By Angela Mndolwa and Shah Jahan Khandokar, Norton Rose Fulbright
Huge natural gas discoveries in East Africa, attracting global interest and investment in recent years, have given rise to complex and politically sensitive boundary disputes in the region, most recently within the United Republic of Tanzania between the mainland and semi-autonomous Zanzibar.
Despite a strong desire to reap the rewards from oil and gas within its boundaries, investors in the region are hoping that the two governments of Tanzania will realise that it is better to share revenue than risk deterring investment. Read more
Tanzania has become the third east African country in as many months to discover the size of its economy is bigger than previously thought, benefiting from a surge of investment from gas explorers.
Tanzania joins neighbours Kenya and Uganda in their hefty upward revisions. Statisticians say the new estimate for the size of the economy in the country of 51m people is $41bn, 32 per cent more than previously estimated and the highest revision leading the east African pack, followed by Kenya (which rose 25 per cent at the end of September) and Uganda (13 per cent, also this month). Read more
Tanzania, the best-performing stock market in Africa so far this year, has lifted restrictions on foreign ownership of shares, potentially unleashing pent up demand for companies listed in the small Dar es Salaam Stock Exchange.
The exchange said in a statement released on Thursday that “as per the new foreign investors regulations dated 19 September 2014, there are no longer restrictions for foreign investors to buy shares or bonds at the exchange”.
Source: Dar es Salaam Stock Exchange
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
Source: Thomson Reuters. Click to enlarge
Pity Tanzania’s stockbrokers. For the first time in years, it looked as if the country’s famously closed and illiquid markets might be about to open up to foreign investment. But, in classic Tanzanian style, “procedure” has called a halt. Read more
When Tanzanian President Jakaya Kikwete steps down next year he hopes to have completed the first of three phases in a plan to turn Tanzania into a middle-income country. The purpose of the first phase is to tackle “constraints to growth” in agriculture, transport, energy, water, education and resources. Read more
It would be exaggerated to call Davos the “money Oscars”, as Jon Stewart did on the Daily Show. But this year, WEF participants did like to think of countries as winners or losers, especially among emerging markets. In this last roundup, beyondbrics summarises who, to paraphrase the FT, “was hot – and who decidedly not.” Read more
Tapping bond markets is something of a trend for many African countries in the past year, including Gabon this month with a $1.5bn 10-year eurobond priced to yield 6.375 per cent.
But selling long-term debt is proving a hard game in east Africa, despite the presumable attractions of political stability and a favourable business environment. Interest costs for government securities are high, with long-term instruments maintaining yields of about 10 per cent or more, creating a growing concern for central banks. Read more
Tanzania has been riding the wave of the east African gas boom, with national natural gas reserves estimated at 40tn cubic feet. Now, to carve out a bigger slice of the action, the government has announced tougher new terms for companies.
The new model Production Sharing Agreement published Monday, which replaces a 2008 version, introduces signature and production bonus payments into the mix, raises the royalty rate for offshore gas from 5 to 7.5 per cent, and sets out more stringent local content requirements. It also puts forward details on capital gains tax, in a bid to avoid the kinds of disputes Uganda is embroiled in. Will it scare companies off? Read more
Tanzania is one of several African countries that have announced their intention to issue eurobonds this year, taking advantage of favourable conditions for frontier market sovereign debt.
But instead of going to market with a plain vanilla eurobond as expected, the east African country has surprised money managers with plans to issue a $500m, seven-year amortising bond this week in a private placement. Read more
African Barrick Gold continues to fail to live up to expectations. The Tanzania-focused miner, which was spun off from Barrick Gold in 2010, disappointed investors again on Wednesday with guidance in its full-year results suggesting its gold production would be 540-600 thousand ounces in 2013.
This compares to 2012′s 626koz – 9 per cent less than 2011 – and suggests the company is once again heading for a decline in production. Read more
Shares in African Barrick Gold plummeted by over 20 per cent on Tuesday following news that China National Gold had pulled out of talks to buy a majority stake in the company from Barrick Gold.
In heavy trading the shares fell from 444p to reach 354p as of 11.00 GMT, down from the initial float price of 575p in 2010, but some way off their all time low of 310p reached in May. Read more
Green and red are universal symbols for stop and go. Or so you might think. In Tanzania, green and red mark cheap goods in the nationwide system of price banding while expensive products are gold and blue. And it is in this cheaper end of the Tanzanian market that money can be made.
For example, Carlyle Group has partly funded a $210m investment which will allow Tanzania’s Export Trading Group to open a factory producing soya protein meals, catering to those who can’t afford meat and fish. An FT Special Report looks at the wider business environment in the country. Read more
Independent and small-scale oil companies like to be quick on their feet, beating the energy giants time and again in the exploration race. But in some of Africa’s more promising energy areas, regulatory hurdles and resource nationalism are starting to hold things up. Read more
In most countries paying taxes is nothing special. For those that fail to dish up the dues – and get caught – punishments await. But elsewhere, compliance is so low that carrots are used as well as sticks. Wednesday was Taxpayers’ Day in Tanzania. Read more
Sub-Saharan Africa’s local bond markets are for the most part small and rudimentary and lack transparency. In some cases even yields are difficult to find. But many have made significant progress in recent years, potentially offering succour to companies starved of institutional funding.
These markets – where the debt securities are priced in Nigerian naira, Kenyan shillings, Zambian kwacha or Botswana pula, as opposed to US dollars – are mostly dominated by government bonds. For companies the cost is often high and the process arduous. But several markets now boast an array of corporate bonds – and more are on the way. Read more
When it comes to the giant gas deposits off the coast of East Africa, not everybody is on board. In Tanzania, a political row over exploration has broken out causing a licencing roadshow in three continents to be canned.
The row is between the country’s lawmakers, who are pushing for a ten-year moratorium on new offshore exploration, and the ministry of energy and minerals. But will Tanzania risk falling behind its neighbours, Kenya and Mozambique, in developing LNG? Read more
Good news for Tanzania. Ophir Energy on Monday delivered the best possible response to investors concerned about a lack of news on its key Tanzanian offshore acreage – and announced a big upgrade in the estimated resources in Block 1 of its Mzia discovery.
The shares jumped over 6 per cent on Ophir’s statement of an increase in the resources from 2-6tn cubic feet to 4-9tn, with a mean estimate of 6tn. That takes the total in-place discovered resources in Ophir’s three blocks to 13.5-21tn cubic feet, enough to support construction of not one but two LNG production trains. It brings Ophir that much closer to building east Africa’s first LNG terminal. Read more
Mining companies are queuing up for east Africa’s natural resources boom, but one key player might now be heading for the exit.
On Thursday Barrick Gold, the world’s biggest gold producer, confirmed it is considering selling its 74 per cent stake in its African operation, African Barrick. As the FT reports, potential buyers in the frame are China National Gold and the Zijin Mining Group – both state owned. Read more
An investor in a business majority-controlled by another shareholder has embarked on a mystery tour, writes Jonathan Guthrie in the FT’s Lombard column.
With gold miner African Barrick, which has attracted bid interest from China, the trip has been far from magical. The shares fell roughly a third between flotation in 2010 and an announcement from 74 per cent stakeholder Barrick Gold of Canada that it is mulling a disposal.