Archive for the 'Namibia' Category

Innovative African IPO and listing successes show strong demand

Here is a round-up of recent initial public offers (IPOs) and other listings of shares on African Stock Exchanges, many of them over-subscribed. Namibia has scored its first listing of a special purpose acquisition company (SPAC), while Mauritius is the home for an innovative listing of Afreximbank GDRs and of 2 primary listings on the Johannesburg Stock Exchange.

Namibia: Nimbus Infrastructure Limited is first SPAC vehicle
Nimbus Infrastructure Limited listed on the Namibian Stock Exchange (NSX) via private placement and started trading on 6 October. It raised more than N$100 million ($7m) from local investment institutions and retail investors. It aims to invest into information, computer and telecommunications (ICT) projects and institutions in sub-Saharan Africa.

It is Namibia’s first listed capital pool company (CPC). This is a type of company, also known as a special purpose acquisition company (SPAC), is most popular in the USA or Canada and South Africa’s Johannesburg Stock Exchange (JSE) has listed several SPACs.

The company has no commercial operations or assets, except cash. It uses its cash to evaluate promising investments and once it has invested in a viable business, usually within a set timeframe, it continues to operate as a conventional listed company. The funds are kept in an escrow account and are released on approval by shareholders or in line with a pre-approved spending budget, according to the company website. It must also comply with the Corporate Governance Code for Namibia (NamCode).

The private placement was open from 15-29 September. The listing of Nimbus was a joint initiative between Cirrus Capital, Paratus Namibia and Cronje and Company.

According to the company, it “is currently looking at a number of potential transactions and as per the stock exchange rules, aims to take these transactions forward for shareholder approval before the end of the year.” Nimbuas has signed a management agreement with Paratus.

According to an NSX statement, reported in Namibian Economist: “The Nimbus listing boasts exciting opportunities for Namibia, as not only does it focus on the fast-growing ICT sector across the continent, but in so doing, it offers a strong diversification opportunity for the funds of institutions and individuals alike, allowing diversified jurisdiction, currency and sector returns for investors. Further to this, as Namibia’s first CPC, Nimbus represents an opportunity to prove a new concept that will likely form a critical part of the future development of the Namibian real and financial sectors”.

Côte d’Ivoire: Ecobank Cote d’Ivoire
Ecobank Cote d’Ivoire launched a share offer on 27 September and closed it the same day as it was already twice oversubscribed. The IPO was to sell 20.44% of the bank’s shareholding in the form of 2,250,000 shares at XOF20,000 per share, raising XOF45bn (USD79.5m).

The bank is set to list on the Bourse Régionale des Valeurs Mobilières (BRVM) in December, where it will join parent company Ecobank Transnational Incorporated (ETI), a leading share on the BRVM, the Nigerian Stock Exchang and the Ghana Stock Exchanghe.

The offer, organized by stockbrokers EDC Investment Corporation and Hudson & Cie had been scheduled to run from 22 September to 11 October. It was 2.2x oversubscribed on the first day.

According to Enko Capital “Ecobank Cote d’Ivoire was created in 1989 following the acquisition of Chase Manhattan Bank. The bank has since expanded to become the third largest lender in Ivory Coast with a market share of 10.5% in terms of loans and 11.7% in terms of deposits and employs 648 people across 53 branches holding 274,018 accounts.

“Prior to the IPO, ETI held a 94.26% stake in Ecobank Cote d’Ivoire and this will reduce to 75% post listing. ETI was founded in Togo in 1985 and currently has a presence in 36 African countries. The banking group is listed on three exchanges in Africa.. Its stock is owned by more than 600,000 shareholders and the group employs over 17,000 people across 1,200 branches and offices. Ecobank Cote d’Ivoire is the third largest contributor to ETI’s group revenue after Ecobank Nigeria and Ecobank Ghana.”

Namibia: Letshego Holdings
Letshego Holdings Namibia had to extend its IPO by 4 days to 26 September and drop its offer price from NAD4.70 to NAD3.80 per share, according to Enko Capital: “The main purpose of the IPO was to satisfy the Bank of Namibia’s conditions for granting a banking license to Letshego Bank Namibia in 2016 which require a minimum 45% local ownership within a four year period.”

Letshego listed on 28 September on the Namibian Stock Exchange (NSX)with a market capitlaization of NAD1.9 billion, according to a report in New Era and a press release.

Finance Minister Calle Schlettwein did not have a warm view of capital markets as he celebrated the listing: “’With this listing Letshego has taken a dive into the shark pool, but this is a well-prepared dive that you were truly prepared for”.

Over 3,600 qualifying applications were received during the 4-week offer, with individuals and non-institutional investors making up NAD40m of the total NAD180m raised.

NSX CEO Tiaan Bazuin said: “I am extremely pleased with the successful listing of Letshego. There has been a lot of talk about localization in the Namibian market and this listing shows the best way, in my mind, to achieve this goal.”

Letshego Namibia is an offshoot of Letshego Holdings Limited, listed on the Botswana Stock Exchange, which has reduced its holding from 85% to 79%. Letshego Bank Namibia has had a full licence since July 2016, and is a 100% subsidiary of Letshego Holdings Namibia. Its origin in 2002 was as Edu Loan Namibia, making salary loans, and in 2008 Letshego bought majority shareholding.

Mauritius – Afeximbank global depositary receipts
African Export-Import Bank (Afreximbank), headquartered in Egypt, raised more than its $100m minimum target after selling global depositary receipts (GDRs) backed by its Class D shares. The GDRs listed on the Stock Exchange of Mauritius was on 4 October. The minimum investment for the offer was $30,000 and it closed on 22 September.

Afreximbank is a supranational trade finance bank established in October 1993. Class A shareholders consist of African States, African central banks and African public institutions; Class B shareholders are African financial institutions and African private investors; Class C shareholders are non-African investors, such as international banks and export credit agencies; while Class D shareholders can be any investors.

South Africa: African Rainbow Capital Investments
This newly formed company listed on the main board of the Johannesburg Stock Exchange on 7 September, the 12th listing to date in 2017. It raised ZAR4.0bn ($282m) and brought the total capital raised on the JSE in the year to date to ZAR76bn ($54bn), according to this JSE press release.

ARC Investments is a capital raising and investment entity incorporated in Mauritius which will offer shareholders the opportunity to invest in a permanently broad-based black controlled investment entity holding a diversified portfolio of investments. The initial investment portfolio held by ARC Investments will be seeded by African Rainbow Capital Proprietary Limited (ARC), which will remain the majority shareholder in ARC Investments.

Shareholders invest alongside ARC in the initial portfolio of 16 investments in financial services including: Alexander Forbes Limited, Alexander Forbes Group Limited, Indwe Broker Holdings, Senayo Securities and Santam and and 17 non-financial services including investments in agriculture and food production, building and construction, energy, information technology and telecommunications, investment holding companies and real estate businesses. Its most significant investment is a 20% interest in Multisource Telecoms Proprietary Limited, currently trading as Rain. According to Reuters, ARC Investments is valued at ZAR8.5bn, and has 3 cornerstone investors including Singapore’s GIC Pte Ltd, the Public Investment Corporation and Sanlam Private Wealth.

ARC is a majority black-owned investment holding company which seeks to utilize its empowerment credentials, strong balance sheet and the track record of its leadership and brand to invest in financial services distribution businesses. ARC is wholly owned by Ubuntu-Botho Investments (UBI), which was created in 2003.

Patrice Motsepe, Chairman of both Ubuntu Botho Investments and ARC, said: “the listing of ARC Investments on the JSE is a major step towards realising one of the key objectives of ARC, namely to build a world class broad- based black – controlled investment entity for all South Africans.”

Nemer says the JSE is equally proud to help ARC Investments facilitate its goal of providing investment exposure for the public to B-BBEE assets, which are often only held privately.

South Africa – Steinhoff Africa Retail (STAR)

Holding company Steinhoff Africa Retail (STAR) successfully raised ZAR15.38bn (USD1.08bn) after placing 750,000,000 shares at ZAR20.50 each between 4 and 14 September. It listed on the JSE on 20 September.

It brings public shareholding to 21.7% of STAR, which was formed as part of the restructuring of the Steinhoff Group, and Steinhoff International holds 78.3%. The group has 4,808 stores in Angola, Botswana, Lesotho, Mozambique, Malawi, Namibia, Nigeria, South Africa, Swaziland, Uganda, Zambia and Zimbabwe. Brands operating under the STAR group include Pep, Ackermans, Poco, Russells, Flash, Bradlows, Rochester, Buco, Timbercity, The Tile House, Incredible Connection, HiFi Corp, Dunns, John Craig, Refinery, Shoe City, Tekkie Town and Sleepmasters.

According to Enko capital, the offer was 4.8x over-subscribed.

South Africa: Brainworks
Mauritius-registered investment holding company Brainworks, with an investment base focused on hospitality, real estate, financial serice and logistics in Zimbabwe, listed on the JSE on 13 October, after an IPO from 28 September to 11 October. It is the first Zimbabwean company with a proimary listing on the JSE and the 16th listing for the year to date, according to a JSE press release, where it sought to raise ZAR316.5m (USD22.3m) through the sale of 27,523,951 shares at ZAR11.50 per share.

Brainworks was established in 2011 and holds investments including controlling stakes in 2 listed hospitality companies, African Sun and Dawn Properties, which are listed on the Zimbabwe Stock Exchange. It also has investments in GetBucks, GetCash, GetSure, MyBucks, Skyclear and FML Logistics and says approximately 38% of revenue is generated in hard currency.

Donna Nemer, Director: Capital Markets at the JSE, says the exchange is proud to welcome Brainworks to the South African market. “As Africa’s largest stock exchange, the JSE believes we can make an important contribution to the growth and the development of our continent. We do this through offering foreign investors a secure and transparent entry point into Africa and providing the companies who do business here with a liquid platform to raise further capital to fund their expansion.”

Nemer says the JSE also favours dual- or cross-listings, wherein debt or equity is listed simultaneously on the JSE and on a local market. “This assists companies from other African countries to gain access to a much larger capital pool and trade in a more liquid environment, while still allowing local market participation.”

Thanks to research contribution by Enko Capital, which invests in African opportunities.

Egypt is Africa’s new #1 investment destination

The challenge for African economies is to adapt to commodity slowdown and sluggish production growth. Many countries have suffered stress in the past three years, and the latest report from a leading investment bank suggests the new winners – and who is lagging. Rand Merchant Bank’s (RMB) Where to Invest in Africa 2018 report shows changes in the top investment destinations in Africa.

South Africa is off the top spot, edged aside by Egypt, and Nigeria and Algeria have crashed out of the top 10. The theme is “money talks” and focuses on major sources of dollar revenues, important income-generators and investment opportunities.

But the report compares 191 global jurisdictions and measures African against country groupings. African countries are still at the lower end of the global-performance spectrum, which is still dominated by the US, UK, Australia and Germany.

In Africa, according to the RMB press release, there is a new pharaoh in town: “Egypt (#1) displaced South Africa (#2) largely because of its superior economic activity score and sluggish growth rates in South Africa, which have deteriorated markedly over the past seven years. South Africa also faces mounting concerns over issues of institutional strength and governance though in South Africa’s favour are its currency, equity and capital markets which are still a cut above the rest, with many other African nations facing liquidity constraints.

“Morocco (#3) retained its third position for a third consecutive year having benefitted from a greatly enhanced operating environment since the Arab Spring which began in 2010. Surprisingly, Ethiopia (#4), a country dogged by socio-political instability, displaced Ghana (#5) to take fourth spot mostly because of its rapid economic growth, having brushed past Kenya as the largest economy in East Africa. Ghana’s slide to fifth position was mostly due to perceptions of worsening corruption and weaker economic freedom.

“Kenya (#6) holds firm in the top 10 at number six. Despite being surpassed by Ethiopia, investors are still attracted by Kenya’s diverse economic structure, pro-market policies and brisk consumer spending growth. A host of business-friendly reforms aimed at rooting out corruption and steady economic growth helped Tanzania (#7) climb by two places to number seven. Rwanda (#8) re-entered the top 10 having spent two years on the periphery, helped by being one of the fastest reforming economies in the world, high real growth rates and its continuing attempt to diversify its economy.

“At number nine, Tunisia (#9) has made great strides in advancing political transition while an improved business climate has been achieved by structural reforms, greater security and social stability. Cote d’Ivoire (#10) slipped two places to take up the tenth position. Although its business environment scoring is still relatively low, its government has made significant strides in inviting investment into the country leading to a strong increase in foreign direct investment over the years resulting in one of the fastest growing economies in Africa.

“For the first time, Nigeria (#13) does not feature in the top 10, with its short-term investment appeal having been eroded by recessionary conditions. Uganda is steadily closing in on the top 10 though market activity is likely to remain subdued after a tumultuous 2016 marred by election-related uncertainty, a debilitating drought and high commercial lending rates.

“Though Botswana, Mauritius and Namibia are widely rated as investment grade economies, they do not feature in the top 10 mostly because of the relatively small sizes of their markets – market size has been a key consideration in the report’s methodology.”

RMB Africa analysts spoke on economic trends:

Neville Mandimika: “The last three years have sounded an alarm, amplifying what is now a dire need for the economies of Africa to shift their focus from traditional sources of income to other viable alternatives.”

Celeste Fauconnier: “Over the past three years, some African governments have had to implement deep and painful budget cuts, announce multiple currency devaluations and adopt hawkish monetary policy stances – all as a result of a significant drop in traditional revenues.”

Nema Ramkhelawan-Bhana: “Some countries have been more nimble and effective than others in managing shortfalls,” says and an author of the report. “But major policy dilemmas have ensued, forcing governments to balance economically prudent solutions with what is politically palatable.”

Where to Invest in Africa 2018 also includes 191 jurisdictions around the world, and measures Africa’s performance relative to other country groupings. The report is available via: www.rmb.co.za/globalmarkets/where-to-invest-in-africa-2018-edition.

Namibian SX and Bank of Namibia poised to launch paperless

The Namibian Stock Exchange and the central Bank of Namibia are working together to create a central securities depository (CSD) for equities, bonds and bills traded. They are waiting for laws and regulations to be passed to get the new system operational.

According to Kazembire Zemburuka, Deputy Director: Corporate Communications at the Bank of Namibia, quoted in a Southern Times newspaper article: “In an effort to develop the domestic capital market, the Bank of Namibia and the Namibian Stock Exchange have collaborated to jointly create a Central Security Depository company that will be licensed by NAMFISA (regulator) to hold and safeguard financial instruments in electronic format.”.

He said the Central Security Depository (CSD) Company is already in existence and has a Board of Directors comprising representatives from the two institutions. Following industry-wide consultations, systems requirements for the Namibian CSD were developed and a vendor has been appointed to provide a system. It will cater for both equities and bonds.

“Full implementation of the system awaits the finalisation of the necessary legislation and regulations. This process is already at an advanced stage,” explained Zemburuka. The company will provide electronic settlement of equities and bonds transactions concluded on the NSX and settle transactions in money market securities. It will be regulated by the Namibian Financial Institutions Supervisory Authority (NAMFISA).

Earlier, Tiaan Bazuin the NSX CEO told Namibian Economist newspaper why the 2 institutions are working together: “It is not a requirement to work jointly, it is preferred as it is a national project, in fact we have a market steering committee with all the market participants involved, including the banks, asset managers [amongst others].”

Interested stakeholders would be able to join as shareholders in future. “We have already indicated once it is up and running, others will also be able to join as shareholders if they want to. Typically some market participants wish to have a strategic stake in financial market infrastructure.”

In many African countries there are often two CSDs, with the central bank and the exchange each running their own systems, but it is much more efficient and reduces risk if both are integrated and built to work seamlessly with the capital markets trading such as the securities exchanges. Bank of Namibia and the local banks have worked together over decades and built advanced payment systems between the banks. Similar systems extending across most other countries in the Southern African Development Community (SADC) and it is hoped eventually that crossborder securities trading will also become more widespread.

Since the NSX was founded, it has operated using physical or paper certificates representing ownership of equities and bonds. It set up a very streamlined system for this, settling domestic equities on T+5 and South African stocks on T+3, and working closely with the banks involved in including global custodians.

Only treasury bills are paperless. Dual-listed South African and other shares are settled on the home country central securities depository, for example Strate in South Africa.

IFC raises N$180m bond in Namibia

Photo credit: Namibian Sun www.namibiansun.com

Photo credit: Namibian Sun www.namibiansun.com

The International Finance Corporation, part of the World Bank Group, has continued its programme of helping develop African debt markets by launching the first bond by a non-resident issuer in Namibia. It raised NAD 180 million (about $12m) which it will use for private sector development in the country. The bond yield is 9.812% per annum.

The 5-year bond is named “Namib” after the world’s oldest desert. The bond is part of a medium-term note programme registered with the Namibian Stock Exchange that allows IFC to issue up to NAD 10 billion (approximately $650m) in bonds in the domestic market. Standard Bank and IJG Securities (Pty) Ltd are lead managers for the bond issuance. IJG Securities is also the sponsoring broker on the transaction, while Standard Bank and Transfer Secretaries (Pty) Ltd are fiscal agents.

The bond is issued under IFC’s Pan-African Domestic Medium Term Note Programme, which was launched in May 2012 to support capital-market development in the region. The IFC has already issued local-currency bonds in Rwanda and Zambia, and 9 countries are part of the programme.

Jingdong Hua, IFC Vice President and Treasurer, said: “Deep, vibrant capital markets create access to long-term, local-currency finance for the private companies so they can get tailor-made financing for growth and expansion. The IFC Namib bond is an integral part of IFC’s strategy to support Africa’s capital market development and create access to finance for the region’s private sector.”

IFC supports local capital market development in Africa by working with governments, regulators and market authorities to put in place frameworks that encourage market entry by domestic and international issuers. IFC also supports African companies looking to access capital markets.

More recently, IFC launched a new capacity-building programme for African capital market regulators and practitioners. This is a partnership with the Milken Institute and George Washington University and will create a network of experts and advocates to support the region’s capital markets.

Ipumbu Shiimi, Governor of the Bank of Namibia, said: “Developing Namibia’s capital markets will be critical for long-term economic development, and especially for the expansion of the infrastructure and banking sectors. We hope that other international and domestic issuers will follow IFC and connect savings to Namibia’s private sector investment needs.”

IFC issues bonds denominated in local currencies in emerging markets as part of its regular programme of raising funds for private-sector development, and to support the development of domestic capital markets. In many cases IFC is the first, or among the first, non-resident issuer in a domestic market. IFC bonds are rated triple-A by Moody’s Investors Service and Standard & Poor’s.

NAMFISA becomes IOSCO associate member

The Namibia Financial Institutions Supervisory Authority (NAMFISA), the regulator of Namibia’s stock exchange and many other organizations, has been accepted as an associate member of the International Organization of Securities Commissions (IOSCO). IOSCO is the leading international body of securities regulators and administrators and its members regulate over 95% of world securities markets.

Kenneth Matomola

Kenneth Matomola


IOSCO is having increasing impact on African regulators, helping them to work together to advance standards in the national securities markets, including working through African regional associations of regulators such as the Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) of the Southern African Development Community (SADC).
NAMFISA’s acting CEO, Kenneth Matomola, said attaining IOSCO membership is a significant step in NAMFISA’s quest to become a respected regulator of the financial industry. IOSCO associate membership enables NAMFISA to gain wider exposure and exchange best practices with fellow regulators from all over the world. “This newly-acquired membership sends a strong message that the authority is respected for its ability to regulate the securities market locally. It indeed speaks volumes of NAMFISA’s place in the global securities community,” he observed.
IOSCO has 3 types of membership. Ordinary membership is open to securities commissions and other governmental agencies. Associate membership is available to other agencies that regulate in an environment where there is an existing national regulatory body. Affiliate membership is available to entities which carry out self-regulatory functions, such as stock exchanges.
IOSCO associate membership gives NAMFISA a seat on the IOSCO Presidents Committee. It is also eligible to become a member of IOSCO Growth and Emerging Markets Committee and to participate in the Africa Middle East Regional Committee meetings.
IOSCO ordinary members listed on IOSCO’s website which are based in Africa are: Algeria’s Commission d’Organisation et de Surveillance des Opérations de Bourse; Central Africa regulator Commission de Surveillance du Marché Financier de l’Afrique Centrale (Securities and Exchanges Commission of Central Africa) based in Gabon; Egyptian Financial Supervisory Authority; Ghana’s Securities and Exchanges Commission; Kenya’s Capital Markets Authority; Reserve Bank of Malawi; Mauritius’ Financial Services Commission; Morocco’s Conseil déontologique des valeurs mobilières; Nigeria’s Securities and Exchanges Commission; South Africa’s Financial Services Board; Tanzania’s Capital Markets and Securities Authority; Tunisia’s Conseil du marché financier; Uganda’s Capital Markets Authority; the Conseil regional de l’épargne publique et des marches financiers of the West African Monetary Union, based in Abidjan Côte d’Ivoire; and Zambia’s Securities and Exchange Commission.
The associate African members are: Angola’s Comissao do Mercado de Capitais; Botswana Non-Bank Financial Institutions Regulatory Authority; Namfisa; and Rwanda’s Capital Market Authority.
IOSCO’s objectives are to cooperate to promote high standards of regulation to maintain just, efficient and sound markets; to exchange information on their respective experiences to promote the development of domestic markets; to unite efforts to establish standards and an effective surveillance of international securities transactions; and to provide mutual assistance to promote the integrity of the markets by a rigorous application of the standards and by effective enforcement against offences.

Namibia’s stockbrokers switch to IRESS to access NSX

namibiansx151007_Logo_NSX_Namibia
All 4 Namibian stockbrokers have switched their front-end links into the local bourse trading system to the trading solutions supplied by IRESS. The company is a leading supplier of innovative technology for financial markets, wealth management and the mortgage industry in South Africa, Asia, United Kingdom, Canada, New Zealand and Australia.

IRESS says that the fully integrated solution incorporates order and execution management means that brokers no longer have to use multiple and legacy trading systems when managing orders on the local Namibian Stock Exchange (NSX) and their institutional order flow to South African brokers for execution on the Johannesburg Stock Exchange (JSE). Order routing is fully managed by IRESS and delivered within a unified multi-market order-management system. Brokers can leverage IRESS’ international trading connectivity and seamlessly access counterparties on the IRESS network, which includes many “buy-side” or institutional investors. Efficiency benefits include unified systems and no need to enter data twice or more, removing the potential for human data entry error.

Ridwaan Kharva, Head of Trading Solutions at IRESS, explains in a press release: “Having an integrated order-management system and execution platform creates a huge amount of efficiency in terms of both cost and workflow. We are delighted to include all Namibian brokers as IRESS exchange trading clients in addition to our presence in South Africa. IRESS has been connecting market participants for over 10 years and brokers in Namibia will now be able to benefit from enhanced trading capability, delivering improved speed and reliability with reduced cost.”

IRESS has also supplied the NSX with IRESS Professional Market Data, enabling comprehensive market monitoring and analysis.

The NSX made history in 1998 when it became the first African exchange to run its trading systems on the system offered by the JSE under an agreement to exchange technology, skills and . That has ensured, over the years, that it has remained with one of the world’s best and most up-to-date trading systems, currently running out of Johannesburg and previously run by the London Stock Exchange. The arrangement was renewed in 2014, and details of its benefits are given in this JSE press release.

The NSX has 34 listed companies and 4 listed exchange-traded funds (ETFs), 4 stockbroking members and 7 sponsoring brokers.

IRESS, headquartered in Australia, employs over 1,340 staff globally, with local knowledge and industry experience. All its product streams support a diverse range of roles and offer front, middle and back-office functionality for clients that range from financial service institutions through to independent operators

Top performances for USD investors at Africa’s stock exchanges

Malawi came out as Africa’s top-performing securities exchange for USD-based investors over 2013, with a strong 62.4% return over the year to 31 December. According to data published by the excellent website, www.investinginafrica.net, 8 out of 13 African exchanges surveyed beat the 29.6% return achieved by the key US S&P 500 equity index.
Other top performers for USD investors included West Africa’s regional securities exchange Bourse Régionale des Valeurs Mobilières (BRVM) which covers 8 countries. Ghana Stock Exchange gave 44.8% return, the Nigerian Stock Exchange was close behind with 44.6% and Kenya’s Nairobi Securities Exchange scored 43.7%.
Worst performers were the Namibian Stock Exchange (-2.6%) and the South Africa’s Johannesburg Stock Exchange (JSE) with a return of -9.3%, both strongly affected by the decline in the exchange rate of ZAR currency against USD.
Prospects for African exchanges continue to look good with many African economies expected to continue strong growth in coming years and increasing deal interest. However, changes in quantitative easing in the US could lead to cash withdrawals from emerging and frontier markets including Africa.
Liquidity is a major challenge for many exchanges, according to the data by Ryan Hoover of InvestinginAfrica. Zambia’s Lusaka stock exchange only traded $0.7million of African equities a week, while Malawi and Uganda only achieved $0.8m each and Namibia $1m. Ghana was at $3.5m a week, just behind Abidjan-based BRVM which traded $4.6m, while Mauritius managed $5.7m a week, Botswana $6.2m and the Zimbabwe Stock Exchange $8.5m. Most liquid exchanges in the list (which does not include the Egyptian Exchange) include Nairobi averaging $37.1m a week, Nigeria at $106.8m and the JSE at $3.5 billion of equity trading a week.
Although Hoover lists the Dar es Salaam SE as trading a creditable $10.7m a week, a news report in the Tanzania Daily News say turnover jumped 5 fold to TZS252.3bn ($155.9m) in 2013, up from TZS50.9bn in 2012, which is equivalent to $3m a week. The paper quotes DSE’s CEO Moremi Marwa saying: “The DSE outstanding performance demonstrates the increased activities coupled with education campaigns geared at enhancing awareness that gradually made the market more vibrant”. However, the article notes there was a single transaction for TZS78.5bn ($48.5m) in Tanzania Breweries (TBL) in the third week of December 2013 as 48 deals between the International Finance Corporation and local investors which boosted local ownership and may have influenced the figures.

For the full table, check www.investinginafrica.net here:

New securities exchange prepares in Namibia

“Transformation is central to NamFin-X’s philosophy, and the exchange will benefit Namibia and Namibians in a plethora of ways, at both the micro and macro economic level,” said former Namibian Minister of Finance Helmut Angula. He is heading plans to establish a second securities exchange, the Namibia Financial Exchange (NamFin-X).
According to a report in local newspaper New Era, the current Minister of Finance Saara Kuugongelwa-Amadhila gave the exchange a licence in September 2012, as an association of 10 persons. According to the report, the shareholders of NamFin-X are 5 Namibian corporate entities, 4 individuals and 1 international corporate investor. Namibians own the majority, in line with the government’s policy of indigenous ownership of financial institutions.
It is envisaged the broader Namibian public will be able to own shares in the exchange.
Namibia’s existing Namibian Stock Exchange has been running since 1992 and has a good record for administration. It has very high market capitalization due to dual-listings but has also helped many local companies raise capital through listings. The editor of African Capital Markets News was GM of the NSX from 1995-2000 (see “About Us” page).
Since the approval, there has been a review of the application. In May 2013, a notice was published in the Government Gazette that NamFin-X’s application and rules for the stock exchange were open for inspection. The regulator called for comments from the public through advertisements in 2 local daily newspapers over 3 weeks. This closed at the end of June 2013.
The article reports that the promoters have solicited the experienced management, rules and listing requirements, and IT from a reputable source and investment partner. No more details were given but it quotes Angula as saying: “NamFin-X will provide Namibia with world-class financial services and regulators, and membership of the World Federation of Exchanges which will provide a footprint on the world stage and will lead to a more competitive, more liquid financial sector.”

Widen participation
“NamFin-X will widen the economic participation in the market, empower issuers and investors to realise their economic freedom and more importantly, fill a much needed funding gap allowing many new ventures and SME businesses to realise their economic potential.
“NamFin-X will not only provide sources of finance for these businesses but also access to the expertise and experience of investment companies, the investment community and a nominated advisor. This will occur within a regulated framework.
“The general public as well as companies looking to raise capital will benefit from the proposed new exchange because of the competition and increased liquidity that an alternative bourse will provide. The initiative is aligned with, and supports Namibian government policy, including investment in job creation, investment in financial services education, new enterprises and socio-economic transformation.
“NamFin-X is a truly Namibian endeavour, and fundamentally Namibian in its philosophy.”
Angula pointed out that 60% of the new exchange’s developmental goals are closely integrated and cognisant of Namibia’s Vision 2030 and the National Development Plans. It also refers to Namibia’s Financial Sector Strategy (NFSS), which seeks to “guide the achievement of the financial sector objectives as set out in the various national development plans (NDPs and Vision 2030)” and to ultimately “contribute to fostering economic growth and poverty alleviation as well as reducing income inequality.”

Sub-Saharan African sovereigns outside SA to raise $7bn in fixed income

African countries (apart from South Africa) are set to place $7 billion of debt this year, buoyed by low interest rates and a huge global appetite. According to this article in Bloomberg Businessweek by Roben Farzad, this year’s debt issues will be more than the previous 5 years combined and African capital markets are feeling the boom.
No wonder international investors who are “grabbing for yield and growth” (according to Farzad) are looking to Africa which the International Monetary Fund forecasts will grow at 5.6% this year against 1.2% in developed countries. But Africa’s terrible infrastructure, including electricity, bridges, roads and wastewater treatment, is costing African sat least 2 percentage points of growth. Some of the new bond proceeds are likely to go on infrastructure, which needs investments of up to $93 billion a year.
The article cites research from JP Morgan Chase that average yields on African debt fell 88 basis points in the past 12 months, to 4.35%. “Nigeria, Gabon, Ghana, Ivory Coast, Namibia, the Congo, Senegal, and the Seychelles have all seen their borrowing costs fall this year.”
“It’s a hugely exciting story,” Jim O’Neill, the chairman of Goldman Sachs Asset Management who plans to retire this year, said in an April 23 interview with Bloomberg Television in London, writes Bloomberg reporter Chris Kay: “The only thing one has to be a little bit careful of are many of those markets are still very undeveloped and suddenly there’s a lot of people around the world regarding Africa to be sort of fashionable and trendy.”
Farzad wonders how easy it will be to “service so much easy-money debt when the credit cycle turns, or if commodities and political stability decline. At least for now, though, you get the impression that sub-Saharan Africa has turned a corner in global capital markets.” And journalist Chris Kay quotes Charles Robertson, global chief economist at Renaissance Capital: “For governments, great, don’t look a gift horse in the mouth. I still don’t believe investors are getting risk-adjusted returns in the dollar-bond space.”
According to Kay, debt-forgiveness programmes have helped 45 African nations cut debt to about 42% of gross domestic product this year from an average 120% in 2000, according to data compiled by Bloomberg and IMF estimates. South Africa’s Finance Minister Pravin Gordhan says debt will peak at 40% of GDP in 2016, compared with more than 100% for the U.S. and an average 93% in the eurozone.
Another reason why Africa offers lower risk is that taxpayers have no expectations of massive social and other spending in nearly all countries. Meanwhile global appetites are shown by the $20 trillion reportedly invested in debt at less than 1% yield.

Some potential issues
Nigeria planning to offer $1bn in Eurobonds and a $500m Diaspora bond, according to Minister of State for Finance Yerima Ngama. It was recently included in JP Morgan and Barclays local bond indices. Yields on the existing $500m Eurobond, due 2021, were down to 4.05% by 3 May, from a peak of 7.30% in October 2011.
Kenya really boosted investor confidence in Africa with its peaceful outcome after elections on 4 March and the Finance Minister Robinson Githae said on 11 March they could be in line to issue up to $1bn by September.
Ghana fuelled by an oil boom, has seen its debt yields on the 10-year bonds down 3.43 percentage points to 4.82% since their issue in October 2007, said Bloomberg.
Zambia successfully raised $750m last year at 5.625% and is thinking to return for another $1bn. Yields were up 20 basis points to 5.66% by 3 May.
Tanzania has asked Citigroup to help it get a credit rating before issuing a maiden Eurobond of at least $500m. Finance Minister William Mgimwa said a total of $2.5bn was bid for a private offering of $600m of Government debt in March. According to this story on Reuters that bond’s pricing and structure at the time had shocked markets and appeared to benefit investors: “The cheaply priced US$600m seven-year private placement was described as a “disaster” by one banker. And certainly the immediate secondary market performance looked terrible. The bonds jumped 2.75 points on their first day of trading.. That works out at a cost to the government of US$4m a year in coupon payments, assuming that the bonds could have priced at the tighter level.”
Angola did a private sale of $1bn in debt in 2012 and will go for $2 billion this year, according to Andrey Kostin Chairman of VTB Bank OJSC, who helped arrange the first issuance, last October.
Mozambique and Uganda may also issue foreign currency bonds of $500m each, according to Moody’s last October.
Gabon’s $1bn of dollar bonds are down 4.78 percentage points to 3.13% since they were issued in December 2007.

Africa’s bourses should work together to channel investors

Africa’s 24 stock markets should learn to work together better if they are to seize high levels of investor interest, said Nicky Newton-King, CEO of South Africa’s JSE Ltd (www.jse.co.za), Africa’s biggest securities exchange. She was speaking in an interview with agency AFP.
“The appetite for Africa is very, very high. I think everybody is trying to find their way, to participate meaningfully in that. All of us who are privileged enough to run exchanges, need to figure out that these waves of investor appetite aren’t yours by right. Once they come you have to be able to ride them properly. We should not be taking this as business as usual, this is a business opportunity.”
The International Monetary Fund forecasts the aggregate economy of sub-Saharan Africa will grow at around 5.7% next year, presenting a giant opportunity.
Newton-King said on 7 Dec that one way to channel the investor interest through African markets would be to make it easier to invest across borders and to improve liquidity in small markets so that assets can be bought and sold quickly.
The JSE already works closely with the Namibian Stock Exchange (www.nsx.com.na) and she said it is looking to make deals with two other African bourses. She said that creating a single pan-African bourse is not currently on the agenda and the JSE is concentrating on improving the continent’s financial plumbing including allowing cross- and dual-listings and easier order-routing.
“I think it is far more about collaboration. Were we not to have any exchanges on the continent I think we would have wanted to create a single exchange that would service multiple jurisdictions out of one legal base. That’s the most efficient way to do it, but I’m a bit of a realist. Once you try to do cross-border mergers and acquisitions, you run into much more trenchant issues of a regulatory nature, all of which stem from ‘how do we protect the local investor?’, ‘how do we make sure the local market grows?”
Newton-King identified liquidity as a key challenge to attract foreign investors: “Really big trades are not going to go to illiquid markets. The average day’s trade on the JSE is more than the average annual trade on Kenya and Mauritius put together. There are amazing companies in both of those countries.”
She said that allowing Kenyans to invest in joint-listed South African stock in KES shillings, or by allowing South Africans to more easily place orders into Nigerian stock markets would attract more foreign investors. She adds that there are benefits from cross-listing (securities being traded on more than one exchange), as the JSE learned when its leading shares moved to London: “When Anglo-American cross-listed in London, the amount of trades in Anglo-American increased. South Africa’s percentage of trade in Anglo-American decreased, but the decreased percentage was worth more. In those cases you have to think quite bravely.”
She was echoing a theme about Africa’s securities exchanges needing to become more liquid to serve the growing needs both of investors and of enterprises seeking capital.This theme has been strongly stressed by Sunil Benimadhu, CEO of the Stock Exchange of Mauritius, since he took over as Presdient of the African Securities Exchanges Association in October 2010, as reported on this blog.
The JSE has consistently offered to work closely to help other exchanges to develop and the author of this blog was GM of NSX when it linked its trading and broker systems in 1998-9. Exchanges in Southern Africa and in East Africa are stepping up the pace of collaboration. The Committee of SADC Stock Exchanges (COSSE) is working to forge more links,improve technology and other connections and take other steps to improve markets and boost liquidity, as reported here.

“Nigeria the new gateway to African capital markets”
The Nigerian Stock Exchange (NSE – www.nse.com.ng) aims to transform Nigeria into the gateway of African capital markets. Oscar Onyema, CEO of the NSE, on 12 Dec said this at a national competition for secondary and tertiary schools and colleges in Lagos. Priorities for the NSE management in 2013 will continue to be innovations in technology and new product development. Onyema promised more technology-based solutions and data services and said the NSE would advocate changes in policy and would also continue cleaning and restructuring, and making the market accessible.