International Retailers Eye-Up Africa

Africa Brief: ‘Good gains’ in Botswana property investment, Zimbabwe economic activity, growth in Africa and more

‘Good gains’ in Botswana property investment

Direct investment property in Botswana produced total returns of 17.9% last year, beating returns on South African fixed investment property, which delivered a 15.2% total return last year. According to the Investment Property Databank (IPD) Botswana annual property consultative index, the total return for all property in Botswana — commercial and residential — was 17.9% for 12 months to December last year, compared with 20.9% for 2011.

Botswana and SA are the only African countries to be covered by the IPD. Botswana, which has a far smaller property investment market than SA’s, was included for the first time in 2011 while SA was included in the mid-1990s. The IPD said that a growing sample of 103 individual properties, with a total value of nearly 3-billion Botswana pula, “will underpin research based on the IPD Botswana annual property consultative index”. The figures represented the combined holdings of seven leading Botswana property investment portfolios.

For the full story, read ‘Good gains’ in Botswana property investment by Nick Hedley, published by Business Day on 05/08/13

Special: Zimbabwe: Indigenisation without compensation on cards

Economic experts and business executives in Zimbabwe are expecting a further slowdown in economic activity in Zimbabwe after election results showed President Robert Mugabe winning 61% of the presidential vote and his Zanu (PF) party bagging nearly three-quarters of the parliamentary seats.

The mining sector, which has been affected badly by negative investor perception, is now projected to grow by a mere 5%, revised downwards from 17%.

South African companies are actively involved in the country’s economy and have generally braved the indigenisation policy which seeks to force foreign firms to give up 51% shares to black Zimbabwean groups. Most of these companies have up to now looked to Zimbabwe to boost production figures as the country has lower production costs.

Mr Mugabe has said that his party will finalise the empowerment policy by making sure that the country’s resources are in the hands of black Zimbabwean groups. But now this is expected to happen without monetary compensation to the companies.

Empowerment Minister Saviour Kasukuwere has told Business Day he had communicated to the foreign mines the government will now not be required to receive compensation for the shares ceded under non-binding empowerment laws signed in the past few months. “Cor­rections have been made and we have communicated this to the companies. We will not pay for our resources.”

For the full story, read Special: Zimbabwe: Indigenisation without compensation on cards by Tawanda Karombo, published by Business Day on 05/08/13

Wealth managers eye Africa as growth swells its rich-list

Barclays is joining Citigroup and UBS in targeting millionaire clients in Africa as the continent’s fastest-growing economies swell a rich list topped by billionaires Aliko Dangote and Johann Rupert.

Barclays Africa Group, in which the London-based bank will hold a 62.3% stake, is seeking to build on experience of managing wealth in SA after acquiring eight African operations previously run by its parent. That expansion depended on regulators in countries including Kenya, Ghana and Mauritius, said CEO Maria Ramos. “It’s potentially a very exciting opportunity,” Ms Ramos. The number of Africans with at least $lm of investable assets climbed 9.9% to 140,000 last year, according to a report published on June 18 by Capgemini SA and Royal Bank of Canada.

That was the fastest rate of increase outside North America, posted as the economies of countries such as Nigeria and Ghana grew at more than 5% last year. “It’s a great time for private banking, wealth management and asset management in Africa,” Mark Mobius, who oversees $53bn as executive chairman of Templeton Emerging Markets Group, said in an interview on June 28. About 42% of the millionaires in Africa and the Middle East are prioritising wealth accumulation, a higher proportion than in North America, Europe or Asia, the Capgemini report showed.

Excerpt from Wealth managers eye Africa as growth swells its rich-list by Renee Bonorchis, published by Business Day on 05/08/13

South Sudan: Deadline for oil cuts extended

South Sudan was continuing to export oil in the week starting 5 August, the country’s Petroleum Ministry said; after a cut-off deadline from Sudan was extended by two weeks. Sudan told South Sudan in June that it would block all exports through its pipelines starting in early August, accusing Juba of aiding rebels hostile to Khartoum. “All the oil wells in Unity and Upper Nile states are operating, As it stands, we are producing between 100 000 and 180 000 barrels a day” Petroleum and Mining Ministry spokesman Nicodemus Ajak Bior said. “There is an extension until August 22.” The extension was arranged by negotiators from Ethiopia and the AU, who are eager to see the two nations resolve their differences without resorting to shutdowns that would hit both economies.

For the full story, read South Sudan: Deadline for oil cuts extended by Sapa-DPA, published by The Star, Business Report on 06/08/13

Firms see beauty in Africa, and money

The opportunity presented by Africa’s booming middle class is proving irresistible to global cosmetics companies, which are increasingly expanding their operations on the continent as they target brand-hungry consumers.

In just two years, French cosmetics and beauty giant L’Oreal has opened offices in Egypt, Kenya, Nigeria and Ghana. The company, which sells products such as Soft-Sheen-Carson’s Dark&Lovely, Lancome lipstick and Maybelline mascara, recently acquired Kenya’s Interconsumer Products, which caters for the domestic market and neighbouring Uganda and Tanzania as well.

Urbanisation and rising affluence are fuelling the consumer boom on the continent.

The Economist Intelligence Unit predicts that by 2030, Africa’s top 18 cities could have a combined spending power of $1.3 trillion. Among the countries with the most promising growth, L’Oreal SA MD Bertrand de Laleu identifies Algeria, Egypt, Ethiopia, Nigeria, Angola and Tanzania. The Paris-based group has extended the ranges of brands such as Lancome to tap into broader target markets. It is also pinning its hopes on Mizani — a premium, ethnic hair-care offering.

We have opened one MAC store in Lagos, in Ikeja City Mall, with a retail partner, Essenza, and the second store will open at The Palms by the end of this month,” Sue Fox, Estee Lauder’s MD for sub-Saharan Africa, says.

Excerpt from Firms see beauty in Africa, and money by Zeenat Moorad, published by Business Day on 06/08/13

Goodyear turns attention to Mozambique

Tyre manufacturer Goodyear said Mozambique was the key African country for its growth strategy on the continent.

Mozambique is a popular investment destination for South African companies because of relatively low barriers to entry. The country is developing infrastructure for mining, farming, ports and other industries. Goodyear, an American tyre com­pany, said that its African footprint was the most comprehen­sive of all tyre manufacturers on the continent. Goodyear has operations from Swaziland up to Kenya on the east coast and Namibia to the Repub­lic of the Congo on the west.

Goodyear has operated for more than 25 years in Mozambique. Its distribution channel and services partner Trentyre first opened its doors in 2000 and then, in 2005, opened a branch in Beira, in central Mozambique, that quickly rose to con­tribute 50% of the company’s turnover in the country. It is also looking to open a branch in Tete.

SA’s biggest construction group, Aveng, is building a R160m plant for the manufacture of infrastructure products including those used in mining, in Tete, and there could be possible synergies.

For the full story, read Goodyear turns attention to Mozambique by Alistair Anderson, published by Business Day on 06/08/13

Egypt : IMF loan ‘is key to recovery’

Egypt’s interim government considered a loan agreement with the International Monetary Fund (IMF) an “essential” part of efforts to revive economic growth, Planning Minister Ashraf EI-Arabi said. The timing of a resumption of talks on a $4.8 billion (R47.2bn) loan was still under discussion, El-Arabi said. The government was assessing Egypt’s financing needs based on the latest economic data. El-Arabi’s remarks came a day after Egypt’s government said it had been told by visiting US Deputy Secretary of State William Burns that the US supported a resumption of talks. Egypt’s negotiations with the IMF have been repeatedly disrupted since 2011.

Excerpt from Egypt : IMF loan ‘is key to recovery’ by Bloomberg, published by The Star, Business Report on 06/08/13

David Okwara

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