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
About David Okwara
Africa, Africa challenges, Africa opportunities, African continent, agriculture, Angola, boost income, commodities, Dangote, Dangote Group, development, energy, energy and power, equity, Ethiopia, global, government, Invest Africa, investment, Nigeria, pursue opportunities, stock exchange, Tanzania, tomato paste, tomatoes, trading, transacting in Africa, world population, Zambia