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It's a great time to invest in Africa @rediamondjr @cnbcafrica Africa |
"There are headwinds from commodities and international banks pulling out," Bob Diamond told CNBC Africa on Saturday at the London Business School's Africa Business Summit.
However, Diamond was optimistic about the medium to long-term prospects for Africa
“This is a great time to be investing because the prices of businesses, in our case of banks are lower. In the currency levels vs the dollar and other major currencies are also at a good level. So we see this as a time to invest.”
Since quitting Barclays in 2012 following the bank's interest-rate manipulation scandal, Diamond has focused his attention on Africa. In 2013, he co-founded Atlas Mara, which purchases African banks with the aim of establishing a sub-Saharan Africa-wide banking chain.
Home Thoughts
I am reading
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Revolution as Ritual Africa |
MARIO VARGAS LLOSA'S powerful and haunting historical novel, ''The War of the End of the World,'' based on events in South America at the end of the 19th century, succeeds brilliantly in penetrating and opening to examination the ancient significance of the millenarian myth
As the century's final decade comes to a close, a mysterious figure, bearded, rail-thin, clad in a purple tunic, appears in the sertao. He speaks of love, peace and repentance. He speaks of death and judgment, heaven and hell. The stranger's name is Antonio Conselheiro and he is known to his followers as the Counsellor
“It's easier to imagine the death of one person than those of a hundred or a thousand. When multiplied, suffering becomes abstract. It's not easy to be moved by abstract things.” ― Mario Vargas Llosa, The War of the End of the World
“And yet, my dear Estela, in the end one accepts the will of God, resigns oneself, and discovers that, even with all its calvaries, life is full of beautiful things.” ― Mario Vargas Llosa, The War of the End of the World
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Man who foresaw oil crash bets against Saudi Arabia @cnn Emerging Markets |
"Saudi has two to three years of runway before it hits a wall," Schreiber said at the 21st Annual Sohn Investment Conference last week, returning to the scene of his 2014 oil call.
Schreiber predicted Saudi Arabia will be "structurally insolvent" by that point because it faces the twin threats of huge spending commitments and cheap oil.
"No wonder they're now issuing tons of debt," he said.
Saudi Arabia's central bank is sitting on almost $600 billion -- a massive rainy day fund that is helping it cope with the financial storm. But the Saudis have burned through $140 billion between the end of 2014 and February. The IMF too recently warned the Saudis could eventually run out of cash.
And Schreiber argues that Saudi Arabia's balance sheet is "overstated and misunderstood." He points to nearly $340 billion of liabilities that minimize the size of that rainy day fund.
These concerns may help explain why the Saudis are planning to sell off a 5% stake in the country's crown jewel: state-owned oil behemoth Aramco.
Conclusions
"If they sell the golden goose, how do they fund anything? It's insane. Saudi is mortgaging away its future to buy time," said Schreiber.
"Let's hope for the best, and hedge for the worst," Schreiber said.
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Congo opposition leader faces mercenary charges, backers cry foul Africa |
A leading opposition candidate for president of Democratic Republic of Congo was questioned on Monday over government allegations he hired mercenaries in a plot against the state, a case that could halt his fledgling campaign.
Police fired tear gas at thousands of supporters of Moise Katumbi who were advancing on the prosecutor general's office, where he was being questioned, chanting "president!", a Reuters witness said.
Some entered the building and at least four were arrested. After Katumbi emerged from the building, police made further arrests and again fired teargas at the crowd.
The hearing was later suspended until Wednesday.
Katumbi's supporters say the allegations are aimed at disrupting his campaign to succeed President Joseph Kabila, who has ruled since 2001 but is barred from standing for a third term at elections set for November.
"The tricks continue in this trial of shame," Katumbi's chief adviser, Salomon Idi Kalonda Della, said on Twitter.
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African growth story is still on the move BDLIVE Africa |
Africa achieved average real annual gross domestic product (GDP) growth of 5.4% between 2000 and 2010, adding $78bn annually to GDP (in 2015 prices). But growth slowed to 3.3%, or $69bn, a year between 2010 and last year.
New research from the McKinsey Global Institute that will be published in October shows that the shine has not come off Africa’s growth story, but it has become more nuanced.
The deceleration in growth since 2010 has been concentrated in two groups of economies — oil exporters and northern countries rebuilding after the political convulsions of the Arab Spring. The economies of Egypt, Libya, and Tunisia did not grow at all between 2010 and last year, in stark contrast to average annual growth among the three economies of 4.8% in the previous decade.
The rate of growth among oil exporters such as Algeria, Angola, Nigeria and Sudan fell sharply, to 4% from 7.1%. Productivity growth also declined in these two sets of economies. The annual rate of productivity growth in the Arab Spring countries fell from 1.7% to 0.6%, and in Africa’s oil exporters, from 2.6% to 0.4%.
THE rest of Africa maintained stable rates of GDP and productivity growth in the past five years. Real GDP grew at an annual rate of 4.4% a year, virtually the same as it was in 2005-10. Productivity grew at a compound annual rate of 1.7% during the same period, consistent with 1.6% from 2000-10.
Between 2010 and 2014, services generated 48% of Africa’s GDP growth, up from 44% in the preceding decade. Growth in Africa’s manufacturing sector has been low at 4.3% a year between 2010 and 2014, but utilities and construction achieved significant expansion to ensure that industry overall generated 23% of Africa’s growth, up from 17% in the preceding decade.
Resources made a negative 4% contribution to growth between 2010 and 2014, compared with 12% during the previous decade.
In the long-term, three powerful positive trends are likely to sustain Africa’s growth. First, its young population and growing labour force is a valuable asset in an ageing world. In 2034, Africa is expected to have the world’s largest working-age population of 1.1-billion.
Second, Africa is still urbanising and much of the economic benefit lies ahead. Productivity in cities is three times as high as in rural areas and, in the next decade, an additional 187-million Africans will live in cities, according to the United Nations.
We project Africa’s consumers will spend $2-trillion by 2025. But companies will need to gather detailed market intelligence on the whereabouts of the most promising consumer markets. Only 75 cities accounted for 44% of total consumption last year.
NIGERIAN consumers alone may account for up to 30% of Africa’s consumption growth in the next decade. Other segments to target include households earning more than $20,000 per annum in SA and Morocco, two of Africa’s most diversified economies with a large consumer base, or those earning $5,000-$20,000 in the fast-growing economies of East and West Africa. Third, African economies are well positioned to benefit from rapidly accelerating technological change that can unlock growth and leapfrog the limitations and costs of physical infrastructure in important areas of economic life.
East Africa is a global leader in mobile payments. The penetration of smartphones is expected to hit the 50% mark in 2020, from only 2% in 2010.
Foreign direct investment reached $73bn in 2014, up from $14bn in 2004. Africa has 700 large — and increasingly pan-African — companies earning revenues of more than $500m. These companies together boast $1.4-trillion in revenues, and many continue to grow extremely fast.
Undoubtedly, policy makers will need to grapple with significant challenges ahead. As the price of oil and other commodities has fallen, Africa’s finances have deteriorated: the continent ran a weighted average budget deficit of more than 6.9% of GDP last year, from only 3.3% of GDP five years earlier.
In 2010, Africa was running a small current account surplus of 0.4% of GDP; by last year, that had turned into a deficit of 6.7%. Several countries are in talks for financial assistance, including Angola with the International Monetary Fund (IMF) and Nigeria with the Chinese government.
Political instability is also more prevalent. The number of violent incidents measured by the Uppsala Conflict Data Program jumped from 858 in 2010 to 2,022 in 2014.
ABOUT one-fifth of Africa’s GDP comes from countries we call growth stars, with high rates of growth and a high score on stability. These countries, among them Côte d’Ivoire, Ethiopia, Kenya, Morocco and Rwanda, are not dependent on resources for growth, and are reforming their economies and increasing competitiveness.
The second group, the unstable growers that account for 43% of Africa’s GDP, experienced high growth rates in the past five years, but achieved lower scores on stability. This group of countries includes Angola, the Democratic Republic of the Congo, Nigeria and Zambia, which need to diversify their economies away from resources, to improve their security, or stabilise their macroeconomies.
And then there are the slow growers that accounted for 38% of GDP last year including SA, Madagascar, Egypt, Libya and Tunisia.
BETTER planning of urbanisation is critical to unlocking the growth opportunity in full and to make African cities competitive. A stronger focus on expanding power supply and electricity is needed to solve the number one challenge to the business environment.
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Uganda Confines Opponents Ahead of Museveni's Swearing In Africa |
Uganda’s main opposition party said one of its senior officials is missing and the homes of its leaders were surrounded by security forces, three days before President Yoweri Museveni is sworn into office.
Confining the leaders of the Forum for Democratic Change is meant to curtail their freedoms as Museveni takes his oath on Thursday, Wafula Oguttu, the leader of the opposition in parliament and a senior member of the party, said on his Facebook page. Ingrid Turinawe, the party’s head of mobilization, was “abducted last night,” he said.
“I think they want all of us put out of circulation as part of their swearing in preparations,” he said.
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Africa's Would-Be Switzerland Flaunts Economic Prowess With WEF Africa |
More than two decades on from a genocide that claimed 800,000 lives, Rwanda is taking another step toward looking like the closest thing Africa has to Switzerland.
A tiny, landlocked, mountainous nation, Rwanda’s economy has outperformed almost all its continental peers, with annual growth averaging 7.8 percent since 2000. Like Switzerland, which hosts the World Economic Forum in Davos every year, it’s also about to welcome delegates to the organization’s annual African gathering.
“The slump in energy and commodities prices have demonstrated the urgent need for greater diversification and entrepreneurship across Africa,” said Elsie Kanza, the WEF’s head of Africa. Rwanda “stands as a good example of how long-term planning and savvy investing can lead to sustainable and inclusive growth.”
according to Maurice Toriotich, the chief executive officer of Kenya Commercial Bank Ltd.’s Rwandan unit. Foreign direct investment in Rwanda will probably rise 36 percent this year to $1.5 billion, the nation’s development board said last month.
“The government has a good PR machine,” Toriotich said by phone from Kigali, the Rwandan capital. “Investment returns continue to be attractive. ”
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Mozambique's fallout from the credit boom FT Subscriber Africa |
In the annals of financial wizardry, Gregor MacGregor has a special place. The 19th century Scots adventurer conjured up the fictional state of Poyais and made a fortune selling bonds on its behalf. Mozambique is a different prospect, but the same impulse that drove British investors to plough savings into Poyais has propelled Maputo’s tuna bond fiasco. The paper MacGregor hawked in the 1820s promised six per cent returns when the British equivalent offered three. Yields in frontier markets like Mozambique have proved equally alluring during the recent trough in developed market rates.
The tuna bond arose from an $850m loan arranged in 2013 by Credit Suisse and a subsidiary of Russia’s VTB. Ostensibly this was to finance a state-backed fishing fleet. In reality it went mostly towards maritime security contracts. It was sold to investors as a bond and then restructured in March as government debt.
It may have seemed a reasonable gamble then. It looks less so since Maputo was obliged to disclose a string of other hidden debts worth at least $1.4bn, the bulk of these brokered by the same Credit Suisse and VTB. The International Monetary Fund has halted lending. Bilateral donors, who fund a quarter of the budget, are turning off the taps. Lawyers are determining liability for losses.
Mozambique was viewed latterly as an African success, partly in anticipation of production at vast, offshore gasfields. It now stands among the first instances of fallout from the boom in emerging market debt which has driven billions of dollars into countries with poor credit profiles. Foreign reserves are dwindling, the fiscal deficit is yawning and devaluation of the metical could drive debt to gross domestic product ratios above 100 per cent this year, says Fitch.
Africa has been here before. The continent lost two decades as a result of the vanity projects and Cold War imperatives that foreign lenders indulged in during heady post-independence years. But memories are short. In 2000, Mozambique was among the first African states to benefit from the Heavily Indebted Poor Countries Initiative, the Bretton Woods process that helped clear that odious, historic debt.
Many African nations have gone on to become responsible borrowers but in a number of states, debt levels have risen again beyond what the IMF deems sustainable. As in the past, when subsequent austerity bit deep into education and health, it is Africans who will ultimately pay.
Cheerleaders of the Eurobond bonanza argued their governments would be more accountable when borrowing from markets than when depending on donor aid. Governance would therefore improve. The saga of the “tuna bond” provides a reminder that this is far from universally true.
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Uganda orders boost Kenyan businesses after poll-linked slowdown CFC StanBic Kenya Kenyan Economy |
“It’s business as usual in Uganda after the conclusion of elections in February and hence Kenya’s manufacturing exports have been robust,” said Jibran Qureishi, regional economist for East Africa at CfC Stanbic Bank.
The lender forecast that the completion of the standard gauge railway will further increase the trade with Uganda. The railway line is set to reach Nairobi by mid next year.
The railway is planned to be extended to Kisumu and Malaba at the border with Uganda.
“As regional infrastructure is bolstered, through developments such as the standard gauge railway, we believe this avenue will continue to show more promise in the coming years,” said the bank.
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.@KenGenKenya - Disclosure of the Terms of the Rights Issue here Kenyan Economy |
KenGen is offering a total of 4,396,722,912 new ordinary shares at 6.55 per KenGen ordinary share to raise 28,798,535,074.00 Shareholders will have the right to subscribe for 2 new ordinary shares for every one ordinary share held on the register on Monday 16th May 2016 [''the record date''] GOK will take up their full entitlement of the Rights Issue representing 70% of the transaction through a conversion of some of the loans on-lent by the Government to KenGen into equity [shares] Commencement of Trading in Nil paid rights 23rd May 2016 Last Date for trading in NIL paid rights 3rd June 2016 Rights Issue closing date 10th June 2016 Press Announcement of Rights Issue Results 1st July 2016 Listing and commencement of Trading of new shares at the NSE 6th July 2016
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