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Macro Thoughts

"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

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

The operation, near Chinese-occupied Fiery Cross Reef, was to
"challenge excessive maritime claims of some claimants in the South
China Sea", the department said.

Euro 1.1389
Dollar Index 94.22
Japan Yen 108.80
Swiss Franc 0.9720
Pound 1.4421
Aussie 0.7331
India Rupee 66.725
South Korea Won 1173.28
Brazil Real 3.5162
Egypt Pound 8.8783
South Africa Rand 15.1796

Dollar Index 3 Month Chart INO 94.22 [Holding up again]

Gold 6 month INO 1263.825


Crude Oil 1 Year Chart INO 43.43


*SINGAPORE IRON FUTURES DROP BELOW $50/T, FIRST TIME SINCE MARCH
H/T @moved_average

"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.

Frontier Markets

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.

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.

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.

South Africa's Q1 unemployment highest on record: statistics head
http://af.reuters.com/article/investingNews/idAFKCN0Y0121

South Africa All Share Bloomberg +1.29% 2016
http://www.bloomberg.com/quote/JALSH:IND

Dollar versus Rand 6 Month Chart INO 15.1796
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Reuters Africa ‏#SouthAfrica's top anti-graft official fears for
her life | Top News | Reuters

"On the 1st of April she received a text message from an informant,
and that informant warned her to be careful. That person said a top
gangster in the Western Cape was paid to get a hit man to kill her,"
said spokeswoman Kgalalelo Masibi

Nigeria All Share Bloomberg -9.82% 2016
http://www.bloomberg.com/quote/NGSEINDX:IND

After 30 years of unsuccessful protests, even violence, Abdirahman
Mahdi, the Ogaden National Liberation Front’s (ONLF) foreign secretary
and founding member, denies it is time for the Somali rebel group to
give up their dream of self-determination and warns of an Arab
Spring-style insurrection in Ethiopia.

Emerging Skate-Board Scene Ethiopia
http://www.tadias.com/05/09/2016/meet-the-photographer-documenting-ethiopias-emerging-skate-scene/

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. ”

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.

Which brings me back to East Africa and Kenya. There is a massive
trend- change occurring in front of our eyes in what was a previously
intractable problem, the perennial current account deficits. This is
an important point to note. Our import bills [fuel and associated
product are the single biggest expense item] have cratered. At current
prices, I estimate Kenya is on-side by $150 million a month. This is
big and this is why the shilling has turned ‘teflon’. In fact, whilst
Kenya still runs behind Tanzania and of course Ethiopia on a GDP
basis, this part of Africa is now outperforming the rest of
sub-Saharan Africa and the outperformance is accelerating and we might
just find ourselves in a sweet spot.

“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.

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

Par Value:                  2.50/-
Closing Price:           8.00
Total Shares Issued:          2198361344.00
Market Capitalization:        17,586,890,752
EPS:             5.24
PE:                 1.527

Nairobi All Share Bloomberg -0.04% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -1.93% 2016
http://j.mp/ajuMHJ

Every Listed Share can be interrogated here
https://rich.co.ke/rcdata/nsestocks.php