Africa%20Weekly%2014092009

Africa%20Weekly%2014092009 - The Africa Weekly In this...

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Unformatted text preview: The Africa Weekly In this week's issue Regional 14 September 2009 Market moves Botswana Malawi Mauritius Namibia Zambia Zimbabwe Kenya Tanzania Uganda BRVM Ghana Nigeria Egypt Morocco Tunisia MSCI EM FTSE Johannesburg Nikkei S&P 500 Currency moves Week % 1.3 ‐0.6 4.9 0.0 ‐4.5 ‐1.3 ‐2.8 ‐0.1 ‐2.2 ‐1.0 0.4 ‐1.8 1.1 0.5 1.5 1.5 3.3 3.4 2.5 2.6 YTD % ‐2.3 ‐19.0 35.1 ‐4.9 2.6 33.0 ‐12.1 ‐2.2 ‐4.1 ‐23.9 ‐37.7 ‐31.7 45.5 ‐1.1 34.0 6.0 13.0 18.9 17.9 15.4 Southern African countries behind Free Trade Area targets to implement customs union. Southern Africa Angola: Angola blocks sale of Marathon field stake to China; Chevron announces first oil from offshore Tombua‐Landana project. Botswana: Debswana resumes production at Orapa No.2 mine; Discovery Metals to expedite development of Boseto copper mine; FNBB EPS up 8.7% in FY09. Lesotho: LRA signs MoU with FNB and Nedbank for filling tax returns; Kopane shares soar 70% on GBP 1.5bn diamond find rumour. Malawi: Malawi drops on business ratings; Government deports tobacco company managers; MTL fibre network attracts clients. Mauritius: Mauritius gains seven places in Doing Business Report; Mauritius promotes itself as ideal venue for data centres; New activity in offshore sector drops 50% y/y. Namibia: Namibia climbs 6 places on GC Index; Government considers dam project on Fish River; SABMiller granted Namibian brewing license. Swaziland: Regulator urges insurance and retirement funds to comply with new act; Central bank liquidates pyramid schemes. Zambia: IMF predicts recovery and allocates USD 600m funding; Copper output to increase 12% by 2012; Lafarge incurs losses and cement prices rise 65%. Zimbabwe: Deadline looms for banks’ recapitalisation; MDC pushes for RBZ governor and attorney general dismissal; Delta to dispose 40% of Ariston. East Africa Level* Week % ‐1.40 0.00 ‐2.00 ‐0.43 ‐0.60 ‐0.46 ‐1.50 ‐1.90 ‐0.26 0.07 ‐0.48 ‐1.70 ‐1.33 ‐1.85 ‐1.69 ‐2.67 ‐2.06 Kenya: KenGen to raise KES 15.0bn to support capacity expansion plans; KQ expands reach. Rwanda: World Bank ‘Doing business report’ ranks Rwanda 67 ; Bralirwa IPO gains momentum. Tanzania: Exports to Kenya on the rise; Zanzibar current account deficit up to TZS 7.54bn; Tanzania’s national debt up 2%. Uganda: Protests over Kabaka’s tour disrupt Kampala; Lawmakers demand transparency in oil management; Shilling strengthens amidst foreign flows. West Africa th BRVM: New Guinea‐Bissau president sworn in; Senegal to receive USD 540m development grant; Cocoa producing countries discuss charter revision. Ghana: COCOBOD revises target for 2010‐11; FDI increases 74.1% in 2Q09; Ecobank Ghana and SG‐SSB Limited announce rights offer details. Nigeria: Reports indicate possible bank recapitalisations; NGN 106bn Treasury bill maturities settled; 7‐UP Bottling Co and Northern Nigeria Flour Mills report FY09 results. North Africa BWP 6.68 MWK 140.61 MUR 30.75 ZMK 4,625.0 KES 75.77 TZS 1,305.5 UGX 1,965.0 XOF 449.54 GHS 1.46 NGN 154.28 EGP 5.51 MAD 7.78 TND 1.30 EUR 0.69 GBP 0.60 JPY 90.48 ZAR (NAD, SZL, LSL) 7.44 * relative to USD Randolph Oosthuizen Head of Research +27 11 214 8384 [email protected] Egypt: Urban inflation drops to 9.0% y/y; Revenues from Suez Canal at CY09 high; New cement licenses proposed. Morocco: Trade deficit decreases 9.2%; Lafarge Ciments reports 5% increase in profit after tax in 1H09. Tunisia: CPI inflation slightly higher in August; Tunisia plans nuclear power station by 2023; Tunisian car sector grows despite recession. Refer to important terms or use, disclaimers and disclosures on back page. Maciek Szymanski Group Economist +27 11 214 8338 [email protected] Rob Brownlee Head of International Sales and Trading +27 11 214 8464 [email protected] The Africa Weekly TABLE OF CONTENTS Market commentary.........................................................................................................4 Economic indicators .........................................................................................................7 Regional............................................................................................................................8 Angola...............................................................................................................................9 Botswana........................................................................................................................11 Lesotho ...........................................................................................................................14 Malawi ............................................................................................................................15 Mauritius ........................................................................................................................17 Namibia ..........................................................................................................................19 Swaziland........................................................................................................................21 Zambia ............................................................................................................................23 Zimbabwe .......................................................................................................................25 Kenya ..............................................................................................................................28 Rwanda...........................................................................................................................30 Tanzania .........................................................................................................................32 Uganda ...........................................................................................................................33 BRVM..............................................................................................................................35 Ghana .............................................................................................................................37 Nigeria ............................................................................................................................39 Egypt...............................................................................................................................42 Morocco .........................................................................................................................44 Tunisia ............................................................................................................................46 Recently published research ..........................................................................................48 Regular publications .......................................................................................................48 14 September 2009 African Alliance Pan‐African Securities Research 2 of 49 The Africa Weekly MARKET SNAPSHOT Market Botswana Mauritius Malawi Namibia Swaziland Zambia Zimbabwe Kenya Tanzania Uganda BRVM Egypt Ghana Morocco Nigeria Tunisia South Africa Botswana Mauritius Malawi Namibia Swaziland Zambia Kenya Tanzania Index name Domestic Semdex (All All Share Local All Share All Share Industrial Top 20 All Share All Share Composite EGX 30 All Share All Share All Share All Share All Share Domestic Semdex All Share Local All Share All Share Top 20 All Share Weekly market moves (%chg local) Tunisia: 1.52% Morocco 0.47% Egypt 1.14% BRV M ‐0.96% Nige ria ‐1.75 % 0.41% Ghana Uganda: ‐2.21% Ke nya ‐2.82% Tanzania ‐0.11% Zambia ‐4.48% NaNamiia ia mi b b Zimbabwe Botswana ‐1.34% 1.26% Malawi ‐0.57% M auritius 4.91% South Afric a 3.43% Swaziland Source: African Alliance database 14 September 2009 African Alliance Pan‐African Securities Research 3 of 49 The Africa Weekly African and global markets heat map (%chg local) Date Botswana BRVM Egypt Ghana Kenya Malawi Mauritius Morocco Namibia Nigeria Swaziland Tanzania Tunisia Uganda Zambia Zimbabwe South Africa FTSE 100 Nikkei 225 S&P 500 Shanghai Composite MSCI World MSCI EFM Africa ex ZA MSCI EM Index Daily price changes (%) (31‐Aug ‐ 11‐Sep 2009) 31A 01S 02S 03S 04S 07S 08S 09S 10S 11S ‐0.2 0.6 0.2 ‐0.0 ‐ 0.3 0.3 0.1 0.0 0.5 0.4 ‐0.8 1.7 ‐0.8 ‐0.7 0.2 ‐0.9 ‐0.7 0.6 ‐0.1 0.6 ‐0.3 ‐2.0 ‐0.8 1.1 0.9 0.2 ‐0.4 ‐0.1 0.5 4.9 4.6 4.4 0.4 0.1 0.1 ‐0.0 0.1 0.0 0.2 0.3 0.8 1.6 0.4 ‐0.1 ‐0.4 ‐1.5 ‐0.4 ‐0.8 0.2 ‐ 0.1 ‐ ‐ ‐ ‐0.6 ‐ ‐ ‐ ‐ ‐0.0 1.3 0.1 ‐0.1 0.6 0.7 1.5 1.5 0.8 0.4 ‐0.4 ‐0.0 ‐1.0 ‐1.5 0.4 ‐0.1 0.3 0.5 ‐0.1 ‐0.1 ‐0.5 ‐3.0 ‐ ‐ ‐ 3.1 ‐ ‐ ‐ ‐3.0 ‐1.4 ‐1.9 ‐0.7 ‐0.9 ‐1.5 ‐1.2 ‐1.0 ‐0.3 0.8 ‐0.1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0.1 ‐ ‐ 0.1 ‐ ‐0.1 ‐ ‐ ‐ 0.5 ‐0.0 0.5 0.1 0.6 0.3 ‐0.1 0.4 0.5 0.5 ‐ 0.0 ‐2.0 ‐ ‐0.3 ‐ ‐2.9 0.4 ‐ 1.3 1.6 0.4 0.0 ‐ 0.6 0.1 ‐3.5 2.6 ‐3.3 ‐0.2 ‐0.6 0.4 ‐ ‐0.4 ‐0.9 ‐1.0 ‐1.8 ‐0.1 0.9 0.7 ‐1.2 ‐0.5 ‐1.1 0.4 0.4 1.2 0.8 ‐0.6 0.9 1.0 ‐ ‐0.4 ‐0.8 ‐6.7 ‐1.8 0.4 ‐2.2 0.6 ‐0.0 ‐2.4 ‐0.3 1.2 Weekly chg (%) 4‐Sep‐09 11‐Sep‐09 0.6 1.3 ‐0.2 ‐1.0 ‐1.3 1.1 15.2 0.4 3.0 ‐2.8 0.1 ‐0.6 1.9 4.9 ‐2.5 0.5 ‐3.4 ‐ ‐6.3 ‐1.8 ‐ ‐ 0.2 ‐0.1 1.7 1.5 ‐1.2 ‐2.2 2.6 ‐4.5 ‐1.5 ‐1.3 ‐2.1 ‐1.2 ‐3.3 ‐1.2 0.0 ‐1.7 ‐3.1 0.2 3.4 3.3 2.5 2.6 4.5 4.1 1.5 4.8 Year‐to‐date change 1‐Jan‐09 11‐Sep‐09 7,035.5 6,871.9 178.2 135.6 4,596.5 6,689.9 10,431.6 6,503.0 3,521.2 3,096.2 6,091.2 4,933.4 1,182.0 1,597.7 10,984.3 10,864.7 158.0 150.3 31,450.8 21,483.0 209.4 213.0 1,239.9 1,212.7 2,892.4 3,875.9 782.1 750.4 2,539.1 2,606.0 100.0 133.0 21,509.2 4,434.2 8,859.6 903.3 1,820.8 920.2 548.9 568.2 %c h ‐2.3 ‐23.9 45.5 ‐37.7 ‐12.1 ‐19.0 35.2 ‐1.1 ‐4.9 ‐31.7 1.7 ‐2.2 34.0 ‐4.1 2.6 33.0 25,567.4 18.9 5,011.5 10,444.3 1,042.7 2,989.8 13.0 17.9 15.4 64.2 ‐0.4 ‐0.6 0.9 4.8 1.1 1.7 0.3 ‐0.3 1.3 0.7 1.3 ‐ 0.9 0.6 0.7 1.7 1.2 ‐0.8 0.8 0.5 ‐0.3 2.0 1.0 ‐0.7 0.5 ‐0.7 ‐0.1 2.2 ‐0.8 ‐1.7 ‐0.7 0.5 1.0 0.9 1.2 0.7 0.8 0.4 ‐0.6 ‐1.3 ‐0.7 ‐0.2 ‐0.4 0.4 0.1 0.2 0.5 0.2 ‐1.4 0.3 ‐1.3 1.2 1.5 1.4 1.8 ‐0.1 0.8 0.8 1,119.2 21.6 582.0 6.0 894.3 57.4 MARKET COMMENTARY The Moroccan index traded positive in the early part of the week, but ticked down on Thursday and Friday to close 0.47% up for week. Mid‐week saw some large trades going through the larger cap stocks. During these trades Maroc Telecom dropped 2.27% to close at a one year low of MAD 135.85. The counter also accounted for 24.3% of the week’s trading, turning over MAD 122.5m out of a total of MAD 503.9m. Lafarge Morocco gained 1.27% for the week after releasing 1H09 results. Other large caps with gains include Douja (+4.76%), BMCE (+2.31%), and BCP (+1.51%). The Egyptian EGX30 gained 1.1% last week,yet average daily turnover remained weak at EGP 0.9bn. Stocks were volatile ahead of the last full trading week before Ramadan Bairam. Turnover was also below average Sunday through Wednesday at under EGP 1.0bn, before peaking on Thursday to reach its highest level of EGP 1.04bn in 10 days. Foreign investors maintained their net buying position whereas local investors remained net sellers. Most of the larger cap stocks made price gains during the week, including OCI (+2.1%), OTH (+1.49%), TE (+2.99%), and Mobinil (+2.43%). (Source: Pharos) In Nigeria, a turnover of NGN 13.6bn on 27,713 deals was recorded for the week, which saw the All‐Share Index lose 1.75% to close at 21,483.02 points. The NSE‐30 14 September 2009 African Alliance Pan‐African Securities Research 4 of 49 The Africa Weekly Index dropped by 1.2% to close at 814.41 points. The Banking sub‐sector was the most active during the week, with 1.05 billion shares worth NGN 8.56bn exchanged by investors. Activity in the subsector was largely driven Zenith Bank, First Bank of Nigeria and UBA. Trading in the shares of the three banks accounted for 42.45% of the sub‐ sector’s turnover. The Insurance sector, boosted by activity in the shares of Universal Insurance Company and Continental Re‐Insurance, followed on the week’s activity chart with a turnover of NGN 285.8m. Four equity prices were adjusted for dividend and/or bonus issues as recommended by the Board of Directors. Union Diagnostics & Clinical Services was adjusted for dividend of NGN 0.08 per share and a bonus share issue of 1 for 5. University Press was adjusted for a dividend of NGN 0.40 per share and bonus share issue of 1 for 4. NEM Insurance was adjusted for a dividend of NGN 0.04 per share. Royal Exchange was adjusted for a bonus share issue of 1 for 10. Among the larger cap stocks, FCMB led the way up, gaining 11.46% followed by GT Bank (+9.64%), Zenith (+7.57%), Benue Cement (+7.48%) and UBA (+7.28%). Decliners among the large caps included Union Bank (‐22.37%), Access Bank (‐22.26%), Intercontinental Bank (‐18.12%) and Ecobank Nigeria (‐9.71%). In Kenya, following reduced trading at the beginning of the week, weekly turnover declined to KES 556.0m from KES 806.3m. During the week, CFC Stanbic and NIC recorded rare large block trades, with both counters ending the week weaker. Most prices ended the week lower pushing the NSE 20 share and NSE All Share indices down by 2.8% and 1.5%, respectively. Pan‐African Insurance was the week’s top gainer edging up 4.0%. Crown Berger reversed its previous week’s gain of 19.8%, to close the week 11.0% lower. Trading in the coming week is expected to remain low key, due to selective trading by majority of foreign investors and minimal participation by local institutional investors. Other markets: In Botswana, the bourse’s heavyweights stood their ground as the local index edged up 1.3% on trade of BWP 7.5m. The week closed with 4 gainers and 4 losers. The gainers for the week were Primetime (+6.9%), Imara (5.9%), Barclays (+3.4%) and FNBB (1.8%), while the decliners were Chobe (‐3.7%), Sefalana (‐3.3%), Engen (‐2.5%) and Standard (‐1.2%). Activity was dominated by Letshego, generating 71.5% of the week’s market turnover. Trade in BRVM was dominated by Sonatel, which accounted for 70% (XOF 1.0bn) out of the XOF 1.5bn that changed hands. The index fell 0.96% on the back of price declines in SOLIBRA (‐7.5%), SAPH (‐10.71%), and SOGB (‐8.16%). Small gains in some of the large markets could not prevent the index from closing in the red. Ghana’s, GSE All‐Share Index continued its upward trend for the fifth consecutive week, recording a marginal increase of 0.41%, to close at 6,502.98 points, representing a ytd loss of 37.7%. During the week under review the GSE recorded low volumes compared to the previous week. Trades were recorded in twenty equities. Ghana Commercial Bank (GCB) dominated the week’s trading activity accounting for 32.4% of total value traded. The larger cap stocks held firm, with no losers among the top 20 shares. Only Benso Oil Palm (‐13.8%), and Tansol (‐9.1%) lost ground in the week. In Malawi, the market recorded trading activity in eight counters, for a total consideration of MWK 6.5m. The Malawi All Share Index moved downwards by 0.57% driven by a 4.8% fall in the price of FMB. There were no price gains during the week. 14 September 2009 African Alliance Pan‐African Securities Research 5 of 49 The Africa Weekly In Mauritius, the Semdex and SEM‐7 indices were up 4.9% and 6.4%, respectively, mainly supported by local investor participation and improved prices on blue chip stocks,. Weighed by a drop in foreign investor activity (‐103.2% net inflows) value traded declined 38% to MUR 148.3m from MUR 239.6m. Mauritius Commercial Bank continued to record improved foreign investor interest while State Bank of Mauritius witnessed a rise in foreign investor sales. The top 3 gainers for the week were all hotel stocks. Only two counters suffered price declines in the week. Tanzania witnessed trade to the value of TZS 464.2m, the bulk of this going through Twiga, which traded flat, and accounted for 38.4% (TZS 178.3m) of the week’s total trade. The index lost 0.11%, as a result of the decline in CRDB (‐1.5%), the week’s only price move. The Tunisian index continues to gain ground, closing the week up 1.5%. Value traded came off slightly, with a total of TND 32.8m changing hands. The banking sector was in the spotlight during the week, with banks dominating both trading volumes and price gains. Amen Bank again topped the trading list, accounting for 16.7% of turnover (TND 5.47m) while finishing the week’s top gainer, up 12.9%. Amen Bank is up 59.5% YTD. Performance amongst other larger caps included gains from Attijari Bank (+4.52%), BIAT (+2.66%) and SFBT (+1.81%). UIB (‐1.15%) witnessed a total weekly trade of TND 2.17m (6.6% of the market), as well as a series of block trades early in the week totalling TND 10.0m. The Ugandan USE All Share Index declined 2.21% to close the week at 750.36 points. Two shares lost ground, namely New Vision (‐3.75%), and Stanbic (‐3.0%), which was also the top traded counter. Stanbic accounted for 81.8% (UGX 151.9m) of total market turnover of UGX 185.9m In Zambia, the all share index dropped by 4.48%, to end the week at 2,605.99 points on turnover of ZMK 4.5bn. Three shares made gains during the week, including Cavmont Capital (+9.1%), AEL (+7.8%), and ZAMEFA (+4.1%). Seven shares fell, including Zambia Sugar (‐16.4%), and StanChart (‐2.95%). Zimbabwe witnessed a week similar to the previous week, with the Industrial index losing 1.34% on trade of USD 5.23m. Econet Wireless remained the most active counter, accounting for 18.7% (USD 0.98m) of total trade. Among the larger stocks, gains came from Kingdom Meikles (+10.87%), RioZim (+9.78%), and AICO (+8.82%), while declines were seen in African Sun (‐11.11%), Hippo Valley (‐5.56%), and Delta Corp (‐5.12%) 14 September 2009 African Alliance Pan‐African Securities Research 6 of 49 The Africa Weekly ECONOMIC INDICATORS Country Southern Africa Angola Botswana Lesotho Malawi Mauritius Namibia Swaziland Zambia East Africa Kenya Rwanda Tanzania Uganda West Africa Cote d'Ivoire (BRVM) Ghana Nigeria North Africa Egypt Morocco Tunisia Source: Central banks, statistical agencies Prime (%) 14.44 12.50 12.17 19.50 5.90 11.44 10.00 20.90 13.60 7.49 16.05 18.90 CPI (%) 13.97 6.00 6.90 8.00 1.90 7.50 6.35 14.30 18.40 5.81 10.90 12.40 0.80 20.10 11.10 9.00 2.20 4.20 Month Jul Jul Jul Jul Aug Jul Jul Aug Aug Jul Jul Aug Jun Jul Jul Aug Jun Aug 18.50 17.50 9.25 3.25 4.50 14 September 2009 African Alliance Pan‐African Securities Research 7 of 49 The Africa Weekly REGIONAL SOUTHERN AFRICA Southern African countries behind Free Trade Area targets to implement customs union Analysts have said that the Free Trade Area (FTA) formally launched early this year is struggling in its infancy with member countries failing to implement agreed targets. The Southern Africa Development Community’s (SADC’s) Regional Indicative Strategy Plan said SADC would follow up the FTA with a customs union in 2010, a common market in 2015 and a monetary union in 2016, which will automatically herald the adoption of a single currency. Non‐convergence in economic growth and reforms means that the region will not meet its economic integration targets. Outgoing South Africa Reserve Bank (SARB) Governor, Tito Mboweni recently said countries in the region haven’t met “convergence criteria” on curbing inflation, adding the region was behind schedule. “We are very much behind schedule. Inflation increased at an alarming rate in 2008 due in part to the pressure from food and oil,” Mboweni said. To join the common monetary union, countries are expected to have stable inflation of between 3‐5% and a prudent fiscal policy with budget deficits of less than 3% of gross domestic product (GDP). Mboweni said that economic integration should be backed by prudent fiscal policies, financial balances among member countries and policies which minimise market distortions. He noted that despite declaring a FTA, the region still lags in implementation and called for political will to spur economic integration in the bloc. “In crafting of the macro‐economic policies of the region, we have to ensure that market certainty is maintained,” Mboweni said. Trade analysts said the FTA had virtually failed to take off, dashing hopes for a customs union in 2010. Paul Kruger, a researcher at Trade Law Centre for Southern Africa (Tralac), said regional countries were still struggling to implement the FTA, a year after it was formally launched. Kruger said ambitions to form a customs union would not come to fruition in the immediate future, citing the asymmetry in economic development in the region. He advised regional members to go back to the drawing board and “re‐look the targets and take a more realistic approach”. The researcher said SADC was failing to implement most of its objectives such as the free movement of goods and services as well as free movement of people across the borders. The failure by the FTA to take off smoothly is in spite of the fact that SADC trade protocols place a number of obligations on member states to harmonise policies towards the creation of a common market and an economic union. Kruger said SADC was still to agree on a revenue sharing formula for a customs union next year. In addition, there have also been calls for wider integration encompassing the Common Market for East and Southern Africa (Comesa). To set up a customs union, member states would have to adopt a common external tariff. Analysts warn that diverse interests could result in clashes over trade policy objectives. “They (SADC) won’t reach the second target (customs union) on time. Progress has been slow on the implementation of the FTA and a single currency is a way off. It’s not going to happen soon,” Kruger said. Kruger added that the region should focus more on trade facilitation, which involves easing the cost of trade among member states and eliminating non‐tariff barriers. South Africa’s Department of Trade and Industry Deputy Director Xavier Carim said early August that alternative models of integration should be considered. (Source: Pana) 14 September 2009 African Alliance Pan‐African Securities Research 8 of 49 The Africa Weekly ANGOLA POLITICAL AND ECONOMIC NEWS Angola blocks sale of Marathon field stake to China Angola has blocked the sale of Marathon Oil's 20% stake in an oil block to Chinese state‐owned firms CNOOC and Sinopec. The two Chinese companies announced on 17 July that they had agreed to pay USD 1.3bn for the stake in the offshore block in a 50‐50 joint venture. Manuel Vicente, head of Angola's state‐owned oil company Sonangol, said on Thursday that they were going to exercise their right of first refusal and that the process was already formalised. This right of first refusal allows Sonangol (who has a 20% stake in the Block), along with the other partners in the block, to step in and buy the stake for the price the Chinese firms have offered. The highly prospective offshore block has already yielded 12 discoveries. It is operated by French oil major Total, with a 30% stake, Texas‐based Exxon Mobil Corp holds 15%, while Portugal's Galp owns 5%. Sonangol's refusal to allow the Chinese firms to buy the Marathon stake is a set‐back for the Asian powerhouse's campaign to secure energy assets in Africa. Angola rivals Nigeria as Africa's biggest oil producer. China, the world's second largest oil consumer, imports more of its crude from Angola than from any other nation. The Angolan Block 32 is estimated to have 1.5bn barrels of oil reserves. Production is expected to start in 2012. Houston‐based Marathon announced the possible deal on 17 July. At the time it said it planned to retain a 10% working interest in Block 32 after the sale was carried out. A Marathon Oil spokesman was not immediately available for comment. The USD 1.3bn deal price is substantially lower than the USD 2bn Marathon was asking in 2008. Bidders then included the CNOOC‐Sinopec consortium, India's ONGC and Brazil's Petrobras, according to sources. Vicente said Sonangol, which acts as both a regulator and player in Angola's oil sector, could hold a new round of bids for new oil licences by the end of next year. "If we hold a bidding round it will only be at the end of next year," he said, adding work on a new constitution and presidential elections, expected to take place in 2010, would delay the process "We also want our existing oil blocks to mature," he said. Angola currently heads the Organisation of the Petroleum Exporting Countries (Source: Reuters) Mota‐Engil, Soares da Costa open bridge in Angola Portuguese builders Mota‐Engil and Soares da Costa opened a new bridge in Catumbel on Thursday. Construction work started in January 2007 and required more than EUR 26.1m to complete. The bridge is very important to the development of the Benguela region, Mota‐Engil's chairman, Antonio Mota, stressed. The bridge is related to another Mota‐Engil project in the region, namely the transformation of the highway between Lobito and the city of Benguela into an expressway, which required EUR 45m to construct. The expressway also became fully operational on Thursday after the opening of the bridge. (Source: Portuguese News Digest) COMPANY NEWS Chevron announces first oil from offshore Tombua‐ Landana project Chevron announced that it started crude oil production on 19 August at its Tombua‐ Landana project off Angola’s coast. The Tombua and Landana fields are located in offshore Block 14, and oil output is projected to reach 100,000bpd by 2011 with continued development drilling. The consortium developing the project has invested USD 3.8bn in the Tombua‐Landana facility; construction began in September 2006. It is the third development in Block 14 in the Lower Congo Basin, offshore the enclave of Cabinda. Chevron's Angolan subsidiary Cabinda Gulf Oil Co. Ltd operates the Block 14 contractor group with a 31% interest and its partners include Sonangol (20%), Italy's Eni (20%), France's Total (20%), and Portugal's Galp (9%). 14 September 2009 African Alliance Pan‐African Securities Research 9 of 49 The Africa Weekly The project will not only increase Angola's oil production after a long ramping‐up period, but it will also monetise the associated natural gas—instead of being flared, the gas will be used as feedstock for the Angola LNG facility, which appears to be on schedule with first LNG expected early in 2012. (Source: IHS) 14 September 2009 African Alliance Pan‐African Securities Research 10 of 49 The Africa Weekly BOTSWANA POLITICAL AND ECONOMIC NEWS Debswana resumes production at its Orapa No.2 mine as gem demand picks up Debswana Diamond Company has restarted production at its Orapa No. 2 mine earlier than anticipated, as gem demand picks up on the international market. The company indicated in February that the mine would remain closed until the end of 2009, but the mine resumed production on 27 July and is currently operating at 80% production capacity. Debswana spokeswoman, Esther Kanaimba‐Senai said the mine resumed operations in order to work towards meeting the company's production quota of 17mct by the end of the year. Debswana's Damtshaa mine will be the only mine that will remain closed until the end of the year. (Source: Mmegi) According to the 2009/2010 Global Competitiveness Report, Botswana has dropped 10 places down the rankings after fairing badly in macroeconomic stability as a result of the impact of the global recession, which has eroded government revenues. The report, which is sponsored by the World Economic Forum, places Botswana at position 66 out of 134 countries (down from position 56 in 2008). The country's macroeconomic stability index fell to 41 from 22 in 2008, marking the worst drop among the 12 pillars used to measure a country's competitiveness. Poor work ethic in the national labour force continued to be highlighted as the most problematic factor of doing business in the country. The report also highlights an inadequately educated workforce; challenges in accessing finance and an inefficient government bureaucracy. In the infrastructure index, Botswana fairs badly on the quality of air transport and available seat kilometres. The low rate of secondary and tertiary enrollment, which was made worse by this year's freeze on government sponsorship by the Ministry of Education, also contributed to the poor ranking. Commentators at the launch of the report highlighted that the report is a signal to policymakers to be proactive in their response and also called on the private sector to be part of the solution. (Source: Mmegi) According to the 2009 World Risk Survey by Australian media research group, Resource Stocks, Botswana maintained its position amongst the top ten least risky environments for resource sector investment, coming in fourth overall. The survey covers the perceptions and opinions of company executives on country risk profiles across ten categories including financial risk, sovereign risk, green tape, land claims, red tape, infrastructure, civil unrest, natural disasters and labour unrest. The global financial crisis and resulting global recession resulted in Botswana sliding one position down to fourth place in 2009's survey. The recession also resulted in other countries losing their positions in the top ten, with only Botswana, the United States, Sweden, Chile and Australia remaining amongst the survey's front runners from 2008 to 2009. According to the survey, Canada, Greenland, Namibia and the UK all fell out of the top 10 world leaders in risk. (Source: Mmegi) Botswana’s global competitiveness slips due to the effects of the global crisis Botswana amongst top ten less risky countries for resource investment COMPANY NEWS Discovery Metals to expedite development of its Boseto copper mine Discovery Metals (DML) is planning to fast track the construction of its Boseto copper mine in Maun, with the first concentrate from the mine expected in 2011. DML Managing Director, Brad Sampson indicated that the bankable feasibility for the USD 130m mine is expected to be completed during 1Q10, with an 18‐month mine construction schedule envisaged in order to meet the 2011 production target. Infill drilling is expected to be completed during September 2009, after which the company hopes to move a large percentage of the 50mt resource to the measured and indicated category. DML plans to scale‐up the project and increase the feed grade into the 14 September 2009 African Alliance Pan‐African Securities Research 11 of 49 The Africa Weekly concentrator, as well as extend the estimated mine life beyond 10 years. (Source: Mmegi) FNBB EPS up 8.7% during FY09 First National Bank (FNBB) released its FY09 results to June 2009, registering an 8.7% growth in EPS to BWP 0.16. Net interest income grew by 30.6% to BWP 522.9m on the back of a 10.9% increase in interest income and a 0.7% decline in interest expense. The 30.6% growth in net interest income was ahead of the growth in advances (+17%), mainly as a result of higher margins earned from retail lending. Non‐funded income grew by 6.5% to BWP 370.2m, mainly because of a high base in FY08 which included a one‐off gain of BWP 35m, which, if adjusted for, yields 18% growth. Non funded income was also impacted by reduced volumes in foreign exchange trade due to reduced mining activity, which is a key forex earner. Despite a 13.4% growth in operating expenses, the cost to income ratio reduced by 190bp to 35.4%. Operating profit before impairments grew by 23% to BWP 576.5m, while profit before tax registered a 19.4% growth to BWP 528.6m. Despite good growth in income, PAT was slightly depressed by a 95.6% growth in the impairment charge which came in at 0.9% of loans (against 0.5% in FY08). Profit after tax grew by only 8.7% as a result of a higher effective tax charge (23% against 15.5% in FY08), which led to a 77% increase in tax to BWP 121.9m. First National Bank Year to Jun (BWP m) Interest income Interest expense Net interest income Other income Total income Operating expenses Operating profit Impairment charge Income from associate Indirect tax Profit before tax Tax Profit after tax EPS (BWP) DPS Loans and advances to customers Investment securities Customer deposits Source: Company report FY08 1,168.3 ‐768.1 400.3 347.7 747.9 ‐279.1 468.8 ‐20.8 1.3 ‐6.4 442.9 ‐68.8 374.0 0.15 0.08 3,969.5 5,363.2 9,763.6 FY09 1,296.5 ‐773.6 522.9 370.2 893.0 ‐316.5 576.5 ‐40.8 1.1 ‐8.3 528.6 ‐121.9 406.7 0.16 0.09 4,643.2 6,085.8 4,643.2 % chg 11.0 0.7 30.6 6.5 19.4 13.4 23.0 95.9 ‐13.9 19.4 77.0 8.7 8.7 8.8 17.0 13.5 8.1 MARKET ACTIVITY The bourse’s heavyweights stood their ground as the local index edged up 1.3% on trade of BWP 7.5m. The week closed with 4 gainers and 4 losers. The gainers for the week were Primetime (+6.9%), Imara (5.9%), Barclays (+3.4%) and FNBB (1.8%), while the decliners were Chobe (‐3.7%), Sefalana (‐3.3%), Engen (‐2.5%) and Standard (‐1.2%). Activity was dominated by Letshego, generating 71.5% of the week’s market turnover. A new government bond, BW006, carrying a coupon rate of 7.5% was listed on the BSE on 9 September. The bond matures on 9 March 2012. A tranche of BWP 300m was offered for the bond, and bids amounting to BWP 558m were received with only 14 September 2009 African Alliance Pan‐African Securities Research 12 of 49 The Africa Weekly BWP 300m being allotted. Bids below the stop out yield of 7.42% received full allotment, while those at stop out yield received partial allotment. The issue closed a stop out yield of 7.42% Botswana Stock Exchange Top gainer(s) Primetime Imara Botswana Barclays Botswana % chg 6.9 5.9 3.4 5.37 Price Top loser(s) 1.39 4.50 6.00 0.80 Chobe Sefalana Engen Botswana % chg ‐3.7 ‐3.3 Price 2.60 2.90 3.90 ‐2.5 7.51 Top trader Letshego BWP (m) USD (m) Total Traded BSE DCI 2.7 BWP (m) USD (m) 1.12 Market Performance BSE DCI (BWP) Source: African Alliance database Level BWP (%) 6,872 1.3 USD (%) BWP/US 6.68 % chg 1.4 Dividends (BWP) Company BIHL Imara RDCP Sefcash Source: Botswana Stock Exchange Financial year Dec 09 Apr 09 Dec 09 Apr 09 Type Interim Final Interim Final Amount Last cum date 17.00 18 Sep 09 3.00 21 Aug 09 13.83 25 Sep 09 150.00 21 Aug 09 14 September 2009 African Alliance Pan‐African Securities Research 13 of 49 The Africa Weekly LESOTHO POLITICAL AND ECONOMIC NEWS LRA signs MoU with FNB and Nedbank for filling in tax returns. Nedbank Lesotho and First National Bank (FNB) signed a Memorandum of Understanding with the Lesotho Revenue Authority (LRA) allowing taxpayers to fill in their tax returns at the banks. This brings the number of banks under the scheme to three, after Standard Lesotho Bank signed a similar agreement with the LRA last year. With the new arrangement taxpayers are now able to fill in their Value Added Tax and Pay As You Earn tax returns at the three banks throughout the country. This collaboration of FNB, Nedbank Lesotho and Standard Lesotho Bank with LRA will make it easier for people to comply with their tax obligations. The LRA stated that the authority will introduce more areas of co‐operation for the convenience of taxpayers in Lesotho. (Source: Lesotho Times) COMPANY NEWS Kopane shares soar 70% on GBP 1.5bn diamond find rumour Shares for Kopane Diamonds rose 70% at the end of the week on expectations that it will announce that it has discovered diamond deposits worth more than GBP 1.5bn. While Kopane hoped the assets would be substantial, the market has been waiting on further analysis of the sites. However, mining sources said Kopane would announce that geological studies had confirmed the value of diamonds in the sites to be in excess of GBP 1.5bn, and that once facilities are in place, up to GBP 100m worth of diamonds could be mined each year. Kopane Diamonds is listed on the London Stock Exchange Alternative Investment Market (AIM) and holds a 75% stake in Liqhobong Mining Development Company (LMDC) in Lesotho. (Source: Minesite) 14 September 2009 African Alliance Pan‐African Securities Research 14 of 49 The Africa Weekly MALAWI POLITICAL AND ECONOMIC NEWS Malawi drops on business ratings Malawi’s rating under the Doing Business Index of the World Bank has worsened with the country dropping by one point from 131 last year to 132 this year. The report released by the International Finance Corporation (IFC) of the World Bank shows that Malawi has faired badly in a number of areas including construction permits, employment of workers, starting a business, access to bank credit, cross border trading, enforcing contracts and protection of investors, among others. However, the country has done well on business taxes and on procedures for closing a business. Minister of Trade and Industry Eunice Kazembe said Malawi was making progress in improving its business environment, but the speed at which other countries were doing the same could have contributed to the negative rating. President of Economic Association of Malawi (ECAMA), Thomas Munthali also said this year’s rating could have been influenced by developments from last year when Malawi was considered to have stagnated in its business reforms initiative. The IFC report, which ranks Mauritius as the best country for doing business in Africa and Rwanda as the most improved in the year, shows that Malawi performed badly in giving out permits for construction to property developers, with the indicator on construction registering the biggest drop of 7 points. (Source: Daily Times) Government revoked temporary working permits of four bosses from major tobacco buying companies and served them deportation orders. Chief Immigration Officer Elvis Thodi confirmed the deportation of Limbe Leaf Tobacco CEO Kevin Stainton, his leaf buying manager Bertie Van Der Merwe, Premium Tama Tobacco Company head Alex Mackay and Alliance One Managing Director, Collin Armstrong. Thodi said the tobacco bosses were deported due to conduct that was not consistent with the country’s development agenda. President Mutharika is on record to have threatened to deport tobacco buyers that he claimed were offering low prices at auction floors to poor farmers. (Source: Nation) Government deports tobacco company managers COMPANY NEWS MTL fibre network attracts clients Fixed telephone operator, Malawi Telecommunications Limited (MTL) says it has already identified potential clients for its fibre optic cable network. The project which aims at facilitating speedy voice and data transmission from the main line to recipients is to be completed next month. MTL Chief Executive Officer, Peter Zimmer said potential clients which are ready to utilise the network include banks, non‐ governmental organisations, insurance companies and corporates. The USD 55m (MWK 7.7bn) initiative involves the establishment of a high capacity digital backbone ring network over optic cables laid into deep trenches throughout the length of Malawi. Currently, data and voice transmission is achieved using 20‐year old microwave links, which according to the company’s statement, can no longer carry the full load traffic generated by MTL’s customer base. (Source: Daily Times) MARKET ACTIVITY The market recorded trading activity in eight counters, for a total consideration of MWK 6.5m. The Malawi All Share Index moved downwards by 0.57% driven by a 4.8% fall in the price of FMB. There were no price gains during the week. 14 September 2009 African Alliance Pan‐African Securities Research 15 of 49 The Africa Weekly Malawi Stock Exchange Top gainer(s) No gainers % chg 2.08 Price Top loser(s) FMB Malawi 0.01 MSE ALSI ‐0.57 % chg ‐4.8 Price 10.00 Top trader Press Corp MWK (m) USD (m) Total Traded Level MWK (%) 4,933 ‐0.57 MWK (m) USD (m) 6.51 0.05 Market Performance MSE ALSI (MWK) Source: African Alliance database USD (%) MWK/US 140.61 % chg 0.00 Dividends (MWK) Company Press Corporation Source: Malawi Stock Exchange Financial Year Dec 09 Type Interim Amount Last cum date 1.00 30 Oct 09 14 September 2009 African Alliance Pan‐African Securities Research 16 of 49 The Africa Weekly MAURITIUS POLITICAL AND ECONOMIC NEWS Mauritius gains seven places in Doing Business Report Mauritius is ranked 17 in the Doing Business report 2010, thus gaining seven places during trying economic conditions. The Board of Investment (BOI), in collaboration with the Finance Ministry, is already working on a plan to propel Mauritius into the top ten countries. World Bank Country Representative, Constantine Chikosi, explains that Mauritius has improved in key areas and is in a position where it will be fully prepared for the economic recovery. “Government reforms are paying off. Registering land, flexibility in Labour laws and the introduction of a dedicated division of the Supreme Court to hear commercial and contractual disputes have propelled the country. The country cannot remain stagnant in its efforts as other countries are moving forward and we cannot fall behind,” he said at the launching of the Doing Business Report 2010 at the World Bank Office in Port Louis on Wednesday. (Source: Le Défi Media Group) Mauritius tries to entice data centre operators to set up shop on the island by showcasing their technological offerings. Data Centre Strategies, an international conference and exhibition taking place in Mauritius over the period of 30 September to 1 October will profile a new sea water cooling system for data centres. As data centres are in constant need of a reliable power supply and cooling system, the Mauritius Eco‐Park project will aim to exploit the position of the island, which is on the path of a deep sea current, through technologies that are sustainable and environmentally friendly. The temperature profile of the deep water around the island may enable seawater air‐ conditioning (SWAC), already implemented in Hawaii and Curacao. The Board of Investment Mauritius, is bringing together enterprise CIOs, IT Directors and Data Centre Owners and Investors from overseas, to showcase the opportunity for a secure data centre disaster recovery system and their advantageous location for new facilities. “Mauritius is ideally positioned at the crossroads of Africa, Asia and Australia and outside major earthquake ridges,” commented Philip Low, Managing Director at BroadGroup, who are researchers and producers of the event. “The island is also well known as a major financial and infocom hub. Being relatively remote but well‐ connected to the world is a major attribute for the island‐nation to position itself as a disaster recovery and business continuity destination.” (Source: My Broadband) New activity in offshore sector drops 50% in first 5 months of 2009 Mauritius' offshore business sector saw a more than 50% fall in new activity during the first five months of 2009 as competition for dwindling business toughened during the global financial crisis. The remote Indian Ocean island, which launched its offshore sector in 1989, pitches itself as a financial platform bridging Africa, the Indian sub‐ continent and Asia. "We have registered a reduction of about 50‐60% in the number of new incorporations in the global business sector in 2009 compared to 2008," Milan Meetarbhan, CEO of Financial Services Commission (FSC) said. "The fall in number coincides with the peak of the financial and economic crisis which has reduced the flow of investments across the world," Meetarbhan said. Consistently one of Africa's strongest performing economies, Mauritius has diversified away from sugar and textiles into tourism, ICT, business outsourcing and offshore banking. Mauritius offers two global business licences that cover a range of activities Mauritius promotes itself as ideal venue for data centres 14 September 2009 African Alliance Pan‐African Securities Research 17 of 49 The Africa Weekly from financial services to fund management, insurance, pensions, aviation leasing and shipping. FSC data showed the number of new global business licences issued between January and May this year fell to 836 from 1,750 during the same period last year. In total there were 33,119 registered global business companies in 2008, the regulatory body said. Penny Hack, a Mauritius‐based corporate lawyer, warned that the island's regulators were in danger of setting too many bureaucratic hurdles to jump through compared with rivals also considered clean offshore centres. Hack said Mauritius needed to streamline procedures and develop new products to win business in a cut‐throat market. (Source: Reuters) MARKET ACTIVITY The Semdex and SEM‐7 indices were up 4.9% and 6.4%, respectively, mainly supported by local investor participation and improved prices on blue chip stocks,. Weighed by a drop in foreign investor activity (‐103.2% net inflows) value traded declined 38% to MUR 148.3m from MUR 239.6m. Mauritius Commercial Bank continued to record improved foreign investor interest while State Bank of Mauritius witnessed a rise in foreign investor sales. The top 3 gainers for the week were all hotel stocks. Only two counters suffered price declines in the week. Stock Exchange of Mauritius Top gainer(s) Naiade Resorts Sun Resorts New Mauritius Hotels % chg 14.9 12.1 8.0 43.6 Price Top loser(s) 50.00 69.50 135.00 1.40 Harel Freres Mount Sugar Estates ‐‐ % chg ‐1.3 ‐1.2 Price 23.00 84.00 Top trader New Mauritius Hotels MUR (m) USD (m) Total Traded MAUR 7.1 MUR (m) USD (m) 148.3 4.77 Market Performance MAUR (MUR) Source: African Alliance database Level MUR (%) 1,598 4.9 USD (%) MUR/US 30.75 % chg 2.0 14 September 2009 African Alliance Pan‐African Securities Research 18 of 49 The Africa Weekly NAMIBIA POLITICAL AND ECONOMIC NEWS Namibia climbs 6 places on GC Index Namibia has continued its climb up the international competitiveness ladder for the third year in a row, with its strong infrastructure and institutions pushing the country up six notches on the World Economic Forum’s latest Global Competitiveness Index (GCI). On the banking system score, Namibia moved from 34th position to 7th. According to the Global Competitiveness Index, Namibia is now the 74th (2008: 80th) most competitive country out of 133 worldwide. (Source: IJG Securities) Government is considering building a dam in the Fish river about 40km west of Keetmanshoop, reviving an idea mulled by the German colonial government a century ago. It would be the largest dam in Namibia, three times bigger than the Hardap Dam and just north of Seeheim railway station in the vicinity of a farm called Neckartal. The proposed Neckartal dam site is situated in the Fish river approximately 25 km north of Seeheim and will provide water for the irrigation of approximately 5,000ha of land to the north and south of the tarred road between Keetmanshoop and Seeheim. It would have a vast catchment area of 45,365sq km with a calculated average annual run‐off of 397m cubic metres. The anticipated wall height is 66 metres with a wall crest length of 480 metres. The storage volume is expected to be 846 cubic metres and the full supply area may cover 39 square kilometres. A pipeline may possibly be built approximately 26km downstream of the dam wall from the river to the irrigation area. The Ministry of Environment and Tourism has commissioned an environmental impact assessment (EIA), which was initiated last week. (Source: The Namibian) InnoVent plans 300MW wind power project The French company InnoVent plans to set up a wind power project just south of Walvis Bay, which is estimated to generate 300MW of electricity according to the license application submitted to the Electricity Control Board. (Source: IJG Securities) Government considers dam project on Fish River COMPANY NEWS SABMiller granted Namibian brewing license SABMiller announced that it has been granted a license by the Namibian government to brew and bottle beer in Namibia after it concluded a black economic empowerment deal. Through the creation of a new subsidiary to be called SABMiller Namibia, the group plans to invest in the construction of a brewery with a capacity of between 250,000 to 300,000 hectoliters, which is expected to be completed by 4Q11. Chairman of Onyewu Holdings, an established BEE investment company owns 20% of the newly formed SABMiller Namibia, while a further 20% has been allocated to three regional trusts for exclusive grassroots benefit: the Omaheke and Karas regions each hold 7%, while the North collectively holds 6%. SABMiller has been importing beer into Namibia through Castle Brewing Namibia for more than 20 years and sells brands such as Castle Lager, Carling Black Label, Peroni Nastro Azzurro and Castle Lite (Source: IJG Securities) MARKET ACTIVITY The index remained flat over the course of the week, as the market witnessed trade in one counter. FNB Namibia shares worth NAD 394,090 traded, at a steady price of NAD 11.00. 14 September 2009 African Alliance Pan‐African Securities Research 19 of 49 The Africa Weekly Namibian Stock Exchange Top gainer(s) No gainers % chg 0.39 Price Top loser(s) No losers % chg Price Top trader FNB Namibia NAD (m) USD (m) Total Traded 0.05 NMB LOCAL 2.1 NAD (m) USD (m) 0.39 0.05 Market Performance NMB LOCAL (NAD) Source: African Alliance database Level NAD (%) 150.28 0.00 USD (%) NAD/US 7.44 % chg 2.1 14 September 2009 African Alliance Pan‐African Securities Research 20 of 49 The Africa Weekly SWAZILAND POLITICAL AND ECONOMIC NEWS Regulator urges insurance and retirement funds to comply with new act The Registrar of Insurance and Retirement funds has circulated a memo to stakeholders reminding them of the requirement to invest at least 30% of their assets locally by 1 November 2009. He warned that post 1 November 2009, his office will actively conduct inspections to determine that retirement funds have complied with the legislation and those found to be non‐compliant will be penalised accordingly. The Registrar reported that about SZL 1.4bn of retirement funds was invested in Swazi assets at 31 July 2009 and that about SZL 1.6bn is currently outstanding. This is the amount that will make its way back to Swaziland by 1 November 2009. The Registrar noted his concern that a large portion of the SZL 1.4bn is held in cash deposits, which could quickly find its way back to South Africa, and that this was not the intention of the Insurance and Retirement Funds Act. A key benefit of the local content requirement is that it will stimulate domestic investment, which in turn will drive job creation. The main drivers of economic activity in Swaziland include reliance on debt, consumption of imports and foreign capital. On another note, the Registrar reported that newly established insurance firms are required to have a 25% local equity partner. He said most of the firms have not complied with this requirement, but are in advanced discussions with possible equity partners. Newly registered insurance firms are Liberty Life, Metropolitan Life, PFM, Old Mutual, Momentum and Ludwala Insurance. (Source: Office of the Registrar of Insurance and Retirement Funds) Central bank liquidates pyramid schemes The Central Bank of Swaziland has announced the liquidation of two pyramid schemes, Aloe Funds and Diamond Africa. PricewaterhouseCoopers Advisory Services has been appointed liquidator of the schemes and has already taken possession of the schemes’ assets. Once PricewaterhouseCoopers completes the preliminary assessments, it will invite investors and other creditors to submit their claims against the schemes. The Central Bank has also announced that Peter Cooper, of PricewaterhouseCoopers Advisory Services, has been appointed curator of Corporate Money Managers (CMM) in terms of the Financial Institutions Act No6/1974. CMM is a newly established investment manager that ran into liquidity problems which resulted in it being unable to honour its financial obligations. Amid much public criticism for licensing CMM, the bank noted that the appropriate due diligence was conducted when licensing the company, and that the onus to invest in an entity is the prerogative of the investors and not the licensing authority. COMPANY NEWS The Royal Swaziland Sugar Corporation (RSSC) has declared an interim dividend of SZL 0.52 per share for the period ended 31 March 2010. The dividend is payable to shareholders registered in the books of the company at close of business on 25 September 2009. Payment of dividend is expected on or about 06 November 2009. RSSC is the largest listing on the Swaziland Stock Exchange with a market capitalisation of SZL 963.4m, which amounts to 65.5% of the market. (Source: Royal Swaziland Sugar Corporation) 14 September 2009 African Alliance Pan‐African Securities Research 21 of 49 The Africa Weekly MARKET ACTIVITY There were no trades on the market during the week. Swaziland Stock Exchange Top gainer(s) No gainers % chg 0.00 Price Top loser(s) No losers % chg Price Top trader No Trade SZL (m) USD (m) Total Traded 0.00 SSX ALSI 2.1 SZL (m) USD (m) 0.00 0.00 Market Performance SSX ALSI (SZL) Source: African Alliance database Level 212.96 SZL (%) 0.00 USD (%) SZL/USD 7.44 % chg 2.1 Dividends (SZL) Company Royal Swaziland Sugar Corporation Source: Financial Year Mar 10 Type Interim Amount Last cum date 0.52 28 Sep 09 14 September 2009 African Alliance Pan‐African Securities Research 22 of 49 The Africa Weekly ZAMBIA POLITICAL AND ECONOMIC NEWS IMF predicts recovery and allocates USD 600m funding The International Monetary Fund (IMF) has projected higher economic growth for Zambia in 2009, following the doubling of copper prices and improvements in other sectors. According to an IMF visiting team, the improved outlook was already being reflected in the appreciation of the Zambian kwacha since May 2009. “The more‐than‐ doubling of copper prices since the beginning of 2009, along with some improvement in other sectors, will underpin somewhat higher GDP growth in 2009 than previously forecast." The country’s balance of payments is expected to strengthen on the back of a stronger kwacha and a maize harvest of 1.9mt. Government and the IMF agreed on a framework for the 2010 budget, which maintains focus on increased spending on priority capital projects and social sectors, following the international financier’s allocation of USD 600m funding to the country. (Source: Times of Zambia) Copper output is projected to increase 11% from 600,000t to 664,000t for CY09. Production is expected to increase a further 13% by 2012, according to the government’s mid‐term expenditure framework (MTEF) policy document. (Source: Post Zambia) Former first lady Maureen Mwanawasa has declared that she will contest the 2016 presidential election, but will for now support the candidature of President Rupiah Banda for the 2011 polls. Mrs Mwanawasa has also called on the public to respect the decisions of the judiciary, saying insistent attacks on recent judgments were against the ideals of a democratic country that demands separation of powers. Speaking in an exclusive interview with a local daily newspaper, she claimed that she was now ready to compete for office. (Source: Times of Zambia) Cross‐border infrastructure development has become an area of interest following the approval of the construction of a regional hydropower interconnector by ECZ (Environmental Council of Zambia). This approval will ensure that there is collaboration between ZESCO (Zambia Electricity Supply Corporation) and its regional counterparts. Government recently applied for a loan to the World Bank for the development of the Kafue Gorge Lower, which will have capacity to produce about 700MW of power, a part of which would be exported into the region. (Source: Times of Zambia) Copper output to increase 12% by 2012 Mwanawasa’s wife eyes presidency in 2016 Regional interconnector to help development in power sector COMPANY NEWS SABMiller acquires Maheu SABMiller Africa has acquired the Maheu beverage portfolio in Zambia. SABMiller Africa's operating subsidiary in Zambia, Heinrich's Syndicate, has entered into an agreement with Trade Kings to acquire its Maheu business for a total cash consideration of approximately USD 19.25m. The transaction includes the purchase of the Maheu brand 'Super Maheu No.1', which is a non‐alcoholic maize drink available in a variety of flavours. Completion of the acquisition is subject to certain customary conditions, including approval from the Zambia Competition Commission. The market anticipates that the acquisition will be finalised over the next two months. SABMiller owns Zambian Breweries, the country's largest clear beer and soft drinks business, as well as 70% of National Breweries, which manufactures opaque beer. Lafarge Cement has suspended operations after court bailiffs started seizing its property to execute a High Court ruling which awarded USD 13m to Citizens for a Better Environment (CBE) for environmental liabilities caused by operations of Lafarge Cement in Ndola and Kitwe. Lafarge Cement has made daily losses of about USD 600,000 over one week, after it halted operations. The action by the court Lafarge incurs losses and cement prices rise 65% 14 September 2009 African Alliance Pan‐African Securities Research 23 of 49 The Africa Weekly messengers came on the back of a high court order awarding the Citizens for a Better Environment (CBE) USD 13.2m for contributions to the Environmental Protection Fund (EPF). The Kitwe High Court made the ruling against Lafarge Cement following its failure to remit contributions towards the EPF under the Ministry of Mines as estimated by CBE. Lafarge Cement management indicated that operations which were initially suspended two weeks ago had now resumed. However, the resumption of operations came after obtaining a stay of execution (suspension of property attachment) from the Lusaka High Court, although the matter has now been referred to the Supreme Court for appeal. Production capacity currently runs at 3,500 tonnes per day, and with the losses incurred, management indicated that government would also lose out on revenue from lost sales. Cement prices increased by nearly 65% to ZMK 90,000 per 50kg bag, following the drop in supplies. (The Post, Aggregate Research) MARKET ACTIVITY The all share index dropped by 4.48%, to end the week at 2,605.99 points on turnover of ZMK 4.5bn. Three shares made gains during the week, including Cavmont Capital (+9.1%), AEL (+7.8%), and ZAMEFA (+4.1%). Seven shares fell, including Zambia Sugar (‐16.4%), and StanChart (‐2.95%). Lusaka Stock Exchange Top gainer(s) Cavmont Capital Zambia AEL Zambia ZAMEFA % chg 9.1 7.8 4.1 1,169.7 Price Top loser(s) 6.00 1,100 231.00 0.25 Zambia Sugar Pamodzi Copperbelt Energy % chg ‐16.4 ‐11.0 Price 300.00 365.00 437.00 ‐8.6 4,498.0 Top trader Celtel ZMK (m) USD (m) Total Traded LuSE ALSI ‐4.07 ZMK (m) USD (m) 0.97 Market Performance LuSE ALSI (ZMK) Source: African Alliance database Level ZMK (%) 2,606 ‐4.48 USD (%) ZMK/US 4,625 % chg 0.43 Dividends (ZMK) Company Zain Zambia Source: Lusaka Stock Exchange Year Dec 08 Type Final Amount Last cum date 20.00 ‐ 14 September 2009 African Alliance Pan‐African Securities Research 24 of 49 The Africa Weekly ZIMBABWE POLITICAL AND ECONOMIC NEWS Deadline looms for banks’ recapitalisation The first deadline for local and foreign‐owned banks to meet the new minimum capital requirements of USD 6.25m is 30 September 2009. Central Bank Governor, Gideon Gono, therefore warned banks that this deadline would not be shifted, and action would be taken against defaulting banks. However, he indicated that curators would not be appointed to manage banks that failed to raise their capitalisation. Ten banks claim to have met the requirements already, while CFX Bank and Genesis Investment Bank recently announced that they would undertake rights issues to raise USD 10m and USD 7.3m, respectively. In June 2009, the Reserve Bank of Zimbabwe sent out a circular to financial institutions outlining a phased enforcement of the minimum capital requirements. According to the plan, banks were supposed to meet 50% of the requirements by 30 September 2009, while the remainder is to be settled by 31 March 2010. Commercial banks must have a minimum capital of USD 6.25m by 30 September 2009 and USD 12.5m by 31 March 2010. Building societies and merchant banks should have USD 5m by the first deadline and USD 10m by the second deadline. Finance and discount houses are required to have USD 3.75m this year and USD 7.5m early next year. (Source: Sapa) Civil society calls on state not to withdraw from SADC Civil society groups have condemned government’s withdrawal from a regional tribunal which ruled against the legality of state‐orchestrated land seizures. The groups argued that government should either abide by the tribunal’s ruling or withdraw from the regional body entirely. A Southern African Development Community (SADC) heads of state meeting in the Democratic Republic of Congo referred the ruling, which was in favour of former white farmers, to a special summit planned for Maputo in two weeks time. Government announced on 2 September 2009, that it would no longer be bound by decisions of the Namibia‐based regional court, claiming that the treaty which led to its formation is yet to be ratified by at least 66% of member countries. However, civic groups believe an amendment to the SADC Treaty establishing the Tribunal in 2001 made the court an integral part of SADC, hence excluding it from the usual requirement for ratification by a 66% vote. The ruling came after several white farmers and a black commercial farmer approached the tribunal opposing the haphazard land reform programme launched by the government in 2000. (Source: IPS) According to a senior party aide, the Movement for Democratic Change (MDC) will not drop its demands to have the central bank governor and attorney general removed from office, as their appointments were done outside the Global Political Agreement. “This is an issue that was referred to SADC for arbitration and as far as we are concerned it is still outstanding, despite efforts by state apparatus to convince all that the matter was closed”, the party aide stated. The SADC communiqué unequivocally states that the appointments of the reserve bank governor and the attorney general will be dealt with by the inclusive government after its formation. (Source: SW Radio) The Ministry of Economic Planning and Investment Promotion said government is working on concerns surrounding BIPPA (Bilateral Investment Protection and Promotion Agreement) with South Africa, adding that the agreement would be signed soon. Clause 11 of BIPPA, which deals with the issue of land, had stalled the signing of the agreement with South Africa on fears that the provision could negate the land reform. BIPPA has become a topical issue in the country following reports that delays in signing the agreement had frozen large sums of foreign investment through potential lines of credit from the southern neighbour. The Ministry of Justice and Legal MDC still wants RBZ governor and attorney general dismissed Government still to sign BIPPA with South Africa 14 September 2009 African Alliance Pan‐African Securities Research 25 of 49 The Africa Weekly Affairs is on record as having indicated that government was prepared to sign the BIPPA with any country as long as this would not result in a reversal of land reform. The country is currently negotiating for USD 50m in lines of credit from South Africa and is also seeking the reinstatement of a ZAR 2.7bn loan facility which was suspended in 2008 at the height of the country's economic challenges. (Source: The Herald) COMPANY NEWS Delta to dispose 40% of Ariston Delta Beverages has identified a group of investors from Europe willing to buy its 40% stake in Ariston Holdings. A source familiar with the deal said the investors were using an investment vehicle based in Mauritius. The deal is now awaiting Exchange Control approval from the Reserve Bank of Zimbabwe (RBZ). Foreign investors are allowed to have up to 10% equity in listed firms, without exchange control approval, and have thus submitted their application to the RBZ. Delta is the country's largest beer and soft drinks manufacturer and acquired a controlling stake in Ariston, the largest exporter of flowers, coffee, fruit and tea, two years ago. The aim of the purchase was to tap into Ariston’s foreign exchange reserves at the height of the economic crisis, characterised by foreign exchange shortages. The company decided to sell its equity in Ariston to concentrate on its core business of beer and soft drinks production. Delta indicated two months ago that 11 investors were bidding for the stake, but it has decided to settle for the European investors. According to sources, the group of investors is not new in the region and have operations in South Africa, Botswana and Mozambique. The group also has strong ties with agricultural companies in Argentina and is involved in various agricultural projects in horticulture and beef. (Source: The Herald) ZimRe properties posts loss as rental yields decline Depressed property prices on the local market, owing to tight liquidity conditions and the absence of mortgage finance, weighed down on ZimRe Property Investments Limited’s operations. This resulted in a loss before tax of USD 385,228 for the half‐year financial period ending 30 June 2009. The group indicated that normal business transactions have been greatly affected by this crisis, with most tenants failing to meet their financial obligations. Total revenue for the six months to June was USD 1.13m, while operating profit amounted to USD 695,079. Equity investments appreciated and contributed USD 1.1m to the profit after tax, through fair value adjustments. During the period under review the group witnessed low property sales as void levels increased by 7% compared to June 2008. This is because tenants either closed down or moved out of the central business district. ZimRe management said collection performance, averaging about 50% for the period, is indicative of a depressed economy characterised by liquidity problems. "Rental payments are no longer paid in advance, but rather throughout each month, while barter trading is now considered an alternative method to settling rental obligations. During the period under review, the company's investments declined 5% h/h to USD 40.2m, whilst total assets amounted to USD 43,8m. (Source: The Herald) Fixed line operator ordered to reduce tariffs Government has directed TelOne to reduce its tariffs by at least 50% in order for subscribers to be able to afford payments. The reduction is also seen as a means to align tariff levels with regional counterparts. The directive comes after concerns that parastatals were fuelling inflation through high charges for their products. Other parastatals, such as ZESA (Zimbabwe Electricity Supply Authority), have since reduced their tariffs after customers were increasingly failing to meet their obligations. The Zimbabwe Revenue Authority and the Ministry of Finance would have to make a loan‐ loss provision on TelOne's debt following the tariff reduction. (Source: The Herald) 14 September 2009 African Alliance Pan‐African Securities Research 26 of 49 The Africa Weekly Engen and KenolKobil in Zimbabwe joint venture Engen Petroleum Limited, a South African refined petroleum products company, and KenolKobil Limited, the largest indigenous African petroleum marketing company in the East and Central African region, have signed a sale and purchase agreement to jointly acquire all the shares in Shell Zimbabwe (Private) Limited and BP Zimbabwe (Private) Limited. The agreement remains subject to a number of suspensive conditions, including approvals by the relevant Zimbabwean authorities. The acquired entities were previously operated by BP on behalf of the joint venture, which marketed under both the BP and Shell brands in Zimbabwe. With this transaction, Engen and KenolKobil have acquired the best developed assets in the oil industry in Zimbabwe, consisting of more than 75 service stations spread across the country, as well as several depots, located in Harare, Bulawayo, Mutare, Gweru and other major towns in Zimbabwe. (Source: KenolKobil filing) Investors not likely to receive dividends over medium term Economic challenges experienced since 2004, characterised by declining output and reduced profitability have constrained the ability of most companies to pay out cash dividends. The hyperinflationary environment which characterised the period meant that cash dividends were not in the interests of shareholders because the value would be eroded. Companies then resorted to rewarding shareholders with either scrip dividends or bonus share dividends. However, since the introduction of a multi‐ currency system, companies have been reluctant to re‐introduce cash dividends citing liquidity strains as well as a need to manage recovery. Most companies are likely to seek recapitalisation and would therefore require cash from its current or potential shareholders. Based on recently released financial results, very few companies will be able to pay dividends. These include companies like Econet and OK Zimbabwe, who have indicated that they are implementing expansion plans. (Source: The Herald) MARKET ACTIVITY The market witnessed a week similar to the previous week, with the Industrial index losing 1.34% on trade of USD 5.23m. Econet Wireless remained the most active counter, accounting for 18.7% (USD 0.98m) of total trade. Among the larger stocks, gains came from Kingdom Meikles (+10.87%), RioZim (+9.78%), and AICO (+8.82%), while declines were seen in African Sun (‐11.11%), Hippo Valley (‐5.56%), and Delta Corp (‐5.12%) Zimbabwe Lusaka Stock Exchange Top gainer(s) Turnall Bindura Nickel Corp Mashonaland Holdings % chg 25.0 20.0 16.7 0.98 Price Top loser(s) 0.03 0.18 0.01 0.98 Colcom Holdings PG Industries Caps Holdings % chg ‐25.0 ‐22.2 ‐20.0 Price 0.18 0.07 0.02 Top trader Econet Wireless USD (m) USD (m) Total Traded ZSE Ind ‐1.34 USD (m) USD (m) 5.23 5.23 Market Performance ZSE Ind (USD) Source: African Alliance database Level USD (%) 133.01 ‐1.34 USD (%) USD/USD 1.00 % chg 0.00 Dividends (USD) Company Zain Zambia Source: Lusaka Stock Exchange Year FY08 Type Final Amount 20.00 Last cum date ‐ 14 September 2009 African Alliance Pan‐African Securities Research 27 of 49 The Africa Weekly KENYA COMPANY NEWS KenGen to raise KES 15.0bn to support capacity expansion plans Kenya Electricity Generating Company (KenGen) opened the application for its KES 15.0bn (USD 197.0m) Fixed Rate Long‐term Infrastructure Bond. The bond offers a coupon of 12.5% over a term of 10 years. Included in the structure is a green‐shoe option that allows for increased uptake, up to a maximum of KES 10.0bn, in case of a performance rate greater than 100.0%. The structure also allows for early principal redemption from 30 April 2012, effectively reducing the average life of the bond to 6.25 years. The offer closes on 29 September. Proceeds from the offer will be used to meet KenGen’s cumulative capacity expansion plans of USD 5.0bn over the next 10 years. The capex will be incurred in three phases, with the first phase aimed at increasing its capacity by 500MW (current capacity is 1,022MW). Proceeds from the bond issue will supplement the USD 161.5m already raised to fund phase one of the project, with an estimated cost of USD 1.5bn. At the end of the 10‐year project horizon, KenGen expects to have total installed capacity of 3,000MW. Currently, with KenGen generating close to 75.0% of the country’s power, its over dependence on hydroelectric power (50.0% of its total installed capacity) leaves the country exposed to erratic weather patterns. Given a 7.0% CAGR in power consumption over the past 5 years, Kenya has a power reserve margin of less than 3.0% during peak hours. Capacity expansion, as planned by KenGen, will reduce dependence on hydro‐ generation by focusing new capex on geothermal, coal and wind projects. Another strategy is the licensing of more independent power producers (Source: Company announcements) KQ expands its reach South Kenya Airways (KQ) has launched three weekly flights to Botswana to extend its African reach and diversify from increasingly competitive international routes. Given that charges are expected to be USD 200 less, KQ’s move is a direct threat to its main competitor South African Airways (SAA) ‐ the only other commercial airline servicing Botswana. KQ beat an Ethiopian and Middle Eastern carrier to win the tender allowing for the direct flights. The introduction of the flights into Botswana also marks KQ’s strategic move to strengthen its hold on the Southern Africa region, as most countries within the region diversify their economies from natural resources to tourism and the creation of business hubs. In 1Q09, Africa accounted for 74.2% of KQ’s total passenger traffic of 639,348. Over the same period, capacity to the Southern Africa region registered a capacity growth of 7% y/y, following increased frequencies to Johannesburg from two to three times daily (source: Nation Newspaper) 14 September 2009 African Alliance Pan‐African Securities Research 28 of 49 The Africa Weekly MARKET ACTIVITY Following reduced trading at the beginning of the week, weekly turnover declined to KES 556.0m from KES 806.3m. During the week, CFC Stanbic and NIC recorded rare large block trades, with both counters ending the week weaker. Most prices ended the week lower pushing the NSE 20 share and NSE All Share indices down by 2.8% and 1.5%, respectively. Pan‐African Insurance was the week’s top gainer edging up 4.0%. Crown Berger reversed its previous week’s gain of 19.8%, to close the week 11.0% lower. Trading in the coming week is expected to remain low key, due to selective trading by majority of foreign investors and minimal participation by local institutional investors. Nairobi Stock Exchange Top gainer(s) Pan Africa Insurance Safaricom Kenya Oil % chg 4.0 1.4 1.0 177.7 Price Top loser(s) 52.00 3.70 51.50 2.34 Crown Berger EA Cables Access Kenya % chg ‐11.0 ‐8.0 Price 28.25 20.25 21.00 ‐6.7 556.0 Top trader EABL KES (m) USD (m) Total Traded NSE 20 ‐2.23 KES (m) USD (m) 7.32 Market Performance NSE 20 (KES) Source: African Alliance database Level KES (%) 3,096 ‐2.82 USD (%) KES/USD 75.77 % chg 0.6 Dividends (KES) Company NIC Bank Jubilee Holdings Kenya Airways East African Breweries Bamburi Cement Limited Mumias Sugar Limited Source: Nairobi Stock Exchange Financial Year Dec 09 Dec 09 Mar09 Jun 09 Dec 09 Jun 09 Type Interim Interim Final Final Interim Final Amount Last cum date 0.50 16 Sep 09 1.00 23 Sep 09 0.10 25 Sep 09 5.55 29 Sep 09 1.50 29 Sep 09 0.40 06 Nov 09 14 September 2009 African Alliance Pan‐African Securities Research 29 of 49 The Africa Weekly RWANDA POLITICAL AND ECONOMIC NEWS World Bank ‘Doing business report’ ranks Rwanda 67th Rwanda did not only achieve the double digit ranking it was aiming for in the 2010 World Bank 'Doing Business Report', but the nation also emerged as the top reformer in establishing a conducive business environment. It took a giant leap from its previous ranking of 143 to 67 out of 183 countries. The Doing Business 2010 Report named "Reforming through Difficult Times" was officially unveiled at the World Bank country office by Penelope Brook, the acting vice president of Financial and Private Sector Development at the World Bank‐IFC. "We have seen 67 reforms in 29 Sub‐Saharan economies this year and we get to celebrate the fact that we have two African countries in our top ten reformers. Rwanda is the top reformer worldwide," Penelope Brook said. Out of the 10 indicators, Rwanda registered massive reforms (the best globally) in: starting a business, employing workers, dealing with construction permits, registering property, getting credit, protecting investors, trading across borders and closing business. It also emerged the most consistent reformer, followed by Mauritius, which is 17 overall from 24 in the previous report. Reforms in the company law passed this year, simplifying the start‐up process from 14 days to just 2 days, and time taken to register property, largely boosted Rwanda's new ranking. Also outstanding is the improvements in access to credit and protecting investors, which were all strengthened by the new company law. Alongside the company law is the new labour law, security interest in movable property and the law on commercial recovery and settling of issues arising from insolvency helped Rwanda rank highly. The business reforms are part of the government's wider efforts to promote Rwanda as a business and investment destination, in order to drive the growth of the private sector and generate wealth. The prime minister noted that while achieving the double digit is very rewarding, Rwanda must remain focused on the implementation of sustainable reforms and ensuring that they trickle down to all administrative levels. He also expressed the willingness and determination of the government to continue implementing major reforms, bearing in mind the competitiveness of the countries, adding that Rwanda will aim even higher in the next rankings. In the region, Rwanda again emerged the most favourable place to do business with its neighbours ranking behind it. Kenya is the nearest ranking at 95, Uganda 112, Tanzania 131, Burundi 176 and DRC a lowly 179. (Source: AllAfrica.com) COMPANY NEWS Bralirwa IPO gains momentum Rwanda is set to kick‐off its divestment programme through the capital market, following government's official communication that it will float 25% in Bralirwa on the country's bourse, making it the first Initial Public Offer (IPO) in Rwanda's history. No official date has been set for the listing of Rwanda's leading beer and soft drink manufacturer, but government officials expect it could be at the end of this year or early next year. "Government of Rwanda wishes to offer to the public 25% of Bralirwa shares through an IPO on the Rwanda Over The Counter (OTC) market under the on‐ going privatisation programme and the need to develop the capital market in Rwanda," a statement inviting professional firms to express interest for the provision of advisory services for the IPO states. 14 September 2009 African Alliance Pan‐African Securities Research 30 of 49 The Africa Weekly Government holds 30% in Bralirwa, while Heineken is the majority shareholder with 70%. The Ministry of Finance and Economic Planning said in a statement that government is seeking to hire a lead sponsoring stockbroker, co‐sponsoring broker, legal advisor, public relations firm, receiving bank, share registrar and a reporting accountant. The ministry did not disclose the details of Bralirwa's IPO, saying that they must manage market expectations. The ministry said the government is targeting four more companies, which include; cement manufacturer Cimirwa, insurer Sonarwa, Commercial Bank of Rwanda (BCR) and MTN Rwanda, a local unit of MTN South Africa for listing. The Rwanda OTC market currently lists three treasury bills, BCR corporate bond and one cross listing from Kenya Commercial Bank Group, which has a subsidiary in Rwanda. (Source: AllAfrica.com ) MARKET ACTIVITY Both the equity and bond OTC market remained quiet through the week to Thursday. In the bond market there were bid/ask mismatches with bonds worth Rwf 2bn on offer during the week. For weeks this has been the situation making bond trading illiquid. 14 September 2009 African Alliance Pan‐African Securities Research 31 of 49 The Africa Weekly TANZANIA POLITICAL AND ECONOMIC NEWS Tanzania exports to Kenya on the rise Tanzanian exports to Kenya have registered a 17.0% y/y increase in value, narrowing the trade balance gap between the two countries (Kenya’s export to Tanzania was up 27.0% y/y). Tanzanian revenue from exports to Kenya has grown to USD 95.8m in 2008 compared to USD 86.6m in 2007. (Source: All Africa) According to the Bank of Tanzania, Zanzibar recorded a USD 5.8m (TZS 7.54bn) deficit in its current account during the year ending June 2009, compared with a surplus of USD 8m in the corresponding period last year. This was mainly attributable to a rise in the value of imports and a slowdown in donor grants. Imports of goods and services grew (+10.9% y/y) to USD 162.8m from USD 146.8m, while exports increased to USD 119.2m (+17.1% y/y). Net inflows amounted to USD 41.9m, while the trade account registered a deficit of USD 74.9m. (Source: All Africa) Tanzania’s national debt up 2% According to the Bank of Tanzania's July monthly economic review, the national debt stock increased 1.9% in June to about TZS 11trn. This was attributable to the rise in exchange rate fluctuations, accumulation of arrears on external debts, new external loans and issuance of new government bonds on domestic debts. According to the bank, out of the total debt stock external debt was 79.5%, while domestic debt was 20.5%. Out of total domestic debt, government securities accounted for 99.6% and the remaining 0.4% was unsecuritised debt. (Source: All Africa) Tanzania Energy and Water Utilities Regulatory Authority (EWURA) plans to ban the importation of leaded petrol and leaded diesel. The move comes after researchers' reports indicated the many health risks associated with such fuels. (Source: All Africa) Zanzibar current account deficit up to TZS 7.54bn Tanzania plans to ban leaded petrol and diesel MARKET ACTIVITY The DSE witnessed trade to the value of TZS 464.2m, the bulk of this going through Twiga, which traded flat, and accounted for 38.4% (TZS 178.3m) of the week’s total trade. The index lost 0.11%, as a result of the decline in CRDB (‐1.5%), the week’s only price move. Dar es Salaam Stock Exchange Top gainer(s) No gainers % chg 178.3 Price Top loser(s) CRDB Bank 0.14 DSE 0.35 % chg ‐1.5 Price 167.50 Top trader TWIGA TZS (m) USD (m) Total Traded Level 1,213 TZS (m) USD (m) 464.2 0.35 Market Performance DSE (TZS) Source: African Alliance database TZS (%) ‐0.11 USD (%) TZS/USD 1,306 % chg 0.46 14 September 2009 African Alliance Pan‐African Securities Research 32 of 49 The Africa Weekly UGANDA POLITICAL AND ECONOMIC NEWS Protests over Kabaka’s tour disrupt Kampala Violent protests erupted in the city centre and outskirts of Kampala over government’s refusal to allow the Kabaka of Buganda to visit Bugerere County in Kayunga district, a constitutionally recognised part of the Buganda kingdom. Business came to a standstill after violence and looting erupted in most parts of downtown Kampala and the outskirts of the city. The visit, scheduled for Saturday, was later cancelled by the Kabaka over the escalating skirmishes and violence. By the close of the weekend, more than 21 people had lost their lives and at least 96 people has been injured. Five radio stations also had their operating licenses suspended by the Uganda Broadcasting Council over allegations of inciting violence. (Source: The Weekly Observer, The New Vision) High food prices driving poverty ‐ FAO High food prices amidst an extended drought period and high inflation are worsening the poverty situation and pushing rural households to hunger, a report by the United Nations Food and Agricultural Organisation states. Despite a consensus decline in international prices, current food prices remain markedly above pre‐crisis levels as costs of basic staple foods have surged in most parts of the country. High unemployment and reduced wages are also fuelling the problem further as 80% of rural incomes are spent onfood. (Source: The New Vision) Lawmakers have called for openness in the management of the country’s petroleum resources and have ordered the government to present all production‐sharing agreements it has signed with prospecting companies to date. The calls followed debates in parliament during scrutiny of the Ministry of Energy’s budget proposals for the financial year 2009/2010. The Ministry of Energy has in the past stated that release of the agreements could jeopardise the interests of both government and the oil companies. Commercial quantities of oil were first discovered in Uganda during 2006. The government has reportedly signed production‐sharing agreements with top exploration companies, although details on the signed deals remain vague. (The Daily Monitor) Shilling strengthens amidst foreign flows The Uganda shilling firmed against the US dollar last week, buoyed by increased foreign inflows from foreign investors and international agencies, coupled with muted corporate demand for the greenback. By close of the week, the unit was quoted at 1952/1962 bid‐ask compared to the 2060/70 bid‐ask levels seen on (Wednesday) 2 September. The week also marks the first time the currency has traded below the UGX 2,000 mark since the start of the year. Market players attribute the firming trend of the currency to stimulus packages in European and American financial markets, which are boosting foreign investment in the market. The country lost approximately USD 642bn (UGX 300m) during the peak of the financial crisis as offshore investors exited the financial system last year. Currency dealers expect the shilling to hold steady at present levels. (Source: The New Vision) Lawmakers demand transparency in oil management COMPANY NEWS East Africa cement producers battle cheap imports In East Africa, Lafarge's Hima Cement faces new struggles as cheaper cement imports infiltrate the market, the company said. Hima, the largest manufacturer of cement in Uganda, has said that imports issues are happening most in Uganda and Tanzania where construction continues to boom. 14 September 2009 African Alliance Pan‐African Securities Research 33 of 49 The Africa Weekly Cheap imports are believed to be arriving from China, Thailand, India, and Egypt. Along with lower prices, often below market price, comes substandard cement. Despite a profitable first half in 2009, Hima is worried that without the aid of the government, who controls import requirements, they may face a grim second half of the year. According to Hima General Manager David Njoroge, the reason “cheap cement is flooding the market is because the East African governments, mid last year, removed cement from the sensitive list of products that need to be protected from competition, and reduced the common external tariff from 55% to 25%.” The results are price fluctuations and businessmen looking to cut costs with their construction projects. Already, cement production has been suspended at two of the three companies in Tanzania and employees have been put on leave. Without assistance, the same situation could happen in Uganda – leaving 1500 people unemployed and eliminating the tax revenue contributions the industry provides. (Source: Cemweek) MARKET ACTIVITY The USE All Share Index declined 2.21% to close the week at 750.36 points. Two shares lost ground, namely New Vision (‐3.75%), and Stanbic (‐3.0%), which was also the top traded counter. Stanbic accounted for 81.8% (UGX 151.9m) of total market turnover of UGX 185.9m Uganda Securities Exchange Top gainer(s) No gainers ‐‐ ‐‐ % chg Price Top loser(s) New Vision Stanbic Uganda ‐‐ 0.08 USE ALSI ‐0.72 % chg ‐3.8 ‐3.0 Price 770.00 160.00 151.9 Top trader Stanbic Uganda UGX (m) USD (m) Total Traded Level UGX (%) 750.36 ‐2.21 UGX (m) USD (m) 185.9 0.09 Market Performance USE ALSI (UGX) Source: African Alliance database USD (%)UGX/USD 1,965 % chg 1.5 Dividends (UGX) Company Stanbic Uganda Source: Company Reports Financial Year Jun 09 Type Interim Amount Last cum date 5.27 03 Sep 14 September 2009 African Alliance Pan‐African Securities Research 34 of 49 The Africa Weekly BRVM (Mali, Burkina Faso, Benin, Guinea Bissau, Togo, Côte d’Ivoire, Senegal, Niger) POLITICAL AND ECONOMIC NEWS New Guinea‐Bissau president sworn in Guinea‐Bissau's newly‐elected president, Malam Bacai Sanha, was sworn in last Tuesday, receiving congratulations from UN Secretary‐General Ban Ki‐moon and UN peace official Maria Luisa Viotti. At the inauguration ceremony, Sanha vowed to work with the government to restore peace and stability in the country, reform the military and boost the economy. Ban Ki‐moon voiced his confidence that "with the support of international partners, the people and leaders of Guinea‐Bissau will continue their efforts to strengthen democracy and foster respect for the rule of law." Viotti, president of the commission for the UN’s peace consolidation in Guinea‐Bissau, hailed the return to constitutional order in Guinea‐Bissau last Monday. The United Nations also unveiled programmes to help Guinea‐Bissau to revitalise its economy, conduct defense and security reforms and increase employment among young people. (Source: Xinhua) ECOWAS lawmakers move against tenure elongation in Niger At least 11 members of the ECOWAS parliament have indicated their intention to mount pressure on President Mamadou Tanja of the Niger Republic to return to the path of democracy. The regional lawmakers want to use the occasion of the second session of parliament, which opened in Abuja last Monday, to call on Nigeria and the international community to impose sanctions on the West African nation. Tandja had in May dissolved the Nigerien parliament and constitutional court and organised a referendum with the intention of amending the 1999 Constitution and lengthening his tenure. Eight pro‐democracy ministers, who protested and resigned from the cabinet, were replaced by the president. (Source: This Day) Senegal to receive USD 540m development grant The board of directors of the US Millennium Challenge Corporation (MCC), chaired by Secretary of State Hillary Rodham Clinton, approved a five‐year USD 540m Compact grant to Senegal to reduce poverty through economic growth. The Compact, according to a 7 September MCC announcement, will focus on road rehabilitation and food security initiatives in some of the poorest regions of Senegal. (Source: US Fed News) Members of the Alliance of Cocoa Producing Countries (COPAL) met in the Togolese capital Lome last week to discuss the revision of their statutory documents and the problems in the international market. COPAL comprises Brazil, Cote d'Ivoire, Cameroon, Ghana, the Dominican Republic, Sao Tome and Principe, Nigeria, Sierra Leone, Malaysia and Togo. The meeting centred on the revision of the Abidjan Charter before further discussions are held later in London on a new international accord on Cocoa. The statutory documents of the alliance were formulated in 1962. According to the secretary general of COPAL, Soda Ebai, the current prices of between USD 2,007 and USD 2,009 per tonne on the New York market could be improved. "We must at this level, improve the quality instead of developing new plantations which, after three or four years, will increase global production leading to a drop in prices," the official said. In Togo, the cocoa industry is confronted by many difficulties, among them the menace of the swollen shoot disease and the reduction in production from 20,000t to 8,000t. (Source: Xinhua) Cocoa producing countries discuss charter revision in Lome 14 September 2009 African Alliance Pan‐African Securities Research 35 of 49 The Africa Weekly UN mission chief in Cote d'Ivoire meets IMF delegation The special representative of the United Nations secretary general in Cote d'Ivoire, Choi Young‐jin, received a delegation from the International Monetary Fund (IMF) on Friday. Head of the delegation, Doris Ross, said she had come to discuss with Choi the speeding up of the process to end the crisis, a UN official disclosed. Ross said she was satisfied with "what the United Nations Operations in Cote d'Ivoire (UNOCI) was doing to totally unify the whole of Cote d'Ivoire." On the IMF's role in ending the crisis, Ross said the world financial institution had and would continue to provide economic aid to the government of Cote d'Ivoire, especially in terms of debt reduction. She was quoting as saying that the PPTE initiative for the reduction of debt will go on under some conditions that the government must fulfil with the help of the World Bank. In March, the IMF approved a USD 565.7m loan in an effort to help alleviate poverty in the country. The decision will enable the West African state to immediately draw the equivalent of USD 159.348m of the IMF's special drawing rights (SDR) (about USD 241m), it said. The African Development Bank (AfDB) also offered XOF 64bn (USD 128m) to Cote d'Ivoire in March to aid the country's development programme. The UN Security Council has adopted resolution 1865 to reduce the UNOCI presence from 8,115 to 7,450, citing "increased stability" in Cote d'Ivoire, where the 29 November presidential election is expected to end the years of crisis. (Source: Xinhua) Malian customs collect more than USD 48 in August Mali’s customs authority has collected more than XOF 24bn (USD 48m) in August, ensuring a profitable performance for the West African country's treasury, the customs management said on Thursday. All departments of the customs achieved their set targets in the month, it declared. "Practically, all structures have done their best this year," said one of the managers in charge of collections. Mali pegs the monthly customs collections at XOF 22.2bn this year. The country is eyeing a yearly target of XOF 260bn, in anticipation of a rise to XOF 280bn in 2010. "If the momentum we have can be maintained, then I think that the achievement of our yearly target will be possible. The XOF 260bn FCFA mark should be attained," the director general of the customs said. "This is good news for the public Treasury which suffered a cash crisis recently," he added. (Source: Xinhua) MARKET ACTIVITY Trade was dominated by Sonatel, which accounted for 70% (XOF 1.0bn) out of the XOF 1.5bn that changed hands. The index fell 0.96% on the back of price declines in SOLIBRA (‐7.5%), SAPH (‐10.71%), and SOGB (‐8.16%). Small gains in some of the large markets could not prevent the index from closing in the red. Bourse Regionale des Valeurs Mobilieres Top gainer(s) BICI CI SGB Onatel BF % chg 4.5 2.8 1.9 1,086.2 Price Top loser(s) 29,990 37,000 49,900 2.39 SMB SAPH SOGB % chg ‐18.2 ‐10.7 Price 22,005 12,500 16,990 ‐8.2 1,552.6 Top trader Sonatel SN XOF (m) USD (m) Total Traded IC Comp 1.0 XOF (m) USD (m) 3.42 Market Performance IC Comp (XOF) Source: African Alliance database Level XOF (%) 135.62 ‐0.96 USD (%) XOF/USD 449.54 % chg 1.9 14 September 2009 African Alliance Pan‐African Securities Research 36 of 49 The Africa Weekly GHANA POLITICAL AND ECONOMIC NEWS COCOBOD revises its target for 2010‐11 The CEO of the Ghana Cocoa Board (COCOBOD) has said that Ghana will miss its target of producing 1mt of cocoa a year in the 2010‐11 season. COCOBOD has revised its target to 1mt a year by the 2012‐13 season. COCBOD is putting in place measures to encourage production, including planting new trees, expanding cultivation, and boosting fertiliser subsidies; and is also considering social welfare programmes. The current season’s output is likely to increase by 30,000t to 680,000t. Meanwhile, COCOBOD is yet to set a target for the 2009‐10 harvest. Government is likely to increase the price it pays to farmers. (Source: Bloomberg) The Bank of Ghana has introduced an electronic system for cheque clearing and an automated payment process. The new Cheque Codeline Clearing, which becomes operational this week, replaces the manual paper credit clearing system. Mr Fred France, CEO of the Ghana Interbank Settlement System, explained that the new clearing system will involve the scanning of the front and back images of a cheque and the magnetic ink character recognition codeline data. Mr France added that the new system will reduce the clearing cycle, ensure timely availability of funds to beneficiaries, and ensure a better verification process. (Source: Businessweek) The Ghana Investment Promotion Council (GIPC) has released its quarterly report showing that foreign direct investment (FDI) for 2Q09 increased by 74.1% from USD 53m a year ago to USD 92.32m. The GIPC also reported that 83 new projects, valued at USD 112m, were registered during the quarter compared with 53 a year ago. Wholly‐owned foreign projects accounted for 67% of the registeredprojects during the period, while joint ventures between foreign owners and their Ghanaian partners made up the remaining 32.53%. (Source: Businessweek) The chairman of the review committee of the Ghana Telecom (GT) Sales and Purchases Agreement (SPA) between the government of Ghana and Vodafone in 2007 has presented its report to the minister of communications. The SPA involved the sale of 70% shares in GT to Vodafone on a cash‐free and debt‐free basis for USD 900m. The minister said the government would be guided by the recommendations of the report in its decision about the SPA. The minister noted that even though government's decision on the Vodafone SPA may have major ramifications on foreign investment in the country, the government would place the strategic interest of the public above all other considerations. (Source: Ghana News Agency) Electronic cheque clearing introduced in Ghana FDI for 2Q09 increased by 74.1% Government receives committee’s report on sale of GT to Vodafone COMPANY NEWS Following approval from the Securities and Exchange Commission (SEC) Ecobank Ghana Limited (EBG) announced that the ex‐rights and qualifying dates for its GHS 79.5m rights issue have been set as Monday 14 September and Wednesday 16 September 2009, respectively. Only shareholders on the Register of Members of EBG at the close of business on Wednesday 16 September will therefore be entitled to exercise their rights under the offer. Under the offer, 28,597,122 shares are available to EBG shareholders at GHS 2.78 per share in the ratio of 1 new share for every 7 existing shares held as at Wednesday, 16 September 2009. The offer is therefore at a discount of 10% to the 3 September 2009 price of EBG shares on the Ghana Stock Exchange (GSE). 14 September 2009 African Alliance Pan‐African Securities Research 37 of 49 The Africa Weekly EBG seeks to undertake the offer to raise capital to meet additional capital requirements, fund its branch expansion project and implement its 5‐year strategic plan of increasing its market share of customer deposits, through increased coverage, proximity and quality of services to clients. (Company filing) SG‐SSB Limited announces rights offer details SG‐SSB Limited (SG‐SSB) announced its renounceable Rights Offer of 57,500,000 ordinary shares of no par value at GHS 0.40 per share to qualifying shareholders. This represents a 33% discount on the current market price of GHS 0.60 (as at 8 September 2009). The offer will be made in a ratio of one (1) new share for every 5 shares held. The Ex‐Rights Date has been set as Wednesday, 23 September and the Qualifying Date as Friday, 25 September 25, 2009. Consequently, only shareholders on the Register of Members of SG‐SSB at the close of business on Friday, 25 September 2009 will be entitled to exercise rights under the offer. Investors purchasing SG‐SSB shares on or after Wednesday, 23 September 2009 (ex‐rights date) shall not qualify to exercise Rights under the offer. The proceeds from the offer are expected to enable the bank to meet the new minimum capital requirement set by the Bank of Ghana (BOG), enhance its competitive edge, deal with new challenges, and take advantage of the expectant growth in the economy. (Source: Company filing) MARKET ACTIVITY The GSE All‐Share Index continued its upward trend for the fifth consecutive week, recording a marginal increase of 0.41%, to close at 6,502.98 points, representing a ytd loss of 37.7%. During the week under review the GSE recorded low volumes compared to the previous week. Trades were recorded in twenty equities. Ghana Commercial Bank (GCB) dominated the week’s trading activity accounting for 32.4% of total value traded. The larger cap stocks held firm, with no losers among the top 20 shares. Only Benso Oil Palm (‐13.8%), and Tansol (‐9.1%) lost ground in the week. Ghana Stock Exchange Top gainer(s) Ghana Oil SIC Insurance UT Financial Services % chg 12.5 10.0 5.9 0.16 Price Top loser(s) 0.18 0.33 0.18 0.11 Benso Oil Palm Transol ‐‐ % chg ‐13.8 ‐9.1 Price 0.50 0.10 Top trader Ghana Commercial GHS (m) USD (m) Total Traded GSE ALSI 0.7 GHS (m) USD (m) 0.49 0.34 Market Performance GSE ALSI (GHS) Source: African Alliance database Level GHS (%) 6,503 0.41 USD (%) GHS/USD 1.46 % chg 0.26 14 September 2009 African Alliance Pan‐African Securities Research 38 of 49 The Africa Weekly NIGERIA POLITICAL AND ECONOMIC NEWS New reports indicate that most banks may require recapitalisation The financial examination report of the CBN (Central Bank of Nigeria) may have found high non‐performing loans in 11 of the 14 banks audited in the second phase of the current exercise. The development which could result in the banks being ordered to seek recapitalisation comes on the back of harshly worded exchanges between the central bank and key shareholders of the affected banks. There were strong indications last week that the 11 banks would raise funds from the bond market, even as moves from CBN suggested that some foreign investors were being encouraged to acquire the local banks. One of the banks, which has been recording operational losses in the last three months, has been asked by CBN to make further provisions of NGN 150bn in its accounts to address its bad debt loan portfolio. The profile of the remaining 10 were said to be similar, with indications that some of their CEOs and executive directors would also be dismissed soon. (The Guardian) The financial examination report of the CBN (Central Bank of Nigeria) may have found higher non‐performing loans in 11 of the 14 banks audited in the second phase of the exercise. The development which could result in the banks being ordered to seek recapitalisation comes on the back of harshly worded exchanges between the central bank and key shareholders of the affected banks. CBN promises to meet investors following the Governor’s China trip According to the Nigerian Stock Exchange, the CBN has concluded plans to meet with stockbrokers and investors on 16 September 2009, following the Governor’s trip to China. The meeting will focus on discussion regarding the troubled banks and the banking sector. A similar meeting will follow that and banks’ shareholders would be invited. (Source: Vanguard) The CBN indicated that it has injected NGN 105.6bn into the economy, following the maturity of treasury bills previously issued over 30 to 182 day periods. The transactions were conducted through the central bank’s open market operations and primary market auction. (Source: Vanguard) The CBN’s Basel Committee on Banking Supervision has called for higher levels and quality of tier 1 capital for the country’s troubled banks’ sector. The call was part of measures taken by the Committee two weeks ago, to manage regulation, supervision and risk management of the banking sector. Tier 1 capital is the core measure of a bank’s financial strength from a regulator’s perspective and is composed of core capital and reserves. The Committee also proposed the introduction of a leverage ratio as a supplementary measure to the Basel II risk‐based framework. (Source: Vanguard) The SEC (Securities and Exchange Commission) has exonerated the Director‐General of the NSE (Nigeria Stock Exchange) Ndidi Okereke‐Onyiuke, over her alleged role in the recent crisis in the banking sector that saw five CEOs and executive directors dismissed, following a report indicating it was satisfied with her response to the query. According to SEC, issues that were raised, which Okereke‐Onyiuke responded to satisfactorily, bordered on alleged involvement of NSE council members in the mismanagement of credits in the affected five banks, the technical suspension placed on quoted companies besides the affected five banks and her role in the debts owed to the affected banks by Transcorp (Transnational Corporation Plc) of which she is the chairman. "All the issues we raised have been addressed by her and we are satisfied by her response," according to SEC management. (Source: ThisDay) NGN 106bn Treasury bill maturities paid out CBN supervision committee recommends higher capital adequacy of banks SEC queries and clears NSE head 14 September 2009 African Alliance Pan‐African Securities Research 39 of 49 The Africa Weekly Nigeria aims for 100% tele‐ density Vice President Goodluck Jonathan declared that the country’s tele‐density, which currently stands at 48%, will reach 100% by 2020. Speaking at the Africa Telecom Development Summit, he claimed that the country has over the past 10 years been experiencing sustained double digit growth in excess of 30% per year. “Although Nigeria has recorded a remarkable milestone in telecom development, there is still a long way for us to go to achieve universal service in the country.” The vice president indicated that the information and communications sector has continued to grow and that government had devoted numerous resources towards the creation of a stable policy and regulatory environment to support private investment in the sector. (Source: Daily Independent) According to the Senate Committee on Banking, Insurance and other Financial Institutions, the NGN 420bn bail‐out of the troubled banks did not require appropriation by the National Assembly. Speaking to journalists, the Committee indicated that the controversy over the propriety of the bail‐out was appropriate and should not even be queried. (Source: ThisDay) According to FMI (Financial Market Intelligence), the country is losing money by holding US dollar reserves, which has been depreciating on international foreign exchange markets. The FMI in its recent report states that the dollar has lost 12% since March 2009, against an index comprising the European Union euro, Japanese yen and four other major currencies. As at June 2009, Nigeria’s reserves stood at USD 43.5bn, and using the purchasing power parity implies that this amount can only fund imports valued at USD 38.6bn. Alternatively, the reserves have lost USD 5.2bn in real terms, and if the US dollar depreciation persists, reserves would decline by another USD 5bn by about December 2009. (Source: Vanguard) Senate concludes that banks’ bail‐out did not require approval State losing out on US dollar reserves owing to depreciation of the hard currency COMPANY NEWS Unrest at Wema Bank following restructuring A major crisis is looming at Wema Bank, following the dismissal of about 200 staff members. The restructuring exercise meant to improve efficiency at the bank has resulted in affected staff pointing out that due process had not been followed. The dismissal also required that the staff repay all loans immediately, a move which was seen as fuelling unrest among those affected. (Source: Nigerian Tribune) 7‐UP Bottling Company released FY09 results to 31 March with revenue increasing 14% y/y to NGN 34.9bn and profit after tax declining 5% y/y to NGN 1.5bn. The profit after tax margin declined 87bp to 4.4%. (Source: Nigerian Stock Exchange) Northern Nigeria Flour Mills released FY09 results to 31 March with revenue increasing 55% to NGN 8.5bn. Profit after tax increased 310% to NGN 263.3m while the profit after tax margin improved by 204bp to 3.1%. (Source: Nigerian Stock Exchange) 7‐UP Bottling Company’s profit after tax declines 5% in FY09 Northern Nigeria Flour Mills reports 310% increase in profit after tax in FY09 MARKET ACTIVITY Turnover of NGN 13.6bn on 27,713 deals was recorded for the week, which saw the All‐Share Index lose 1.75% to close at 21,483.02 points. The NSE‐30 Index dropped by 1.2% to close at 814.41 points. The Banking sub‐sector was the most active during the week, with 1.05 billion shares worth NGN 8.56bn exchanged by investors. Activity in the subsector was largely driven Zenith Bank, First Bank of Nigeria and UBA. Trading in the shares of the three banks accounted for 42.45% of the sub‐sector’s turnover. The Insurance sector, boosted by activity in the shares of Universal Insurance Company and Continental Re‐Insurance, followed on the week’s activity chart with a turnover of NGN 285.8m. 14 September 2009 African Alliance Pan‐African Securities Research 40 of 49 The Africa Weekly Four equity prices were adjusted for dividend and/or bonus issues as recommended by the Board of Directors. Union Diagnostics & Clinical Services was adjusted for dividend of NGN 0.08 per share and a bonus share issue of 1 for 5. University Press was adjusted for a dividend of NGN 0.40 per share and bonus share issue of 1 for 4. NEM Insurance was adjusted for a dividend of NGN 0.04 per share. Royal Exchange was adjusted for a bonus share issue of 1 for 10. Among the larger cap stocks, FCMB led the way up, gaining 11.46% followed by GT Bank (+9.64%), Zenith (+7.57%), Benue Cement (+7.48%) and UBA (+7.28%). Decliners among the large caps included Union Bank (‐22.37%), Access Bank (‐22.26%), Intercontinental Bank (‐18.12%) and Ecobank Nigeria (‐9.71%). Nigerian Stock Exchange Top gainer(s) First City Monument Guaranty Trust Bank Zenith Bank % chg 11.5 9.6 7.6 2,561.4 Price Top loser(s) 5.35 13.19 11.51 16.6 Union Bank Nig. Access Bank Oceanic Bank Intl % chg ‐22.4 ‐22.3 Price 7.98 5.03 3.30 ‐18.3 13,581.6 Top trader Zenith Bank NGN (m) USD (m) Total Traded NIGSE ‐1.82 NGN (m) USD (m) 88.1 Market Performance NIGSE (NGN) Source: African Alliance database Level NGN (%) 21,483 ‐1.75 USD (%) NGN/US 154.28 % chg ‐0.07 Dividends (NGN) Company Guinness Nigeria 7‐UP Bottling Company Northern Nigeria Flour Mills Adswitch Roads Nigeria Royal Exchange Source: Nigerian Stock Exchange Financial Year Jun 09 Mar 09 Mar 09 Apr 09 Mar 09 Dec 08 Type Final Final Final Final Final Bonus Amount Last cum date 7.50 1 Oct 09 1.50 25 Sep 09 0.40 18 Sep 09 0.04 9 Sep 09 0.40 1 Oct 09 1 for 10 4 Sep 09 14 September 2009 African Alliance Pan‐African Securities Research 41 of 49 The Africa Weekly EGYPT POLITICAL AND ECONOMIC NEWS Urban and nationwide inflation drop to 9.0% and 8.4% respectively Egypt’s inflation rate fell to its lowest level since 2007 in August, opening the way for the central bank to cut interest rates for the sixth time this year. Urban inflation, the benchmark that the central bank monitors, slowed to a 20‐month low of 9.0%, from 9.8 percent the previous month, according the Cairo‐based Central Agency for Public Mobilisation and Statistics (CAPMAS). The nationwide inflation rate fell to 8.4% from 9.7%. A 50bp rate cut is likely, according to economists. (Source Bloomberg) Revenues from the Suez Canal reached USD 372.0m in August 2009, declining by 26.3% compared to USD 504.5m recorded in August 2008. The figure represents the highest revenue from the canal during CY09. Total revenues from the canal in FY09 amounted to USD 4.7bn. (Source: Bloomberg) The Central Bank of Egypt (CBE) indicated that net foreign reserves grew by 4.0% in August 2009 to USD 32.9bn, compared to USD 31.6bn reported a month earlier. The figure represents a 5.5% decline when compared to USD 34.8bn reported in the same period a year earlier. (Source: Pharos, Reuters) The Central Bank of Egypt (CBE) has accepted bids for bills amounting to EGP 3.0bn at rates between 9.7% and 9.8%. The bills are for issue on 15 September 2009 and will mature on 15 June 2010. (Source: Pharos, Reuters) The Minister of Trade and Industry announced that the government is currently considering offering new cement licenses if growth in local demand continues to outpace consumption. He added that growth in cement consumption for 2009 was previously estimated at 10.0%; currently growth in local consumption is between 25.0% and 35.0%. Last year the ministry approved 14 cement plants as demand for cement rose on heavy activity in the construction and real estate sectors.(Sourece: Pharos, Reuters) The Minister of Trade and Industry announced that the government is targeting 15.0% growth in exports during FY10, while EGP 4.0bn (USD 724.0m) will be allocated in the current budget to support exports. According to the Central Bank of Egypt, exports declined in FY09 by 14.3% to USD 25.2bn owing to the global economic slowdown. (Source: Pharos, Bloomberg) Revenues from Suez Canal at a high for CY09 CBE reports 4% growth in foreign reserves CBE to accept bids for EGP 3.0bn in bills Minister of Trade and Industry consider new cement licences Minister of trade and industry targets 15.0% exports growth in FY10 COMPANY NEWS France Telecom appeal in the Mobinil saga dismissed An independent judicial committee has dismissed France Telecom's (FT) appeal of the Capital Market Authority's rejection of FT's third offer to acquire all outstanding shares of Mobinil. The committee supported the authority's decision based on the principle of equal opportunities. In an updated story, FT will appeal to the Egyptian Court within the next ten days against the rejection of its offer. FT stated if the Egyptian court rejects its offer it will seek international arbitration. (Source: Pharos, Bloomberg, Al Shourk) Orascom Telecom Holding (OTH) has turned down two offers for its fixed line operation in Algeria, Lacom, since the offers did not meet OTH's price expectations. The company stated that it would delay the sale of the unit until market conditions improve. Lacom is jointly owned by OTH and Telecom Egypt (TE). On another note, OTH is considering the sale of its internet service provider, Linkdotnet in November Update on the sale of OTH subsidiaries Lacom, and Linkdotnet 14 September 2009 African Alliance Pan‐African Securities Research 42 of 49 The Africa Weekly 2009. This follows bids submitted by Mobinil and TE to acquire the company (Source: Pharos, Al Masry Al Youm) OCI declare USD 0.80 cash dividend Orascom Construction Industries (OCI) will distribute a cash dividend of USD 0.80 per share. Local shareholders will be entitled to the dividends until 27 September and the payment date will be on 30 September 2009. GDR holders are entitled to the dividends until 25 September and the payment date is for 2 October 2009. (Source: Pharos, Company Press Release) Telecom Egypt (TE) and Vodafone Egypt (VFE) have signed an agreement for the provision of wholesale services. The deal entitles VFE to utilise TE's international gateway services to transit all of its customers' incoming and outgoing international traffic. The agreement, which builds on a pre‐existing relationship between both companies, also allows VFE to rely on the incumbent's extensive domestic network for its infrastructure leasing needs. The deal will become effective immediately and is expected to represent a total value for TE of around EGP 4.0bn over the coming three years. (Source: Company Press Release) Telecom Egypt and Vodafone Egypt sign wholesale services agreement MARKET ACTIVITY The EGX30 gained 1.1% last week, yet average daily turnover remained weak at EGP 0.9bn. Stocks were volatile ahead of the last full trading week before Ramadan Bairam. Turnover was also below average Sunday through Wednesday at under EGP 1.0bn, before peaking on Thursday to reach its highest level of EGP 1.04bn in 10 days. Foreign investors maintained their net buying position whereas local investors remained net sellers. Most of the larger cap stocks made price gains during the week, including OCI (+2.1%), OTH (+1.49%), TE (+2.99%), and Mobinil (+2.43%). (Source: Pharos) Egyptian Stock Exchange Top gainer(s) Misr Beni Suef Cement Ghabbour Auto Egypt Aluminium % chg 8.4 7.4 6.3 290.4 Price Top loser(s) 131.03 27.28 45.17 52.6 Alex Mineral Oils Alex Containers & Export Dev Bank Egypt % chg ‐9.1 ‐8.1 Price 44.78 121.31 13.80 ‐5.9 3,085.3 Top trader Orascom Telecom EGP (m) USD (m) Total Traded EGX 30 1.6 EGP (m) USD (m) 559.1 Market Performance EGX 30 (EGP) Source: African Alliance database Level EGP (%) 6,690 1.1 USD (%) EGP/USD 5.51 % chg 0.48 14 September 2009 African Alliance Pan‐African Securities Research 43 of 49 The Africa Weekly MOROCCO POLITICAL AND ECONOMIC NEWS Trade deficit decreases by 9.2% Morocco recorded a trade deficit of MAD 83.4bn (USD 10.5bn) during the seven month period to July 2009, registering a 9.2% decrease compared to the same period in 2008. Exports of goods reached MAD 68.2bn, down 32.2% y/y. All export oriented products, apart from finished consumer goods, registered a decrease during the period, particularly semi‐finished products (‐53.1% at MAD 16.6bn), raw products (‐55.2% at MAD 6.4bn) and food products (‐17.5% at MAD 14.3bn). Sales of phosphates and derivatives, which are a key component of national exports, stood at MAD 1.2bn by July 2009. Imports reached MAD 151.6m for the first seven months of 2009, having declined by 21.2% from the corresponding period in 2008. The decline was seen on all import oriented products, except services which rose by 6.7% to MAD 30bn. (Source: Maghreb Arabe Presse) The World Bank on Wednesday highlighted that Morocco had made progress in several key aspects of investment, which have not been taken into account by the Doing Business Indicators 2010. The institution explained that Morocco achieved good results in terms of administrative procedures and access to credit information by setting up a new private credit bureau. It also found that the country is well positioned in indicators related to entrepreneurship, obtaining administrative approval and import/export. The institution however went on to say that Morocco remains lower ranked in indicators pertaining to the labour code, protection of minority shareholders in the corporation’s law, security law or the functioning of commercial courts and the Civil Code. Whereas Morocco has been placed at position 128 from 130 in 2008, the World Bank stressed that the country has ample room to improve business regulations and strengthen the dynamism that its economy is currently experiencing. According to the report, the MENA region has picked up the pace of business regulatory reform more than any other region during a year of a global financial uncertainty. In the Maghreb region, Morocco is doing better than Algeria, but Tunisia remains the most attractive due to strengthened investor protection and eased trade rules. (Source: CMC) World Bank highlights progress achieved by Morocco COMPANY NEWS Lafarge Ciments reports 5% increase in profit after tax in 1H09 Lafarge Ciments published its 1H09 figures reporting a 9.1% y/y increase in consolidated turnover to MAD 2.8bn. EBIT was up 9.7% and net profit was up 5.0% to MAD 1.38bn and MAD 980m, respectively. Bad weather early in the year acted as a brake on sales, so total sales over the period grew by 0.4% compared to 0.9% for the market. Lower energy prices, together with savings thanks to the company's wind generators, have allowed the company to compensate for hikes in other costs. 2H09 results might be better ‐ in July and August the company recorded sales growth of 2.3%. (Source: Integra Bourse) Lafarge Ciments 6m to Jun (MAD m) Turnover EBIT Profit after tax Source: Company report 1H08 2,584 1,253 933 1H09 2,818 1,375 980 % chg 9.1 9.7 5.0 State owned phosphate producer achieves MAD 11.5bn turnover Office Cherifien Des Phosphates (OCP), Morocco’s state‐owned phosphate producer, achieved a turnover of MAD 11.6bn (USD 1.5bn) during the period from January to August 2009, which is 75% of the year’s budget. OCP indicated that the figure is 13% 14 September 2009 African Alliance Pan‐African Securities Research 44 of 49 The Africa Weekly higher than the same period in 2008. The company also indicated that the group continues to achieve good performance compared to other years, in spite of the global economic crisis which led to a decline in demand and a late start of activity. OCP contributes 15% to 20% of foreign exchange earnings and 2% to 5% of investment carried out in Morocco, with a MAD 4bn investment program by 2015. (Source: Maghreb Arabe Presse) MARKET ACTIVITY The MASI index traded positive in the early part of the week, but ticked down on Thursday and Friday to close 0.47% up for week. Mid‐week saw some large trades going through the larger cap stocks. During these trades Maroc Telecom dropped 2.27% to close at a one year low of MAD 135.85. The counter also accounted for 24.3% of the week’s trading, turning over MAD 122.5m out of a total of MAD 503.9m. Lafarge Morocco gained 1.27% for the week after releasing 1H09 results. Other large caps with gains include Douja (+4.76%), BMCE (+2.31%), and BCP (+1.51%). Casablanca Stock Exchange Top gainer(s) Brasseries Dumaroc Douja Prom. Addoha RISMA % chg 6.0 4.8 4.3 122.5 Price Top loser(s) 3,392 132.00 277.45 15.6 Centrale Laitiere Maroc Telecom Lesieur Cristal % chg ‐4.8 ‐2.3 Price 8,280 135.85 1,089 ‐2.2 503.9 Top trader Maroc Telecom MAD (m) USD (m) Total Traded MASI 2.2 MAD (m) USD (m) 64.2 Market Performance MASI (MAD) Source: African Alliance database Level MAD (%) 10,865 0.47 USD (%) MAD/US 7.78 % chg 1.7 14 September 2009 African Alliance Pan‐African Securities Research 45 of 49 The Africa Weekly TUNISIA POLITICAL AND ECONOMIC NEWS CPI inflation slightly higher in August According to data recently published by Tunisia's National Statistics Institute, the consumer price index (CPI) grew 4.2% y/y in August, up from 3.7% y/y in the previous month, on the back of higher prices for foodstuffs. Growth in the cost of foodstuffs, which accounts for about 37% of the price index, rose from 4.7% y/y in July to 5.8% y/y a month later. On a monthly basis, the CPI rose 0.3% in August, following a 0.7% m/m increase in July, driven by higher costs of foodstuffs, transport, healthcare, housing, and leisure activities. On the other hand the monthly cost of clothes fell 3.9% m/m in August. CPI inflation has been rising on a y/y basis since April, reflecting robust increases in the cost of food. The increase in consumer prices in July and August could also be due to preparation by households for the holy month of Ramadan. Overall, cumulative consumer price inflation stood at a moderate 3.4% y/y in the first eight months of 2009, as opposed to 3.3% y/y in the January‐July period. IHS Global Insight continues to expect CPI inflation in Tunisia to ease in 2009, as monetary policy remains prudent and domestic demand eases on the back of moderated economic growth. (Source: IHS) Tunisian agriculture in good shape Positive data emerged on the situation of Tunisian agriculture, which contributes 11% to the country's GDP, during a recent meeting of the executive office of the Tunisian Union for Agriculture and Fishing (UTAP). According to official estimates reported by AnsaMed news agency, the cereal harvest is set to reach a record figure of 25m quintals over 1.3m ha. Average productivity is currently over twenty quintals per hectare compared to eight in the 1970s. The country's main crops, except for cereals, include olive oil, citrus fruits and dates. The agricultural sector in Tunisia accounts for 9% of exports and employs 22% of the country's working population, which amounts to more than 10m people. (Source: Green Med Journal) A strategic planning study commissioned by the Société Tunisienne d'Electricité et de Gaz (STEG) for 2031 outlines three distinct scenarios for the evolution of energy demand in Tunisia. It calls for working out a programme to develop the electric system that integrates a nuclear power station of 1000MW by 2023. The plant would cover 15% of the country's electricity needs. (Source: African Manager) Recent statistics show that, despite the hard times for the motor industry worldwide, Tunisia’s car industry continues to grow, recording a 14.3% increase in 2009. Figures published by the Ministry of Transport indicate that Tunisians are buying more cars. Neither the slow but steady rise in car prices and petrol seem to have abated the average Tunisian’s demand for a personal vehicle. Personal automobiles make up 70% of the total number of vehicles in Tunisia. There are currently some 806,493 individual cars in Tunisia against 783,748 a year ago and 744,263 in 2007. During the seven first months of 2009 some 22,745 new car plates were registered. Tunisia’s public transport has also followed suit with 16,019 buses in 2009 against 15,652 in 2008. (Source: Tunisia Online) Tunisia plans a nuclear power station by 2023 Tunisian car sector grows despite recession COMPANY NEWS A.M. Best revises ratings of Societe Tunisienne de Reassurance Ratings agency A.M. Best has announced that it has revised its ratings for Tunisia‐ based Societe Tunisienne de Reassurance (STR), a company believed to have a market share of approximately 25% in the domestic reinsurance market. The agency has revised its outlook to positive from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of ‘BBB‐’. According to the agency, the positive 14 September 2009 African Alliance Pan‐African Securities Research 46 of 49 The Africa Weekly rating reflects STR’s strong and improving risk‐adjusted capitalisation, which will benefit from a planned capital injection of TND 10m in 2010, and consistently good technical performance. A.M. Best believes that Tunis Re maintains a very good stable domestic business profile as a national reinsurer created by the State. However, Tunis Re’s limited capacity continues to hinder its development in the international market. In A.M. Best’s opinion, Tunis Re’s overall earnings are expected to remain consistently stable and positively impacted by likely stable investment returns, while the investment portfolio gradually increases exposure to shareholdings in 2010 and 2011 to take advantage of the anticipated markets recovery, translating into an expected return on equity in the range of 10% over the next three years. According to A.M. Best the company’s combined ratio is likely to deteriorate to around 93%‐94% in 2009 (92.4% in 2008), mainly due to higher brokerage fees and increased domestic claims severity. Tunis Re’s expense ratio is expected to increase to around 37%‐38% (36.6% in 2008) due to higher overhead costs from increased expenditures on new office buildings. (Source: Global Banking News, Best’s Insurance News) MARKET ACTIVITY The Tunis index continues to gain ground, closing the week up 1.5%. Value traded came off slightly, with a total of TND 32.8m changing hands. The banking sector was in the spotlight during the week, with banks dominating both trading volumes and price gains. Amen Bank again topped the trading list, accounting for 16.7% of turnover (TND 5.47m) while finishing the week’s top gainer, up 12.9%. Amen Bank is up 59.5% YTD. Performance amongst other larger caps included gains from Attijari Bank (+4.52%), BIAT (+2.66%) and SFBT (+1.81%). UIB (‐1.15%) witnessed a total weekly trade of TND 2.17m (6.6% of the market), as well as a series of block trades early in the week totalling TND 10.0m. Tunis Stock Exchange Top gainer(s) Amen Bank STB Attijari Bank % chg 12.9 7.5 4.5 5.47 Price Top loser(s) 53.26 12.68 22.20 4.18 SOTETEL Assad SIMPAR % chg ‐3.6 ‐3.3 Price 14.57 11.80 32.99 ‐3.0 32.8 Top trader Amen Bank TND (m) USD (m) Total Traded TUNIS Index 2.9 TND (m) USD (m) 25.0 Market Performance TUNIS Index (TND) Source: African Alliance database Level TND (%) 3,876 1.5 USD (%) TND/USD 1.30 % chg 1.4 14 September 2009 African Alliance Pan‐African Securities Research 47 of 49 The Africa Weekly RECENTLY PUBLISHED RESEARCH 10 Sep Nigeria Banks Research ‐ Monthly earnings and valuation update 09 Sep Botswana Company News ‐ Barclays Bank of Botswana 1H09 Results 02 Sep Kenya Company News ‐ Bamburi Cement 1H09 Results 02 Sep Kenya Company News ‐ Access Kenya 1H09 Results 01 Sep Kenya Company News ‐ Mumias Sugar Company FY09 Results 24 Aug Malawi Company News ‐ Stanbic Malawi 1H09 Results 20 Aug Kenya Company News ‐ Co‐op Bank 1H09 Results 12 Aug Kenya Company News ‐ Equity Bank Kenya 1H09 Results 12 Aug Malawi Company News‐ NBM 1H09 Results 5 Aug Kenya Company News ‐ Athi River Mining 1H09 Results 5 Aug Kenya Company News ‐ Standard Chartered Bank Kenya 1H09 Results 5 Aug Uganda Company News ‐ DFCU Limited1H09 Results 5 Aug Lesotho Economic Research ‐ June 2009 Consumer Inflation 5 Aug Zambia Company Research ‐ Zambia Sugar Company Update 4 Aug Kenya Economic Research ‐ July 2009 Consumer Inflation 4 Aug Nigeria Banking Research ‐ Sector Update (Jul09) 4 Aug Kenya Company News ‐ Bank Sector Update (04 August 2009) 4 Aug Kenya Company News ‐ Barclays Bank of Kenya 1H09 Results 4 Aug Kenya Company News ‐ National Bank Kenya 1H09 Results 30 Jul Kenya Company News ‐ Kenya Commercial Bank 1H09 Results 30 Jul Nigeria Company News ‐ Benue Cement Company 1H09 Results 29 Jul Nigeria Company News ‐ Zenith Bank 3Q09 Results Flash (29Jul09) 27 Jul Nigeria Company Research ‐ Stanbic IBTC Bank Plc FY08 Results 24 Jul Kenya Company News ‐ Housing Finance 1H09 Results 24 Jul Malawi Company News ‐ First Merchant Bank 1H09 Results REGULAR PUBLICATIONS Africa Markets Daily (English/French) Botswana Daily Ghana Daily Uganda Daily Africa Liquidity Snapshot (monthly) Lesotho Fixed Income Malawi Daily Kenya Daily Kenya Fixed Income Weekly 14 September 2009 African Alliance Pan‐African Securities Research 48 of 49 African Alliance Botswana Securities African Alliance House Fairgrounds Office Park Gaborone Telephone: +267 318 8958 Facsimile: +267 318 8956 African Alliance Lesotho Suite 4, SA Trust Building 214 Moshoeshoe Road Maseru Telephone: +266 22 312 673 Facsimile: +266 22 313 637 African Alliance Swaziland Securities 2nd Floor, Nedbank Centre Cnr Sishayi and Sozisa Roads Mbabane Telephone: +268 404 8394 Facsimile: +268 404 8391 African Alliance Stockbroking Holdings (Mauritius) 1st Floor, Altima Building 1 56 Ebene Cybercity Ebene Telephone: +230 466 9591 Facsimile: +230 466 9591 African Alliance Securities Ghana 2nd Floor, Heritage Towers 6th Avenue, Ridge Ambassadorial Enclave Accra Telephone: +233 21 679 761‐2 Facsimile: + 233 21 679 698 African Alliance Securities (Malawi) 4th Floor, Livingstone Towers Glyn Jones Road Blantyre Telephone: +265 183 1995 Facsimile: +265 183 1859 African Alliance Uganda 1st Floor, Worker’s House 1 Pilkington Road Kampala Telephone: +256 414 235 577 Facsimile: +256 414 235 575 African Alliance Kenya Securities 4th floor, Kenya Re Towers Upper Hill, Off Ragati Road Nairobi Telephone: +254 20 273 5154 Facsimile: +254 20 273 1162 African Alliance South Africa Securities 4th Floor, 23 Melrose Boulevard Melrose Arch 2196 Johannesburg Telephone: +27 11 214 8300 Facsimile: +27 11 684 1052 African Alliance Securities Zambia 3rd Floor, Hotel Intercontinental Haile Selassie Avenue Lusaka Telephone: +260 977 775 583 Facsimile: +260 211 290 968 TERMS OF USE - DISCLAIMER - DISCLOSURE This document is confidential and issued for the information of internal and external clients of African Alliance Ltd (Reg no 79171C, Isle of Man) and its subsidiaries (African Alliance). 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This note was uploaded on 05/20/2011 for the course ECON 5128 taught by Professor Ram during the Spring '11 term at Cambridge College.

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