Following a decade in which Chinese largesse has helped to transform Africa’s prospects – and challenged the supremacy that western companies once enjoyed over the continent’s natural resources – Beijing has sent word to Washington that the world’s two biggest economies might combine their efforts to generate some much-needed electricity in one of the poorest.
The Democratic Republic of Congo, an expanse the size of western Europe that perennially ranks among the worst countries in which to do business, has known little but conflict and penury for decades. World Bank-backed plans to build a third dam at Inga are part of a broader vision for a dam complex capable of generating 40,000MW – twice the size of the Three Gorges dam in China.
Ivory Coast prime minister Daniel Kablan Duncan expects a sovereign bond planned by his country to come to market in July. He talks to Javier Blas about his financing plans and the challenges facing Africa.
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.
Less than three years since civil war erupted in Ivory Coast it’s back to business as usual. Growth rates are now among the highest in Africa and the west African nation is set to return to international capital markets as it looks to finance infrastructure projects and pay off debt.
Randgold chief executive Mark Bristow has criticised a “disturbing” tendency among African governments to increase taxes and regulations on mining investors, as the company disputes its tax bill with the Malian government.
The chief executive of the FTSE 100 gold mining company, which has operations in Mali, the Democratic Republic of Congo and Ivory Coast made his statement at the Mining Indaba conference currently taking place in Cape Town. He claimed that revisions to mining laws risked deterring investment on the continent.
With emerging market debt markets booming, is now time for African nations to join in? If Zambia’s recent bond is anything to go by, the answer would be a firm ‘yes’ – as many analysts are fond of pointing out, Zambia’s yield on its 10-year bond is lower than that of Spain.
So what’s stopping African countries jumping in and issing international bonds?
In a sport where making profits has taken a back seat to on-pitch results, former French football international Jean-Marc Guillou is bucking the trend.
Players trained at his JMG Academy have contracts at top clubs like Manchester City and Arsenal. And his investors are averaging nominal returns of over €15m – over 200 per cent over a ten year period. And Guillou himself, of course, does well too. But it’s a model that is not without critics.
Chocolate lovers, brace yourselves.
Dry and windy weather across the Ivory Coast is sending the price of cocoa, the main ingredient of chocolate, soaring in New York and London. Cocoa to be settled in March has jumped as much as 14 per cent already this week on the ICE Futures US exchange – and sector watchers reckon this could just be the beginning.
Everyone, everywhere is piling into emerging markets and Regus (RGU:LSE), the ready-to-use office space company, knows it.
The company is expanding rapidly to take advantage of the new footloose, flexible, working practices it says are the way forward. Since the only way to do that is to have a presence in as many countries as possible, the UK company intends to “get there first” and is “running through a list of countries”, chief executive Mark Dixon told beyondbrics.
Frontier markets aspiring to emerging market status should take a cue from the Ivory Coast on what not to do. The country announced this week that it would not make any more payments to holders of its $2.3bn of Eurobonds until 2012, citing months of post-election violence which began in November last year as a ”shock to the economy”.
For investors however, the government’s own forecast of $2.7bn in revenues for 2011 makes the total Eurobond coupon payments due this year ($101.1m) look like small change, and raises the question of whether there is more to its decision to delay payment.
Crisis and killing on the streets of Ivory Coast not only ultimately forced out Laurent Gbagbo, the country’s recalcitrant former president; they also all-but closed down the stock exchange serving the whole of west Africa.
But with Alassane Ouattara, the new president, now in place, the exchange is due to re-open on May 16 in the country’s business capital, Abidjan, giving investors a chance to place their bets on the country’s prospects.
It’s one thing to measure political risk in terms of swings in currencies, stock markets and CDS spreads. It’s another to count the costs in your P&L which is what Societe Generale has had to for its operations in Egypt, Tunisia and the Ivory Coast.
The French bank on Wednesday disclosed, in its first quarter results, €50m provisions for the three countries “undergoing political transition”. With net income of €916m, the group can take the hit. But nobody wants to lose that much in what are still peripheral markets.
By Katrina Manson
Following months of violent unrest in Ivory Coast, the IMF predicts that west Africa’s economic giant will contract 7.5 percent this year, making it not only the worst performer on the continent in 2011, but the only sub-Saharan economy predicted to shrink. It’s a massive drop: even in the depths of its civil war in 2003 , its economy contracted only 1.7.
By Katrina Manson
It’s an ill wind….The best-performing emerging market bond of 2011 is none other than the war-torn Ivory Coast’s $2.3bn issue.
It is up 25 per cent for the year to date, says JP Morgan, and around 55 per cent above its low on March 15, when investors took fright amid alarming reports of an imminent military attack on Abidjan, of refugees fleeing abroad and of an extension to a cocoa export ban. But what next for the bond, now that it stands at 54.6 cents to the dollar?
Ivorian leader Laurent Gbagbo was captured on Monday at his besieged residence in Abidjan and is in detention after a French military operation, the BBC reports.