By Charles Okeahalam of AGH Capital
Tom Hank’s portrayal of Captain Richard Phillips’ encounter with the pirate Abduwali Muse aboard the MV Maersk Alabama has focused public attention on an issue threatening an industry that, according to the International Maritime Organization (IMO), handles more than 90 per cent of global trade. Continue reading »
Are fixed exchange rates bad for growth? Much of the economic literature suggests no causal relation between a country’s exchange rate regime and economic growth. But the IMF has produced a paper suggesting that sub-Saharan Africa may be different.
Manuk Ghazanchyan and Janet Stotsky, the authors, perform a random effects model and find that non-oil exporting nations that claimed to have a flexible exchange rate had significantly higher GDP per capita growth from 1999 to 2011. Continue reading »
Back in September, to much fanfare, Nigerian President Goodluck Jonathan officially handed over share certificates and licenses to the handful of energy consortiums who successfully bid $2.5bn for ownership of ten distribution companies and five power generation plants.
But investors are starting to grumble about breakdowns in communication, procedural confusion and the government’s failure to properly think through how the new system will work. Continue reading »
Investors in Nigeria’s oil sector have been having a tough time of it as commercial-scale theft and sabotage have hurt operations and the country sits in regulatory limbo. Now there’s some bad news on taxation.
International oil companies have been lobbying hard to have the fiscal terms proposed in the now-famous draft Petroleum Industry Bill (PIB) diluted, but it doesn’t look like those efforts have paid off. The government hasn’t got any intention of compromising on its proposed tax regime, the minister of petroleum resources said, despite complaints that production could slump by 25 per cent if the legislation is passed in its current form. Continue reading »
With all the talk of the rise of the African consumer, you might be forgiven for thinking that it’s simply a matter of showing up and opening up shop.
Well here’s a reality check: Woolworths of South Africa is closing its three stores in Nigeria, just a couple of years after opening. Continue reading »
It’s already been a record year for African bonds, despite the emerging market sell-off, and the list of 2013 issuers has just got longer. Nigeria’s largest lender, Guaranty Trust Bank (GTB), is the latest entity to tap yield-hungry international investors, launching a 5-year $400m eurobond at a yield of 6.13 per cent.
GTB is taking advantage of a bright period for emerging market debt. Borrowing costs soared and issues plummeted after the US Federal Reserve hinted in May that it would begin cutting back its bond buying programme, which has stimulated the purchase of EM assets. But since then it has delayed “tapering”, causing a slew of issuers to come to market while prices are still decent. Continue reading »
There is plenty of investment appetite for African stocks among institutional investors, and the continent’s financial markets are taking notice.
Nigeria, South Africa, Kenya and Angola have all recently pushed ahead with plans to deepen and improve their financial markets. But there is still a long way to go. Continue reading »
Are Nigeria’s pension funds ready to step up to the plate and help finance the country’s development? Policy makers hope they will grow out of their conservative approach of buying government paper and take advantage of recent changes designed to encourage them into new alternative asset classes, including private equity and infrastructure funds.
“Our pension funds are young,” says Olusegun Aganga, trade and industry minister. “We’ve not had them for a very long time so it is natural that there is a conservative way of looking at things.” But having built up a capital base of around $20bn (from $2bn in 2004), they are ready to do more, the minister hopes. Continue reading »
From an economic viewpoint, Africa’s most populous country, with about 173m people, is moving in the right direction, as the FT’s bumper Investing in Nigeria special report shows. Growth remains strong, at more than 6 per cent. Nigeria is set to overhaul its ways of calculating GDP, for the first time since 1990, to reflect more recent developments, which should bring it closer to overtaking South Africa as Africa’s biggest economy. Inflation is down to single-digits and government debt remains modest. Continue reading »
As incomes rise in Africa, the battle is on to snap up the millions of ‘unbanked’ – those without a bank account. The potential is vast: the African Development Bank says only 20 per cent of African families have bank accounts.
As well as innovative new players, the old global payment technology rivals Visa and MasterCard are keen to join in. Both are looking to enlarge their footprint in different corners of the continent. Continue reading »
What’s the difference between Kenya and Nigeria? About two centuries, according to a new study by Stephen Broadberry and Leigh Gardner, two professors at the London School of Economics.
The pair have totted up the levels of GDP per capita of the countries of Africa, and compared them with historic rates of GDP per person in pre-industrial Europe. Citizens of Sierra Leone are about as rich as early medieval Englishmen, and modern-day Kenyans are just as rich as Elizabethans. Continue reading »
It’s well known that Nigeria’s oil industry is going through a rough patch – and one that’s likely to get rougher as a US shale boom revolutionises the global energy market. The government has noticed too and is setting its sights on other sectors as future sources of economic growth. Mining is high on the list. Continue reading »
Nigeria’s central bank has held its policy interest rate at 12 per cent for the 12th consecutive month. Can anything make it budge?
Analysts seem to think not. There are three factors that will keep rates locked: inflation, the naira and reserves. Continue reading »
Unlike some of his predecessors, Nigeria’s mild-mannered president is not renowned for wielding a big stick. So it was something of a surprise when Goodluck Jonathan sacked nine ministers on Wednesday.
It was his first big cabinet shake-up since he was elected more than two years ago, and came just 11 days after a splinter group broke away from the ruling PDP party, partly in protest at Jonathan’s intention to seek another term. Continue reading »
Why change a winning formula? The International Finance Corporation was successful when it launched its first naira-denominated bond earlier this year, raising $76.3m after orders came in for more than double the original $50m offering. Now it’s back for seconds. And thirds.
The private sector arm of the World Bank will launch a series of bonds totaling $1bn in a bid to create more liquid capital markets in Africa’s second biggest economy, officials told beyondbrics. Continue reading »