Seven reasons to be optimistic about Africa

Africa Brief: Business News from around the continent

Ecobank eyes new CEO and Nedbank tie-up

Pan-African bank Ecobank is expected to appoint a new group CEO within the next three months as Albert Essien reaches the mandatory retire­ment age.

A new group CEO is expected to give direction on how the banking group is to address issues such as high costs. The bank’s cost-to-income ratio sat at about 66% in the nine months ended last September.

The other development at Ecobank is that it is considering bringing together its corporate and investment banking team in Johannesburg with, that of Ned-bank’s as part of a plan to strengthen ties and create the opportunity to access business in and out of SA.

Talk at the Africa CEO Forum in Geneva, Switzerland was that Johannesburg-based Ecobank group executive for corporate and investment bank Charles Kie was a top contender for the job. However, he did not want to comment on the suc­cession process saying that candidates for the group CEO role had been invited to submit their applications by January 8.

by PHAKAMISA NDZAMELA, published in BUSINESS DAY on 17/03/2015

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Securities market ripe for recovery after Abil’s fall

THE ASSET-BACKED securities market is ripe for recovery after the demise of African Bank showed investors that buying lenders’ debt carries risks, according to Future growth Asset Management. Securities market ripe for recovery after Abil’s fall

Securitisation of assets such as homes and cars might climb 13 percent this year to R8.5 bil­lion after plunging more than 30 percent in 2014, Elena Ilkova at Rand Merchant Bank said. A rebound could be hastened as yields on South African bank bonds advanced to records relative to government debt, data showed.

The August collapse of unse­cured lender African Bank sig­nalled to money managers that they were exposed to losses in the case of bank failures, even as depositors were protected. This might push the market to diversify investments into instruments such as asset-backed securities, said Andrew Canter at Future growth.

by Renee Bonorchis, published in THE STAR BUSINESS REPORT on 16/03/2015

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 Aveng, Stefanutti Stocks also face summons

LISTED construction groups Aveng and Stefanutti Stocks have been included in the more than R428 million civil dam­ages claim lodged against Wil­son Bayly Holmes-Ovcon (WBHO) by the City of Cape Town for colluding on the ten­der for the construction of the Green Point Stadium for the 2010 Fifa World Cup.

The City of Cape Town con­firmed to Business Report last month that it had lodged the claim against WBHO in the high court in December. Ian Neilson, the City of Cape Town’s mayoral commit­tee member for finance, subse­quently confirmed the sum­mons was issued against WBHO Construction, Stefa­nutti Stocks and Aveng jointly and severally for R429 474 878, alternatively R428 757 001, to­gether with interest on the amount.

Neilsen said the quantum was determined through an assessment of the financial circumstances of the matter by a panel of expert economists, auditors and other profession­als. But he said the exact method of quantification was still privileged at this point.

WBHO was in a joint ven­ture with Murray & Roberts (M&R) when bidding for the tender and then won the tender. The project was completed in November 2009.

WBHO, Stefanutti Stocks and Aveng each made admissions related to the Green Point Stadium in the settlement agreements they reached with the Competition Commission in terms of the fast-track settle­ment process. M&R is not in­cluded in the City of Cape Town’s civil damages claim.

by Roy Cokayne, published in THE STAR BUSINESS REPORTon 16/03/2015

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GSK sells its stake in Aspen

DEAL : GlaxoSmithKline sold half its stake in Aspen Pharmacare for R10.5bn to invest in new priorities. It sold about 28.2-million shares in Africa’s largest pharmaceutical manufacturer through institutional investors for R372 a share, Aspen said on Friday.

by Bloomberg, published in BUSINESS DAY on 16/03/2015

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CoAL enters Makhado BEE deal

COAL of Africa (CoAL) has entered into an agreement in which some community empow­erment representatives will buy a 26% stake of its Makhado hard coking and thermal coal project.

If concluded successfully, the transaction will help the project, near Musina in Limpopo, com­ply with empowerment legisla­tion, said CoAL on Friday.

It would satisfy “one of the last remaining requirements for the granting of a new order min­ing right”.

The participants in the blackeconomic empowerment (BEE) deal include seven local commu­nities represented through the Makhado Colliery Community Development Trust. They will buy 20% of the project.

by SIKONATHI MANTSHANTSHA, published in BUSINESS DAY on 16/03/2015

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 Eskom chair takes control of ‘probe’

ESKOM chairman Zola Tsotsi has put himself in charge of the “investigation” into the state of the utility and will head a board subcommittee with full dele­gated powers to determine the terms of reference, the contract­ing of investigators, and to over­see its progress.

The announcement last Thursday of the investigation, along with the suspension of four top executives, has caused con­sternation across the political spectrum, with credit rating agencies and trade unions shar­ing the view that the move will further destabilise Eskom.

The news that Mr Tsotsi would manage the investigation himself was grounds for even greater concern as best practice would require him to keep his distance and to allow a subcom­mittee of the board to report to him. Board members said a full mandate had been given to Mr Tsotsi at last Wednesday’s meet­ing after he had brought the pro­posal to it.

by CAROL PATON, published in BUSINESS DAY on 16/03/2015

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Measuring black ownership on JSE

THERE has been much bluster recently about just how much of the JSE’s market capitali­sation is owned by black people. The JSE put out some of its own numbers saying it is 23% of the top 100 companies. That num­ber has been disputed, with some arguing it is less than 3%. You may think such range of disagreement is surprising, but at the heart of the dispute is a profound philosophical prob­lem. The fact is very little of the JSE is owned by people at all.

More than 90% is owned by institutions like pension funds and life insurance companies. The problem is that there are big differences between the charac­teristics of natural persons and legal persons. It is a lively area of philosophical debate, for instance, about what sort of legal rights and responsibilities one can demand of legal persons compared to natural persons.

There is no debate, though, that race is a characteristic that we can only sensibly apply to natural persons.

by Stuart Theobald, published in BUSINESS DAY on 16/03/2015

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David Okwara

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