Accra, AfDB, Africa, African Development Bank, Arik AirWest Africa Business Expo, Bank of Ghana, Bank of Tanzania, Business, Enko Africa Private Equity Fund, Enyan Denkyira Bank, Eurobond, Ghana, Government, Invesments, Kenya, Lloyds, National Petroleum Authority, Nigeria, Power Holding Company of Nigeria, Tanzania, Ten-Year Treasury Bond, Uncategorized, United Bank for Africa

Africa Focused News

REPORT OF FRIDAY 06/09/13

by Dario Galluccio

This Blog is sponsored by http://www.reflexecogroup.com

Ghana: Consumers saved from possible fuel increase

Consumers of petroleum products have been saved from paying extra cost on fuel as government in the most recent price review has absorbed an increase in the product. This is the second time in the row that government is taking up the increased cost since the last increment at the beginning of August. These subsidies, however worsens government’s indebtedness to the Bulk Oil Distribution Companies, an impasse yet unresolved.

The National Petroleum Authority (NPA) in its most recent price review for the first half of this month, maintained prices of all petroleum products except industrial kerosene which increased marginally by 1.6%.

Petrol is being subsidised at 3% and Diesel less than 1%. Domestic kerosene continues to be the most highly subsidised, with government taking up to 42% of the cost. This was followed by Premix which is subsidised up to 19%.

Nigeria: UBA to invest $2 Billion in Africa’s power projects

CEO of United Bank for Africa (UBA), Phillips Oduoza, has revealed that the bank plans to invest an additional $2 billion into power projects across the continent over the next three years, aside the $700 million it has invested in Nigeria’s power sector this year. Of the proposed $2 billion, Oduoza said UBA will earmark about $1.2 billion to help Nigeria put an end to its chronic power shortages.

State-owned Power Holding Company of Nigeria has been broken up into 11 generation companies and six distribution companies, all being sold separately to private consortia, for about $2.5 billion.

Since Nigeria embarked on its power transformation projects, banks in the country have contributed over 70 percent (about N280 billion) of the money needed by investors for the 14 successor companies to the Power Holding Company of Nigeria. According to reports, about N400 billion ($2.4 billion) was realised by the Federal Government (FG) in the power sector privatisation project.

Kenya: Eurobond advisors to be known in two weeks

The lead transaction advisors for the country’s first Eurobond will be known within the next one or two weeks. Cabinet Secretary Henry Rotich said once the advisors have been picked, it will take another two months to prepare all the document terms before the roadshows to market the issue kicks off. Rotich said it has not been decided how much will be issued but it will be between Sh87 billion ($1 billion) and Sh174 billion ($2 billion).

The government is banking on the peaceful election early this year and favourable credit rating to issue the international bond for infrastructure projects.

Nigeria: Arik operations inject U.S.$10 Billion annually into economy

Lloyds, world’s renowned insurance organisation, has said Arik Air realises about $10 billion annually from its operations for Nigeria’s economy.

Arik last year engaged the services of Lloyds to assess its assets and also audit its transactions to know the expanse of its business and its worth. Lloyd in its report said with a fleet of 24 new generation aircraft, 43,000 flights per annum, airlifting over 2.4 million passengers in all its destinations in 2012, the airline injects $10 billion. The report stated the amount was inclusive of banking services and charges; the money expended on fuel, food and other supplies, aeronautical and non-aeronautical services; payment of salaries to over 2,800 employees, bills on hotel services, expenditure on training of indigenous pilots, engineers, cabin crew and other services.

Ghana: West Africa Business Expo 2013 opens in Accra

The first ever West Africa Business Expo 2013, opened in Accra on Thursday 5th of Septmber, with a call on Ghanaians to develop interest in setting up their own businesses. The two-day event was designed to create platforms for business owners to access information and interact with service providers and encourage learning.

The expo on the theme: ‘Kick starting and sustaining business growth’, was also aimed at educating the public on how entrepreneurial activities have been the backbone of many economies, and the focus of many countries to drive economic growth in a sustainable way. It would enlighten the participants on a number of implementations and successful interventions including finance, capacity and skill building, which have been adopted to drive growth in developed economies.

Ghana: Enyan Denkyira Bank makes profit

Enyan Denkyira Rural Bank Limited made significant gains in all its financial items in 2012 compared with the previous year’s figures.

It showed that total asset value of GH¢4.8million for 2012 included a 24.4 per cent growth over the 2011 figure of GH¢3.8million. One significant detail under equity (assets) as contained in the annual report was that the bank had achieved a stated capital of GH¢377,618 as at December 31, 2012, which is 26 per cent higher than the new capital requirement of GH¢300,000 every rural bank was expected to have to avoid being declared distressed in which case it has to prepare for a merger with other such rural banks.

Presenting the chairman’s statement, the Chairman of the Board of the bank, Mr William Panford Bray, gave the picture of the difficulties in the banking environment in 2012 and how the board adopted the strategy of increasing the bank’s consumer base “to pursue growth opportunities in consumer banking and improve our governance structures and process flows” to assuage the effects of those challenges. Mr Bray appealed to shareholders to buy more shares to increase the bank’s stated capital further to strengthen its activities.

Africa: AfDB approves $15m for mid-sized business Stock Listing

The board of African Development Bank (AfDB) has approved a $15 million equity investment fund to support African mid-sized businesses in achieving stock market listing. The fund will be provided through Enko Africa Private Equity Fund (EAPEF), a pan African investment fund with a target of $150 million in total endowments, aimed at providing finance and expertise for successful listing of African companies on their bourses.

The fund – which is in line with the development bank’s strategy of Private Sector Operations (PSO) – aims to rectify the inflationary situation currently experienced in most African stock markets.

It was reported that though financial markets across the continent have witnessed significant upscale in activities – number of bourses rising from about 12 to 23 in a little over 20 years – with excess demand leading to an oversubscription of IPOs, the supply is still remains significantly insufficient. Analysts believe this deficit is as a result of a lack of financial capital and technical knowhow needed for mid-sized companies to successfully make the leap in registering with the stock market.

However with AfDB’s fund approval, EAPEF can further push its agenda by injecting financial resources to enable expansion, recapitalization, and deleveraging; but also to bring expertise in strengthening corporate governance, improving business practices and standards of disclosure in preparing companies for stock market listing.

Tanzania: Ten-Year Treasury Bond exhibits improved liquidity

The ten-year Treasury bond was received relatively well on Wednesday 4ht September, with investors oversubscribing by 37.73 per cent, an indication of improved liquidity in the market.

The Bank of Tanzania (BoT) wanted to raise 29.5bn/- from the 10 year-bond that had a price tag of 14.5 per cent as coupon rate, but the market tendered 40.63bn/-. Despite the oversubscription, BoT accepted 29.5bn/- offered to the market for bidding, an indication that some investors offered price below market value.

Investors’ appetite for the 10-year Treasury bond was not prevented by the slight fall of the weighted average to maturity to 14.5 per cent compared to 15.3 per cent offered in the previous ten-year government paper.

The government papers are among the debt instruments the state uses to borrow money from the public for financing of various development projects. The stock of domestic debt at the end of June 2013 stood at 5.64tr/-, an increase of 1.4bn/- from the level recorded at the end of preceding month.

On annual basis, domestic debt stock increased by 1.46tr/- from 4.17tr/- recorded at the end of June 2012. The profile of domestic debt stock by instruments shows that government bonds accounted for 74.1 per cent, with the treasury bills accounting for 21.2 per cent.

Commercial banks continued to be the largest holders of the government domestic debt, holding 45.9 per cent followed by the central bank at 25.9 per cent. Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent being retail investors. Others are pension funds, insurance companies and few micro-finance institutions.

Kenya: Nigerians to meet Kenyan businessmen

The Kenya business community will host a Nigerian delegation on Saturday, 7th of September. The forum will be led by the Kenya National Chamber of Commerce and Industry. At the meeting, an agreement between the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture and Kenya’s KNCCI will be signed. The deal will promote trade and investment between Nigeria and Kenya. The NCCIMN president Alh Muhammad B Abubakar will lead a group of influential businessmen such as billionaire Aliko Dangote and 50 other investors in a fleet of seven private jets.

They will be accompanying President Goodluck Jonathan on a four-day visit to Kenya that is expected to see the level of trade between the two countries rise. Goodluck and President Uhuru Kenyatta will attend the forum. Nigerian governors Peter Obi, Jona Jang and Dr Olesegun Mimiko will also be present. They will be expected to urge the businessmen to establish systems of trade and investment, and encourage tourism between the two nations. Kenya Airways flies to Lagos and plans are underway for a direct flight to Abuja.

Ghana: Yields will fall slowly – BoG

The Bank of Ghana (BoG) says Treasury yields will fall slowly from record highs as government restructures its debt profile and reduces demand for short-term funding. Adams Nyinaku, the BoG’s Head of Treasury, told demand for short-term debt has stabilised in recent weeks, which has caused yields to fall marginally — in line with a plan to cut the cost of public-sector borrowing.

Yields on 91- and 182-day government paper dropped from 22.77 percent and 22.39 percent to 22.64 percent and 22.26 percent respectively during the last three auctions. The one- and two-year notes also fell from 21.95 percent and 22.2 percent to 21.89 percent and 21.95 percent respectively in the same period. According to Mr. Nyinaku this trend is set to continue as demand for the bills may even soften in the coming weeks.

“We’re restructuring the debt. In recent weeks, demand for the short-term bills has stabilised and government has not been taking the excess offers. The demand may even go down.”

Debt restructuring has emerged as a fiscal policy priority after public-sector borrowing costs surged in 2012 due to a weak currency and monetary tightening to rein-in growth-driven excess import demand.

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