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Africa Brief: political difficulties of investment in Africa, Sasol, infrastructure issues hinder coal project, and more
FirstRand is proving that acquisitions in Africa can give one a serious headache. The bank was thoroughly wrong-footed by political currents in Zambia where it thought it had acquired Finance Bank, only to have the deal jettisoned by Michael Sata’s new government in 2011. In Ghana, FirstRand has almost bought out Merchant Bank, a once-successful corporate bank that got itself into a serious mess of bad debt involving large, politically-connected entities. The Supreme Court of Appeal (SCA) two weeks ago delivered a resounding victory for Netl UEPS, the company awarded the tender to distribute all 15-million social grants made every month around the country.
A global management shake-up at Toyota Motor has hit African shores, with local Toyota chief Johan van Zyl called in to head the new position of CEO of Toyota’s operations across Africa. Toyota has been restructured into two main businesses. There is Toyota Number One, which is the developed markets (the US, Europe and Japan), and Toyota Number Two, which are the developing markets. Dr van Zyl will take control of product planning, production and sales on the continent.
Angola, which is Africa’s second-largest oil producer after Nigeria, plans to raise $lbn through a Eurobond issue this year. Angola’s economy expanded 7.4% last year, thanks to a recovery in oil output after technical problems, and the government forecasts growth of 7.1% this year. Other African countries are also seizing the opportunity. Kenya plans to sell a debut $lbn Eurobond in September, Nigeria is planning its second issuance and Ghana is mulling refinancing one and issuing another.
Africa Brief: Central Africa security focus, resources curse, banks post higher losses, Egypt, Uganda, Transnet and more
SA’s government and its military seem to be focused on the problems of central Africa — the geographical region, not the country — but the reasons for the growing involvement are hard to discern. 13 paratroopers were flown home in body bags after extraordinary battles in Bangui with Seleka rebels on March 23. SA is becoming more and more involved with peacekeepers and other military contingents in the Democratic Republic of Congo — with more on the way in a new intervention force in the eastern Kivu region — and in the CAR, and in Sudan’s Darfur region.
Africa Brief: Commodity trading houses snap up assets in Africa, Central African bank, P&G growth opportunities and more
Commodity trading houses are expanding aggressively in Africa as they look to add volume and take on assets that promise to benefit from a continent achieving some of the highest economic growth in the world. Merchant traders have historically been mostly concerned with shipping Africa’s oil onto global markets but are now viewing Africa as a destination market for fuels and are investing in the storage and retail networks the continent needs to develop.
BARCLAYS plans to add branches in Egypt this year as it seeks to expand in that country after rivals from France sold local units. Barclays Bank Egypt will boost its branch network by 10% this year and is preparing to offer Islamic banking services. Barclays Egypt, which started operations in the mid-1800s when the country was under Ottoman rule, controls about 1.2% of the assets of Egypt’s 39 banks, data show. Barclays Egypt makes up about 0.1% of the British bank’s asset base of £1.63-trillion of assets as of June last year, according to calculations based on financial statements. The bank is not planning to issue debt to fund expansion. It also has no plans to sell shares to the public, as the British lender’s units in Kenya and Botswana have done.
KENYAN presidential candidate Uhuru Kenyatta has asked for his trial on crimes against humanity charges be delayed to allow time to prepare his defence given prosecutors’ late disclosure of evidence, his lawyers said yesterday.
Mr Kenyatta, a former finance minister, is accused at the International Criminal Court (ICC) of orchestrating bloody clashes in which 1,200 people died and thousands were uprooted from their homes after disputed elections in December 2007.
Africa Brief: South Africa, investment destination, Africa Barrick Gold, Angola’s interest rate and more
SA remains the most attractive country in Africa in which to do business despite serious knocks to investor confidence during the past few months, two separate surveys showed yesterday.
SA moved up a notch to rank 14th out of 27 countries in a global emerging markets opportunity index, and remains the highest rated economy on the African continent, according to research compiled by business services company Grant Thornton.
Implats and Zimbabwean Indigenisation Minister Saviour Kasukuwere signed a conditional, non-binding term sheet for an R8.3bn deal to transfer 20% of Zimplats to employee and community trusts and 31% to a state-run National Indigenisation and Economic Empowerment Fund.
Zimplats holds a special mining lease over two areas in Zimbabwe totalling 48,535ha in extent.
Economic growth in Zambia should reach 7 percent by the end of this year, deputy central bank governor Bwalya Ng’andu said on Friday Inflation in Africa’s top copper producer should end the year around 6 percent, Ng’andu said.
Egyptian consumer prices posted the biggest monthly increase in more than two years last month after the pound weakened to a record low amid the worst slide in foreign reserves in at least 15 years. Prices rose 1.7 percent month on month compared with 0.2 percent in December, the Central Agency for Public Mobilisation and Statistics said.
African states benefit financially much less from mining than from oil enterprises in their countries, International Monetary Fund (IMF) adviser Philip Daniel told the Mining Indaba in Cape Town yesterday. Speaking at a panel on Sustainability in mining, he argued that financial Sustainability was a crucial aspect of the debate, and should not be minimised in the larger debate on mining Sustainability.
Five Forty Aviation had withdrawn Fastjet’s rights to use the Fly540 brand in a dispute over licensing fees and had notified airline regulators in Tanzania, Angola and Ghana of the change, it said yesterday Five Forty Aviation was owed $7.7 million (R69m) by Fastjet, which also had not provided required safety information.
The Zimbabwe transport department has commissioned the European project management, engineering and consultancy group Royal Haskoning to conduct a major road upgrade and tolling study on the 580km-long Harare-Beitbridge highway. The expected cost of rehabilitating the route is more than $600m, some of which will be funded as a loan against revenue from future tolls.
South Africa remains the most targeted country for investment in Sub-Saharan Africa. The value of merger and acquisition investments in Sub-Saharan Africa increased by 18% in 2012, even though globally mergers and acquisitions deals decreased by 7%.
Majority of the M & A were in the materials, energy and power sectors. The Royal Bank of Canada and Golddman Sachs made the two largest investments. South Africa was the most active nation in the equity capital markets in 2012.
68 000 jobs were lost between October and December last year, this is the first fourth quarter fall in employment since the start of Statistics SA’s quarterly labour force survey (QLFS) five years ago. This is not likely to be the end of job losses. Standard Bank research strategist Shireen Dar-malingam said, if Anglo American Platinum went ahead with its plans to retrench 14 000 workers, total mining employment would be reduced by 3%.
One of the most potent dangers to West Africa’s stability is the huge surge in drug trafficking and other criminal activity over the past decade. The region has become the conduit for narcotics from Latin America to Europe, while opiates from Afghanistan and Pakistan arriving via East Africa, are sent on to the US from West Africa after being cut and packaged.
Egypt’s central bank cancelled a foreign currency auction that was supposed to take place on 3 February 2013 and said it will announce details of upcoming auctions. This is believed to be a signal of a possible change to a system of currency sales brought in to stem a decline in foreign reserves.
Mining companies need to establish a good relationship with their host communities and countries. This will be achieved through the mining companies being committed to board social engagement and effective environmental sustainability.
The mining companies need to take into account the aspirations of local communities to avoid political uprisings and strikes by the local communities. The 2013 mining indaba will involve discussions relating to sustainable development and community engagement.
Accra, Lusaka and Luanda have been identified as the African cities with the highest potential for growth over the next 5 years. The growth rates were developed taking into account historical and projected future data.
These factors include economic data, governance levels, infrastructure and ease of doing business. Accra’s high growth rate is a result of its growth in gross domestic product per capita and growth in household consumption, ease of doing business and strong regulatory environment.
Accra, Ghana’s booming capital, was identified as having the highest growth potential of any city on the continent, according to the MasterCard African cities growth index, launched in Johannesburg on January 29th. The index was produced by Prof George Angelopulo of the University of SA and Prof George Roger of the University of Cape Town on behalf of MasterCard.
Platinum production in Zimbabwe fell 2.79% last year, according to the latest mining figures released by the Zimbabwe Chamber of Mines. As a result, the revenue generated fell from $538.27m in 2011, to $464.51m last year, representing a 13.7% drop.
In a year characterised by wildcat strikes in SA, which is the world’s largest platinum producer, analysts attribute Zimbabwean platinum mines’ failure to cash in to low international platinum prices and higher mining royalties.
Altech sold its money-losing East African businesses to Liquid Telecommunications for 8.6% of the shares in Liquid Telecommunications. Altech’s loss incurred in the year ended February 2012 was as a result of impairments on its East and West African businesses. Altech thought the East African businesses would benefit from being a part of Liquid’s larger more specialised network. This network will provided efficiencies and interconnectivity between different African countries not achieved in the past. Altech is planning on purchasing $16.5 million more worth of shares in Liquid Telecommunications.
Dispossessed Zimbabwean farmer Mike Campbell was able to take his case to the judiciary in SA because of the Southern African Development Community (SADC) Tribunal decision, pronounced before it was dissolved, which found Zimbabwe to have been in violation of the SADC Treaty. Zimbabwe was in contempt of court for refusing to adhere to that ruling.
“The petitioners, Campbell and Co, sought to have the SADC judgments enforced in a South African court,” says Nicole Fritz, director of the Southern Africa Litigation Centre.
Uganda will auction 13 blocks for oil and gas exploration when a new bill governing the petroleum sector is signed into law by the President Yoweni Museveni.
Ghana’s producer price inflation rose in December to 17.1% from 15.8% in November, due to increasing gold prices.
Zimbabwe’s Delta sees lager, premium beer sales rise – Delta Corporation partly owned by SABMiller has been projected to raise its 2013 annual profit by 31%, although the trading update shows the Chibuku sales volumes declined by 10% …
Tanzania bids to cut call costs – Tanzania Communications Regulatory Authority plans to increase the competition between telecoms operators by cutting the interconnection rates telecoms operators charge each other by 69% in March.
Gambian President Yahya Jammeh has declared Friday a rest day to allow for more prayer, social activities and agriculture. This four-day work week will take effect from 1 February.
Kenya plans to construct a new $300 million (R2.6 billion) fuel pipeline from the port of Mombasa to Nairobi, to replace an older one, and possibly extend it to Uganda. Kenya Pipeline Company said that it was inviting proposals for the design of the 450km pipeline from east Africa’s trade gateway to feed land-locked growing economies, which rely on Mombasa for fuel imports. “The new pipeline is designed to meet petroleum products demand for the region up to the year 2044,” the company said.
Oil bunkering – hacking into pipelines to steal crude then refining it or selling it abroad – has become a major cost to Nigeria’s treasury, which depends on oil for 80% of its earnings. Many local Nigerians would obtain these oils and refine the oil to sell to the local and foreign market to make a living even though they know this is illegal. Nigerians can make $60 (about R523) in a day by oil bunkering.
Excluding South Africa, Sub-Saharan Africa is said to grow at 6.6% this year. When including SA’s 30% weighting in the Sub-Saharan Economy, the growth rate falls to 5.4%. President of the African Bank Donald Kaberuka says the dynamic in Africa is good however, there are risks when you consider the global environment.
Africa has turned to one of the biggest profit generators for Vodafone, helping to make up for the European slow down. Africa will be the industry’s fastest growing region by subscribers over the next 5 years as firms build advanced networks and customers switch to broadband. Vodafone reported a R12.9bn EBITDA, which is 15% up from the prior year.