered nation’s stock exchange.
In the last 10 years Zambia has enjoyed a relatively stable economic growth, with a real GDP growth (2005 – 2013) of more than 6% year-on-year. The country achieved relative macro-economic stability and in 2011 was reclassified by the World Bank as a middle-income country. Investor confidence has been high, as evidenced in the successful issue of two Eurobonds, and a burgeoning mining industry.
Travelling around the African continent's big cities Abuja, Nairobi, Johannesburg, and Cape Town one can spot a similar trend in these cities. The most notable is the number of construction sites that are mushrooming in almost every corner.
A new double tax treaty between South Africa and Mauritius will allow South Africa to tax some repatriations of profit on investments in South Africa structured through a Mauritian holding company, according to Eloise Walker, a tax expert at Pinsent Masons, the law firm behind Out-law.com.
When the World Economic Forum (WEF) released its 2015 Africa Competitiveness Report earlier this month, a familiar name topped the ranking. The study found Mauritius to be Africa’s most globally competitive economy and put it in 39th place worldwide – well ahead of Russia, Brazil, and India – suggesting that it stands a good chance of growing quickly over time.
More workable and pragmatic models for project finance are helping improve the pace of projects in Africa and remove some of the bottlenecks that existed previously.
