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2018

May 2018

01 May 2018

PRESS RELEASE: Invest Africa and Business Council for Africa announce global trade and investment platform

In 2017 Invest Africa (IA) and the Business Council for Africa (BCA) announced a strategic partnership and advised their respective memberships of the intention to merge their operations. We are pleased that as of 1st May, the two organisations will operate as Invest Africa using the well-known BCA logo.

BCA’s reputation and strong heritage, together with its in-country representation across Africa, when added to IA’s network of influencers and investors and its offices in London, New York, Cape Town and Dubai, fits the expanded organisation’s ambition to be the global platform for trade and investment on the African Continent.

A responsible and profitable private sector has a crucial role to play in Africa’s development and it is in this spirit that BCA and Invest Africa’s common goal will evolve under the guidance of the Invest Africa Advisory Board, chaired by Mark Simmonds. David Lamb, Chairman of Business Council for Africa, will join the IA Board, Karen Taylor will be the CEO and join the IA Board, whilst BCA Adviser, Lanre Akinola, will be on the IA Advisory Board. 

With a combined membership of more than 400 individuals and companies, ranging from global organisations and multi-nationals to individual investors and entrepreneurs, Invest Africa will focus on connecting the private sector with real business opportunities. It enjoys strong connections through the European Business Council for Africa (EBCAM) which has over 4000 members active in Africa.

Invest Africa will continue to support the BCA as a not for profit organisation, established for over 60 years. The future composition of the organisation and strategy will be established under the guidance of Clive Carpenter, Deputy Chairman of the BCA.

Chairman, David Lamb said “Africa finds itself at the nexus of today’s fast-changing, technology-driven world of business. Global interest in the Continent’s economic potential is high and with the recent signing of the Continental Free Trade Area Agreement the merged organisation is ideally positioned to engage with both public and private sectors.”

Robert Hersov, Founder and Chairman of Invest Africa said “There has never been a better time to invest in Africa, with economic and political change opening up opportunities in countries which have been closed to business for years. As one organisation, we will be able to expand our joint services and offer a larger platform for investors, businesses and entrepreneurs that deserve recognition and investment, with the aim of bringing Africa to the world.”

2018

April 2018

18 April 2018

Navigating trends in emerging-market African currencies

Currency volatility presents challenges both for treasurers working in Africa and for the central banks throughout the continent. David Bee, Head of Global Markets at Crown Agents Bank, explores some of the recent trends in the African foreign exchange landscape and explains how volatility might be managed

It goes without saying that any organisation working in Africa – whether financial institution, payment provider, government aid agency or NGO – needs access to local currencies. Yet these are often hard for treasurers to find on global markets. And as if availability was not enough of an obstacle, they must deal with the persistent challenge of price volatility.

For the central bankers working to preserve fiscal stability across the continent, volatility presents further challenges.

Higher prices for major-traded (G10) currencies can make imports more expensive, push up inflation and risk debt, while defending local exchange rates potentially impact reserves.

With the help of the right global transaction banking partnerships, however, both foreign treasurers and African central banks can weather the foreign exchange environment.

 

The need for illiquid currencies

For those organisations doing business with Africa, the ability to source emerging- and frontier-market currencies – from the Ethiopian birr to the Zambian kwacha – is essential. Perhaps most obviously, it allows OECD-based banks to facilitate their clients’ trade across Africa, and unlock new growth potential in markets that are rapidly rising in importance.

Accessing foreign exchange also underpins the work of those specialist payment providers – among them many fintechs – that channel cross-border remittance flows from the developed world to home countries in Africa. These providers represent a crucial source of income for the families of working diaspora populations.

The need for emerging-market currencies is by no means limited to the financial sector. Government aid agencies channelling development funds from the OECD require local currencies in what may be challenging and remote jurisdictions – as do NGOs responding to environmental or humanitarian crises. An international charity, for instance, may collect its donations in euros, krone or sterling, but operating on the ground in Africa could mean sourcing Ugandan shillings or Rwandan francs with which to fund its grassroots projects, pay local staff, and maintain ongoing operations in far-flung locations.

The problem is that such currencies can be relatively illiquid. Often rarely traded on global markets, OECD-based treasurers can struggle to source them from their banks. Yet find them they must – reliably, on time, and at competitive prices.

 

Volatility: a challenge for treasurers

If it is hard to find these local currencies, it can be harder still for treasurers to find them at stable prices. Recent years have seen increased movement in some African currencies.

One example is Mozambique: Having reached an all-time high against the dollar in October 2016, the metical retreated over 30% by the end of that year – before rebounding by another 20% to become one of the best currencies of 2017.

In Sierra Leone, meanwhile, the Leone weakened by a considerable 27% over 2016. But its value climbed significantly throughout 2017, almost doubling in value against the dollar last year, and has reached record highs this April.

The Zambian kwacha has also experienced a wide trading range over the past few years. In 2015 it depreciated by over 40%, it then rallied by nearly a fifth in the first half of 2016 and a further 13% in the second – to become among the world’s best-performing currencies of that year. 2017 and 2018 so far have seen only a small degree of stabilisation.

 

Further headaches for central bankers

Currency volatility also presents challenges for African central banks, for several reasons. First, many emerging and frontier economies in Africa remain highly dependent on reliable supplies of G10 currencies – above all, US dollars, but increasingly Chinese yuan – to facilitate imports of capital goods, fuel and machinery. Demand for foreign exchange will only rise as Africa’s economies continue their development and invest in ambitious new infrastructure projects. Countries such as Ethiopia and Kenya, for instance, have spent much of their foreign exchange reserves in recent years on high-cost infrastructure developments, from dam and power distribution projects to road, rail and port infrastructure. By making imports more expensive, price volatility represents a threat to the ongoing viability of such projects.

Second, weak local exchange rates contribute to rising consumer prices. By April of last year, inflation in Kenya, for example, had reached a five-year high of 11.7 per cent. Here, the shilling had depreciated by 15 per cent against the dollar from 2014 to 2017 – and even this was modest compared to many other sub-Saharan currencies. (Aided by currency stabilisation since the start of this year, this has now been tamed, to around 4.2 per cent as of March.)

Third, currency volatility can increase fiscal pressures. Some countries – Ethiopia and Zambia among them – have reduced their foreign exchange reserves in recent years by actively intervening in their local currencies. With sovereign bond issues largely priced in foreign currencies, any subsequent depreciation in local African currencies makes servicing obligations more expensive. This problem has been particularly pronounced for those governments that took advantage of relatively cheap financing in the years just after the global financial crisis. Having issued foreign currency-denominated bonds, refinancing may be more expensive given weaker local currencies once maturities approach.

 

What can be done?

Given the volatile landscape, some corporate treasurers may choose to retreat to a collection of “safe havens”. Several developing economies in Africa have certainly enjoyed relative currency stability in recent years – chief among them the countries of the African Financial Community (CFA) zone (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, Gabon, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo). Such stability is thanks in no small part to the fact that the two currencies in use in the region – the Central African franc and the West African franc – are both pegged to the euro. This smooths the flow of foreign (especially European) trade, reassures investors, and reduces inflation.

Of course, not all treasurers can take the safe-haven route. For NGOs, development agencies and remittance firms – whose work takes them to some of the most challenging jurisdictions – retreating from certain markets is just not an option.

Treasurers at these organisations must therefore look for the right transaction banking partners. Such partners must be experienced with, and committed to, emerging markets in Africa. They must be able to help their clients adapt to the volatile foreign exchange environment with agile, modern currency trading technologies – which is why at Crown Agents Bank we’ve recently launched a new online platform, EMpowerFX, for that very purpose. And they must also have strong relationships with local African financial institutions for access to competitive rates for local currencies. These relationships can, in turn, ensure that central and local commercial banks on the ground are well supplied with G10 currencies.

Crucially, these transaction banking partners need to focus on their due diligence. The withdrawal by many large global banks from smaller or challenging jurisdictions in Africa – largely in the face of mounting compliance pressures – has prompted the loss of some foreign exchange services. That is why at Crown Agents Bank, for instance, we invest in the strict regulatory compliance controls necessary to preserve the vital flow of foreign exchange between Africa and global money centres.

Like many emerging currencies around the world, volatility in Africa is unlikely to end any time soon – least of all in emerging and frontier markets. But with the right partners, both OECD-based treasurers and African central banks can continue to source the foreign exchange they need.

2018

March 2018

29 March 2018

Commonwealth Heads of Government Survey

In advance of the Commonwealth Heads of Government Summit in April, colleagues at the Department for International Trade (DIT) would like to hear about any major commercial developments relating to African Commonwealth markets that could be announced at Summit events. Please find the relevant form:

It should be returned to carl.bruce@trade.gov.uk as soon as possible.

 

29 March 2018

Angola Investor Mission - October 2018 - Register your Interest

Investor Mission to Luanda, Angola

Date:  October, 2018
Sector:  Multi-Sector

We are delighted to offer you the opportunity to visit Angola on this Investor Mission in October 2018.  This Mission is open to all sectors and gives you, the delegate, the chance to choose from a menu of services to ensure that you receive the most benefit from your participation.

About the Mission:

  • This Mission will be led by The Business Council for Africa & Invest Africa, an investor network platform for business leaders, investors and entrepreneurs to gain insight into doing business in Africa.
     
  • The Mission will be composed of circa 10 individuals, thus enabling an intimate and targeted meeting environment. Delegates are encouraged to outline their key meetings of interest upon confirming interest to attend.
     
  • The closing date for registering your interest is Friday 30th April 2018.

Market Information:

  • Considering recent political changes, Angola’s growth prospects are positive under President Joao Lourenco’s leadership.
  • This year, the IMF project the Angolan economy to grow by 2.25% from 1% in 2017, and growth may reach 5% in the medium term.
  • The new administration is rightly focused on macroeconomic stability and improving governance, albeit the core issue is the heavy debt burden.
  • There is an array of promising prospects for conducting business within the country.  Several firms operate in Angola, including, BP, Diageo and Standard Chartered Bank.
  • The fastest growing sectors in Angola are, Oil and Gas, Construction and Infrastructure, and Agriculture – the latter being a national development priority.

Benefits of the Mission:

  • Unrivalled access to industry heads, senior government officials and local entrepreneurs.
  • Tailor made proprietary meetings focused on individual industry of interest.
  • In country introductions as well as access to BCA-IA members who have complementary interests in the chosen country and/or sector.

Who is this Mission for?

  • This Mission is multi-sector and open to all
  • Participants will include a range of Private Investors, Private Equity Firms, Family Offices and Multinationals.

Contact:

 

 

29 March 2018

Africa Confidential - Weekly Update - 20th March

We start with the prospects for President Cyril Ramaphosa's reforms in South Africa and then the chances of a deal between Mozambique and its commercial creditors. Still in Southern Africa, President Emmerson Mnangagwa's financial amnesty is proving a success ahead of elections in July and Angola's former President, José Eduardo Dos Santos, is trying to extend his term as head of the ruling party.

SOUTH AFRICA: Ramaphosa reforms take off with Zuma's trial, Moyane suspended from tax authority and purge of state firms

Step by step President Cyril Ramaphosa and his economic team – the Ministers for Finance and State Enterprises, respectively Nhlanhla Nene and Pravin Gordhan – are remaking the government and its administration. The decision last Friday (16 March) by Shaun Abrahams, Director of the National Prosecuting Authority, to prosecute ex-President Jacob Zuma on 16 charges of corruption, racketeering and money-laundering sends a powerful signal about the seriousness of the new order.

Although Abrahams, who is contesting a judicial order that he is unfit to run the NPA, had little choice in the matter, his decision is seen by the ex-President's allies as a betrayal. Other allies of Zuma are threatening to cause mayhem in the African National Congress in revenge but their power is waning.

The more robust Zuma supporters warn that South Africa could follow the example of Brazil, where the fall of a corruption-plagued leftist government led to the rise of a right-wing president implementing tough neo-liberal reforms. So far in South Africa, the centre-right Democratic Alliance has benefited little from the fall of Zuma.

This is where Ramaphosa's political skills come in. His strategy is to pull more supporters into the ANC from both right and left: with a combination of anti-corruption policies and sympathy for the landless and unemployed. His decision on 19 March to suspend Tom Moyane as director of the South African Revenue Services sent another powerful signal. Lambasted for sacking some of SARS's most effective officials, Moyane had refused all entreaties to resign. He is already under investigation.

State revenues are likely to grow sharply if some of the top professionals who sacked by Moyane are reinstated. That will help Nene who is trying to balance the budget as credit ratings agencies make their assessments of the early effects of the Ramaphosa era.

However, the most significant changes will follow Gordhan's efforts to restructure the state companies that have proved such a political and economic drain on the ANC government. Starting with the power utility Eskom and South African Airways, Gordhan is working his way through the companies that served as a political patronage machine for Zuma and allies.

 

MOZAMBIQUE: Secret loan saga to cast shadow over government meeting with creditors

Expectations of an agreement on debt-restructuring between Maputo and its commercial creditors were low ahead of today's talks (20 March). Banking sources say that the government had not proposed a new plan ahead of the meeting and that the creditors were divided in their approach.

According to the IMF, Mozambique's foreign debt was US$13.3 billion at the end of 2017 and its arrears are now over $700 million Most of the country's financing problems have been traced back to some $2 bn. in secret loans, organised in deals with Credit Suisse and Russia's VTB which are now under international scrutiny.

Some creditors, one banker said, may have been prepared to accept some form of write-down but others would refuse any such offer, preferring to wait for full repayment until gas exports start up around 2023.

 

ZIMBABWE: President Mnangagwa sets July as date for national elections as fresh investments arrive
A succession of announcements about fresh foreign investments are feeding a more optimistic view of the country under President Emmerson Mnangagwa's reshuffled government. Some $590 mn. in foreign exchange has been repatriated to Zimbabwe under Mnangagwa's financial amnesty programme. But officials say that at least another $800 mn. is due.

Emboldened by the flow of both new and old money coming in, Mnangagwa has announced that national elections will be held in July.

He added that election-monitoring organisations from across Africa and the European Union would be accredited for the vote. This is despite ousted President Robert Mugabe complaining at a press conference at his mansion in Harare in the week ending 17 March that he had been the victim of a coup d'état.

Insiders suggest that Mugabe's press conference may have badly misfired, partly because it showed the considerable luxury in which his family still live – despite his claims of persecution by the new government.

 

ANGOLA: Ex-President Dos Santos tries to control the ruling party for another year as his family face growing challenges

Contrary to expectations, the last six months have seen the family of President José Eduardo dos Santos lose power, influence and money at a dizzying rate as new President João Lourenço consolidates power. Dos Santos's daughter has been ousted as head of the state oil company and his son sacked as head of the sovereign wealth fund. Other children have lost lucrative state contracts and are said to be under investigation.

Yet ex-President Dos Santos has retained his position as head of the governing MPLA. That is about to change if many of the party militants have their way. They want to see Dos Santos out of the party leadership in the next few weeks, at most months.

Pushing back against this, Dos Santos says he wants to stay until December, if not April 2019. Some suspect that he wants to use that position as a shield against further investigations. The party politburo meets again next month.

News in very brief

NIGERIA: Row over super-salaries for Senators will be a campaigning issue in next year's election

EGYPT: Government cracks down harder on media but President El Sisi faces no serious challenger in the 26-28 March elections

BURUNDI: President Nkurunziza to hold referendum on 17 May which could give him another decade in power

CONGO-KINSHASA: Government stands firm on higher resource taxes against big mining companies as demand grows sharply for its cobalt

Don't forget to check www.africa-confidential.com for our latest stories.

2018

March 2018

20 March 2018

Angola: A new era dawns

For investors seeking a footprint in Africa’s largest markets, Angola has remained an enigma following the end of the country’s 27-year civil war in 2002. A new President, João Lourenço, was inaugurated in September 2017, bringing an end to 38 years of rule by his predecessor José Eduardo dos Santos. Since acceding to power Lourenço has begun to implement sweeping changes. In this briefing, Sofala provides an outlook for Angola’s political and investment climate under new leadership, and the implications for companies looking to enter the Angolan market.

Download the full report:

www.sofalapartners.com

2018

March 2018

09 March 2018

Infrastructure Development in Africa with Geoffrey White, CEO of Agility Africa

We were delighted to host Geoffrey White, CEO of Agility Africa, to speak on Infrastructure Development in Africa on 6th March 2018 at Hogan Lovells, Dubai.

Africa’s infrastructure deficit is a constraint on its growth, which can be viewed as an opportunity to leapfrog to new, more efficient technologies. Closing the infrastructure quantity and quality gap relative to the best performers in the world could increase growth of GDP per capita by 2.6% per year, reported by the World Bank. Geoffrey spoke on the future prospects of the infrastructure development industry in Africa, spotlighting; energy, retail, technology and consumer goods sectors.

Please click the link below for more information on Agility Africa's activities across the Continent. 

2018

February 2018

12 February 2018

Nigeria's Economic Outlook for 2018

Nigeria, following several years of poor economic performance and recession in 2016/17, driven by reasons well documented, towards the end of 2017, the economy appears to have turned a corner. Between 2006 and 2016, Nigeria’s GDP grew at an average rate of 5.7 percent per year. This was sustained largely by high oil prices, but following the oil price crash, Nigeria experienced negative GDP growth. After contracting for five consecutive quarters, the economy has returned to growth in the second and third quarter of 2017.

Click the link below to read the full article  

2018

January 2018

29 January 2018

UK Africa Roadshow Update

UK Africa Roadshow, February 2018 Be part of the future of trade
DIT Africa in collaboration with UK Regions

The Department for International Trade invites you to join DIT Africa colleagues in a UK city near you to hear about the business opportunities on the vast and diverse African continent; share insights on doing business in Africa; and understand how DIT Africa can help you with your exporting journey. DIT Africa’s Deputy Trade Commissioner, Dr Rob Daniel, will be touring the UK with colleagues from the Africa Trade Team from 5 to 16 February 2018.

This is an excellent opportunity to hear about developments in DIT Africa’s offer to UK business; explore potential business opportunities in Africa; and
understand how the Africa Trade Team can help you and your company. UK companies can pre-schedule one-on-one meetings with representatives from the Africa Trade Team at each event.

Please click the link below for the programme: 

2018

January 2018