July 31st, 2010 by Tom Minney
Zambia’s Lusaka Stock Exchange (LUSE – www.luse.co.zm) will host the 14th African Stock Exchange Association (ASEA) conference from 10 -12 November. The theme this year is “Integration of African Capital Markets through Technology” which occupies a few sessions are dedicated to this (see the list below and the conference pages on the website).
The meeting will be in the tourist capital, Livingstone, which has international flights, but in quiet moments you can still hear the impressive Victoria Falls. LUSE Chief Executive Officer, Beatrice Nkanza.says the stock exchange has been preparing for the conference since 2008, when it was agreed Zambia would host this year’s event. Previously LUSE successfully hosted the 5th conference in September 1998.
The agenda includes: capital markets and economic growth in Africa, the role of financial systems in capital market developments, a road map for the future of African stock exchanges, regulation, investor protection and corporate governance, credit rating, IT solutions & the role of technology, valuation, research, asset management, bond market development strategies, regional Integration, cross-border securities settlement and
private equity vs. public-private partnerships.
ASEA is a not-for-profit association of 20 stock exchanges drawn from 27 African countries. It was founded in Kenya in 1993 for systematic mutual co-operation and exchange of information among its members. It seeks to increase the visibility of African stock exchanges as the preferred frontier markets for investments including attracting foreign direct investments (FDI).
Speakers and panellists from Africa and elsewhere could include World Bank Zambia representative from Washingston, Dr. Sam Maimbo; Bank of Zambia Governor Dr. Caleb Fundanga; CEO of Johannesburg Stock Exchange Russell Loubser; FSB South Africa Director Markets Supervision Anna Manganyi and Common Market for Eastern and Southern Africa (COMESA) Director General Mr. S. N. Ngwenya..
Topics & Speakers:
Capital markets and economic growth in Africa – the link and way forward: Dr. Kapil Kapoor- World Bank country representative Zambia
The role of financial systems in capital market developments: Dr. Caleb Fundanga- Bank of Zambia Governor
African Stock Exchanges – a road map for the future: Russell Loubser, CEO Johannesburg Stock Exchange
Regulation of Stock Markets – Current trends & issues: Panel discussion Anna Manganyi – FSB South Africa, Michael Liweleya – Director Markets Supervision, SEC Zambia
Investor protection and corporate governance in African capital markets: Panel discussion Dr. Joshua Okumbe – CEO, Centre for Corporate Governance (Kenya), Mr. Mumba Kapumba – President Institute of Directors Zambia
Credit rating – is it still relevant? Panel discussion Dr. Denny Kalyalya – Deputy Governor Operation Bank of Zambia; Mr. Konrad Reuss – Managing Director, Standard & Poor’s sub–Saharan Africa; Mr. Michael Mwaanga – Debt Management Department, Ministry of Finance and National Planning, Zambia
IT solutions & the role of technology in African capital markets: Millennium IT- Malabe, Sri Lanka.
Private Equity vs PPP in Africa – trends and way forward: JP Fourier – Executive Director, Southern Africa Venture Capital Association
Valuation and Research on African Markets: Panel discussion, Hubert Danso – Managing Director, Africa Investor – South Africa
Asset Management in African emerging markets – fund manager’s perspective: John Legat- Managing Director IMARA Asset Management; Jonathan Auerbach – co-founder & Managing Director, Auerbach Grayson & Co., New York.
Bond Market development strategies: Panel discussion Mr. Peter Banda – Director Financial Markets, Bank of Zambia; Dr. Graham Smale – Head of Fixed-Income Securities JSE; Almet Keshkilner – Turkish Treasury; Nigeria Stock Exchange
Regional Integration: What are the opportunities & challenges? Mr. S. N Ngwenya – Director General, COMESA
Cross-Border Securities Settlement: Panel discussion Vipin Y. S Mahabirsingh – Managing Director CSD Mauritius; Rose Mambo – CEO, CSDS Kenya; Steve Everettee – Strate, South Africa.
July 31st, 2010 by Tom Minney
The Nigeria Stock Exchange (NSE – www.nigerianstockexchange.com, working intermittently) on 26 July denied that there was any succession crisis. Court cases on the succession had led to there not being any meetings of the Council, said the NSE.
Court wrangles following the election of the reported billionaire business mogul Alhaji Aliko Dangote as President of the NSE on 6 August 2009 have featured regularly in Nigerian media and websites. The following is a quick and selective summary as found on the Internet.
In April 2009, Nigeria’s Securities and Exchange Commission (SEC) cleared Dangote of involvement in manipulating shares in African Petroleum Plc (AP), which had accused him of instructing a stockbroker to force down its stock price more than 80%. The election at which Dangote became NSE President was 2 days after a court order of 4 August.
Later, 15 aggrieved AP shareholders filed a suit against: Dangote, Nova Finance and Securities Limited, the NSE including Director-General (CEO) Prof Ndi Okereke-Onyiuke, the Securities and Exchange Commission and 10 defendants over the alleged share price manipulation. They sought to nullify Dangote‘s election on the grounds of disobedience to the previous court order.
This was supported by the ruling of Justice Lambo Akanbi in the Federal high Court on 12 March, that the action of the NSE and the Securities and Exchange Commission in conducting the election and electing Dangote as NSE President was contemptuous of a court order. He set aside all the steps taken by the NSE and SEC on the issue.
Dangote was dissatisfied with the verdict and appealed against his removal as the NSE Ppresident. On 6 July 2010 Justice Raphael Agbo of the Court of Appeal in Lagos struck out the application and awarded N10,000 costs in favour of the respondents. The date of 4 November has been set for hearing a fresh application by Dangote.
A further session of the Federal High Court in Lagos on 14 July requested Dangote, Okereke-Onyiuki and others to appear to answer contempt of court claims, that Dangote had been acting as President with the support of Okereke-Onyiuki, including presiding over meeting of Council in late June and receiving a dignitary. The Court gave 22 July as a date for them to appear before it and face potential prison for contempt, but the two said they were unable to appear. The Court, presided over by Justice James Tsoho, ordered the Police to compel them to appear on 27 July. It is not clear what is the actual situation from the reports, since we would expect more articles on the subject, but lawyers for the two are said to be appealing.
Reuters quotes African Petroleum as saying a year earlier that the alleged share manipulation was linked to a dispute between Dangote and AP Chairman, Femi Otedola, who is also a business mogul, with vast interests in oil and gas, shipping, cement and real estate. Otedola is reportedly the other Nigerian on last year’s Forbes billionaires list, with reported wealth of $1.2 billion.
On the succession to Okereke-Onyiuki, who retires after a distinguished career, the Daily Trust newspaper quotes an NSE spokesperson as saying that the exchange had a succession plan since April 2008. However, as a peace-loving organization, the bourse had agreed to comply with the position of the Securities and Exchange Commission to advertise proposed positions for senior executives.
The report quotes the NSE spokesperson: “This is going on as scheduled with Accenture, only for these agents of destruction to raise false alarm in order to scuttle the recruitment process.” The NSE claims that since the court ruled last year barring Dangote from parading as NSE president, the exchange has been conducting its operations via committee since the court order did not ask for the shutting down of the market. “NSE is a law-abiding corporate citizen; hence Ndi Okereke-Onyiuke has never called any National Council meeting whatsoever and has no plans to call one. The orchestrated claims by the faceless detractors that there is succession crisis at the NSE are absolutely false.”
Justice Akanbi was scathing in his judgement in March on teh contempt of court, according to the report in the Vanguard newspaper: “..like every judicial official, I feel troubled and tremble each time I see any Chief Executive of a government agency or establishment and their minions spurn the treat the order of court with levity, leaving the impression that since the court have neither the police nor guns nor the army to enforce whatever orders they make, they should be treat such orders with impunity.
He condemned both the NSE and the SEC: “the conduct of all officials of the NSE and SEC, who organised and/or participated in the purported election of Dangote is reprehensible and highly condemnable. They perhaps look at the court and think that it can only bark but cannot bit.
“This court will make them see that our teeth are not only sharp, they can be poisonous when they chose to bite. The court will not allow them to treat the court orders as useless by refusing to obey them lest anarchy may set in..”.
According to the BBC website, Dangote, group president and CEO of the Dangote Group, is reputed to be Africa’s richest man, with Forbes magazine in the United States estimating his fortune two years ago at $3.3bn (£2.3bn). His wealth was built on a business empire that he founded in 1977 and now includes the number one sugar production company in Nigeria, a cement factory and textile products, plus he was made a Commander of the Order of the Niger five years ago. He is a long-standing supporter of English Premier League soccer team Arsenal FC, but in May denied he was buying a 15.9% stake in the club that is reportedly on the market.
The story is based on reports in Daily Trust, Vanguard and Punch newspapers together with www.bbc.co.uk/sport, www.reuters.com, www.itsnaija.com and www.huhuonline.com. We do not vouch for the accuracy or completeness of the reports.
July 28th, 2010 by Tom Minney
International private equity firm Emerging Capital Partners (www.ecpinvestments.com), on 25 July announced the final closing of its ECP Africa Fund III PCC (Africa Fund III), with total commitments of over $613 million. It is one of the largest funds ever raised for investment across Africa and is the 7th fund managed by ECP, bringing the firm’s total capital raised to more than $1.8 billion, with more than $1 billion invested to date.
An article in the Financial Times (www.ft.com) suggests that the size and success of the fund indicates growing interest from investors into Africa. Some fund managers have reported increased inquiries, especially after all the media coverage of Africa as a business destination around the World Cup. However, most investors seem to need an experienced partner who will help them through the hurdles such as liquidity and market risk.
Africa Fund III includes over $450 million from return investors such as the African Development Bank, the International Finance Corporation, the Overseas Private Investment Corporation and CDC, the United Kingdom government development finance institution. The remainder came from new investors, including pan-African fund-of-funds manager, South Suez (www.southsuez.com).
Africa Fund III will seek controlling stakes or influential minority positions in high-growth companies through equity and quasi-equity investments, including convertible debt, in line with the firm’s usual strategy. It aims to invest in leading companies and will focus on under-penetrated markets where factors such as industry consolidation, positive macroeconomic trends, liberalization and improved regulations offer opportunities for above-market returns. It will also look for companies expanding regionally in various sectors such as telecommunications, natural resources, financial services, agriculture, transportation and utility businesses.
ECP is based in Washington but focuses on Africa. It has 10 years of experience investing in Africa through 7 successful funds, with investments in more than 50 companies spread across 40 countries. The investment strategy aims to deliver consistently above-market returns by focusing on economies uncorrelated to the U.S. and other developed nations. The ECP team operates from offices in Washington, D.C., Abidjan, Casablanca, Douala, Johannesburg, Lagos, Paris and Tunis.
The company says that Africa’s growth is not so likely to be affected by ongoing uncertainty in global credit markets, because most African governments, companies and individuals did not take on. It adds that debt forgiveness plans have seen external debt plunge as a proportion of economic output in Africa, improving credit worthiness. A press release quotes Vincent Le Guennou, co-chief executive officer of ECP, saying: “Investors can see development models that were successful in India, Brazil and Mexico and project that growth onto Africa. Many see Africa as the next place that’s going to boom as local companies adopt efficient management practices, financial discipline and governance standards.”
Hurley Doddy, co-chief executive officer of ECP, says in the press release: “The positive response we’ve received from investors for Africa Fund III demonstrates the growing appreciation of the tremendous investment opportunity that exists across the African continent. Our team has the optimal combination of local market knowledge, operational prowess and financial expertise to provide investors with diversification and competitive returns by sourcing attractive investment opportunities and expanding our portfolio company businesses into regional and global markets.” The FT quotes him as saying that the middle class in Africa is growing fast.
ECP has already started investing capital from Africa Fund III, with four investments totaling over $180 million:
• Financial Bank, which provides banking in 6 countries in Central and West Africa
• Wananchi Group, a pay television and high-speed internet provider in East Africa
• Groupe NSIA, an insurance company in West and Central Africa
• Thunnus Overseas Group in Madagascar and Cote d’Ivoire which provides 25% of the canned tuna in France.
The press release quotes Matthew Hunt, Director of South Suez, as saying: “With its long track record of successful investing in Africa and established presence via 6 regional offices, ECP is a first choice for us when looking at investing on the continent”. The FT quotes him: “Africa is mis-priced because it is misunderstood, so it has cheaper growth than other emerging markets due to a big gap between perception and reality.”
ECP argues that economic growth is widely spread across Africa, creating investment opportunities across sectors and in countries outside traditional commercial hubs. New technologies such as mobile telephony and the emergence of a middle class have shown that Africa is not simply a “resource play,” as many foreign investors once considered it.
July 26th, 2010 by Tom Minney
Activists are calling for a tax of 0.005% on all financial transactions worldwide, to raise some $33 billion dollars per year for development and particularly to replace dwindling funding for life-saving AIDS drugs. Protestors at the world AIDS forum in Vienna on 21 July said a “Robin Hood” tax on financial transactions would be one of a series of new funding initiatives, and said the time is right to propose it ahead of a review summit on Millennium Development Goals in September and a G20 meeting in November.
Funding from by rich donor nations to poor countries fighting HIV and AIDS fell back in 2009 to $7.6 billion, from $7.7 bln in 2008. The turnaround set alarm bells ringing for tens of thousands of people in Africa who are kept alive through expensive courses of ART drugs. Cutbacks could be a death sentence.
The 2009 decline ended 6 years of increases averaging more than 10% a year. The Global Fund to fight AIDS, Tuberculosis and Malaria is seeking $17 bln in pledges for 2011-2013, compare to total funding of $1.2 bln for anti-HIV drugs and other initiatives in 2002.
According to news reports, campaigners at the AIDS forum said it was time for innovative financing solutions for development. Dr Philippe Douste-Blazy, former French Minister of Foreign Affairs and Special Adviser on Innovative Financing for Development, said: “It is up to us to explain to the Heads of State that that they do not have any other solution because we know it only depends on political will.” His organisation UNITAID (www.unitaid.eu) has implemented a small tax on airline tickets. In its first 2 years of existence UNITAID committed $730 million of fresh funds to tackle HIV and AIDS, malaria and tuberculosis. A portion of thoe funds came from low- and middle- income countries, mostly through the air tax mechanism. UNITAID, in partnership with the Clinton Health Access Initiative (www.clintonfoundation.org) has stimulated the manufacture of new medicine formulations as well as funded an integrated package of care for HIV-positive children.
July 26th, 2010 by Tom Minney
“Currently our capitalisation is just above US$3 billion and is falling, but if we attract big companies to list, especially in the mining and banking sectors, we can grow the size of the market up to levels of US$10 billion.” These brave words come from the new chair of the management committee of the Zimbabwe Stock Exchange (www.zse.co.zw), Ndodana Mguquka.
He added, according to a report in the Zimbabwe Independent newspaper (www.theindependent.co.zw): “As the new executive committee, we are looking forward to reviving the ZSE. At the moment there are a lot of issues that need to be sorted out, particularly the quality of our listings. We need to improve the quality of our listings to attract foreign and local investment.”
On 14 July, Finance Minister Tendai Biti had given a good summary of the ZSE’s woes in his 2010 Mid-Term Fiscal Policy Review (www.zimtreasury.org) to Parliament. He said: “Trading on the Zimbabwe Stock Exchange has largely been low, mainly due to market illiquidity in the first half of the year. Foreign participation has remained subdued with investments mainly confined to portfolio restructurings. Corporate results have also failed to uplift the equity market as most corporate are still undercapitalised and also suffering from subdued demand.”
He said that on average takeup of recapitalization rights issues had only been 50%, and underwriters had taken the balance.
“The industrial index which started the year at a high of 156.52 had dropped to 127.46 by June 2010, whilst the mining index fell from an opening of 209.8 to 143.08. Similarly, market capitalisation fell from US$3.97 billion in January 2010 to US$3.19 billion by end of June 2010. The poor performance is as a result of investors pulling out their investments reflecting depressed investors’ sentiment over perceived financial risks, especially following gazetting of the Indigenisation Regulations on March 1.
“In particular, foreign investors’ contribution to market turnover fell from between 40-50% to an average 20% per month.”
Mr Mguquka is the Managing Director of New Africa Securities. The management committee manages and controls the ZSE, settles disputes between members, examines all applications for listing securities for trading on the exchange, and enforces listing requirements with powers to grant, review, suspend or terminate listings so that securities would no longer be tradeable on the bourse. He took over from Bart Mswaka of Renaissance Securities who remains as his deputy.
July 22nd, 2010 by Tom Minney
Africa regional funds attracted $484 million inflows in the first half of 2010, says EPFR Global (www.emergingportfolio.com), and total investment fund allocation to Africa was a record $1.39 billion, according to a report in the Financial Times (www.ft.com). Africa regional funds have enjoyed 43 consecutive weeks of inflows totalling $579m since September 2009, despite the difficult world environment.
The article quotes Cameron Brandt, global markets analyst at EPFR Global: “In terms of sustained interest in Africa, this marks a real turning point.” The new element seems to be global perception.
Koffi Vovor of Kusuntu – Le Club, is quoted as saying: “The South African World Cup has been a major window of opportunity to shed light on Africa and rediscover it. People have started to realise they are perceiving the continent with a 20- to 30-year-old lens.” Kusuntu is an association of diaspora executives that promotes change and investment through private equity in Africa.
Chris Derksen, head of frontier markets at Investec Asset Management, agrees: “Nothing has changed on the continent itself. It’s been the right time to start investing in Africa for 10 years or so.”
The article says that investors are re-evaluating emerging markets, since developed markets themselves started looking risky in the global financial crisis It quotes Sonal Pandit, manager of the JPM Africa Equity Fund at JPMorgan Asset Management: “In the last few years, emerging markets have become more mainstream generally. As they get better known, investors have tried to look at who the next few candidates would be. The African continent still offers a lot of opportunities.”
Africa’s GDP has grown 4.9% a year since 2000, after 20 years of economic stagnation. Collective GDP in 2008 was $1,600 bn – equivalent to that of Russia or Brazil – and combined consumer spending totalled $860bn. Urbanization is nearly as high as China, with 52 cities of more than 1m people. By 2050 it will be home to one-third of the world’s under-25s. It has more middle-class families than India and they are under-penetrated in key areas including telecommunications, consumer goods and financial services.
China is a key growth driver, and trade with Africa has climbed from $10bn in 2000 to $106.8bn in 2008. It is not just exploiting resources, but also investing in infrastructure and the future. According to Ms Pandit, the relationship is symbiotic: “For example, because China wants access to oil and gas exploration in Nigeria, it has been prepared to put down $23bn for 3 oil refineries.”
However, governments need to improve and people to demand more from them. So do the investment structures – capital markets are shallow, many stocks are illiquid, information is scarce and the continent is very diverse. Investec’s Derksen says you need deep local knowledge at the micro level. Or you could invest in companies with a high exposure to Africa but listed abroad. Private equity is another option, but deal flow is not yet strong enough and government incentives are needed to speed the project pipeline.
However change is coming in the next 5 years: capital markets are expanding, diaspora executives returning to Africa for work, and intra-Africa trade growing. The FT cites Derksen: “African capital markets will become much easier to access and the number of investment managers looking at Africa will expand pretty dramatically.”
July 15th, 2010 by Tom Minney
Leading African private equity house Citadel Capital (www.citadelcapital.com) has this week announced 2 cement deals. Citadel was recently named “African Business of the Year” at a gala awards ceremony organized by “African Business” magazine. It is based in Cairo and listed on the Egyptian Stock Exchange (ticker CCAP.CA). It has been expanding into Africa and, according to a press release, has US$ 8.3 billion in investments covering 15 industries and spanning 14 countries.
On 15 July Citadel announced that ASEC Engineering and Management, a portfolio company of its investment platform company ASEC Holding, has signed a 3-year renewable contract to provide technical management services to Alsalam Cement Production Company (ACPC) to manage a cement plant near Atbara, Sudan.
The Atbara plant produces clinker, which is then ground with gypsum to make cement. The plant has a production capacity of approximately 2,000 tons of clinker per day. ASEC Engineering will receive a fixed fee for every ton of clinker produced in return for a guaranteed minimum annual production and a pledge to reduce the plant’s consumption of electrical power and fuel. ACPC was established in 2003 and is owned by the Ahmad Osman Abdulsalam Group. The plant near Atbara is currently ACPC’s sole operation, although it is in initial planning stages for the construction of a second plant.
According to a press release ASEC Engineering Chief Executive Officer Mohamed Galal Yakout says: “We look forward to developing a strategy that optimizes the efficiency of Alsalam’s production process.”
ASEC Engineering has long provided market-leading management and consultancy services in Egypt, where in 2009 the company managed 7 plants with a total production capacity of about 15 million tons per annum (MTPA), or more than 30% of total cement production capacity in the country. In 2010, the company has already delivered 3 major cement plant consultancy projects. In addition to its expansion into Sudan, ASEC Engineering played a vital role in the turnaround of the Zahana cement plant in Algeria and is currently exploring opportunities in other regional markets.
In related news, ASEC Engineering will also be responsible for the technical management of ASEC Cement’s nearby Takamol plant, which is in advanced stages of operational testing. Scheduled to open later this month, the plant will have a production capacity of 1.45 MTPA of clinker and 1.6 MTPA of cement, reducing Sudan’s national cement deficit of 3 MTPA by more than half.
Another subsidiary of ASEC Holding, called ASEC for Manufacturing and Industrial Projects (ARESCO), announced on 12 July that it has signed a US$ 130 million contract to construct a new cement plant for the Building Materials Industry Company (BMIC) in the Upper Egyptian governorate of Assiut. ARESCO is a turnkey contractor serving the cement, energy, petrochemicals, petroleum and general industrial sectors. According to the prss release, ARESCO has “state-of-the-art engineering, steel fabrication and construction units that fabricate quality products including boilers, cement mills, preheaters, tanks, condensers and pressure vessels. With over 4,000 employees, ARESCO is a rapidly growing business that has undertaken turnkey projects in Egypt, Iraq, Jordan, Qatar, Sudan, Algeria and Libya.”
ARESCO is to provide all the civil, electrical and mechanical works for the 1.5 MTPA cement plant, which is projected to be complete in 22 months. The company will also carry out all steel fabrication as well as testing and commissioning for BMIC on a turnkey lump sum basis.
Tarek Salah, a Managing Director at Citadel Capital, says in the press release: “The integration of ARESCO’s in-house design and manufacturing capabilities — which include its own workshops and fleet of cranes — have made the company a strong competitor in both the cement and general industrial sectors.”
Citadel Capital is also a lead investor in Rift Valley Railways which holds a 25-year concession to operate the Kenya-Uganda railway.
July 15th, 2010 by Tom Minney
From when trading started at 10am last Sunday, 11 July, NASDAQ Dubai (www.nasdaqdubai.com) is routing all trades in its listed equities through the trading platform of Dubai Financial Market (DFM – www.dfm.ae). NASDAQ Dubai is one of the leading exchanges contesting the crown of financial centre of the Middle East and North Africa, and also has potential for channeling investments into African countries.
Trading for the first few sessions this week was reported to have gone well and several brokers were said to be inquiring about membership.
NASDAQ Dubai describes itself as: “the international financial exchange serving the region between Western Europe and East Asia. It welcomes regional as well as global issuers that seek regional and international investment. The exchange currently lists shares, derivatives, exchange-traded commodities, structured products, Sukuk (Islamic bonds) and conventional bonds.”
The move has been prepared since last December, and is part of a consolidation between the exchanges and aiming to boost liquidity on NASDAQ Dubai. Essa Kazim, Managing Director and Chief Executive Officer of DFM, said in a press release: “Cooperation between the two exchanges will increase, driving the expansion of Dubai as a centre of capital markets dynamism and innovation. Today’s outsourcing is a major step for us and the region. Through these growing links, DFM gains a wider array of product offerings and international expertise, while NASDAQ Dubai benefits from DFM’s high liquidity and enormous base of over 552,000 investors.”
Clearing, settlement and custody functions for NASDAQ Dubai equities also migrated to DFM’s systems on 11 July under an outsourcing agreement. Jeff Singer, Chief Executive of NASDAQ Dubai, said: “This new structure brings together more than half a million individual investors on DFM with NASDAQ Dubai’s institutional investors, many of them based outside the region. It positions Dubai as a leading international capital markets hub, providing investors with excellent liquidity and issuers with a choice of regulatory frameworks.”
In May 2010 DFM acquired two thirds of the shares of NASDAQ Dubai through an acquisition of shares from Borse Dubai and NASDAQ OMX, the international exchange group. Borse Dubai still owns one third of the shares. NASDAQ Dubai remains a separate exchange regulated to international standards by Dubai Financial Services Authority (DFSA), which gave approval for the outsourcing last week. DFM is regulated by the United Arab Emirates’ Securities and Commodities Authority. NASDAQ Dubai remains a separate company inside the Dubai International Financial Centre (DIFC). It retains its own legal framework, listing rules and Members.
DFM and NASDAQ Dubai equities are now displayed together on the DFM website www.dfm.ae. NASDAQ Dubai equities also continue to be displayed separately on the NASDAQ Dubai website www.nasdaqdubai.com. Brokers who are members of NASDAQ Dubai access the DFM trading platform either directly, or through NASDAQ Dubai’s Market Place Services function, or through another broker.
Under the outsourcing, NASDAQ Dubai’s equities remain listed on NASDAQ Dubai and are not listed on DFM. Trading of equity derivatives continues to take place on NASDAQ Dubai’s own trading platform and systems.
NASDAQ Dubai’s opening hours are now 10am to 2pm UAE time (6am to 10am GMT) Sunday –Thursday. These are also DFM’s opening hours. Previously, NASDAQ Dubai’s opening hours were 10am to 5pm UAE time (6am to 1pm GMT) Sunday-Thursday.
July 11th, 2010 by Tom Minney
The International Monetary Fund (IMF) has revised upwards its economic growth projections for sub-Saharan Africa and the world economy, compared to its April predictions. The revised World Economic Outlook forecasts growth of 5.0% for sub-Saharan Africa in 2009 and 5.9% for 2010, the former up 0.3% on its April prediction, the latter unchanged. World economic growth is now forecast at 4.6% (up 0.4% on the April forecast) for 2010 and 4.3% next year (unchanged).
The new figures were released on 8 July, but based on data collected until 21 June, before markets crashed on fears of a “double dip” recession. The commentary on the IMF website warns: “Nevertheless, recent turbulence in financial markets—reflecting a drop in confidence about fiscal sustainability, policy responses, and future growth prospects—has cast a cloud over the outlook. Crucially, fiscal sustainability issues in advanced economies came to the fore during May, fuelled by initial concerns over fiscal positions and competitiveness in Greece and other vulnerable euro area economies. At the same time, downside risks have risen sharply.. In this context, the new forecasts hinge on implementation of policies to rebuild confidence and stability, particularly in the euro area.”
Growth forecasts for the Middle East and North Africa are virtually unchanged at 4.5% (2010) and 4.9% (2011). Africa still lags behind other key economies, such as China (forecasts of 10.6% and 9.5%) and India (9.4% and 8.4%) but is close to Brazil (7.1% and 4.2%) and ahead of Russia (4.3% and 4.1%).
Projections for South Africa are also being revised up, according to a report in Business Day newspaper (www.businessday.co.za). On 8 July the IMF said SA’s economic growth was likely to reach 3.2% this year, up from an estimate of 2.6% published in April, according to Alfredo Cuevas, the IMF’s senior resident representative in SA. “The recovery in SA has been stronger than expected, and we don’t see ourselves making major revisions to the forecast at this point,” he told the newspaper.
The paper cites Finance Minister Pravin Gordhan as stating on 8 July that growth in the first quarter was 4.6%, up from 3.2% in the fourth quarter of last year. “We have seen a gradual improvement in economic conditions. The pace of growth probably moderated somewhat in the second quarter.” He said that SA was on target to beat the forecast of its Treasury Department, which had forecast 2.3% forecast, after contracting 1.8% in 2009.
Mr Cuevas said that although the European slowdown “weighed” on SA, the effect was less than the good news seen in the past few months, including the effects of the World Cup, which should contribute half a percentage point to overall growth: “It has been a much bigger success than people abroad have expected … SA has been seen in a very positive light as a result of the smooth running of the World Cup.”
The IMF raised its US growth forecasts a little to 3.3% and 2.9% for 2011, but warned unemployment would remain above 9% for both years. It warned that unemployment, a large backlog of home foreclosures and high levels of negative home equity, posed risks of a “double dip” in the US housing market.
According to the IMF statement: “The world economy expanded at an annualized rate of over 5% during the first quarter of 2010. This was better than expected in the April 2010 WEO, mostly due to robust growth in Asia. More broadly, there were encouraging signs of growth in private demand. Global indicators of real economic activity were strong through April and stabilized at a high level in May. Industrial production and trade posted double-digit growth, consumer confidence continued to improve, and employment growth resumed in advanced economies”.
The laggard remains the euro area where overall growth is forecast at 1.0% in 2010 (unchanged) and 1.3% in 2011 (revised down 0.2 percentage points). UK growth is revised downwards to 1.2% (down 0.1 percentage points) and 2.1% (down 0.4 percentage points). Japan is set to grow by 2.4% (up 0.5 percentage points) and then 1.8% 9down 0.2 percentage points).
African Development Bank says the continent is making a “spectacular” recovery from the global recession. Chief economist Mthuli Ncube was reported on 6 July as predicting growth for Africa of 4.5% this year and over 5% next year. It is then expected to return to the average of about 6% percent it enjoyed between 2006 and 2008. Growth was just 2.5% in 2009 (the IMF had 2.2% for sub-Saharan Africa for 2009).
Ncube is reported to link Africa’s recovery to trade with China and decades of market reform. He is reported on Reuters as warning the recovery could be threatened if Europe — to which many African economies are closely connected — fails to bounce back and a slowdown in Europe could see the AfDB trim Africa’s 2010 growth forecast by between 0.5 and 0.8 percentage points. “We think there’s a 50-50 chance that a major slowdown, a double-dip recession (in Europe), will become a reality.” Other threats include the possibility of political or social tension and problems associated with poor infrastructure.
Reduced trade would have the main impact from Europe on Africa, Ncube said, although tightening of credit lines by European banks was also likely to hit growth — as it did in late 2008 when the financial crisis struck. He also pointed to a likely reduction in aid from European governments such as Germany, Britain, Denmark and the Netherlands, where political opposition to domestic austerity measures is bound to grow. “We think that there will be about a 10% reduction in aid”.
July 7th, 2010 by Tom Minney
A UK-based investment and advisory firm concentrating on African venture capital managers has announced its first investment. Jacana Venture Partnership (www.jacana.org) on 29 June announced that it will invest in InReturn Capital (www.inreturncapital.com), a Kenya-based firm investing in East African small and medium enterprises.
Jacana’s aim is that by promoting a thriving venture capital industry in Africa it will enable small- and medium-sized enterprises (SMEs) to grow and help millions out of poverty through economic development and job creation. Jacana’s unique offering of capital and expertise will enable InReturn to reach its goals more rapidly. Access to finance is a major obstacle to the growth of African businesses.
According to Jacana’s mission statement, SMEs are a crucial driver of economic development in Sub-Saharan Africa. Every $1 invested in an SME generates an additional $10 in the local community and $1 of SME finance creates 3 times more jobs than an equivalent investment in microfinance.
International investors are increasingly interested in Africa but find it hard to choose SME fund managers in the target country since they often lack track records. Jacana mitigates this risk for investors by selecting high-quality teams and providing intensive support to local fund managers through a network of expert mentors – highly experienced private equity and venture capital professionals who can provide hands-on support to local teams. Stephen Dawson, Jacana’s Chairman, has over 30 years’ experience in UK private equity and is already actively involved with InReturn’s deal team in Nairobi.
Jacana selected InReturn as its first local partner because of its strong team and deal pipeline, after an extensive market review. InReturn’s East Africa Fund (target size $20 million) invests in SMEs in East Africa. The capital invested in InReturn’s business will support the expansion of the team into Tanzania and Uganda.
InReturn contributes to the profitability, sustainability and growth of the companies that it invests in through the active participation of its local investment team of 5 Kenyan and European professionals. InReturn East Africa Fund maintains a network of investors in Western Europe and has extensive financial and management experience.
Anthony Gichini, Managing Partner for InReturn Capital in Nairobi, said “Jacana’s investment of capital and expertise will help us to accelerate our business, and deliver returns to our investors as well as development impact in East Africa. Tanzania and Uganda are important markets for InReturn and we see significant opportunities to expand our team into these countries as we build our business together with Jacana”.
Jacana’s expertise, provided through its network of private equity expert mentors, will help InReturn to execute high-quality transactions and raise additional capital from international investors, using Jacana’s extensive contacts in the industry. Together, Jacana and InReturn aim to deliver attractive financial returns to investors in the fund, grow the private equity industry in Africa and thereby support the sustainable development of SMEs, leading to significant job creation in Africa.
Simon Merchant, CEO and co-founder of Jacana, commented in a press release: “This is the first step in growing our network of African partners, supported by international private equity experts. We are delighted to be working in close partnership with InReturn and look forward to supporting this excellent team in making successful SME investments in East Africa.”
Jacana aims to select the capital managers with highest potential growth for inclusion in the partnership network and then to work closely with them to create an attractive investment opportunity for international investors. Jacana is talking to several candidates for its next investment.
