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
Uganda has become the latest African nation this year to re-calculate the size of its economy and reveal a much greater gross domestic product, following Nigeria and Kenya.
Following a statistical revision Uganda said its GDP was roughly $25bn at the end of the fiscal year 2013-14, about 13 per cent more than previously thought. The change was made by bringing forward the base year for calculations to 2010 from 2002, when the structure of the economy was very different and booming sectors such as banking and mobile telephony had barely taken off. 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
Uganda is not, after all, jumping onto Africa’s sovereign bandwagon.
The East African country, a perennial candidate in the continent along with Ethiopia and Algeria to issue dollar-denominated debt, not only says that it is not ready to debut in the global capital markets but has also warned others about the dangers.
Emmanuel Mutebile, governor of the central bank, told The East African newspaper that African countries should “not be complacent about the dangers of big projects built on sovereign debt”, adding that African countries would “never again get debt relief”. Read more
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
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. Read more
It might be behind schedule by several years and tax wrangles when it comes to pumping out its prodigious oil finds, but Uganda’s $20bn economy is nevertheless picking up speed.
Not only has it emerged from the doldrums of three years ago, when annual growth rates fell to 3.4 per cent and the country failed an IMF review; the IMF today applauds the country’s prospects, saying growth should reach 6.1 per cent for the 2014/15 fiscal year, up from an expected 5.7 per cent this fiscal year, with inflation on target to come in below 5 per cent in the near future. All this despite civil war in neighbouring South Sudan, which despite its underdeveloped state is a market Ugandan traders rely on for selling everything from plastic pots to tomatoes; a slowdown in agricultural output at home, which occupies three quarters of the country’s 36m population; and the ire of donors, who have held back more than $110m in aid after Uganda passed a controversial law against homosexuals earlier this year. Read more
Uganda’s government has been locked in a long-standing battle with companies over the development of its 3.5bn barrels of oil, mostly located around the Albertine Graben.
So it is with some relief that last week a memorandum of understanding was finally signed with UK-based Tullow Oil, Total of France and China National Offshore Oil Corporation, providing a framework for commercial production which builds on an April agreement. 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
Actis, a British private equity investor, wants to provide Cameroonians with power. On Thursday it agreed to pay $220mn to acquire 56 per cent of Cameroon’s national grid, Société Nationale d’Electricité (Sonel), and two power plants in the country, Kribi and Dibambe.
The grid’s current majority owner, US energy titan AES, is credited for giving Cameroon greater access to more reliable supply of power. Cameroon is now level with Spain in terms of ease of getting electricity according to World Bank data. Can Actis continue AES’s legacy? Read more
When Ethiopia set up its commodity exchange in 2008, few observers foresaw the demand it would generate. But five years on, the ECX has shown that a bourse can help tackle food insecurity in poor nations, and countries are now falling over themselves to replicate its successes. Read more
Bharti Airtel, the world’s fourth largest mobile services provider by subscribers, announced on Tuesday that it is set to buy Warid Telecom Uganda, the Ugandan business of Abu Dhabi-based Warid Telecom.
The Indian service provider is already Uganda’s second largest mobile phone operator with 4.6m customers. And by adding Warid’s 2.8m customers, it will be raise its market share to over 39 per cent. Read more
Less than two years after independence, South Sudan is attracting the attention of insurance companies in east Africa. And it’s not the region’s only new frontier. CIC Insurance Group of Kenya is ready to expand in the country and into neighbouring Uganda.
Next year, CIC has its sights on Tanzania and Malawi, Joel Gatune, the insurer’s finance and investments manager, tells beyondbrics. “For us, we believe sustained growth is in micro-insurance,” he says. “We’ve come up with a micro-insurance blueprint.” Read more
After coming out on top against Heritage Oil in a tax appeal tribunal at home, the Ugandan Revenue Authority claims to be winning the away leg in London as it chases the Jersey-based company for a tax bill of $435m.
Heritage disputes the claim, and says the arbitration is still at a preliminary phase. A swift conclusion seems unlikely, but the case signals a determination on the part of the Ugandan government to ensure it gets a cut of the spoils in its nascent oil industry, and underlines the risks facing investors. Read more
Fancy a bit of east African power? Umeme, the Ugandan power company, was successfully floated on Friday by Actis, a private equity group. So far, it’s been a hit, with the IPO oversubscribed and shares jumping 9 per cent on Monday.
But despite the investor thumbs-up, the stock is already rated by one analyst as a sell. 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
The Bank of Uganda slashed 200 basis points from the benchmark interest rate on Tuesday, bringing it down to 13 per cent. This is the seventh rate cut this year, leading to a cumulative reduction of 10 percentage points in the central bank rate since February.
In a statement the bank explained the monetary easing as the result of disinflationary momentum; headline inflation fell from 11.9 per cent year-on-year in August to 5.4 per cent in September. Read more
East Africa has just gained its 30th home-based private equity fund.
Progression Capital Africa’s first fund, which was launched in Nairobi on Thursday, will put $40m to work in microfinance across the region. Investing funds from three European state-backed development institutions, it’s ready to accept gains of only 10 per cent to 15 per cent – far less than the 30 per cent sought by private sector investors – as long as the projects generate decent social benefits. Read more
As bond yields across Europe climb ever higher, one frontier African economy has managed to get a $409m bond issue away at a yield 150 basis points less than it paid a month ago.
Of course, Nigeria still had to offer an eyewatering yield of 16.5 per cent but any improvement on the even more painful 18 per cent it payed in October is welcome – particularly for an economy that is struggling with inflation, low growth and a high interest rate which is posing a dilemma oft repeated in the region. Read more