“They’re coming up every morning, just like churches,” Peter Kari, a father of two living in Nairobi’s Kawangware slum, says of the private schools mushrooming in his neighbourhood. “They die as they’re being born. You can wake up one morning and see a tin shack. The other night it was a pub. Today, it’s a school.”
A ride down one of the main roads in Kawangware offers evidence for Kari’s claim. Within five kilometres, there are at least fifteen visible signs for private schools, with names like ‘Brightest Star,’ ‘Top Shine,’ ‘Springs of Wisdom,’ and one (see photo) unfortunately misspelt ‘Havard.’ Read more
It’s a few minutes into Marion Akinyi Onginjo’s social studies lesson at Bridge International Academy Gicagi in Nairobi and the class 4 teacher is being drowned out by loud cheers next door.
Bridge International Academy Gicagi, Nairobi. Photo: Tosin Sulaiman
Class 4 finally gets its chance to make some noise when one student, Margaret, correctly answers a question about subsistence crops. After Onginjo tells the class, “let’s give Margaret the cowboy cheer,” they stand up, spin imaginary lassoes in the girl’s direction and yell, “One, two, three, four, five, yee-hah.” Read more
Ghana has promised to bring its fiscal deficit sharply down next year with a combination of higher taxes and lower spending, in what the market took as an effort to secure up to $1bn in soft loans from the International Monetary Fund.
Seth Terkper, finance minister (pictured), on Wednesday pledged to reduce the fiscal deficit to 6.5 per cent next year, down from a better-than-expected 9.4 per cent in 2014. “[The] government is committed to addressing the short-term vulnerabilities that the economy faces,” Terkper told lawmakers presenting next year’s budget. Read more
African dollar bonds are increasingly gaining mainstream acceptance as the continent’s brisk economic growth and low interest rates in the developed world help buoy demand for high-yielding debt.
The size of Africa’s dollar-denominated debt market, not including South Africa, is now more than $20bn, accounting for 6 per cent of JP Morgan’s EMBI index. In sub-Saharan Africa, issuance of international sovereign bonds hit a record $6.9bn this year, with offerings from Kenya, Ivory Coast, Senegal, Ghana, Zambia and South Africa.
But amid the excitement over Africa’s growing role in international capital markets, some are beginning to question just how healthy the dollar borrowing spree is. Read more
By Kevin Daly, Aberdeen Asset Management
Africa is set to be a focus of the International Monetary Fund (IMF) and World Bank’s agenda at meetings next week. But observers need to be discerning: for too many the temptation is to think of Africa as one entity (or even country, if you are certain US politicians). This is frustrating for Africans. It is downright foolish for investors.
The 54 nations of the African Union speak over a thousand languages, are home to over a billion people and hold vast quantities of natural resources. Most maps, based on Gerardus Mercator’s 1569 projection, do not help by distorting land masses which gives the impression Africa is roughly the same size as Greenland.
It is in fact 14 times larger and easily large enough to fit China, India, the USA, Japan and a slew of European countries inside its land mass. The differing attitudes towards adversities suffered by Zambia and Ghana present a lesson in the continent’s contrasts. Read more
Kenya’s big twin deficits will become a heavier burden when higher US interest rates push up borrowing costs, Renaissance Capital warned on Monday. That would batter an economy already damaged by falling tea prices and tourism revenues.
In a note, Who’s hot and who’s not? in sub-Saharan Africa, RenCap predicted that
an increasing interest rate cycle in the US from 2015 will slow the flow of debt to Kenya, particularly the flow of external debt that finances the CA deficit and half of the budget deficit. Partly because of a higher cost of external borrowing, and fall in global appetite for EM and FM assets, as yields on US debt improves. Kenya’s capital inflows are likely to slow at a time when the CA is being undermined by insecurity, which is dampening tourism revenue.
The number of middle class households in 11 key sub-Saharan African countries – excluding South Africa – are set to triple to 22m by 2030, creating a burgeoning consumer market for items such as vehicles, insurance policies, property and health products, according to a Standard Bank research report.
Simon Freemantle, senior political economist at Standard Bank and author of the report, said the prospective boom in middle class households – those earning between US$8,500 and US$42,000 a year – is also likely to be complemented by a swelling in the number of lower middle class households that earn between US$5,500 and US$8,500 annually. Read more
Late at night during a power blackout in Ghana’s capital Accra is neither the time nor the place you’d expect pop diva Celine Dion to come to your rescue. But when a rider from restaurant delivery service Hellofood Ghana lost his bearings with a customer’s dinner on the back of his motorbike, he turned to Celine for help.
Unable to find his customer’s home in the gloom, he arranged for the client to come onto the street playing “My heart will go on” on her phone. The driver, also a Dion fan, played the same music on his phone, allowing the two of them to locate each other by siren song.
“Luckily, he still had a mobile phone signal so he could phone the client,” says Yolanda Lee, a 26 year-old Canadian who runs Hellofood Ghana, a subsidiary of Hellofood Africa which manages a meal delivery service in 10 countries and 14 cities in West, East and North Africa. Read more
When a country cuts power to its aluminium smelters so its people can watch the World Cup on TV, you have to conclude that its economic policy isn’t all about investing for the future.
Ghana this week called in the International Monetary Fund after a depreciation in its currency threatened to turn into a rout. The episode is an excellent illustration of the injunction to be careful what you wish for, in this case Ghana’s discovery of oil. Its fellow minerals exporter, copper-rich Zambia, has also called in the IMF.
The two nations have become object lessons in how easy outside financing and high but volatile export prices give countries enough rope to strangle themselves. Their experience is unlikely to be a bad as similar countries in previous decades, but it still represents another chapter in the sad history of resource-dependent economies going wrong. Read more
For Ghana, which is battling a massive fiscal crisis, the answer is football. The government has ordered one of the country’s biggest industries to reduce production to guarantee enough electricity for television coverage of the World Cup.
The West African country, which is expected to suffer a double-digit fiscal deficit in 2014 for the third year in a row, told the Volta Aluminium Company (Valco), to “reduce energy consumption during periods when Ghana would be playing”. Aluminium smelters are among the biggest consumers of power and, with limited supplies, the country was facing rolling blackouts during the next few weeks when millions of television sets will turn on simultaneously for the football matches. Read more
When Zambia last week approached the International Monetary Fund for financial help, another cash-strapped African country was surely watching: Ghana.
Lusaka and Accra face similar problems: runaway fiscal deficits – the result of electorally-driven increases in public sector salaries – and a swelling current account deficit that is pressuring the exchange rate.
The market response to Zambia’s request should convince Ghana to seek help, too. Read more
Ghana plans to brave into the sovereign bond market before the northern hemisphere’s summer this year, the finance minister, Seth Terkper, told the Financial Times on Friday. The plan comes in spite of a mounting economic crisis in the West African country.
The bond would test the appetite of investors for frontier and emerging countries battling with high fiscal deficits and rapidly rising debt levels at the same time as the US Federal Reserve “tapers” its monetary stimulus. Read more
By Stephen Adams of Global Counsel
Events at west African lender Ecobank over the past six months have been widely and rightly interpreted as an important test for the credibility of African bank governance and regulation. A combination of internal whistleblowing, regulatory pressure and shareholder activism did for former CEO Thierry Tanoh and have prompted a fairly substantial overhaul of bank governance. All good news for African good governance.
But the bigger question for African banks like Ecobank is still unanswered. This is simply that as a cross-border African financial institution, Ecobank is evolving much faster than the institutions that supervise and regulate it. With operations in more than 30 sub-Saharan markets, Ecobank is a complex prospect for African bank supervisors and one that they are only just starting to get to grips with. Read more
The discovery of oil and a rising consumer class had investors positive about Ghana’s growth story, holding up the west-African country as one of the frontier markets to invest in. But the recent broad sell-off in EMs has changed the mood about the country and exposed a slate of problems in need of resolution.
Source: Thomson Reuters
Ghana celebrated its 57th anniversary of independence on Thursday, but a hangover from the heady 15 per cent GDP growth posted in 2011 is putting a damper on the mood.
West Africa’s second largest economy was turbo-charged by the discovery of oil in 2007. Foreign investment flowed in, attracted by the vibrant economy and the country’s reputation as a stable, democratic state. By 2011, Ghana was one of the top 10 fastest growing economies in the world and just a year later, oil had surpassed cocoa as the country’s second biggest export after gold. Read more