Africa Brief: Ghana, Nigeria in fund’s sights and more…
Ghana, Nigeria in fund’s sights
Delta International Property Holdings, the first JSE listed property fund offering investors direct access to high growth markets in Africa, is targeting properties in Ghana and Nigeria, with an acquisition pipeline of $200m having been identified. The 2nd phase would look at acquisitions in Angola, Gabon, Tanzania, Tunisia, Zambia and Zimbabwe. Delta is to largely focus on retail and office property acquisitions. The company will only consider countries with clear property rights, a huge supply-demand mismatch, sustainable high growth and policy certainty. Currently the fund owns assets in Morocco and Mozambique, acquired 50% through equity and 50% through bank funding, a policy they will continue to implement. Delta recently issued $87m worth of shares on the AltX, providing SA investors access to a dollar-hedged investment without having to use their exchange control allowance.
by Roy Cokayne published in The Star, Business Report on 29/07/2014
OK Zimbabwe’s cross-border deal starts off slowly
A deal involving SA distribution firm Kawena Distributors and Zimbabwe’s biggest retail operator OK Zimbabwe, enabling expatriate Zimbabweans in SA to pay for groceries for family back home, is experiencing take-off hurdles and will only expect to make a profit by the end of this year. Under the deal, expats in SA make a payment at a Kawena outlet and the money is electronically credited to the recipient’s card in Zimbabwe, which can be used to purchase goods at any OK outlet. Zimbabwe is facing a shrinking economy and declining revenues, and OK itself faces pressure from competition.
Excerpt from ‘OK Zimbabwe’s cross-border deal starts off slowly published’ in The Star, Business Report on 29/07/2014
World Bank backs Inga dam
The World Bank will support the Democratic Republic of Congo’s plans to build the Inga 3 hydroelectric dam to narrow the countries power shortage. The lender approved $73m in March to finance social and environmental impact studies for the project. SA and the DRC have agreed to develop the $12bn dam
by Bloomberg published in The Star, Business Report on 29/07/2014
Coal exports to support growth
Mozambique is still counting on increasing coal exports to expand its infrastructure and to drive economic growth, despite depressed global prices. The current coal capacity stands at around 6-7 million tons per year. The government was also keen to attract investors to help build the infrastructure necessary to exploit huge offshore natural gas reserves in the north.
by Reuters published in The Star, Business Report on 29/07/2014
Mozambique turns to coal exports despite competition
Mozambique is still counting on raising coal exports to expand its infrastructure and drive economic growth, despite depressed global prices which might delay the timing of some railway and port projects. The World Bank has forecast that coal and gas could generate up to $9bn in revenues by 2032 for the African state still recovering from civil war. However lower global coal prices have reduced Mozambique’s ability to be competitive in the next few years, given the need for transport infrastructure to be developed. Government is however more focused on re-thinking the timetable as opposed to giving up on coal as an economic driver.
by Pascal Fletcher published in Business Day on 29/07/2014
BAT Zimbabwe turns a profit despite revenue slump
BAT Zimbabwe has declared a dividend, after reporting interim after-tax profit of $5.3m from a $1.4m loss in the prior year. However revenue slumped 12%. The performance was described as resilient, in the context of an increasingly challenging economic environment, with continuing declines in consumer spending and limited economic growth. Gross profit fell by $2.2m to $13.8m. BAT has partially complied with the countries indigenization and empowerment regulations. BAT expects the economic outlook to remain challenging in the second half of the year.
by Ray Ndlovu published in Business Day on 29/07/2014
EU made big concessions to SADC for strategic EPA
The EU made bigger concessions to SADC countries in the recently concluded 10-year long trade negotiations because it wanted the economic partnership agreement (EPA) that was agreed, for strategic reasons. The agreement is expected to come into force in the next 8 months and will result in improved bilateral trade, development and cooperation between the regions. Victories for South Africa came in negotiating greater access to the EU market for 32 agricultural products – in particular sugar, wine and ethanol products. The EU also agreed to eliminate export subsidies on agricultural goods destined to the Southern African Customs Union. The deal was important for the EU and therefore compromises were made, so that the non-reciprocal agreements that previously existed with Botswana, Namibia, Lesotho, Swaziland and Mozambique could become reciprocal agreements, in line with the World Trade Organisation’s requirements. The major concession won by the EU was that the SADC countries had agreed to recognise 251 of its ‘geographic indicators’ which give agricultural producers the exclusive rights to a traditional product name associated with their region or fabrication process – an aspect the EU considers significant to maintain international competitive advantage.
Excerpt from ‘EU made big concessions to SADC for strategic EPA’ published in The Star, Business Report on 27/07/2014
Red tape puts plug in Africa’s rich oil bounty
Regulatory uncertainty, corruption and poor physical infrastructure are the major impediments to investors developing oil and gas businesses in Africa, which holds nearly 8% of the world’s proven reserves. For example, in South Africa, multinational companies such as Shell and Anadarko have criticized a recent bill calling for the SA government to receive a 20% free stake in new oil and gas ventures, with the remaining 80% to be bought at an agreed price. Governments should seek to implement policies that balance creating an investor-friendly environment and a fair return for the state, as potential investors weigh up the cost-benefit of investing in Africa. A PwC expert claims that the future of oil and gas on the continent belongs to East Africa.
by Jana Marais published in Business Day on 27/07/2014
Zimbabwe slashes its growth forecast
Zimbabwe has cut its growth forecast for this year from 3.1% to 6.1%, in line with projections from the IMF. The government said the lower growth projection reflected low investor confidence, a liquidity crunch and soft international commodity prices. The downward economic outlook increase risk on the revenue side of the budget. Therefore Zimbabwe is to raise customs duties on selected goods and tighten tax collection to meet a revenue target of $4.12bn. Furthermore businesses are battling with high operational costs, debt, competition from cheap imports and electricity shortages, forcing many companies to close.
by Reuters published in Business Day on 27/07/2014