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Africa Brief: Angola stock exchange, Dangote’s planned investment, Egypt’s borrowing costs and more

Angola pushes back stock exchange plans

Angola has delayed plans for the start of stock-exchange trading by a year to 2016, with a futures and commodities market in Africa’s second-biggest oil pro­ducer set to open a year later. Angola expects its stock exchange to have a market value of 10% of gross domestic product within 18 months of its startup. Angola’s largest banks, which include Banco Angolano de Investimentos and Banco de Poupanca e Credito, as well as cellphone companies Unitel and Movicel Telecomunicacoes, are expected to list on the exchange. The publicly traded market for Angolan notes was scheduled to start by the end of September, The market, which will use electronic trading, will add to Treasury bills already bought and sold among financial institutions and help develop a yield curve, said Angola’s capital markets Com­mission chairman Archer Mangueira. The capital markets commis­sion visited London’s bourse to establish contacts and connec­tions and to partner with them on training. We have signed an agreement with the LSE (London Stock Exchange) so that our staff can receive training in the area of negotiation and post-negotiation systems.

For the full story read, Angola pushes back stock exchange plans by Chis Kay, published by Business Day on 02/07/13

Dangote plans to invest $15bn over five years

Aliko Dangote, Africa’s rich­est man, planned to spend close to $15 billion (R148bn) in the next four to five years pursuing investment opportunities in Nigeria and elsewhere on the African continent, he said. Dangote, who hails from Nigeria, is the force behind the Dangote Group, the interests of which include cement manu­facturing, energy, food process­ing and agriculture.

According to Forbes, his 93 percent stake in Dangote Cement, the largest producer of the material in Africa, is now worth $19.5bn. Last October Dangote sold 63 percent of Dangote Flour to Tiger Brands, a South African consumer goods company, in a deal worth $188m.

According to Dangote, any­body who is serious about busi­ness must invest in Africa. He said opportunities on the conti­nent were so immense that even he and his companies were stretched. But he would continue to pursue opportunities.

Dangote said the African growth story was a reality, echoing a sentiment expressed by Obama during his three-country trip of Africa. He saw immense opportu­nity in the agricultural space.

If you look at the projec­tion of the population in the next couple of years, when the world’s population will cross over 8 billion, a lot of coun­tries need arable land and that land is only available in Africa. So there will be a lot happening here.”

Dangote said that over the past two years his cement com­panies must have invested about $5bn outside Nigeria. That included about $560m in South Africa, $500m in Tanza­nia, $580m in Ethiopia and about $380m in Zambia.

Excerpt from Dangote plans to invest $15bn over five yearsby Ellis Myandu, published by The New Age published on 02/07/13

Egypt: Borrowing costs hit record high

Egypt‘s borrowing costs climbed to a record after masses poured into the streets demanding President Mohamed Mursi step down. The yield on the government‘s benchmark $1 billion (R10bn) of 5.75 percent euro bonds due in April 2020 gained nine basis points to 10.24 percent at 1.28pm in Cairo on 1 July 2013. The cost of protecting Egyptian debt against default for five years fell 13 basis points yesterday to 869 basis points, according to data provider CMA.

Excerpt from Egypt: Borrowing costs hit record high by Bloomberg, published by The Star, Business Report on 02/07/2013

Nigerian tomato paste plant to uplift farmers, cut costs

Shittu Ibrahim ekes out a living for his two wives and 11 children by selling tomatoes he grows to passersby along a highway that runs through the Kadawa Valley near Kano, the biggest city in northern Nigeria. With no way to find new customers, about two-thirds of his crop rots. Now the country’s central bank and Africa’s richest man, Aliko Dangote, have teamed up to establish a $25 million (R246.7m) tomato paste factory that could boost income for Ibrahim and the 8 000 farmers who live in the valley.

The intervention by the Central Bank of Nigeria, which commissioned a study to show that processing local tomatoes is cheaper than importing paste from China, is part of the government’s drive to cut an­nual food imports of more than $10 billion. The 2011 study showed that Nigeria paid $360m a year to import more than 300 000 tons of tomato paste from compa­nies including Hebei, China-based Baoding Sanyuan Food Packing and Singapore’s 01am International. Annual consumption is about 900 000 tons. Tomatoes feature in Nigerian dishes such as Suya, a spicy northern deli­cacy of meat kebabs with raw tomatoes, as well as a tomato stew eaten with rice, beans, yams and cassava dough, form a venture.

The plant is expected to start by November and will produce more than 400 000 tons of tomato paste annually. Most of its tomatoes will come from farmers in Kadawa Valley

Nigeria attracted agricultural investment worth more than $8bn in the past 18 months, Adesina said. Still, only 40 per­cent of its 21 million hectares of arable land is cultivated.

The Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending, or Nir-sal, a unit of the Central Bank of Nigeria, which carried out the tomato study, also provided credit guarantees to enable banks to lend to farmers, said Jude Uzonwanne, Nirsal’s head and a former consultant.

For the full story, read Nigerian tomato paste plant to uplift farmers, cut costs by Dulue Mbachu and Edwin Olufu, published by The Star, Business Report on 02/07/13

Unusually little action on world M&A front

Healthy stock market and cheap debt have traditionally been two ingredients that helped fuel booms in mergers and acquisitions (M&A). The recipe isn’t quite working this year. Instead, the ingredients may be pro-Uonging a lull in transactions, say invest­ment bankers and lawyers, many of whom had predicted a dealmaking comeback in 2013.

Higher stock prices, coupled with a shaky recovery, have made some execu­tives wary of overpaying for acquisitions or selling too cheaply and some potential targets have tapped cheap credit to win a lifeline and stay independent. While transactions worldwide reached about $490 billion (R4.8 trillion) in the second quarter, up 3 percent from the pre­vious three months, they were down about 10 percent from the same period in 2012. In North America, the $208bn of an­nounced second-quarter takeovers was down 3 percent from the same period a year ago, while dealmaking fell 7.8 percent in Europe to $127bn and 9.8 percent in Asia to $120bn. Investment banking fees fol­lowed, falling 20 percent in the quarter to $4.5bn from a year ago, said New York con­sultancy Freeman & Company.

Bankers were optimistic at the start of the year, buoyed by last year’s 13 percent increase in the Standard & Poor’s 500 in­dex. Rising stock markets had tradition­ally been followed by upticks in takeovers as chief executives grew more confident about growth prospects, said Jeff Raich, a co-founder of advisory firm Moelis & Co. The equity markets and the deal environ­ment usually correlate more closely than they are right now,” Raich said.

Deals have failed to keep pace with the advance in equities, which has propelled the S&P 500 to a 137 percent gam since March 2009. Takeovers totalled about $1.8 trillion in the first year of the bull mar­ket and have risen 23 percent to $2.2 trillion in the past year,

“Significant moves in the equity mar­kets are generally not conducive to a strong M&A market,” MacDonald said Jack MacDonald, co-head of Ameri­cas M&A and global head of technology M&A for Bank of America Merrill Lynch.

For the full story, read Unusually little action on world M&A front by Matthew Monks, Matthew Campbell and Jodi Xu, published by The Star, Business Report

David Okwara

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