In 1986 The Economist magazine famously created its Big Mac Index, a guide to the fair value of a currency based on the principle of purchasing-power parity, which states that exchange rates should adjust to bring prices of identical goods into line across national boundaries.
But Big Macs are not sold everywhere. Seeking a similar mechanism applicable to countries in Africa, we have created our Milk Index, based on the price of a gallon of milk. Read more
More bad news for Morocco this week, after it was banished from the Africa Cup for pushing to delay the football tournament out of Ebola fears. S&P Dow Jones has downgraded the equities market one of north Africa’s most stable and promising countries from its index of emerging markets to its frontier market index.
Alone among Arab countries, Morocco managed to weather the political tumult of the Arab Spring, even forging an unprecedented compromise with moderate Islamists that maintained stability without resorting to widespread state violence and helped the country maintain an average annual GDP growth rate of 3.5 per cent since 2011. Read more
By Siona Jenkins
Good news is a rare commodity in the Arab world these days. Violence is raging across Syria and Iraq, Egypt has retrenched into authoritarianism and Libya is in chaos. Even Tunisia, which is managing its transition to democracy with aplomb, is facing huge economic challenges.
But in the far west corner of North Africa, Morocco has so far been spared much of the pain of the last four years.
“Morocco is a bright spot in the region,” said Mohamed Boussaid, the minister of finance, during a visit to London last week. “For us the Arab spring was just a breeze.” Read more
Morocco’s burgeoning automobile sector is driving the industrialisation of an economy still heavily dependent on agriculture. The country’s auto sector will help push GDP growth up 4.5 to 5 per cent in 2015-2016, from 2.5 per cent in 2014, predicted Capital Economics in a note, making Morocco “North Africa’s best performing economy over the coming years”.
Falling output in agriculture was holding back overall growth. New data showed that Morocco’s economy grew by 2.3 per cent year-on-year in the second quarter of 2014, a bit better than the 1.7 per cent recorded in the first quarter, “but it is still sluggish by past standards”, said Capital Economics. Read more
The rush of emerging markets into euro-denominated debt continued on Friday, with Morocco issuing a €1bn 10-year bond with a 3.5 per cent coupon, priced to yield 215 basis points above midswaps, the benchmark euro bond rate.
Mohamed Boussaïd, Morocco’s finance and economy minister (pictured), told beyondbrics that while market conditions had been favourable, the deal was above all an endorsement of Morocco’s economic and political reforms and of its success in steadily reducing the government’s budget deficit. Read more
Young Arabs are increasingly turning their backs on cushy public sector jobs in favour of working for private companies and starting their own businesses, a survey in 16 countries has found.
There has also been an erosion in optimism that the “Arab spring” uprisings in recent years against authoritarian governments across the region will translate into better lives for ordinary people, the survey found. Read more
Africa is at the forefront of bringing financial services to the “unbanked” and new opportunities to seasoned investors. In Monday’s FT special report on Africa Banking and Finance, our correspondents examine the continent’s enormous potential and challenges, writes Justin Cash.
Africa editor Javier Blas looks at the growth of sharia-compliant investments across the continent, whilst Anousha Sakoui assesses bright new prospects for M&A activity. Read more
Last week it was a Moroccan bank issuing international bonds, and now it’s the government that has global investors in its sights. The North African country plans to launch a €1bn ($1.36bn) eurobond over the next few weeks, sealing a crown as the the continent’s second-largest sovereign eurobond issuer. No prizes for guessing number one (South Africa). Read more
With the prospect of Fed tapering looming increasingly large on the horizon, emerging market entities have been scrabbling to issue debt while the price is still right. On Thursday, Banque Marocaine du Commerce Extérieur (BMCE Bank) joined party when it launched a $300m five-year eurobond at a yield of 6.5 per cent – the largest international note ever to come from a Moroccan financial institution. Read more
As beyondbrics reported on Tuesday, index provider MSCI has rejigged its emerging market classifications. The headline grabber is that Greece has been put into the emerging market group. Up from frontier to emerging status come the UAE and Qatar. Morocco was relegated back to the frontier group.
It’s embarrassing for Greece and an overdue vote for the UAE and Qatar. But how much of a difference will it make? Potentially, quite a lot, actually. Read more
It’s been a long time coming. After putting Greece on review for a possible demotion to emerging markets status last year, MSCI went ahead and made it official on Tuesday.
In its annual review of country classification, MSCI removed Greece from its developed markets index and reclassified it as an emerging market. The Athens Stock Exchange has shed nearly 83 per cent of its value since 2008. Read more
By Chiara Francavilla of This is Africa
Morocco is finalising a new securitisation law that will allow the state and companies to issue sukuk, the Islamic equivalent of bonds. Preparations for a corporate and a sovereign sukuk are already underway, according to Islamic finance experts. Read more
Smiles all round on the faces of those officials of the European Bank for Reconstruction and Development who successfully lobbied for their role to be broadened from their traditional stamping grounds in eastern Europe to Turkey, North Africa and beyond.
As any visitor to the organisation’s annual meeting in Istanbul on Friday would have seen, top officials from the likes of Poland, Ukraine and Russia were notable for their absence. But there to fill the gap were the prime ministers of Tunisia, Egypt and Jordan, not to mention the host, Turkey’s premier Recep Tayyip Erdogan. In the ex-Communist bloc, the EBRD is now old hat. In and around the Mediterranean, it still makes news. Read more
Asia’s footprint in Africa’s commodity-rich economies has been growing, with Singapore-listed companies among the biggest investors.
Wilmar, the world’s largest refiner of palm oil, first moved into Africa in 2007 with a couple of palm oil refining joint ventures in Uganda and Ivory Coast. Africa is short of refined palm oil and Wilmar spotted an opportunity to fill that gap. Maersk, the Danish shipping line, says a significant proportion of the goods carried in ships from Singapore to Africa is refined palm oil.
Now Wilmar is expanding its African business to sugar. Read more
Inflation is on the rise in the Middle East and north Africa, bringing risks to consumption-driven growth and adding to political strains in the transitional countries least able to cope with them. Read more
The Arab spring seems a world away on the train from Casablana to Rabat. In one compartment a conversation springs up between a local Moroccan, running a machine parts manufacturing business, and a Saudi from a construction company, visiting Rabat to seek migrant labour to help with the booming development in Saudi’s northwest. Cards are exchanged, then brochures; business is done, right here on the rumbling train. Read more
The “Genghis bonds” issued by Mongolia last week might already be losing its sparkle as political turmoil rocks the country. But the specter of political risk hasn’t deterred investors from piling in on Morocco’s maiden dollar-denominated bond.
The North African country, which is under pressure to plug budget gap and contain the kind of protests that have brought down regimes in other parts of the Middle East, raised $1.5bn in a dual-tranche offering on Wednesday. Read more
Escalating disputes between labour unions and employers in north Africa are threatening to derail economic recovery after the uprisings that ousted long-ruling dictators in the region, writes Farah Halime.
Emboldened by the spirit of political change, thousands of workers in Egypt and Tunisia have staged a series of protests and are now in deadlocked talks with companies over demands for a minimum wage. Read more
Economies in north Africa have suffered a sharp drop in direct foreign investment since last year’s Arab uprisings, and they have been hit hard by the eurozone crisis. What can they do to rekindle investors’ interest?
“Don’t forget, revolutions are expensive”, says Dimitris Tsitsiragos. He should know: his responsibilities as a vice president at the International Finance Corporation include north Africa and the Middle East, not least the countries hit by the Arab Spring.
The IFC, the World Bank’s private sector arm, has, in the last five years, boosted its annual commitments to the region by nearly 50 per cent to over $2bn. But, Tsitsiragos says it’s not enough: without more private sector involvement, the region cannot generate the investments required to produce faster economic growth and more jobs. Read more