Africa Brief: The key for Africa’s prosperity, foreign bond demand, Nigeria car sector and more
The WTO is key for Africa’s prosperity
What we are observing in Africa is very exciting and promising. We are witnessing an unprecedented decade of economic growth, supported by economic reforms and regional integration efforts. As world trade growth slowed down abruptly last year, Africa was the only region with double-digit growth in exports and imports. Although trade has played a key role in making Africa one of the most rapidly growing economic regions in the world, trade should become an even more powerful tool to enhance prosperity in the continent, especially in its least developed countries. The World Trade Organisation (WTO) is essential for the fulfilment of this task. The Doha development agenda negotiations should have delivered a significant push to economic growth and development of Africa by opening world markets to products and services of export interest to African countries. A healthy, strong, predictable and inclusive trade system is important to all members. This is particularly so for African countries and even more so for the least developed countries.
For the full story, read The WTO is key for Africa’s prosperity by Hermino Blanco, published by The Star, Business Report on 08/05/13
Africa cashes in on foreign bond demand at lower rates
Sub-Saharan African nations outside South Africa are selling $7 billion (R63.4bn) of debt this year, more than in the past five years combined, as yields more than double those of US treasuries lure investors repelled in the past by violence and corruption. Violence and corruption, with the International Monetary Fund (IMF) forecasting growth in sub-Saharan Africa to outpace all regions except emerging Asia this year. Africa is captivating bondholders as governments take advantage of record-low interest rates to fund infrastructure projects, such as the construction of roads, railways, ports and hydroelectric plants. “We see significant potential in Africa,” Moody’s sovereign analyst Kristin Lindow said on Friday.
Investors’ search for portfolio diversity as well as yield contributes to high demand for initial offerings from issuers in a frontier region with demonstrated growth potential.”
Ghana, which had seen yields on its $750m of Eurobonds due in October 2017 fall 343 basis points to 4.82 percent since their October 2007 issue, planned to sell more than $lbn in dollar debt this year. Debt forgiveness plans have helped 45 African nations cut debt to about 42 percent of gross domestic product this year from an average 120 percent in 2000, according to IMF estimates.
For the full story, read Africa crashes in on foreign bond demand at lower rates by Chris Kay, published by The Star, Business Report on 08/05/13
SA to help create Nigerian car sector
South Africa and Nigeria have begun negotiating an agreement through which South Africa will supply components and give training to develop a Nigerian industry to produce vehicles. Trade and Industry Minister Rob Davies said the “win-win, symbiotic” agreement on vehicles would be part of wider cooperation to boost industrialisation in both countries. Other areas of economic co-operation identified during the forum were infrastructure, air and sea transport, and agro-processing. Both business communities would be undertaking missions to each other’s countries to establish good will and trust. One of the agreements signed by the two governments yesterday was for greater legal co-operation and Jonathan explained at a joint media briefing with President Jacob Zuma that it was expected that criminals would exploit the greater migration of people between the countries.
For the full story, read SA to help create Nigeria car sector by Peter Fabricius, published by The Star, Business Report on 08/05/13
Commodities to slow Africa’s growth
According to Citi economist David Cowan. At a presentation in Johannesburg yesterday, he said that, for the first time, growth in Africa had outstripped growth in the rest of the world for more than a decade. Negative prospects around the oil price, which it saw heading towards $94 (R846) a barrel next year. The shale gas revolution in the US had already reduced its need for imported oil and he predicted the country would no longer be the biggest oil importer this year but would be replaced by China.
That will have an impact on west Africa – particularly Nigeria and Angola.”
Rating agency Standard & Poor’s said yesterday:
Continuing strong commodity exports should keep the economies of rated sub-Saharan African sovereigns growing solidly over the coming year.” It added: “The positive fiscal impact of high oil prices was one reason we raised the ratings on Nigeria, one of the largest oil exporters in Africa, in November 2012.”
Cowan said lower commodity prices would eventually tip many African countries, particularly those that depend heavily on oil, into a crisis -battling both a fiscal deficit and a current account deficit.
For the full story, read Commodities to slow Africa’s growth by Ethel Hazelhurst, published by The Star, Business Report on 08/05/13
About David Okwara
Africa, Africa's growth, Africa’s prosperity, China, Chris Kay, David Cowan, development of Africa, economic growth, Ethel Hazelhurst, Eurobonds, Hermino Blanco, International Monetary Fund, Johannesburg, Kristin Lindow, President Jacob Zuma, prosperity, regional integration efforts, Rob Davies, Standard & Poor's, The World Trade Organisation, Trade and Industry Minister, US, US treasuries, world trade growth, WTO