Africa Brief: Commodity price drop, Stanbic Nigeria, Namibia power plant sale and more

Commodity price drop threatens Africa

Africa’s brisk economic growth over the past decade has been consumer driven, a much-hyped trend that masks the uncomfort­able fact that the continent is still far too reliant on commodi­ties. Sub-Saharan Africa’s growth rate has been second only to Asia’s and cracked along at 5.8 percent last year, if South Africa is excluded, according to a World Bank estimate. About two-thirds of growth in the past decade has been driven by domestic demand, which has been stoked by a number of factors including the continent’s fast-growing and young population.

Consumption has had multiplier effects into a range of services, includ­ing banking and finance. Africa’s consumer boom has been fi­nanced mostly by income earned from the export of natural resources. Natural resources make up three-quarters of sub-Sa­hara’s exports, according to the World Bank’s latest Africa’s Pulse analysis. In Nigeria, oil and gas account for 80 per­cent of state revenue and 95 percent of foreign exchange. “Any downturn in the oil price on the international market would certainly lead to lower fiscal revenues, and hence may have an impact on fiscal spending and economic growth,” said Thalma Corbett the head of research at NKC Independent Economists.

On the flip side, domestic demand in Africa has been supported by slowing inflation, and falling oil prices will curb that further in the region’s many crude importers. Even South Africa, the most diverse and developed African economy, remains heavily dependent on resources. Metals and minerals account for well over a third of export earnings. Manufacturing has been in relative decline in South Africa and though it has made some headway elsewhere in Africa, it remains tiny on a global scale. Africa’s overall consumption of the past decade, and the growth it has spurred, will clearly not be sustainable if commodity prices continue to come off the boil.

For the full story, read Commodity price drop threatens Africa by Ed Stoddard, published by The Star, Business Report on 29/04/13

Stanbic Nigeria to raise $150m this year

The Nigerian unit of South Africa’s Standard Bank plans to raise up to $150m (R1.4bn) capital this year as it targets a loan growth of 15%, the lender said in a presentation on its website on Friday. Stanbic IBTC Nigeria said loans grew 5% in 2012, owing to sustained competition for good quality credit and because the company sold off some of its own performing loans to comply with central bank exposure limits. Stanbic said it will pay a 0.70 naira interim divi­dend this year, once it collects all divi­dends from its local subsidiaries. Last week, it posted a lower-than-expected 0.10 naira dividend.

For the full story, read Stanbic Nigeria to raise $150m this year by Reuters, published by The New Age on 29/04/13

Vida e Caffe Africa foray targets Ghana

Describing Africa as a “big push”, Cape Town coffee brand Vida e Caffe aims to open its first chain in Ghana this year. The company, which already operates in Angola, says its concept is to bring a slice of European coffee culture onto African streets. Retailers in the food and beverage space are beefing up their presence on the continent in the hopes of cashing in on a burgeoning middle class, whose disposable income is rising. Urbanisation and the progres­sion to formalised retail markets have also led to a demand for modern goods and services. While rich pickings are available, this prospect must be tempered with the reality of doing business in Africa as corruption, regulation and bureaucratic hurdles do exist. The corporate environment is another avenue the group is making inroads into. It recently setup a Vida e Caffe at Standard Bank’s head office in central Johannesburg. Innovation is key to the brand, and the coffee company is developing its iPhone and Android app to include its loyalty programme and a “beat the queue system” where customers can log on, order, pay and then collect their coffee in store.

For the full story, read Vida e Caffe Africa foray targets Ghana by Zeenat Moorad, published by Business Day on 30/04/13

Namibia to sell 49% of power plant

Namibia’s state-owned power company has outlined plans to sell 49% of a $l.lbn gas-fired power plant, as the government seeks to reduce reliance on imports from neighbouring states and stave off a looming shortage expected to hit within three years. Muyenga Muyenga, Kudu gas field project manager, said at the weekend the country would by March next year announce the winning bidders for the engineer­ing and design of the Kudu gas field and the construction of the 800MW plant it would feed. Meanwhile, the Economist Intelligence Unit expects the country will probably face a power shortfall in 2016 because of growing demand. NamPower held informal talks with Maamba Collieries, the Nava Bharat Singapore unit that is building a coal. The government wants the first gas production from the off­shore field by 2018. Exploration off Namibia, where 18 wells have been drilled, has so far focused on Kudu, still untapped since its dis­covery in 1997.

For the full story, read Namibia to sell 49% of power plant by Matthew Hill, published by Business Day on 30/04/13

Kenya judge denies bribery claim in election petition

Kenya’s chief justice yesterday denied accusations that he had received bribes to rule in favour of President Uhuru Kenyatta in a petition challenging the out­come of last month’s poll that was the biggest test yet of the newly reformed judiciary. Kenya’s supreme court, chaired by Chief Justice Willy Mutunga, upheld Kenyatta’s victory, dismissing a petition by presidential contender Raila Odinga. Former prime minister Odinga accepted the verdict, helping to douse tensions after tribal violence blighted the pre­vious election five years ago. The judges’ unanimous deci­sion was that Mr Kenyatta had been “validly elected”, and that Mr Odinga failed to offer enough evidence of malpractice to over­turn the outcome of the vote. Many Kenyans welcomed the court’s role in helping the peace­ful democratic transition in their country, which has the biggest economy in East Africa.

For the full story, read Kenya judge denies bribery claim in election petition by James Macharia, published by Business Day on 30/04/13

David Okwara

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