Most Africa and frontier funds have a very limited part of their portfolio invested in Ghana and for emerging markets funds Ghana is apparently a no-go area. This is understandable as no or very few Ghana-listed stocks meet the minimum liquidity thresholds of these funds. And with hindsight ignoring Ghana has worked well for frontier investors, especially in the 2014-2016 period. In 2017, Ghana has performed very well boosted by optimism regarding the new president and a normalization of interest rates. We believe it can run further as lower interest rates make equities more attractive for local investors. In the long run there could also be a rerating when more international investors buy into Ghana, but it is difficult to predict when that would happen.
President Jacob Zuma has been facing a revolt after replacing a highly respected finance minister with yet another crony which was immediately followed by investment downgrades by foreign ratings agencies. This has widened the chasm within the ruling party but despite this, and public protests, we expect the president to dig his heels in even harder. He will go down kicking and screaming for sure. In essence, there now is a battle for the soul of the ANC.
Over the past few years, the Mozambican real estate market has rapidly evolved with developers tapping into the potential of the new gas discoveries. Not only Maputo’s skyline was rising with new buildings to house luxury hotels, condos and office parks, but also the ‘promised land’ in the northern regions of Nacala, Pemba and Pemba were showing signs of development.
While Anglophone countries in Africa have traditionally attracted more attention from foreign investors, the Francophone countries are entering the radar of many asset managers. Côte d’Ivoire has led the pack as the largest economy in Francophone West Africa and the fastest growing on the continent, while Senegal is also experiencing its own rapid economic development.
Less than a decade after the first, Zimbabwe has experienced its second economic contraction, with the effects of round two being conspicuously similar to those demonstrated in the first round. Supermarket shelves have once again started to empty, some public and even private sector salaries remain unpaid, banking hall queues are getting longer and hospitals are short of basic supplies. Whilst the humanitarian state of affairs is critical we find the socio-economic structures persistently durable, where businesses continue to open their doors and survive, albeit under enormous difficulties. Thankfully many of these surviving businesses (those which remained following the first contraction) have retained their skills and chiselled business physique to survive an economic depression and continue to make profits in a difficult environment.
Ghana has often been a bit ahead of its time, once known as the Gold Coast and the first country in Africa to gain independence from colonial rule in 1957. According to the World Bank, Ghana leads in Africa consistently ranking in the top three for freedom of press and freedom of speech. Politics in Ghana after years of single party states and military dictators has for the past couple of decades been characterised by two main parties. The main opposition was once in power and is large enough and popular enough to be a serious contender at any elections. In fact, the two parties are neck and neck in popularity. The current governing party the National Democratic Congress (NDC) won the last two elections with 50.2% of the vote in 2008, in an election that went to a second round and 50.7%% in 2012. But the 47% the New Patriotic Party (NPP) won makes them a real contender to be in power again as they were when they won the 2004 election with 52% of the vote. And these results are for the Presidential election at Parliamentary level the NDC and NPP are neck and neck with neither over 50%.
Egypt and the International Monetary Fund (IMF) signed a preliminary agreement on a $12bn 3-year loan facility on August 11. If approved, the loan will support government reforms, which are required to support the Egyptian economy. The reduction of the public deficit that is above 12%, adjustment of the Egyptian market and foreign reserves’ increase, which have reached a critical level - are short term milestones.
The North African country will continue to be a very important geographical area for PE funds investing in the Maghreb region, says Albert Alsina, CEO & Managing Partner, Mediterrania Capital Partners
Agriculture, mining and services are key to a more stable and prosperous future in Nigeria, says Bolatito Ajibode, Head, Conglomerates & Industrials, Stanbic IBTC
Whilst the private sector has spent the last six years reducing costs, improving efficiencies and boosting their competitiveness, Government has been making little headway in cutting its own costs. In the early years of the Unity Government, budgets were set on a cash receipt basis with no recourse to borrowing. Since 2013 however there has been a growing issuance of treasury bills initially as a means to repay private sector debts, but then to cover the historical debts of the Reserve Bank and latterly ZAMCO. With rapidly declining tax receipts and no simultaneous spending cuts, Government have been issuing treasury bills to the banks in order to fund itself and pay civil service salaries. The net result is that as at April, treasury bills now represent 30% of total bank deposits (source: RBZ) having been below 10% only one year ago.
For investors looking at African fixed income opportunities, Angola might not be on the investment radar. The fixed income market in the Africa's second largest crude exporter remains at an early stage of development with only a handful of instruments trading. AGF looks closely to identify investment opportunities and risks
West Africa’s Regional Stock Exchange, the Bourse Régionale des Valeurs Mobilières de l’Afrique de l’Ouest (BRVM) came to New York in May this year to attract US investors on the market, promote investment in countries of the West African Economic and Monetary Union (WAEMU) and ensure maximum visibility for the BRVM and regional businesses on the world stage. AGF had a unique opportunity to meet with Edoh Kossi Amenounve, BRVM’s Chief Executive Officer, to discuss BRVM’s performance, its strategic plan and why the Exchange is initiating dialogue with US frontier funds.
For a very long time Nigeria has been the dominant stock market in Sub-Saharan Africa excluding South Africa. This was mostly because of its sheer size and depth of the market. However as limitations on USD expatriation reduce investor appetite for Nigeria, more and more investors are lured to Kenya, a country that never had the luxury of easy oil revenues. Nigeria’s total market capitalization is still much bigger. However, with international investors refusing to trade in Nigeria until its currency is devalued it may be only a matter of time before Kenya will become the most traded Sub-Saharan Africa market after South Africa.