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The Africa Weekly

In this week's issue 04 June 2010

Southern Africa

Angola: Unknown group buys three newspapers; United States to boost trade with

Angola; Hydroelectric capacity to be restored at Matala dam.

Botswana: Govt engages Belgian consultants to develop diamond exchange; Olympia,

Engen and Wilderness report FY10 financial results.

Lesotho: IMF approves USD 61.4m under ECF; Inflation falls below 4% y/y in April.

Malawi: Malawi and neighbours to sign currency agreement; Sugar price up 14.5%;

Blantyre Hotels’ 1H10 slump 24%.

Mauritius: Central bank sees euro crisis curbing growth; India attempts to stem hot

money flow from Mauritius; Shell Mauritius cautionary announcement.

Namibia: Mining sector set to improve; Export ban to South Africa lifted; Trustco HEPS

rises 21% in FY10; Namibia Asset Management earnings rise for 1H10.

Swaziland: Swaziland Electricity Company applies for tariff increases; Illovo Sugar

announces expansion programme; Inyatsi Construction Ltd issues SZL 20m bond.

Zambia: BoZ urges the use of credit reference system; Lack of legislation delays

Alternative Investment Market launch

Zimbabwe: No mine nationalisation – Mugabe; Zimbabwe awaits approval to export

diamonds; Reserve bank under investigation; Sable Mining acquires coal assets.

East Africa

Kenya: World Bank raises Kenya’s 2010 growth to 4%; Shilling weakens on high demand

from energy importers; Inflation rises to 3.9% in May; Barclays Kenya 1Q10 profit slips

on staff costs; CFC Stanbic to cut lending rates.

Rwanda: Reserve bank implements key reforms to ease access to credit; Banque

Populaire du Rwanda to install 27 new ATM’s.

Tanzania: Commodity prices rise as shilling weakens to dollar; New pipeline plan

promises cheaper oil; Zantel re-launch ZPESA.

Uganda: Inflation eases to 4.4% y/y in May; Taxes to rise amidst UGX 2trn deficit; BoU

intervenes in the foreign exchange market; PTA Bank secures USD 90m funding.

West Africa

BRVM: Mali wants new pro-investor mining code; Togo opposition shuns leader over

power-sharing plan; Globalcom granted Senegal's fourth mobile network licence; Illovo’s

investment plans in Mali on track.

Ghana: PURC increases utility bills by 125%; Ghana requires USD 2.3bn annually to

address infrastructure deficit; WIlmar to make an offer to BOPP shareholders.

Nigeria: Electoral reforms by year-end, elections to be held by Jan 2011; Parliament

passes bad bank bill; President urges revision of budget assumptions, proposes

USD 4.3bn supplementary plan.

North Africa

Egypt: Unemployment rate dropped to 9.1% in 1Q10; OCI’s 1Q10 results show net profit

up 19.1% y/y; TE ends discussions for increasing stake in Vodafone.

Morocco: Trade deficit widens between January and April 2010.

Tunisia: Central bank governor receives IMF delegation.

Market moves Week % YTD %

Botswana 0.1 0.5 Malawi 0.0 -6.1 Mauritius 2.2 -2.1 Namibia -0.3 2.4 Zambia 1.0 2.2 Zimbabwe -0.5 -8.7 Kenya 0.7 30.4 Tanzania 0.0 -1.6 Uganda 0.5 40.7 BRVM 2.4 14.2 Ghana 0.3 27.3 Nigeria 0.3 24.5 Egypt 2.8 5.0 Morocco 0.5 16.2 Tunisia 0.3 15.4 MSCI EM 1.5 6.7 FTSE 0.3 -3.7 Johannesburg -1.1 -1.9 Nikkei 2.8 -6.0 S&P 500 0.0 -1.1

Currency moves Level* Week %

BWP 7.07 -0.14 MWK 150.77 0.00 MUR 33.04 -2.43 ZMK 5,065.0 0.12 KES 80.15 0.50 TZS 1,450.0 -1.69 UGX 2,257.5 1.10 XOF 538.60 1.47 GHS 1.43 -0.07 NGN 151.20 -0.49 EGP 5.67 0.08 MAD 9.03 1.19 TND 1.52 1.11 EUR 0.82 1.43 GBP 0.68 -0.38 JPY 92.34 1.74 ZAR (NAD, SZL, LSL) 7.71 1.74 * relative to USD

Randolph Oosthuizen Head of Research +27 11 214 8384 [email protected]

Jared Jeffery Editor +27 11 214 8376 [email protected]

Rob Brownlee Head of International Sales and Trading +27 11 214 8464 [email protected]

04 June 2010 African Alliance Pan-African Securities Research 2 of 56

The Africa Weekly

Table of Contents

Market snapshot .................................................................................................. 3

Market commentary ............................................................................................ 4

Economic indicators ............................................................................................. 7

Angola .................................................................................................................. 8

Botswana .............................................................................................................. 9

Lesotho ............................................................................................................... 13

Malawi ................................................................................................................ 15

Mauritius ............................................................................................................ 18

Namibia .............................................................................................................. 21

Swaziland ............................................................................................................ 23

Zambia ................................................................................................................ 24

Zimbabwe ........................................................................................................... 26

Kenya .................................................................................................................. 29

Rwanda ............................................................................................................... 32

Tanzania ............................................................................................................. 33

Uganda ............................................................................................................... 35

BRVM .................................................................................................................. 38

Ghana ................................................................................................................. 41

Nigeria ................................................................................................................ 44

Egypt ................................................................................................................... 49

Morocco ............................................................................................................. 52

Tunisia ................................................................................................................ 54

Recently published research .............................................................................. 55

Regular publications ........................................................................................... 55


The Africa Weekly

MARKET SNAPSHOT Weekly market moves (%chg local)

Source: African Alliance database

-1.14%

0.12%

South Africa

BotswanaNamibiaNamibia

2.19%

Mauritius

0.50%Morocco

0.30%Tunisia:

2.85%Egypt

0.73%

Kenya

0.96%Zambia

0.49%Uganda:

Swaziland

Ghana

0.01%Tanzania

2.40%BRVM

Malawi

Zimbabwe

-0.26%-0.47%

0.35%

Nigeria

0.35%

Market Index name

Botswana Domestic Companies Mauritius Semdex (All

Share) Malawi All Share

Namibia Local

Swaziland All Share

Zambia All Share

Zimbabwe Industrial

Kenya Top 20

Tanzania All Share

Uganda All Share

BRVM Composite

Egypt EGX 30

Ghana All Share

Morocco All Share

Nigeria All Share

Tunisia All Share

South Africa All Share


The Africa Weekly

African and global markets heat map (%chg local)

MARKET COMMENTARY The Moroccan market opened on a low note last Friday, but the banking and building materials and construction sectors bounced back in the week to bring the total market up 0.5% at Thursday’s close. BCP (+2%) and BMCE (+6.4%) led the banking sector, but Attijariwafa declined by 0.6%. Among the building stocks, CGI gained 3.3% - accounting for most of the market capitalisation gains in the sector; Ciments du Maroc also did well, with the share price gaining 3.1%. Centrale Laitiere was down by almost 6%, dragging the agriculture sector into the red. ONA was one of the most actively traded stocks, but closed unchanged.

Despite a hiccup on Tuesday, the Egyptian market managed to end the week in the green, largely thanks to the Friday and Thursday sessions; the EGX 30 was up by 2.9% for the week. The recovery was widespread, but the telecoms sector accounted for most of the market capitalisation gains as Orascom Telecom rose 14.1%, in what was slightly more than half of the week’s value traded. The building materials and construction sector was one of the few losers, with Orascom Construction falling 1.7% during the week. Among the banking stocks, CIB gained 1.6% but NSGB lost 2.7%.

In Nigeria, a 0.4% rise in the ALSI hid a lot of volatility during the week shortened by a public holiday on Monday. The market was strong last Friday, but the sentiment turned negative in the last two sessions, with a loss of almost 1% in Thursday’s trading.

Date 23M 24M 25M 26M 27M 30M 31M 01J 02J 03J 27-May-10 03-Jun-10 01-Jan-10 03-Jun-10 %ch

Botswana -0.1 - 0.4 0.1 0.4 -0.0 0.1 -0.1 0.0 0.0 0.7 0.1 7,241.9 7,278.6 0.5

BRVM 0.5 - -0.0 -0.1 0.0 -0.2 2.0 0.2 0.1 0.4 0.3 2.4 132.1 150.8 14.2

Egypt -0.4 -1.1 -6.1 4.4 2.2 2.8 0.5 -1.7 -0.1 1.4 -1.3 2.8 6,208.8 6,517.9 5.0

Ghana 0.4 0.3 - 0.1 -1.0 0.8 0.6 0.2 -1.3 0.0 -0.2 0.3 5,572.3 7,095.5 27.3

Kenya 0.2 0.1 0.0 -1.3 -1.4 0.4 0.5 - -0.7 0.5 -2.4 0.7 3,247.4 4,234.3 30.4

Malawi - - 0.1 - - - - - - - 0.1 - 5,155.1 4,840.8 -6.1

Mauri tius -0.6 - -0.7 -1.0 -0.1 0.4 0.8 2.5 -1.9 0.4 -2.5 2.2 1,660.9 1,626.1 -2.1

Morocco -0.5 -2.5 -1.1 0.5 0.7 -0.7 0.7 0.1 0.6 -0.1 -2.9 0.5 10,443.8 12,131.7 16.2

Namibia 0.1 - - - 0.1 - 0.1 -0.3 -0.0 - 0.2 -0.3 154.8 158.6 2.4

Nigeria -1.6 -1.4 -1.9 -1.3 1.1 1.3 - 0.2 -0.1 -1.0 -5.1 0.3 20,827.2 25,939.2 24.5

Swazi land - - - - - - - - - - - - 218.0 218.0 0.0

Tanzania 0.1 0.0 0.0 -0.0 - 0.0 - - - - 0.1 0.0 1,192.4 1,173.2 -1.6

Tunis ia 0.6 -0.3 -0.0 -0.3 0.3 -0.1 0.2 0.2 -0.2 0.2 0.2 0.3 4,291.7 4,953.7 15.4

Uganda - 0.5 1.0 - -0.2 - -2.0 2.5 - - 1.3 0.5 732.5 1,030.6 40.7

Zambia -0.8 -0.8 - -0.0 - -0.5 0.3 0.4 0.3 0.4 -1.6 1.0 2,794.9 2,856.2 2.2

Zimbabwe -0.5 -0.0 - -2.0 -3.2 -0.6 0.2 -0.3 -0.2 0.4 -5.6 -0.5 141.6 129.3 -8.7

South Africa -0.3 2.0 -2.2 3.3 1.5 -0.9 -0.2 0.6 -0.2 -0.4 4.2 -1.1 27,666.5 27,135.8 -1.9

FTSE 100 -0.2 0.1 -2.5 2.0 3.1 -0.1 - -0.5 -0.2 1.2 2.4 0.3 5,412.9 5,211.2 -3.7

Nikkei 225 -2.5 -0.3 -3.1 0.7 1.2 1.3 0.1 -0.6 -1.1 3.2 -3.9 2.8 10,546.4 9,914.2 -6.0

S&P 500 1.5 -1.3 0.0 -0.6 3.3 -1.2 - -1.7 2.6 0.4 2.9 -0.0 1,115.1 1,102.8 -1.1

Shanghai Compos ite 1.1 3.5 -1.9 0.1 1.1 -0.0 -2.4 -0.9 0.1 -0.7 3.9 -3.9 3,277.1 2,552.7 -22.1

MSCI World 0.9 -0.9 -1.5 0.5 3.0 -0.4 -0.0 -1.0 0.9 1.1 2.0 0.6 1,168.5 1,091.0 -6.6

MSCI EFM Africa ex ZA -0.2 -2.5 -3.8 1.4 1.4 0.1 2.0 -0.7 -0.0 0.1 -3.9 1.5 565.9 603.9 6.7

MSCI EM Index 0.5 0.5 -4.0 3.2 2.4 1.4 1.0 -2.1 0.2 1.8 2.5 2.3 989.5 924.7 -6.5

Year-to-date changeWeekly chg (%)Daily price changes (%) (23-May - 03-Jun 2010)


The Africa Weekly

Unusually, the banking sector was almost flat, leaving the responsibility of determining market direction to the industrial counters. The building materials and construction sector was strong (Lafarge WAPCO up by 8.6% and Benue Cement 5.4% higher) and so were the oil marketing companies (Oando up by 4% and Mobil gaining 10.3%); however, Nigerian Breweries gave up 3.8% during the week, ending limit down in Thursday’s trading. Among the banks, Zenith was 4.4% lower, but Access Bank and Diamond Bank gained 13.6% and 14.2%, respectively.

The Kenyan NSE 20 Index rose by 0.7% as banking and telecoms stocks led the market, recovering most of the losses posted in the last two trading sessions of last week. Equity Bank bounced back 10.7% after previous sell-off, while Safaricom gained 4.7% in the first two trading sessions, only to remain flat thereafter. Other banking stocks lost some ground, with NBK down 3.1% and KCB 2.4% lower. EABL continued to push its 12-month highs, closing at KES 178 on Thursday up 1% for the week. Diamond Trust was surprisingly the largest trader in what was a rather quiet week, partially due to a public holiday on Tuesday. Barclays Bank was the largest trader on Monday after releasing 1Q10 results; however the share price remained unchanged on the day and 0.9% up for the week.

Other markets:

In Botswana, the DCI ended the week marginally up (+0.1%) on the back of gains led by the tourism sector, following the publication of results in the past two weeks. Chobe (+5.3%) and Wilderness (+1.2%) ended in positive territory in light trading. Imara plunged 10% on a thin volume of only 8,879 shares, in a single session on Tuesday. Turnover on the board lightened to BWP 13.2m on the back of a total volume of 2.9m shares, with the sell-off on Sechaba (flat) seen in the previous week slowing to just under 1m shares compared to 1.3m shares last week. The counter, however, still came out as the top trader, accounting for 55.5% of turnover (BWP 7.3m).

The BRVM marked ended the week 2.4% higher, on the back of strong buying in a number of large cap counters during a below-average week. Sonatel gained 3.7%, while SOGB (agriculture) and SGB (banking) surged by 16.1% and 13.8%, respectively. Solibra was 1.3% weaker.

The Ghana Stock Exchange remained bullish during the week. UT Financial Services and Enterprise Insurance Company were the top price gainers, 41.7% and 33.9%, respectively. The share price of Ghana Commercial Bank, the most traded equity by value, rose to GHS 1.82 by mid-week and declined thereafter to GHS 1.77 during the last day of trading. GCB and UTF together accounted for 59.1% of the market turnover of GHS 3.85m, which represented an increase of 56.6% compared with the previous week’s value traded. CAL Bank, the biggest price loser, declined by 13.8%. The ALSI gained 0.35% to close at 7,095.5 points, representing a ytd gain of 27.3%.

Another quiet week in Malawi saw the market remain flat, with most trading concentrated in NBM (65% of total value traded).

In Mauritius, the hotel sector continued with the bounce-back rally that started last Thursday and which continued until Tuesday, before seeing some profit taking on Wednesday; nevertheless the sector still gained 6.7% for the week, with Naiade being the clear winner with a 9.2% gain. Harel Freres also had a good week, gaining 11.9%, while MCB gained in two trading session to record a rise of 1.5% in its share price. The SEM ALSI gained 2.2% as a result.


The Africa Weekly

The Namibian domestic index lost 0.3% in thin trading as only Namibian Breweries (flat) and Bidvest Namibia (+0.6%) saw some interest. A trade in FNB Namibia on Tuesday at 0.9% off the previous price caused the market to close lower for the week.

There was no trading in Rwanda this week.

There was no trading in Swaziland this week.

The Tanzanian market was almost exclusively (99% of total value traded) confined to CRDB (flat), NMB (flat) and Twiga (+1.2%), lifting the DSE ALSI by 1bp.

The Tunisian market gained 0.3% with good performance coming from BT (+1.7%) which recently had a 10:1 share split, and BIAT which gained 0.6%. A number of shares were marked down for dividend payments so the market capitalisation fell by 0.4%. Attijari Bank lost 3.4% and Poulina gave up 1.4%.

In Uganda the market turnover dropped by 92.4% to UGX 25.6m. Uganda Clays moved back into positive territory (+7.8%) to close at UGX 55. For the second week Uganda Clay’s 25m shares on offer at UGX 55 are yet to be taken up. Stanbic Bank remained at UGX 200 but generated 48% of the market’s turnover. Due to delays facing custodial SCD account opening, the market has seen temporary absence of institutional clients.

The Zambian market was dominated by trading in Celtel Zambia; the counter accounted for 92% of the total value traded for the week, and the 3.2% increase in the share price lifted the LUSE ALSI almost 1% for the week. Elsewhere, SCB Zambia and Zanaco gave up 2% and 1.8%, respectively.

The Zimbabwean market traded mixed, with volatility driven by foreign investors. Interest in Barclays Zimbabwe (+9.9%) and Delta (+4.7%) lifted the market, but Colcom (down 25%) and National Foods (-15.5%) saw large price drops in light trading. Econet was the most active stock for the week, but it remained unchanged.


The Africa Weekly

ECONOMIC INDICATORS Country Prime (%) CPI (%) Month

Southern Africa Angola 15.62 13.80 Mar

Botswana 11.50 6.00 Mar

Lesotho 11.83 3.70 Apr

Malawi 19.50 8.10 Apr

Mauritius 8.53 2.32 Mar

Namibia 11.25 5.70 Mar

Swaziland 10.00 4.90 Mar

Zambia 22.60 9.20 Apr

Zimbabwe 3.50 Mar

East Africa

Kenya 14.25 3.90 May

Rwanda 16.44 0.65 Apr

Tanzania 14.38 9.40 Apr

Uganda 18.40 4.40 May

West Africa

Cote d'Ivoire (BRVM) -1.60 Dec

Ghana 15.00 13.30 Mar

Nigeria 18.06 12.50 Apr

North Africa Egypt 9.75 12.20 Mar

Morocco 3.25 0.90 Mar

Tunisia 4.50 5.50 Feb

Source: Central banks, statistical agencies


The Africa Weekly

ANGOLA POLITICAL AND ECONOMIC NEWS

Three independent Angolan newspapers have been bought by an unnamed private group, state-owned Jornal de Angola said on Monday, raising concern the new owner could stifle criticism of the government. Semanario Angolense, A Capital and Novo Jornal, three weekly newspapers that have been critical of the government, were sold for around USD 1.5m each, Jornal de Angola said, citing an unnamed source. It said some editors would be replaced, including the managing editor of Semanario Angolense, a well-known government opponent.

"Most people with the power to buy these newspapers belong to the ruling party. If this is confirmed, the move would be a serious blow to freedom of press in Angola," political analyst Rafael Marques said. Novo Jornal, which belongs to Portuguese conglomerate Escom, said talks were underway to sell the newspaper, but said a deal had not been reached.

Angola's ruling party already holds huge sway over the media. The government controls the two national television stations, the radio and only daily newspaper. Angola is due to hold a general election in 2012, although President Jose Eduardo dos Santos signed into law this year a new consitution allowing him to extend his three-decade-long rule. (Source: Reuters)

The United States’ ambassador to Angola, Dan Mozena, said Wednesday in Luanda that they would seek to boost trade relations between Angola and the US, particularly in the agri-livestock sector. Speaking to Angolan news agency Angop, the ambassador said trade relations between the two countries were very good - mainly in the oil sector, where turnover was around USD 10bn in 2008 and USD 18bn in 2009.

“The United States of America is the biggest investors in Angola and, therefore, steps are being taken for these investments to be expanded to other business areas,” he said. According to the ambassador, over the next few months in Luanda there will be a meeting between the Angolan and US authorities to study investment models in the country’s non-oil sectors. (Source: Macauhub)

Work will begin this year to rebuild the mini-hydropower dam in Cavango, destroyed during the civil war, Huambo Province Governor Fernando Faustino Muteka has announced. Reconstruction of the dam, powerhouse, small substation and transport lines, along with the assembly of low-tension cables and other operational equipment, should cost the Huamba provincial government more than USD 20m and produce at least 10MW of electric power. (Source: Euclid Infotech)

Electric power production capacity at the Matala hydroelectric dam, 180km east of Lubango, will be increased from 26 to 40MW, Energy and Water Minister Emanuela Vieira Lopes has announced. Conditions are in place to ensure the availability of quality power in Huila and Namibe provinces within 42 months, Viera Lopes said last Friday after a ceremony launching the project being built by the French group SCN-Lavalin. The Matala dam will be subject to a thorough overhaul, with the three existing turbines replaced by new ones in a project estimated at USD 255m, she said.

The Matala dam was built in the 1960s and conceived to generate 39MW. However, the three generator groups were never fully operational and that target was never reached. (Source: Euclid Infotech)

Unknown group buys three newspapers

United States to boost trade with Angola

Mini-hydropower dam to be rebuilt in Cavango

Hydroelectric capacity to be restored at Matala dam


The Africa Weekly

BOTSWANA POLITICAL AND ECONOMIC NEWS

Government is said to have engaged a Belgian diamond consultancy firm, Gemdax, to help it attain its target of becoming an international diamond centre, attracting critical mass in downstream activities - including a diamond bourse. A statement by the Diamond Hub Head, Jacob Thamage, said the aim is to increase the country's share of diamond downstream activities to increase its chances of becoming the world's leading rough diamond producer. Part of the task of the hub is to establish a diamond trading platform.

Gemdax's experts were in the country in the past week to work out a plan geared towards meeting their engagement, and had meetings with key players including the DTC Botswana. The objective of the engagement is to develop an operational plan, come up with and define the role of strategic partners and assist with the development of selection criteria, including assessment procedures for strategic partners in line with the country's objectives. The first phase of the report is expected in six weeks.

The country's current sales agreement with De Beers expires at the end of the year, and it is expected that government will make a suggestion that a certain percentage of Debswana production should go to the open market. (Source: Sunday Standard)

COMPANY NEWS

CIC Energy said on Friday that regulatory uncertainties in South Africa continue to hinder the advancement of its integrated power plant in Mmamabula. The company indicated that the Mmamabula Energy Project (MEP) has not been scrapped, and that the project is ready to be restarted if and when the Integrated Resource Plan 2 (IRP2) is published by the South African authorities, and provided that it caters for the MEP.

The company noted that all independent power producers with projects that intend to sell electricity to South Africa, which are planned to be commercial beyond 2013 like the MEP, must wait for IRP2 to be gazetted before negotiations for power purchase agreements can be undertaken. The IRP2 is expected to be completed this year and is expected to be a 20-year framework for electricity supply. Under new regulations passed in South Africa in August 2009, the decision on signing purchasing power agreements with independent power producers (IPPs) lies with the government through the Department of Energy, with a stated policy that 30% of its electricity supply will come from IPPs. In the meantime, CIC has announced that it is working on a second, smaller (300MW) power station targeted at the Botswana market, in order to use its vast coal resource. The project is being developed independently from the MEP (1,200MW) project, and will also be located at the Mmamabula coal field. (Source: Sunday Standard)

Olympia Capital published FY10 results to 28 February 2010 reporting a basic loss per share of BWP 0.01 compared to a loss of BWP 0.59 in the corresponding year, largely owing to a BWP 1.6m loss from discontinuing operations. However, normalised EPS from continuing operations was BWP 0.05, down 37% from FY09 normalised EPS of BWP 0.08.

Revenue grew by 7.6% to BWP 38.9m, while cost of sales increase was slightly higher at 9% to BWP 27.1m. As a result, gross profit grew only marginally by 4% to BWP 11.8m, culminating in a 90bp decline in the gross profit margin to 30.4%. Profit

Govt engages Belgian consultants to develop

diamond exchange

CIC still hopeful about prospects for the Mmamabula

Energy Project

Olympia reports a BWP 0.01 loss per share in FY10


The Africa Weekly

before interest and tax increased by 7.7% to BWP 3.4m, as operating costs growth stabilised at 3.1% and other income declined slightly by 6.6%. Operating profit, however, declined faster at 20.6%, primarily on the back of a 44.9% increase in finance costs and a 54.1% slump in investment income. The operating profit margin therefore shed 230bp to 6.6%. Profit before tax came in just under BWP 1m, compared to a loss of BWP 15.9m in FY09. The FY09 loss was a result of a BWP 19.1m loss emanating from discontinuing operations at the company's subsidiaries in South Africa, while in FY10 a loss of BWP 1.6m was realised, as the operations were placed into liquidation. Following a BWP 1.1m tax charge, 18.3% above that in FY09, a net loss of BWP 171,591 was reported for FY10.

Management have indicated that they will consider re-entering the South African market only after settling the company's BWP 13.7m debt, albeit in a more cautious approach. No final dividend was declared as management intends to direct resources towards settling the company's debt. (Source: African Alliance)

Olympia Capital

12m to Feb (BWPm) FY09 FY10 % chg

Turnover 36.1 38.9 7.6 Gross profit 11.3 11.8 4.6

Profit before finance income 3.2 3.4 7.7

Profit/(loss) before tax -15.9 1.0 106.0

Profit/(loss) after tax -16.9 0.2 -99.0

Source: Company report

Engen Botswana published FY10 results (31 March 2010), reporting a 415.5% rise in EPS to BWP 0.57 (23.6% rise in replacement cost EPS to BWP 0.38). Revenue declined by 8.2% to BWP 1.2bn, despite management indicating that the company registered reasonable volume growth due to strong government expenditure.

Gross profit surged 134% to BWP 175.7m, as cost of sales slid 17% due to a positive BWP 39m positive inventory effect arising from increasing crude oil prices, resulting in the GP margin rising to 14.9% in FY10 from 5.8% in FY09. Profit before finance costs surged 275.4% to BWP 118.2m, despite forex losses and distribution and marketing costs increasing by 37.9% and 57.8% respectively. Profit before tax increased by 293.2% to BWP 117.4m as finance costs slid 50.1%, resulting in the PBT margin rising 760bp to 9.9%. Profit after increased by 414.2% to BWP 90.5m, against a 119.5% surge in the tax charge to BWP 26.9m (albeit with the effective tax rate reducing from 41.1% in FY09 to 22.5% in FY10). A final dividend of BWP 0.15 was declared (LDR 25 June 2010), bringing the dividend for the year to BWP 0.26.

The company launched a Corner Bakery at some of its new sites, which is expected to enhance its Quickshop brand. Two sites were re-built and upgraded to full 1 stop offerings, which include sit down Wimpy restaurants.

In addition to the supply of fuel to contractors of the two airport projects in Francistown and Gaborone, Engen also supplied a special grade of bitumen for taxi lanes to the contractors. Management indicates that they remain committed to diversifying the company's product range to improve the business. (Source: African Alliance)

Engen reports a 415.5% increase in EPS in FY10


The Africa Weekly

Engen Botswana Limited

12m to March (BWP m) FY09 FY10 % chg

Turnover 1,285.7 1,180.6 -8.2 Gross profit 75.1 175.7 134.0

Profit before finance income 31.5 118.2 275.4

Profit before tax 29.9 117.4 293.2

Profit/(loss) after tax 17.6 90.5 414.2

Basic EPS (BWP) 0.11 0.57 415.5

Replacement cost EPS (BWP) 0.31 0.38 23.6

DPS (BWP) 0.19 0.26 36.8


Wilderness Holdings published its FY10 results to 28 February 2010 reporting a rise in EPS to BWP 0.21 from a loss of BWP 0.01 in FY09. Revenue declined 12% to BWP 868.1m on the back depressed occupancy rates, also exacerbated by the BWP and ZAR strength against the USD in which most bookings are made.

Gross profit declined a marginal 3.4% to BWP 416.7m, boosted by an 18.6% drop in cost of sales. As a result the gross profit margin improved by 430bp to 48%. Operating expenses declined by 7.5% to BWP 301.4m resulting in the operating profit climbing 11.7% to BWP 61.4m, while the operating margin improved by 150bp to 7.1% during the year. Profit before tax surged 448.9% to BWP 81.5m, predominantly on the back of a BWP 24.1m unrealised foreign exchange gain on loans as compared to a loss of BWP 31.7m in FY09. Profit after tax (from continuing operations) increased by 563.2% to BWP 45.8m, with the tax charge rising by 55.7% to BWP 35.8m despite a lower effective tax rate (43.9% vis-à-vis 154.7% in FY09). A profit of BWP 2.3m from discontinuing operations was realised, pertaining to the disposal of Duba Plains camp in Botswana which realised proceeds of USD 4.5m (BWP 33m) received in May 2010. Total profit for the year (including discontinued operations) therefore came in a BWP 48m, against a loss of BWP 5m in FY09.

No dividend was declared, with management citing the company’s recent listing on 8 April 2010 through which they raised primary capital. (Source: African Alliance)

Wilderness Holdings Limited

12m to Mar (BWPm) FY09 FY10 % chg

Turnover 986.4 868.1 -12.0 Gross profit 431.5 416.7 -3.4

EBITDA 105.6 115.2 9.2

Profit before tax 14.9 81.5 448.9

(Loss)/profit after tax -8.1 45.8 563.2

(Loss)/profit for the year -5.0 48.0

Basic (Loss)/ EPS (BWP) -0.01 0.21

Headlines (loss)/EPS (BWP) -0.01 0.20


Wilderness registers BWP 0.21 EPS in FY10 against a loss of

BWP 0.01 in FY10


The Africa Weekly

MARKET ACTIVITY

In Botswana, the DCI ended the week marginally up (+0.1%) on the back of gains led by the tourism sector, following the publication of results in the past two weeks. Chobe (+5.3%) and Wilderness (+1.2%) ended in positive territory in light trading. Imara plunged 10% on a thin volume of only 8,879 shares, in a single session on Tuesday. Turnover on the board lightened to BWP 13.2m on the back of a total volume of 2.9m shares, with the sell-off on Sechaba (flat) seen in the previous week slowing to just under 1m shares compared to 1.3m shares last week. The counter, however, still came out as the top trader, accounting for 55.5% of turnover (BWP 7.3m).

Botswana Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg Price

Chobe 5.3 3.16 Imara Botswana -10.0 4.50 Barclays Botswana 2.5 6.10 Letshego -2.5 1.95

FSG 2.2 2.30 Sechaba -2.3 10.50

Top trader BWP (m) USD (m) Total Traded BWP (m) USD (m)

Sechaba 7.30 1.03 BSE DCI 13.2 1.86

Market Performance Level BWP (%) USD (%) BWP/USD % chg

BSE DCI (BWP) 7,279 0.12 0.26 7.07 0.14



The Africa Weekly

LESOTHO POLITICAL AND ECONOMIC NEWS

On Tuesday this week, the executive board of the International Monetary Fund (IMF) approved an amount equivalent to SDR 41.9m (about USD 61.4m) three-year arrangement for Lesotho under the Extended Credit Facility (ECF). The arrangement will support the authorities’ medium-term adjustment programme and help reduce balance of payments risks. The authorities’ economic programme focuses on fiscal consolidation and structural reforms to restore macroeconomic stability, encourage economic growth and reduce poverty. Following the board’s decision, a sum equivalent to SDR 7.8m (about USD 11.4m) is available for immediate disbursement. According to the IMF, the three-year ECF arrangement represents 120% of Lesotho’s SDR 34.9m IMF quota.

According to the IMF report, following years of economic stability, Lesotho’s economic performance deteriorated in 2009. The country’s economic growth declined due to reduced export demand, while persistent increases in public expenditure in the past three years have led to a deterioration of the fiscal balance. The fiscal balance shifted into deficit in 2009/10 after five consecutive years of surpluses, and the external current account also shifted into deficit, reflecting lower export earnings and income receipts.

The global crisis has resulted in a significant decline in revenues from the Southern African Customs Union (SACU), which account for around 60% of the country’s tax revenue. SACU revenues are projected to decline by some 23% of GDP during 2010/11 – 2011/12, mainly due to lower imports by South Africa. As a result, Lesotho’s fiscal and external balances will deteriorate significantly, and remain vulnerable to downside risks. (Source: IMF)

Lesotho inflation fell below 4% for the first time since December 2005, due to lower inflation in South Africa as well as a further moderation in food inflation. April inflation recorded 3.7% y/y, down from 4.2% y/y in March.

The divisions that showed a significant annual increase were: Clothing and Footwear (4%); Transport (6.6%); Food and Non Alcoholic Beverages (3.2%); Furnishings, Household Equipment and Routine Maintenance of House (2.8%) as well as Housing, Water, Electricity, Gas and Other Fuels (2.6%). Inflation is expected to ease further in May; thereafter, inflation is expected to pick up slightly during the remainder of 2010. The loti’s recent weakness poses no immediate threat to the inflation outlook, as the current bout of global risk aversion has also put downward pressure on commodity prices, including oil. (Source: Lesotho Bureau of Statistics)

COMPANY NEWS

In a public private partnership (PPP) with the government of Lesotho, Netcare opened three modern medical clinics in Maseru on Friday. In another year, the partnership, named Tsepong, will open a 425-bed hospital that will be the equivalent of Netcare's best in SA. That too will have a "filter" clinic providing primary health care to thousands and referring only cases that qualify to the hospital. The new hospital is scheduled to open in September next year.

These ZAR 1.25bn investments by Tsepong are the future of Netcare's approach to Africa. According to Netcare, governments of developing countries need to decide whether they are going to be a provider or a purchaser of healthcare. The Lesotho

IMF approves USD 61.4m under ECF

Inflation falls below 4% y/y in April

Tsepong opens new clinics

https://flagspot.net/images/l/ls.gif


The Africa Weekly

government has set the example by purchasing the service for a given number of outpatients and inpatients at a given rate and leaving it to the private sector to handle the risk. Netcare won the tender for the contract ahead of Life Healthcare and two other contenders. The International Finance Corporation - the private sector arm of the World Bank, which contributed USD 8.6m, supervised the tender. Of the LSL 1.2bn capital investment, the Lesotho government has contributed LSL 400m. The balance of LSL 800m is 85% debt and 15% equity. Netcare has come up with only LSL 44m in the form of a shareholder loan.

The new clinics, built by Grinaker-LTA, opened only fourteen months after construction started The new hospital is scheduled to open in September next year. Netcare will hold 40% of Tsepong, Excel Health - a group of Lesotho doctors - 20%, Afri'nnai - a group of Bloemfontein doctors - 20%, Women's Investment Company - a Basotho women's empowerment group - 10%, and D10 Investments - the investment arm of the local chamber of commerce - 10%. That means Local Economic Empowerment will be 40%-55% as to ownership and 50% as to control. Some 80% of the 1,000 jobs in Tsepong will be local and 35% of the group's purchasing will be local. (Source: Business Report)


The Africa Weekly

MALAWI POLITICAL AND ECONOMIC NEWS

Malawi and three of her neighbours - Mozambique, Tanzania and Zambia - are set to sign a currency repatriation agreement which will allow the countries four respective currencies to be freely traded in their border towns. Finance Minister Ken Kandodo disclosed this when he presented the 2010/11 national budget in parliament in Lilongwe.

He said the signing of the agreement will allow the four countries to accept each others’ currencies around the common borders to facilitate trading of goods and services. He was informing parliament on new monetary policy options government plans to adopt in the 2010/11 financial year geared towards containing the monetary growth and ensuring low and stable inflation rates while providing room for private sector growth. He argued that the development will help safeguard the country’s foreign exchange reserves.

In an interview, Kandodo confirmed that the government, through the Reserve Bank of Malawi, has already discussed with the central banks of Mozambique, Zambia and Bank of Tanzania on how to roll out the concept. He said all parties welcomed the arrangement and have set a date to officially sign the currency repatriation agreement. He further said, once signed, the four countries will be holding periodic meetings to assess how the currencies will be performing in each other’s economies. (Source Nation)

Japan’s deputy ambassador to Malawi Hiroshi Matsumoto has disclosed that his embassy has made recommendations to their government in Tokyo for the funding of the Lilongwe city dual carriage way which is to be constructed between Kanengo and Old town on the M1 road in the city. Matsumoto said the Japanese government financed the redrawing of the Lilongwe city master plan in which the highway has been included.

Finance Minister Ken Kandodo confirmed that the Japanese government has accepted in principle to finance the project. Lilongwe city assembly CEO Kevin Mmangisa said that the highway will be the first major project under the Lilongwe Urban development master plan and that once completed it will reduce traffic congestion and add beauty to the capital city. He said apart from this dual carriage way, the master plan has also come up with several double-lane roads to be constructed around Lilongwe city to improve the flow of traffic in the city. The master plan has further recommended implementation of several key projects to improve Lilongwe’s water supply as well as sewerage and solid waste management.

The master plan outlines a clear picture of how Lilongwe city would be developed between now and year 2030. Among other things the plan creates zones for specific types of development in the city, including commercial zones, industrial zones and residential zones. It also sets building standards including building height, building line and parking space. (Source: Daily Times)

Malawi and neighbours to sign currency agreement

Japan embassy recommends funding Lilongwe highway


The Africa Weekly

COMPANY NEWS

Illovo Sugar Malawi raised the price of sugar between 8% and 14.5% effective 28 May 2010, citing the high cost of fuel, electricity, labour and theft of sugarcane, particulary at its Nchalo estate in Chikhwawa as some of the contributing factors. The hike comes seven months after Illovo Sugar raised the price of the commodity by 11% in October 2009.

Public relations officer Ireen Phalula said the increase has been triggered by a rise in cost of production attributed to a 16% rise in fuel cost and a 32% increase in electricity cost. She further said a 16.7% y/y devaluation of the kwacha against the South African rand had also resulted in an increase in cost of inputs from South Africa such as machinery, fertiliser and packaging materials.

Consumer Association of Malawi (CAMA) bemoaned the increase arguing that consumers were already overburdened with high cost of living. CAMA executive director John Kapito appealed to Illovo Sugar to always have consumers in mind when raising the price of their commodity saying any hike has a direct bearing on living standards of consumers.

However, Phalula justified the increase citing a survey conducted by the company in South Africa, Zimbabwe, Zambia, Tanzania and Mozambique which showed that sugar prices in Malawi are the lowest among the countries covered by the survey as Illovo Sugar (Malawi) subsidises transport costs across the country. (Source: Nation)

BHL released its 1H10 results to 31 March reporting a 24.5% drop in earnings to MWK 24.6m on 1H09, thanks to a 93% increase in tax expense to MWK 25.2m. Turnover went up 3.5% to MWK 371.2m despite a reported drop in occupancy levels from 57% in the comparable period last year to 55%.

Administrative and other expenses worsened 8.4% to MWK 131.4m compared to 1H09, largely attributed to increases in operational costs arising from weakening currency, rise in fuel costs, increase in amenities tariffs and staff restructuring costs. Finance costs at MWK 21.9m, recorded a favourable variance of 35.2% on the previous period reflecting declining interest rates and reduced loan balances and repayments. Despite a 9% rise in net profit before tax to MWK 50m, net earnings were negatively affected by a 92.9% increase in taxation to MWK 25.2m.

The directors expect profitability to improve in the second half of the year from improved occupancy levels and conferencing business. Occupancy for the year is projected to average 60%. (Source: Company filings)

BHL

6m to Mar (MWK ‘OOO) 1H09 1H10 % chg

Revenue 358,501 371,226 3.5 Cost of Sales -161,774 -170,233 -5.2

Finance costs -33,744 -21,865 35.2

Profit/(loss) before tax 45,584 49,770 9.2

Profit/(loss) after tax 32,515 24,559 -24.5

Source: Company filings

Sugar price up 14.5%

Blantyre Hotels’ interim earnings slump 24%


The Africa Weekly

MARKET ACTIVITY

Another quiet week in Malawi saw the market remain flat, with most trading concentrated in NBM (65% of total value traded).

Malawi Stock Exchange


No gainers No losers

Top trader MWK (m) USD (m) Total Traded MWK (m) USD (m)

NBM 25.4 0.17 MSE ALSI 39.0 0.26

Market Performance Level MWK (%) USD (%) MWK/USD

% chg

MSE ALSI (MWK) 4,841 0.00 0.00 150.77 0.00


Dividends (MWK)

Company Financial year Type Amount Last cum date

NBM Dec-09 Final 2.68 TBA PCL Dec-09 Final 2.00 TBA

NICO Dec-09 Final 0.24 TBA

TNM Dec-09 Final 0.02 TBA

NITL Sep-10 Interim 0.25 11-Jun-10

PIM Sep-10 Interim 0.10 21-Jun-10

Source: Company filings


The Africa Weekly

MAURITIUS POLITICAL AND ECONOMIC NEWS

The euro zone crisis could slow Mauritius' economic growth by up to 0.4 of a percentage point in 2010, but inflation and excess liquidity might indicate a need for a rate rise, according to its central bank chief. The euro zone is a critical source market for the island's key export sectors like tourism and textiles, but Governor Rundheersing Bheenick told Reuters he had no intentions of devaluing the rupee in line with the fall of the euro. There is a possible downside risk from the euro zone crisis which would be estimated at about 10% of the growth.

Before Greece's debt woes spooked global markets, official data forecast Mauritius' almost USD 10bn economy would expand by 4.6% in 2010. Mr. Bheenick said that the growth will comfortably be around 4.5%, or 4.2% if some downside risk is factored in. Further, he forecasts the euro zone would not enter a double-dip recession and dismissed calls from the export sector to depreciate the rupee. Mauritius’ trade balance is in deficit. On top of that there is an imbalance in the currency composition of the island’s trade flows - import trade is largely dollar-denominated and here the focus is mainly on the island’s export trade.

Bheenick also said inflationary pressures would hit prices at home as the global recovery took hold. Annual average inflation slowed to 1.8% in April and has fallen steadily since it peaked at 9.9% in late 2008. In March, the bank's Monetary Policy Committee (MPC) left the benchmark lending rate unchanged at 5.75% for the fourth consecutive quarter, in line with market expectations. Asked if the low inflation rate and the threat to economic growth suggested room for an interest rate cut, he said that if the excess liquidity in the market and the threat of rising inflation are taken into account, this would indicate that one should move in the opposite direction. But this is not something one can be very confident of right now in the sense that the economic outlook in the local markets is not bright. He said the downward trend in government paper yields reflected the market's excess liquidity - the bank had no plans to increase the cash ratio to mop up liquidity. (Source: Reuters)

Total passenger arrivals for the period January to March 2010 numbered 335,108, representing an increase of 9.1% over the corresponding period of the preceding year. During the same period, passenger departures numbered 365,767 (+10.3%). Tourist arrivals for the first three months of 2010 attained 249,971, an increase of 7.3% over the first quarter of 2009.

Arrivals from Europe increased by 5.9% to 172,528, with a 10.9% growth in arrivals from France – Mauritius’ leading market. As regards the other major generating countries, the following performances were recorded in arrivals: Italy (+11.1%), Germany (+1.1%) and United Kingdom (-5.6%). Tourist arrivals from Africa expanded by 12.7% to 56,794 - arrivals from Reunion Island, the major market of the region, grew by 9.9% and those from the Republic of South Africa went up by 18.1%. Arrivals from the Asian market went up by 15% to 14,249, with India, the major generating country of the continent, registering a growth of 20.7%.

Gross tourism receipts for the 1Q10 were estimated by the Bank of Mauritius at MUR 11,021m, an increase of 7.4% compared to the same period of 2009. At the end of March 2010, there were 105 registered hotels in operation, with a total room capacity of 11,564 and 23,547 bed-places. The average room occupancy rate for all hotels for the 1Q10 was 67%, while bed occupancy rate averaged 59%.

Central bank sees euro crisis curbing growth

International travel and tourism show promise


The Africa Weekly

Based on data available on tourist arrivals and information gathered from stakeholders, the forecast of 915,000 tourist arrivals for the year 2010 is maintained, representing an increase of 5% over the figure of 871,356 in 2009. According to the Bank of Mauritius, tourism receipts for the year 2010 will be around MUR 40,150m (+12.5 %) compared to MUR 35,693m in 2009. (Source: Central Statistics Office)

The PPI-A stood at 104.4 in March 2010, following increases of 5.6% and 3.9% in January and February, respectively, and a decrease of 0.1 % in March 2010. The index for ‘Sugar cane’ for the period July 2009 to March 2010 decreased by 15.7% to reach 80.5 based on the provisional price of sugar for the 2009 crop. It is to be noted that the index may be revised at the end of June 2010 when the final price is available.

During the 1Q10, the PPI-A increased by 7.6% compared to the previous quarter. This was mainly due to higher prices of fresh vegetables (+ 65.6%), fruits (+15.3%) and eggs (+11.4%) - partially offset by decreases in the prices of root crops (-11.3%) and flowers and ornamental plants (-2.1%). Compared to the 1Q09 the index decreased by 6.0%. (Source: Central Statistics Office)

Vice-Prime Minister and Minister of Finance and Economic Development Pravind Jugnauth is making an appeal to employees who are the initial unit holders of the Employees´ Real Estate Investment Trust (EREIT) to remain shareholders, as in the long run the Net Asset Value (NAV) of the units is expected to rise owing to the various investment made and development in real estate projects.

Around 348,000 employees hold such shares, and now, after five years, are being allowed to make a redemption request or remain a shareholder. The minister made a speech to provide maximum details to the employees as regards the EREIT set up in the year 2005 by the government, with an initial fund of MUR 350m, transferred from the Employees´ Welfare Fund as defined under the National Savings Fund Act, with a view to democratise land ownership by giving citizens of Mauritius a direct stake in the productive resources of the economy. He further underlined that to date some 32,000 applications have been received at the EREIT from employees claiming their redemptions and that the government has agreed to allocate a deadline of two months for those willing to remain a stakeholder to acquire their shares back. Moreover, he announced that EREIT will provide more units on sale based on the last NAV of the shares for all employees willing to acquire units in the trust, including those who are already shareholders, up to a maximum of 50 units per employee.

The NAV of each unit excluding redemption charges is estimated at MUR 2,649 and henceforth the valuation exercise of the NAV per unit will be calculated on a monthly basis and those willing to claim their redemptions will be paid according to the last NAV worked out. (Orange – business news)

India is changing its tax laws in a bid to introduce greater transparency into its financial transactions with Mauritius. The aim is to stem 'round-tripping' of funds by politicians, businessmen and criminal syndicates, and assuage concerns about the unregulated and 'hot' money which transits through the Mauritian economy and into India. The licit and illicit financial flows from Mauritius account for as much as 90%, or tens of billions of dollars, of foreign direct investment in India each year.

Round-tripping via Mauritius involves the use of the 1983 Double Tax Avoidance Agreement (DTAA), a tax holiday advantage provided by Mauritius and other tax havens, to re-route money transferred illegally out of India. The illicit funds are then transferred back to India as legitimate foreign investment in the Mumbai stock market

PPI – Agriculture increases 7.6% in 1Q10

Employees encouraged to remain shareholders of EREIT

India attempts to stem hot money flow from Mauritius


The Africa Weekly

via participatory notes. These 'P-Notes' are used by overseas investors not registered with Indian regulators, allowing them to acquire shares anonymously, which triggers allegations of widespread money laundering. Much of the money invested through P-Notes is legal and comes from sources like hedge funds, which seek to benefit from the non-taxation of capital gains on Indian stocks bought in Mauritius, but Indian officials worry because they cannot separate the good money from the bad.

Earlier this year, Mauritius tried to defend the DTAA. Milan Meetarbhan, the Chief Executive of Mauritius's Financial Services Commission (FSC), argued that Mauritius was not a tax haven, denied the prevalence of round-tripping of funds to India and said that his government was ready to address Indian concerns about the DTAA. With hedge funds and others able to set up in jurisdictions like Singapore and the Cayman Islands, officials in Port Louis have worked hard to maintain the tax treaty with Delhi.

The potential hot money from Mauritius accounts for a little more than half the FDI inflow into India each year, which can not only influence stocks but also take flight swiftly in turbulent times. Despite talk of regulatory moves, no Indian government has taken serious moves to reform the tax arrangement with Mauritius since it is considered necessary to keep the stock market indices high. (Source: AllAfrica)

COMPANY NEWS

Further to the cautionary announcement published in April 2010, Shell Oil Products Africa (Shell) is reviewing ownership options for its downstream businesses in 21 countries in Africa, including Mauritius, and following several articles which were published since in the local press and media, Shell Mauritius Limited wishes to restate that the transaction process is only in its initial stages and no preferred buyer has been identified at this time. Further, the transaction process is ongoing and it may take up to six months to conclude. (Source: Semdex)

MARKET ACTIVITY

In Mauritius, the hotel sector continued with the bounce-back rally that started last Thursday and which continued until Tuesday, before seeing some profit taking on Wednesday; nevertheless the sector still gained 6.7% for the week, with Naiade being the clear winner with a 9.2% gain. Harel Freres also had a good week, gaining 11.9%, while MCB gained in two trading session to record a rise of 1.5% in its share price. The SEM ALSI gained 2.2% as a result.

Stock Exchange of Mauritius


Harel Freres 11.9 31.00 Shell Mauritius -5.5 103.00 Naiade Resorts 9.2 28.40 United Basalt Products -4.0 120.00

Mauritian Eagle 7.5 57.00 Air Mauritius -2.8 14.00

Top trader MUR (m) USD (m) Total Traded MUR (m) USD (m)

State Bank Mauritius 69.8 2.09 MAUR 198.4 5.93

Market Performance Level MUR (%) USD (%) MUR/USD % chg

MAUR (MUR) 1,626 2.2 4.7 33.04 2.5


Shell Mauritius cautionary announcement


The Africa Weekly

NAMIBIA POLITICAL AND ECONOMIC NEWS

Better times are expected for the tourism and mining sectors in the current financial year. According to the Financial Stability Report from March 2010 issued by the Bank of Namibia, the mining sector can expect significant growth in 2010, while the tourism sector can expect another contraction. This after the Namibian economy contracted by 1.1% in 2009 mainly due to the diamond and tourism sectors that experienced hefty output losses. (Source: Republikein)

The Zimbabwean government’s recent ban on the importation of all fish, animals and animal products from Namibia, following the outbreak of Rift Valley fever, is threatening the viability of the country’s fishing industry, operators have said. The Zimbabwean Ministry of Agriculture, Mechanisation and Irrigation Development announced the ban on 14 May, saying it was a precautionary measure. (Source: The Namibian)

The export of live animals from Namibia to South Africa has resumed. Following discussions with South African veterinary authorities, the Directorate of Veterinary Services in the Ministry of Agriculture, Water and Forestry has decided to resume export of live animals. (Source: The Namibian)

The expansion of Namibia’s port at Walvis Bay to handle larger quantities of copper and uranium will be completed by the end of 2012, the CEO of Namport said. Namport plans to open a new container terminal and dry dock facility for oil rigs at Walvis Bay in a move to become the west coast’s alternative for congested ports in the southern and eastern parts of Africa. (Source: The Namibian)

COMPANY NEWS

Namibia Asset Management released its interim results for the six months ended 31 March 2010 and reported a 26.4% increase in revenue from NAD 11.5m to NAD 14.5m. Net profit for continuing operations increased to NAD 3.2m from NAD 2.7m, representing a 17.9% increase. Basic EPS increased to 1.68 from 1.50 previously and HEPS increased from 1.50 to 2.31. (Source: Republikein)

Trustco witnessed a 20% increase in headline earnings from NAD 71.3m to NAD 85.3m for the year ended March 2010. This translated into diluted HEPS of 12.6c versus 10.4c previously, a 20.9% increase. The group said that 2010 had marked another impressive year for the Trustco Group, considering the current economic climate. Group revenue increased by 14% and group earnings increased by 47% compared to the 2009 financial year. (Source: The Namibian)

Stimulus released its full-year results for the year ended 28 February 2010, declaring a dividend of 346c from 287c previously. It reported total comprehensive income of NAD 10.9m, down from NAD18.5m in F2009, mainly as a result of no gains on the revaluation of land and buildings and lower fair value gains reported for F2010. Dividends received from investee companies increased to NAD5.3m from NAD3.0m, previously, while fair value gains increased to NAD9.7m from NAD18.4m in F2009.

Internet Technologies Namibia (ITN), who recently celebrated its fifth year in the IP communications industry, commissioned a STM-1 Fibre link which adds 155Nbps of data to Namibia. This means that an additional 155Mbps of data can now be received and sent across ITN’s internet network to the rest of the world. The STM-1 terminates

Mining sector set to improve

Viability of fishing industry threatened

Export ban to South Africa lifted

Walvis Bay port expansion on track

Namibia Asset Management earnings rise for 1H10

Trustco HEPS rises 21% in FY10

Stimulus earnings drop for FY10

ITN gains access to the rest of the world


The Africa Weekly

in South Africa, allowing ITN access to a wide variety of internet connectivity options, which include connectivity to the SEACOM, EASY and SAT3 undersea cable systems. (Source: Republikein)

MARKET ACTIVITY

The Namibian domestic index lost 0.3% in thin trading as only Namibian Breweries (flat) and Bidvest Namibia (+0.6%) saw some interest. A trade in FNB Namibia on Tuesday at 0.9% off the previous price caused the market to close lower for the week.

Namibian Stock Exchange


Bidvest Namibia 0.6 7.20 FNB Namibia -0.9 11.67 -- Oryx Properties -0.3 9.45

Top trader NAD (m) USD (m) Total Traded NAD (m) USD (m)

Namibia Breweries 0.57 0.07 NMB LOCAL 1.01 0.13

Market Performance Level NAD (%) USD (%) NAD/USD % chg

NMB LOCAL (NAD) 158.56 -0.26 -1.96 7.71 -1.71



The Africa Weekly

SWAZILAND POLITICAL AND ECONOMIC NEWS

The Swaziland Electricity Regulatory Authority has received an application from the Swaziland Electricity Company (SEC) to raise its tariffs over the next three years. The proposed tariff hikes are at levels of 23.5% for FY11, 26.3% for FY12 and 26.4% for FY13. Consumers have been given up to 11 June 2010 to lodge their objections or submissions with the Authority.

The SEC has indicated it hopes to raise about SZL 450m from the tariff increases and that this will enable it to provide the necessary equity contribution towards government’s proposed 300MW thermal power station project. The combined cost of the project is estimated at about SZL 4.8bn. The SEC is currently working on selecting an appropriate financing model, which will likely see a combination of equity, debt finance and possibly private equity financing. (Source: Times of Swaziland)

COMPANY NEWS

Illovo Sugar has reported expansion projects that will see its Malawi, Zambia and Swaziland operations contributing 25% each to group operating profit. Illovo Sugar Swaziland Limited currently contributes 8% to group profits and has launched an expansion project under which annual sugar production will increase from 220,000t in FY10 to more than 300,000t a year. The company has also commissioned a biomass power plant that will ultimately enable its factory and estates to become self-sufficient in its electricity production, while also supplying power to Swaziland’s national grid.

Illovo is Swaziland’s second largest sugar manufacturer after listed Royal Swaziland Sugar Corporation. (Source: Times of Swaziland)

Inyatsi Construction Limited has issued a SZL 20m bond under its SZL 70m medium-term notes programme. The bond has a coupon of 9% and matures on 27 May 2011. (Source: Swaziland Stock Exchange)

Swaziland Electricity Company applies for tariff increases

Illovo Sugar announces expansion programme

Inyatsi Construction Ltd issues SZL 20m bond


The Africa Weekly

ZAMBIA POLITICAL AND ECONOMIC NEWS

Bank of Zambia (BoZ) Governor Dr. Caleb Fundanga has expressed concern at the low usage of the credit reference system in Zambia and has advised lenders not to withhold information of their borrowers so as to improve the quality of credit reports being accessed by subscribers. It had been noted that some lenders had not submitted information to the Credit Reference Bureau on their borrowers. Dr. Fundanga also noted that there was an erratic and low volume of data being submitted by some financial service providers which was affecting the quality of credit reports for subscribers. He said incidences of loan delinquencies would be significantly reduced by the establishment of the credit reference system.

BoZ issued a directive mandating the user of credit reference service by financial service providers on 10 December 2008. A draft of the law was recently circulated to various stakeholders including the commercial banks for comments and it was expected that a robust and appropriate law would be put in place.

The Credit Reference Bureau collects credit information on borrowers, which it passes on to lenders who then decide whether to lend out the money or not. The bureau, therefore, plays an important role in credit risk management and the promotion of a sound credit culture in the financial system of the country. (Source: Times of Zambia, The Post)

Lusaka Stock Exchange CEO Beatrice Nkanza says the listing of Small and Medium Enterprises (SMEs) has been delayed due to lack of legislation. LuSE is expected to launch the Alternative Investment Market (AIM) to cater for SMEs to enable them to raise their capital and funds for project finance. She said the SMEs tier would be introduced once the Securities and Exchange Act was amended. The act had been reviewed to include SMEs and was waiting for approval from parliament.

About 90% of business in Zambia comprises of SMEs. (Source: Zambia Daily Mail)

Public-Private Partnership (PPP) Director David Ndopu has announced that the government will next month award jobs to preferred identified developers to work on several infrastructure projects advertised by the PPP unit. The unit was established early this year under the Ministry of Finance and National Planning to operationalise the PPP Act which was enacted in August 2009 to address Zambia’s infrastructure by incorporating the private sector.

The focus for the PPP projects is on infrastructure development such as roads, bridges, energy and housing. Mr. Ndopu added that the government plans to construct 12,000 residential houses which have been packaged into lots of 4,000 housing units in Livingstone, Lusaka and Ndola. Each housing lot will comprise 2,000 low cost housing units, 1,500 medium costs and 500 high costs units.

Some of the projects are; the Kitwe-Chingola, Livingstone-Kafue, Lusaka-Ndola, Chingola-Jumbe and Chirundu-Lusaka dual carriage ways. Other projects include expansion and modernisation of the four international airports which are; Lusaka, Ndola, Livingstone and Mfuwe. The railway lines to be developed include Solwezi-katima, Chipata-Petaueke-Serenje and the Livingstone-Katima Mulilo. Key projects under the energy sector that have been approved by the Council of Ministers are; the

BoZ urges the use of credit reference system

Lack of legislation delays AIM launch

State to award Public-Private Partnership tenders


The Africa Weekly

Kafue Gorge Lower, Mombututa Hydro Power Scheme and the Luapula High Voltage transmission line. (Source: Zambia Daily Mail)

COMPANY NEWS

Lunsemfwa Hydro Power Company Limited is planning to develop a hydro power project under a joint venture with InfraCo Limited at a cost of USD 275m. InfraCo Limited is a public funded infrastructure project developer active across sub-Saharan Africa and is owned by various governments - including the United Kingdom, Sweden, Netherlands and Australia. The project will be developed under Muchinga Power Company, a joint venture between the two companies, and will be at the intersection of Lunsemfwa and Mkushi rivers in Central Province.

Mr. Katai Kachasa, the CEO of Lunsemfa, said the main features would include two weirs, a new dam and two power stations, penstocks and transmission lines at a cost of between USD 220mn and USD 275mn. Lunsemfwa’s strategic objective is to increase generation capacity from 38MW to 200MW within ten years.

Mr. Kachasa added that feasibility studies would start in July 2010 to June 2011 and financial closures would be finalised between 2011 and 2012. The implementation and construction of the project is scheduled for May 2012 to April 2016. He said that the major challenges the firm would face in pursuing the project would be land, environment and heritage, water, accessibility, regulatory issues and cost structures. (Source: Zambia Daily Mail)

MARKET ACTIVITY

The Zambian market was dominated by trading in Celtel Zambia; the counter accounted for 92% of the total value traded for the week, and the 3.2% increase in the share price lifted the LUSE ALSI almost 1% for the week. Elsewhere, SCB Zambia and Zanaco gave up 2% and 1.8%, respectively.

Lusaka Stock Exchange


Copperbelt Energy 9.0 471.00 Investrust Bank -2.4 20.00 Celtel 3.2 645.00 StanChart Zambia -2.0 245.00

Zambeef 0.3 3,980 ZANACO -1.8 555.00

Top trader ZMK (m) USD (m) Total Traded ZMK (m) USD (m)

Celtel 5,935.5 1.17 LuSE ALSI 6,418.0 1.27

Market Performance Level ZMK (%) USD (%) ZMK/USD % chg

LuSE ALSI (ZMK) 2,856 1.0 0.8 5,065 -0.12


Lunsemfwa/InfraCo to work on USD 270m hydro-project


The Africa Weekly

ZIMBABWE POLITICAL AND ECONOMIC NEWS

President Robert Mugabe said last Friday that the government has no intention of expropriating the mining industry. He added that no mine has been nationalised since independence

This step would ease the concerns of the foreign-owned mining firms operating in the country, who were reluctant to expand their operations, fearing their businesses could be seized. (Source: Reuters)

Zimbabwean’s mining chamber expects that the country can double its gold production in the next two to five years, if exploration and investment in the mining sector is increased. Further, it is anticipated that the gold output could hit 50t in next 10-15 years, if higher prices continued to hold and more investment was channelled to the sector.

After dropping to 3t in FY08, gold production is expected to touch 7t this year. (Source: Reuters)

Zimbabwe awaits clearance from the Kimberley process, which regulates the global diamond trade, to restart exporting diamonds from the country’s famous Marange fields. A ban was imposed after human rights charged politicians and army of profiting from illegal mining in Marange. (Source: Australia News Net)

The Zimbabwean government decided to abandon operation Maguta after results of the crop assessment by three ministries. The results revealed that over 205,000 households in Matabeleland South, Midlands, Manicaland, Masvingo face starvation this year.

The operation was launched in 2005 but failed to end food shortages in the country, with analysts saying the targets were missed primarily due to lack of inputs and poor planning on the part of government. The finance ministry has already released USD 3.5m to the Grain Marketing Board to tackle the situation. (Source: Zimbabwe Situation, The Standard)

WHO’s Framework Convention on Tobacco Control guidelines poses a threat to Zimbabwe’s tobacco industry. Its recommendations seek a ban on ingredients used to make tobacco products.

The move has drawn criticism from the International Tobacco Growers Association (ITGA), which says such a move would impact on millions of livelihoods around the globe. (Source: Zimbabwe Situation, The Standard)

To promote bilateral economic cooperation, the Communist Party of China (CPC) and Zimbabwe's Zanu-PF will strengthen their inter-party relations to strengthen high-level exchange, to enhance exchange in ruling experiences, to promote bilateral cooperation and to make efforts to promote folk or informal exchange between the two countries. (Source: Zimbabwe Situation, Xinhua)

No mine nationalisation - Mugabe

Zimbabwe to target 20t gold production

Zimbabwe awaits approval to export diamonds

Govt abandons operation Maguta

WHO guidelines a threat to the Tobacco industry

China and Zanu-PF to work on improving inter-party ties


The Africa Weekly

Reserve Bank of Zimbabwe (RBZ) is facing investigation from the Zimbabwe Revenue Authority for importing 75 vehicles without paying any duty. The cars were imported through supplier Imperial Motors and some of these unmarked cars were used in ZANU PF’s hostile campaign during elections. (Source: SW Radio Africa News Stories)

British Petroleum and Shell Zimbabwe have increased prices of its petroleum products sold locally after being severely affected by the Gulf of Mexico oil spill. Petrol at BP filling stations last Friday stood at USD 1.31 per litre, while diesel was at USD 1.40 per litre which is marginally higher than those at other service stations.

This impact is expected to run long as till now company has been unsuccessful in tackling the problem. (Source: AllAfrica)

COMPANY NEWS

OK Zimbabwe released its 1Q10 results reporting revenue of USD 187.5m and operating profit of USD 2.5m. High level of shrinkage during the year, unusual markdowns due to price reduction and fridge failures resulting from frequent power cuts, seriously affected the profitability of the company.

The overhead expenses amounted to USD 27.8m, driven by staff costs, equipment maintenance and high utility and distribution costs. Finance cost totalled USD 1.3m. Capital expenditure for the quarter amounted to USD 1.5m; of which USD 0.67m was spent in rebuilding the Masvingo Branch which was destroyed by fire in October 2007, USD 0.46m on replacement of computer and other equipment, USD 0.15m on a new store in Chipinge and staff housing in Ngezi and USD 0.22m on replacement of motor vehicles.

The directors said that the company is in the recovery stage, and thus decided not to declare any dividend for the year ended 31 March 2010.

OK Zimbabwe is focusing on new and innovative strategies such as renovation of existing stores, strategic expansion of branch network, upgrading of procurement and distribution function and enhancement of information technology to increase its market share. To fulfil the capital requirements for its business, the company has recently undergone with a successful rights issue and has raised a convertible loan. (Source: Company report)

Duration Gold, an emerging gold producer and explorer in Zimbabwe, expects that gold output will reach 100,000oz by FY12 due to an improving investment climate and liberalisation of the country’s gold trade.

Errol Smart, Duration Gold's chief executive, said that the company is producing 1,600oz per month from its three mines, but expects producing 5,000oz per month by year-end (Source: Zimbabwe Situation, Business Report)

Rio Tinto's diamond unit in Zimbabwe said it has begun work on a USD 300m expansion programme that is expected to raise output six-fold. It said that it is discussing with the government ways to improve the investment climate in mining.

This expansion would raise the capacity to 1.8m carats a year. The company is planning to send the investment proposal to the shareholders for their approval. This expansion would increase the production by a factor of 6 to 7 times and would double the jobs. (Source: Reuters)

RBZ under investigation

Petrol prices hiked

OK Zimbabwe announced results for 1Q10

Duration Gold targets 100,000 oz gold output by FY12

Rio Tinto’s new gem project worth USD 300m


The Africa Weekly

Sable Mining said on Tuesday that it has decided to acquire an 80% interest in Monaf Investments, which holds the Lubu coal concession in the Bulawayo mining district of Zimbabwe, by paying USD 3m in cash and USD 3m in shares at 28 pence per share.

Andrew Groves, Sable Mining CEO said that Lubu was a major undeveloped coal resource and the company's objective would be for Monaf to initiate a drilling programme to better define the geology of the coal basin with the intention of confirming the initial 330mt to Samrec-compliant status. (Source: Mining Weekly)

MARKET ACTIVITY

The Zimbabwean market traded mixed, with volatility driven by foreign investors. Interest in Barclays Zimbabwe (+9.9%) and Delta (+4.7%) lifted the market, but Colcom (down 25%) and National Foods (-15.5%) saw large price drops in light trading. Econet was the most active stock for the week, but it remained unchanged.

Zimbabwe Stock Exchange


PG Industries 14.3 0.04 Radar Holdings -33.3 0.30 Barclays Zimbabwe 9.9 0.11 Colcom Holdings -25.0 0.24

First Banking Corp 9.7 0.04 Zimplow -22.2 0.04

Top trader USD (m) USD (m) Total Traded USD (m) USD (m)

Econet Wireless 1.02 1.02 ZSE Ind 3.52 3.52

Market Performance Level USD (%) USD (%) USD/USD % chg

ZSE Ind (USD) 129.28 -0.47 -0.47 1.00 0.00


Sable Mining acquires Zimbabwe coal assets


The Africa Weekly

KENYA POLITICAL AND ECONOMIC NEWS

The World Bank raised its growth forecast for Kenya in a report today, urging the country to develop its port of Mombasa in a vital bid to improve its flagging export performance and sustain future growth. The bank predicts growth of 4% in 2010, up from a projection late last year of 3.5%.

The bank expects good rains to boost the agriculture sector that accounts for a quarter of GDP. The forecast, along with the government's own of 4-5%, signal a return to faster growth after a post-election crisis, drought and the global financial crisis cut it to 1.6% in 2008 from 7% in 2007.

The bank said that should the positive trend continue, the economy could grow by 5% in 2011, bringing the country back into the high growth momentum it experienced in 2004-2007. (Source: Reuters) (Source: Reuters)

The shilling slid to its lowest close in more than a year on Tuesday, dragged lower by a surge in demand from energy importers late in the session. The shilling closed at KES/USD 80.10/20, the lowest since 7 April last year.

Traders said international markets would continue to set the trend for the shilling. "We expect global risk trends to continue calling the shots here and tipping over the KES/USD 80.00 mark is not ruled out," Commercial Bank of Africa said in a market report. (Source: Reuters)

KES/USD (Jun09 to close yesterday)

Source: African Alliance data

The World Bank has approved a USD 330m loan for Kenya to expand its national grid and support its emerging geothermal power generation. The multi-million dollar loan is a part of USD 1.4bn being invested in the electricity sector by the government, the World Bank and other development partners, the World Bank said.

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World Bank raises Kenya’s 2010 growth to 4%

Shilling weakens on high demand from energy importers

World Bank approves USD 330m loan for energy


The Africa Weekly

In the statement released on Thursday, the bank said the lack of reliable energy lowers the annual sales revenues of Kenyan firms by about 7% and reduces Kenya's growth rate by about 1.5% annually. It was citing the 2008 Africa Infrastructure Country Diagnostic report. (Source: Reuters)

Kenya's year-on-year inflation rate accelerated to 3.9% in May from 3.7% a month earlier, a source at the statistics office said today. Inflation had been slowing steadily this year mainly due to heavy rains bolstering crop harvests and depressing food price inflation..

The headline rate is still comfortably below the central bank's 5 percent medium-term target. (Source: Reuters)

Inflation y/y (May09 to May10)

Source: African Alliance data

COMPANY NEWS

Barclays Bank of Kenya posted a 8.9% fall in pretax profit for the 1Q10 due to a one-off staff related cost, but said it expected interest income to rise this year. Pretax profit was KES 2.0bn (USD 25.1m) during the first three months of 2010, down from KES 2.2bn in the same period last year. Although Barclays was first among the big banks in Kenya to post a decline in profit for the period, its net interest income jumped 13% on better margins.

Its operating expenses increased by slightly more than half a billion shillings to KES 4.07bon on the back of a one-off expense related to staff. It said underlying expenses were in line with inflation and business expectations.

Barclays' shareholders approved last week the sale of the bank's custody business to Standard Chartered Bank of Kenya for about KES 3.5bn, it said in a separate statement. (Source: Reuters)

CfC Stanbic Bank has announced it will be lowering the cost of its current and fresh loans from next month, underlining the increasing competition among the country's commercial banks. It will cut base rate by a percentage point from 15.25% to 14.25%.

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Inflation rises to 3.9% in May

Barclays Kenya 1Q10 profit slips on staff costs

CFC Stanbic to cut lending rates


The Africa Weekly

The reprieve to its customers also extends to those currently servicing loans. Barclays Bank of Kenya was the first to reduce its rate from 15.75 % to 13.75%. Citibank then reduced its base lending rate by 4.75% points to 10%, making it by far the lowest so far in a market. (Source: Daily Nation)

CfC Stanbic Holdings is separating its long-term and short-term insurance businesses. Under the new proposal, CFC Life Assurance Ltd will handle long-term insurance, namely life and pensions, while The Heritage Insurance Company will deal with short-term or general insurance business. The intention for such a move is to see insurance business CFC Insurance Holdings Ltd separately listed at the bourse. (Source: Daily Nation)

The merger between Equatorial Commercial Bank (ECB) and Southern Credit Banking Corporation (SCBC) has finally been given shareholder and regulator approval. Industry players say that the merger has been carried out in time to beat the 2012 Central Bank of Kenya deadline, which demands that commercial banks shore up their core capital to at least KES 1bn, as well as synergising their resources to increase their joint efficiency. The two banks have come to gain from the convenience of the consolidated businesses and the access to more branches for their respective customers. (Source: Business Daily)

MARKET ACTIVITY

The Kenyan NSE 20 Index rose by 0.7% as banking and telecoms stocks led the market, recovering most of the losses posted in the last two trading sessions of last week. Equity Bank bounced back 10.7% after previous sell-off, while Safaricom gained 4.7% in the first two trading sessions, only to remain flat thereafter. Other banking stocks lost some ground, with NBK down 3.1% and KCB 2.4% lower. EABL continued to push its 12-month highs, closing at KES 178 on Thursday up 1% for the week. Diamond Trust was surprisingly the largest trader in what was a rather quiet week, partially due to a public holiday on Tuesday. Barclays Bank was the largest trader on Monday after releasing 1Q10 results; however the share price remained unchanged on the day and 0.9% up for the week.

Nairobi Stock Exchange


Equity Bank 10.7 23.25 StanChart (Kenya) -4.5 214.00 Kenya Airways 7.6 56.50 BAT (Kenya) -3.4 200.00

George Williamson 6.8 203.00 NBK -3.1 38.50

Top trader KES (m) USD (m) Total Traded KES (m) USD (m)

Diamond Trust 567.5 7.10 NSE 20 1,547.0 19.3

Market Performance Level KES (%) USD (%) KES/USD % chg

NSE 20 (KES) 4,234 0.7 0.23 80.15 -0.50


CFC Stanbic splits its insurance arms on way to bourse

Equatorial and Southern Credit merge given nod


The Africa Weekly

RWANDA POLITICAL AND ECONOMIC NEWS

The National bank of Rwanda (BNR) has made headway in implementing key credit information reforms and systems that will ease access to credit and boost the country's ranking in the 2011 World Bank's Doing Business Report. The Credit Information System Law (CIS law) assigns the central bank, the role of licensing and supervising private credit reference bureaus. Rwanda’s global position improved in 2010 largely due to due to improved regulations to ease access to credit including securing transactions law that allows the use of movables in collateral transactions. The newly licensed private Credit Reference Bureau (CRB) Africa, is now offering credit reports on demand.

The credit information system will mainly serve banks, microfinance institutions and other credit institutions operating in Rwanda. Access to individual or company's credit history will reduce incidences of institutions lending to habitual defaulters, while rewarding borrowers with good repayment history to continue accessing credit facilities at improved conditions. This initiative is expected to increase bank's appetite to issue credit to the economy, following the central bank's pledge that it will continue to implement a proactive monetary policy boosting liquidity levels within the banking system. (Source: New Times)

Around 9,000 rural households will benefit from three micro-hydropower plants currently under construction in the districts of Rubavu and Rutsiro. Energy plays an important role in poverty reduction and as Rwanda advances in ICT's, rural electrification will ensure widespread use of ICT's in the countryside. Basic education programme availability of energy in the rural areas will guarantee equal opportunities among students both in the villages and urban areas, as education facilities (specifically computers and laboratories) in both settings will be powered by electricity. (Source: New Times)

COMPANY NEWS

Banque Populaire du Rwanda (BPR) - the country's largest bank by branch network - announced it will install 27 Automatic Teller Machines (ATMs) at its major branches around the country by the end of the year. This is in a bid to boost customer service and meet the increasing local demand for modern banking services. It targets to make the service accessible to approximately 400,000 new clients by the end of the year. BPR has spent USD 2.1m on the acquisition of the machines, with each machine costing USD 80,000. (Source: New Times)

BNR implements key reforms to ease access to credit

Rural Electrification to elevate living standards

BPR to install 27 new ATM’s


The Africa Weekly

TANZANIA POLITICAL AND ECONOMIC NEWS

The government unveiled a TZS 11.1trn tentative budget for 2010/11. TZS 6trn of the estimates would be sourced internally, while foreign grants and loans would amount to TZS 2.8trn. The government would borrow TZS 1trn from domestic sources and TZS 983.7bn commercially. Local government authorities are expected to raise TZS 172.6bn, while proceeds from privatised firms would total TZS 30bn. (Source: The Citizen)

Cement prices rose in the past two weeks, with dealers attributing the trend to shilling depreciation against the dollar. Tanzania Portland Cement sources said the commodity price had risen to TZS 12,500 from TZS 12,000 in two weeks. Local manufacturers have reason to smile as prices of imported cement are also starting to increase following a decline in import volumes. The shilling loss is making exports cheap, but imports expensive, triggering inflation. Petroleum products, industrial machinery, second-hand vehicles and metal products are some of the items whose prices are expected to come under pressure from the currency swings. (Source: The Citizen)

Landlocked East African community member states are to benefit from a proposed oil pipeline to connect them to Tanzania if negotiations go through. The USD 3.5bn project, which will see the construction of a refinery and a 1,500km pipeline from the Coast Region of Tanzania to Kigoma and Mwanza regions, will be carried out by Noor Oil & Industrial Technologies (NOIT), a United States-based multinational oil firm. Benefits of this project include cheaper oil, while countries will also save on the cost of road maintenance occasioned by excessive use of surface transport to deliver products to destinations and also ensure uninterrupted supply of refined products. (Source: East African)

Tanzania’s economy expanded by 6% in 2009, beating a forecast for 5.0-5.5% growth, and should grow by 7% this year. The country’s inflation rate should slow to 8% in June 2010; higher than an earlier forecast of 6 %, and that the country's inflation rate was 12.1% in 2009. (Source: Reuters)

COMPANY NEWS

Zantel re-launched 'ZPesa', its mobile banking service in Zanzibar, in an effort to revamp the services. It has additional features enabling subscribers to pay for several utilities through mobile phone. Such services include paying for electricity, water, air tickets, DSTV and cable TV, as well as sending and receiving money and buying airtime. (Source: The Citizen)

Govt plans TZS 11trn budget

Commodity prices rise as shilling loses to dollar

New pipeline plan promises cheaper oil

Tanzania’s economy better than expected

Zantel re-launch ZPESA


The Africa Weekly

MARKET ACTIVITY

The Tanzanian market was almost exclusively (99% of total value traded) confined to CRDB (flat), NMB (flat) and Twiga (+1.2%), lifting the DSE ALSI by 1bp.

Dar es Salaam Stock Exchange


Swissport 1.7 600.00 No losers TWIGA 1.2 1,740 --

Top trader TZS (m) USD (m) Total Traded TZS (m) USD (m)

CRDB Bank 215.3 0.15 DSE 630.2 0.43

Market Performance Level TZS (%) USD (%) TZS/USD % chg

DSE (TZS) 1,173 0.01 1.7 1,450 1.7



The Africa Weekly

UGANDA POLITICAL AND ECONOMIC NEWS

Uganda's consumer price index fell 1.5% in May thanks to a drop in food crop prices, slowing the headline year-on-year inflation rate to 4.4%. According to Uganda Bureau of Statistics (UBOS), headline inflation rate has more than halved since December when it was 11.0%, mainly due to the increased harvests curbing food price inflation. Food crop prices fell 2.7% in May, helping to slash the year-on-year inflation rate for food crops to 5.5% from 10.7% in April.

During the month, lower prices for charcoal and clothing were recorded while prices of diesel, paraffin, firewood, pharmaceutical products and transport fares increased in most centres. In urban centres across the country, Arua registered the lowest annual headline inflation rate of -3.8% compared to the high income centres of Kampala and Mbarara, which registered 5.8% and 7.5% respectively. Underlying rate of inflation that excludes food, energy and metered water prices, eased to 4.6% in May from 5.5% in April. (Source: The New Vision)

Inflation y/y (May09 to May10)

Source: African Alliance

Government is expected to raise taxes in the next budget as the gap between available resources and planned expenditure continues to expand. The FY10/11 budget forecast indicates a possible 11% increase in domestic taxes, the highest tax burden ever in the country as government moves to close a UGX 2trn budget deficit.

On the back of lower growth projections and hence lower domestic revenue projections, the medium-term resource envelope of domestically raised revenues and foreign donor aid is projected to be lower than what was projected in the National Development Plan (NDP) by UGX 8trn. As a result of the shortfall, government intends to cut development expenditure from last year’s UGX 3.4trn to UGX 2.8trn in the coming FY 10/11. Starting July 30, Uganda Revenue Authority (URA) is expected to collect more than UGX 5trn from taxpayers, a projected UGX 1trn more than the current year’s target.

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Inflation eases to 4.4% Y/Y in May

Taxes to rise amidst UGX 2trn deficit


The Africa Weekly

In regards to the financing share of the budget, domestic revenues will finance 72.9% of the budget in 2010/11 compared to 62.6% in 2009/10. The share is projected to lean more on domestic revenue by 2014/15 to about 82.6 % with donors' support declining to about 17.3% in the same year. The Ugandan budget will be read on June 10, concurrently with Kenya, Tanzania and Rwanda. In her budget speech, the Minister of Finance, Ms. Synda Bbumba will seek to strike a balance between reducing the deficit over the long term and stimulating the economy in the short term to cut poverty and unemployment through value addition and increased productivity. (Source: The Monitor)

The central bank this week intervened in the foreign exchange market by selling over USD 120m to stabilise the market. According to Bank of Uganda (BoU), the market for some weeks has experienced some instability based on the turbulent appreciation of major currencies against the shilling, hence its need to intervene. Over the years the central bank has been building strong reserves, reflected through the growth of the gross foreign exchange reserves to a tune of USD 2.7bn. Such growth puts the country on a safer path to guard against shocks that usually occur in the turbulent foreign exchange market. The country's foreign exchange reserve level is also well above the international requirement, which requires developing countries to at least have reserves that can cover three months of future imports - Uganda's foreign exchange is estimated to provide cover for more than five months.

In regard to the global economy, the bank noted there has been a continued recovery from the 2008/9 recession with trade increasing in Asia and America. As to the concern about rising government deficits and debt levels in Greece, Portugal, Italy and Spain has all created instability in the financial markets but the bank has enough reserve to weather the turbulence as the European Union, European Central Bank and the International Monetary Fund put in place rescue measures to address the global crisis. (Source: The Monitor)

COMPANY NEWS

PTA Bank has managed to secure a USD 90m (UGX 199.2bn) from a consortium of European Banks to finance enterprises in its 17 member states. Dutch Development Bank loaned USD 50m, Austria-based OPEC Fund for International Development (OFID) provided a farther USD 20m, while Standard Chartered provided the remaining USD 20m.

The bank, which operates in the eastern, northern and southern parts of Africa, has been able to extend over USD 4.5bn of trade and project financing over the last two decades.

In June 2009, PTA Bank issued a USD 5m bond at the local exchange to raise funds locally for on-lending to qualifying businesses. The bank has financed a number of businesses in Uganda, including a leading pharmaceutical plant and the Oasis shopping mall in Kampala. (Source: New Vision)

BoU intervenes in the foreign exchange market

PTA Bank secures USD 90m funding


The Africa Weekly

MARKET ACTIVITY

In Uganda the market turnover dropped by 92.4% to UGX 25.6m. Uganda Clays moved back into positive territory (+7.8%) to close at UGX 55. For the second week Uganda Clay’s 25m shares on offer at UGX 55 are yet to be taken up. Stanbic Bank remained at UGX 200 but generated 48% of the market’s turnover. Due to delays facing custodial SCD account opening, the market has seen temporary absence of institutional clients.

Uganda Stock Exchange


NIC 33.3 60.00 Bank of Baroda -3.4 425.00 Uganda Clays 7.8 55.00 Stanbic Uganda -0.5 200.00

Top trader UGX (m) USD (m) Total Traded UGX (m) USD (m)

Stanbic Uganda 12.8 0.01 USE ALSI 26.6 0.01

Market Performance Level UGX (%) USD (%) UGX/USD % chg

USE ALSI (UGX) 1,031 0.49 -0.60 2,258 -1.09



The Africa Weekly

BRVM (Mali, Burkina Faso, Benin, Guinea Bissau, Togo, Côte d’Ivoire, Senegal, Niger)

POLITICAL AND ECONOMIC NEWS

Mali wants to introduce a new mining code in October as the West African gold producer attempts to encourage more investment in its minerals sector, its mines minister said on Tuesday. Africa's third biggest gold producer wants to take advantage of high metals prices by developing mining, which recently overtook cotton as the country's biggest export earner. Firms which own permits but are not digging may lose their rights under the proposed new code.

Last month, a mines ministry official said Mali would become Africa's newest iron ore producer in September, when Indian-owned firm Sahara Mining expects to start digging the steelmaking mineral. Despite a call from the African Development Bank last week for African countries to raise taxes on mining firms, Mali suggested it may look to cut taxes.

South Africa's Gold Fields said last month it plans to open a new mine in Mali, the Komana project, in the coming three years. The new mining code will be presented to government by the end of June, and voted upon in the national assembly's October session, Traore said. (Source: Reuters)

The top UN envoy in Ivory Coast warned Thursday that the political stalemate in Ivory Coast over reunification and elections is contributing to growing frustration and heightened tensions in the West African nation. Choi Young-jin told the UN Security Council the reason for the impasse is that the three major protagonists in the Ivorian crisis are each insisting on their own "core interest" and claiming that a March 2007 peace deal creating a unity government and a roadmap for elections supports their demand. President Laurent Gbagbo's camp wants reunification before elections; the opposition wants elections before reunification, and the New Forces rebels of Guillaume Soro, who became prime minister in the unity government, want identification of voters before reunification, Choi said.

"This political stalemate is hardly encouraging," he said. "Indeed, during the eight years since the outbreak of the crisis, perennial delays in implementing the various peace agreements have been a source of deep frustration for the Ivorian people as well as the international community." (Source: The Canadian Press)

Togo's main opposition party has suspended its long-serving leader, Gilchrist Olympio, for agreeing to enter a coalition with the ruling RPT government that it says stole power. Protest rallies have erupted across the West African phosphate producer nation since President Faure Gnassingbe, son of former dictator Gnassingbe Eyadema, won re-election in a March vote opponents say was rigged.

Olympio, leader of Togo's opposition for two decades, on Thursday announced a power-sharing deal to end the dispute that gives his party seven ministries including foreign affairs, but the move was rejected by some supporters. (Source: Reuters)

At the conclusion of an official visit to the Republic of Ghana by invitation of Ghana’s Head of State John Atta Mills, Senegalese President Abdoulaye Wade announced his intention to introduce legislation allowing members of the global African Diaspora community to visit Senegal without need of a visa. In addition, this historic legislation

Mali wants new pro-investor mining code

UN envoy warns that Ivory Coast political stalemate is

heightening tensions

Togo opposition shuns leader over power-sharing plan

Senegal offers Visa-free status


The Africa Weekly

would include a provision allowing members of the Diaspora to acquire a special passport. (Source: WashingtonInformer)

COMPANY NEWS

Gateway Communications has solidified its satellite communications business, taking advantage of erratic outages in land-based networks and the high cost of fibre connectivity in central and West Africa. Gateway, one of the largest satellite companies in the region, has within the last month signed deals with ISPs and telecom operators in Guinea, Benin, Senegal, Chad, Niger and Ivory Coast, showing that Africa is still relying on satellite for communications.

Sat 3 fibre optic cable serves west Africa coast and some landlocked countries in central and north Africa but erratic outages have led to increased reliance on satellite. "The demand for capacity is growing fast in Africa, and countries such as Senegal and Guinea have burgeoning telecommunication markets that are becoming increasingly vibrant," said Mike van den Bergh, CEO of Gateway Communications.

In Senegal, Gateway is working with Sonatel to provide international voice services for its subscriber base. Sonatel is part of the France Telecom group and holds about 70% market share.

Gateway operates in 40 African countries and has an ambitious plan of building an MPLS (Multi Protocol Label Switching) service that will cover every city. It has already rolled out broadband services in some cities and is now working on guaranteed up times that will compete with fibre optic cables. (Source: ComputerWorld.com)

Nigeria's Globalcom is reported to have been granted a mobile operator’s licence in Senegal. The Senegalese licence will also allow Globacom to land its trans-Atlantic submarine cable, Glo 1, in the West African country with opportunities to extend the infrastructure to Mali.

Globacom has operating licences in Nigeria, Ghana, Benin Republic and Cote d'Ivoire, but has recently threatened to withdraw from Ghana, claiming its network is being sabotaged. (Source: CellularNews.com)

South Africa-based sugar producer, Illovo Sugar, is at an advanced stage with its pre-project activities for establishing a sugar project in Mali. As part of Illovo's audited group results for the year ended 31 March 2010, the company states that "the proposed greenfields project in Mali continues to be progressed, and the various pre-project activities are at an advanced stage.

"Subject to the government of Mali meeting certain requirements, the necessary approvals for the funding of the project are likely to be progressed and finalised in the second half of the calendar year. This would facilitate the commencement of cane development, with factory commissioning taking place around two years later," the statement read.

Illovo currently has operations in South Africa, Malawi, Zambia, Tanzania, Swaziland and Mozambique. (Source: HowWeMadeItInAfrica.com)

Fibre outages push up satellite business in West Africa

Globalcom granted Senegal's fourth mobile network licence

Illovo’s investment plans in Mali on track


The Africa Weekly

MARKET ACTIVITY

The BRVM marked ended the week 2.4% higher, on the back of strong buying in a number of large cap counters during a below-average week. Sonatel gained 3.7%, while SOGB (agriculture) and SGB (banking) surged by 16.1% and 13.8%, respectively. Solibra was 1.3% weaker.

Bourse Regionale des Valeurs Mobilieres


SOGB 16.1 21,490 SARI CI -8.2 40,000 SGB 13.8 48,350 SMB -6.6 13,995

PALM CI 11.1 5,555 SIVOA CI -4.2 9,580

Top trader XOF (m) USD (m) Total Traded XOF (m) USD (m)

SAPH 91.9 0.17 IC Comp 375.2 0.70

Market Performance Level XOF (%) USD (%) XOF/USD % chg

IC Comp (XOF) 150.78 2.4 0.9 538.60 -1.45



The Africa Weekly

GHANA POLITICAL AND ECONOMIC NEWS

Mr George Smith-Graham, CEO of the Fair Wages and Salaries Commission (FWSC), said the commission would meet its July deadline in the implementation of the Single Spine Salary Pay Policy (SSPP). Mr Smith-Graham gave the assurance in Accra at a forum organised by the FWSC for members of the Parliamentary Select Committee on Employment and State Enterprises. It was aimed at deepening the knowledge of the committee on the current state of the implementation process of the SSPP.

SSPP is being introduced to promote equity and fairness in public sector salary administration to attract and retain the highly skilled people in the public service. Mr Smith-Graham said the key challenges facing the commission is the agitations from Ghana Medical Association, Ghana National Association of Teachers, Ghana National Association of Graduate Teachers and other interests groups for better conditions for members under the SSPP. (Source: Myjoyonline)

The Public Utilities Regulatory Commission (PURC) has approved the increase utility tariffs by 125%, the first since 2007. The cost of electricity and water is to go up by 89% and 36%, respectively. The PURC has also received assurance that the government would pay its indebtedness to the utility companies, estimated at nearly GHS 80m, to enable the companies to cover their cost and procure the needed equipment to improve the quality of their services. The commission has set clear benchmarks for improved quality of service to be met by the utility companies and would fully apply legal penalties and sanctions on any of the utility companies which do not meet the benchmark.

Rural consumers and other consumers within the 0-50 units’ bracket will not be affected by the increase as a result of government’s subsidy (GHS 48m) allocated to them. Ghana’s energy cost is expected to be lower next year when gas from the West African Gas Pipeline project and the Jubilee fields becomes the primary source for energy generation. (Source: Daily Graphic)

The Africa Infrastructure Country Diagnostic (AICD) 2010 report has revealed that Ghana requires a sustained spending of USD 2.3bn annually over ten years to ensure that the infrastructure needed to attain middle-income status is met. The amount will be invested in improving road infrastructure, agriculture, utilities and improving capacity and efficiency of trade hubs such as the ports.

According to Dr Vivien Foster, the World Bank lead economist for Sustainable Development - Africa Region, although Ghana has progressed in terms of water supply and mobile penetration at reasonably low costs, there was still the need to expand low-cost electricity generation capacity and refurbish ageing transmission network to keep pace with growing demand and preserve service reliability.

AICD is a project implemented by the World Bank to improve knowledge base of physical infrastructure in Africa and provide a baseline against which future improvements in infrastructure services can be measured, making possible monitoring of results achieved from donor support. The study on Ghana was carried out using data from 2005 to 2006 and has subsequently been updated with figures from 2009. The core areas of study were ICT, irrigation, utilities and transport. (Source: Ghana News Agency)

FWSC to meet July deadline

PURC increases utility bills by 125%

Ghana requires USD 2.3bn annually to address

infrastructure deficit


The Africa Weekly

COMPANY NEWS

The management of Enterprise Insurance Company (EIC) disclosed at its annual general meeting held last week, that the company would soon delist from the Ghana Stock Exchange (GSE) and be replaced by Enterprise Group Ltd (EGL) after approval is given at an Extraordinary General Meeting to be convened later in the year.

According to Mr George Otoo, managing director of EIC, EGL, being the holding company, would operate the subsidiaries comprising Enterprise Insurance Company, Enterprise Life Assurance and Consortium House (a real estate development company). (Source: Business & Financial Times)

Kwanim Ghana-Denmark mechanised farm, a joint private Ghana and Danish venture company, is to cultivate 1,000ha of maize on a farm at Kwanim village in the Kwahu North District of Ghana. Already, 450ha of maize, 60ha of soya beans and 20ha of water melon had been cultivated during this year’s farming season. In addition, 500ha of maize would be cultivated in the minor farming season in September this year.

The Executive Chairman of the company, Mr Alex Frimpong Tenkorang, made this known when the board chairman of the Agriculture Development Bank, Mr Ibrahim Adams, paid a working visit to the farm. The company was also assisting a number of block farmers to cultivate 1,500ha of maize through the provision of machinery and seeds and marketing of their produce. The company is also constructing a 10,000t capacity warehouse to store the maize, which would be sold locally to poultry farmers and animal feed producers to supplement government's efforts in ensuring food security.

Mr Alex Frimpong appealed to the African Development Bank for financial assistance to finance the project. (Source: Ghana News Agency)

Wilmar International Ltd (Wilmar), an agribusiness group - on behalf of its wholly-owned subsidiary, Wilmar Africa Ltd - has announced its firm intention to make an offer to acquire at least 58.45% of the entire issued ordinary share capital of Benso Oil Palm Plantation (BOPP). The proposed offer will be for an aggregate consideration equal to GHS 0.83 per share to be settled in cash. The offer price is at a 62.75% premium to the minimum offer price (the average weekly price of BOPP shares in the last six months prior to this announcement).

Unilever Ghana Ltd, majority shareholders of BOPP (with a 58.45% stake) has accepted the proposal subject to the fulfilment or waiver of certain conditions. The offer will commence on 19 July 2010 to 31 August 2010; however, final settlement will be on 3 September 2010. (Source: GSE release)

The management of Total Petroleum Ghana Ltd (TOTAL) announced at its 34th Annual General Meeting, the company’s intention to increase its investment by 43% this year, to enable it expand its network of gas stations by a third from 225 to 300. According to the managing director of TOTAL, Jonathan Molapo, the company will spend GHS 12m (USD 8.4m) on the expansion, with a focus on the Western region - which is set to become the hub for Ghana’s growing energy sector when commercial production of oil begins by the 4Q10.

The company posted an impressive profit after tax of GHS 13.17m in respect of its 2009 financial year as against GHS 6.22m recorded in 2008, attributable to improvements in working capital, decrease in financial costs and improvement in network sales of 9%. (Source: Bloomberg)

EGL to replace EIC on the GSE

Ghana-Denmark joint venture to produce 1,000ha of maize

WIlmar to make an offer to BOPP shareholders

TOTAL to increase investment by 43%


The Africa Weekly

MARKET ACTIVITY

The Ghana Stock Exchange remained bullish during the week. UT Financial Services and Enterprise Insurance Company were the top price gainers, 41.7% and 33.9%, respectively. The share price of Ghana Commercial Bank, the most traded equity by value, rose to GHS 1.82 by mid-week and declined thereafter to GHS 1.77 during the last day of trading. GCB and UTF together accounted for 59.1% of the market turnover of GHS 3.85m, which represented an increase of 56.6% compared with the previous week’s value traded. CAL Bank, the biggest price loser, declined by 13.8%. The ALSI gained 0.35% to close at 7,095.5 points, representing a ytd gain of 27.3%.

Ghana Securities Exchange


UT Financial Services 41.7 0.34 Cal Bank -13.8 0.25 Enterprise Insurance 33.9 1.70 Home Finance -11.3 0.55

Ghana Oil 17.2 0.34 Accra Brewery -10.0 0.09

Top trader GHS (m) USD (m) Total Traded GHS (m) USD (m)

Ghana Commercial 1.59 1.11 GSE ALSI 3.88 2.72

Market Performance Level GHS (%) USD (%) GHS/USD % chg

GSE ALSI (GHS) 7,095 0.35 0.42 1.43 0.07


Dividends (GHS)

Company Financial year Type Amount (GHS) Last cum date Unilever Ghana Dec 09 Final 0.2128 9 Jul 10

Total Petroleum Ghana Dec 09 Final 0.7129 19 Jul 10

Source: Company Filing, Ghana Stock Exchange


The Africa Weekly

NIGERIA POLITICAL AND ECONOMIC NEWS

President Goodluck Jonathan last Saturday announced that plans are in place to introduce electoral reforms in Nigeria to ensure fair elections, which are due next year. He said that these reforms are a collective task that must be completed this year in the country to assure that every vote is counted in the elections being held.

The next general elections are expected to be held by January 2011 or December 2010; if the state assemblies adopt the recommendation of the Joint Harmonization Committee of the Senate and the House of Representatives on the review of the 1999 constitution.

The joint committee recommended that elections shall be conducted in not more than 150 days and not later than 120 days before the expiration of tenure of the present political office holders. (Source: Nigerian Bulletin, Daily Trust Nigeria, Reuters)

Nigeria's two houses of parliament have mutually decided to prepare legislation for setting up an asset management company that would absorb bad bank loans which would be sent to the president for his approval in some days.

Nigeria's central bank has strongly supported for the establishment of an asset management company (AMC), which will buy up non-performing loans in exchange for government bonds in order to free up banks' balance sheets. After the wipe off of bad loans from their balance sheets, Banks would resume lending in Nigeria where credit has been tight since last year's bail-out of nine poorly-capitalized lenders.

As per the bill, the bad loans would be exchanged for seven-year bonds or other debt instruments issued by the AMC and guaranteed by the finance ministry. AMC's value would be at least NGN 20bn (USD 133m). (Source: Reuters)

President Goodluck Jonathan has asked parliament to revise key budget assumptions for FY10 budget and has proposed a supplementary spending plan worth NGN 639.8bn (USD 4.3bn) to reflect a fall in global oil prices. He suggested that the budget's benchmark oil price must be revised and reduced to USD 60 from USD 67 per barrel, and Nigeria's oil output estimate to 2.25m bpd from 2.35m bpd. But, exchange rate would remain unchanged at NGN/USD 150.

The finance ministry reported last month that governmental revenues from oil sales were not sufficient to fund this year’s spending programme worth NGN 4.6trn (USD 31bn) and could force the country to use all of its windfall oil savings.

Jonathan said that it is absolutely necessary to reduce the aggregate level of expenditure from the NGN 4.608trn approved in the 2010 Appropriation Act and also asked parliament to consider a supplementary budget for certain unanticipated key expenditure items. (Source: Reuters)

Members of the Senate unanimously approved a salary increase of NGN 11bn for all legislative aides and National Assembly workers. The resolution was an outcome of a debate on a report on Establishment and Public Service of the Senate Committee headed by Mohammed Ahmed.

Electoral reforms by year-end, elections to be held by Jan

2011

Parliament pass bad bank bill

President urges revision of budget assumptions, proposes USD 4.3bn supplementary plan

Senate approves 100% salary increase for legislative aides and National Assembly staff


The Africa Weekly

The report listed that the workers were demanding 100% increase in their salaries and other allowances along with implementation of consolidated legislative salary structure for staff of the National Assembly. As per the resolution, the legislative aides would increase to NGN 6bn from NGN 3.4bn. For National Assembly staff the salary would increase to NGN 4.6bn as against NGN 2.7bn, while National Assembly Service Commission’s staff would get NGN 0.5m as against NGN 0.3m.

Ahmed explained that the 50% upward review would be implemented after the harmonisation with the House of Representatives while the balance of 50% would be implemented over the next eight years. (Source: Businessdayonline)

The Central Bank of Nigeria (CBN) stated that the country’s foreign reserves continued their downward trend and slipped further to USD 38.79bn on Wednesday from USD 40.28bn on 17 May, 2010. The analysts said that CBN should follow a practical approach to manage inflation, which is critical to the survival of Nigerians. The situation is further intensified by poor infrastructure which is making prices of major items rise.

The increased dollar demand at CBN’s bi-weekly forex auctions in the last two months has put tremendous pressure on reserves, with the bank raising its weekly sales from an average of USD 500m in March to USD 900m by April. It offered USD 500m at Wednesday’s auction, which is its highest single offer since last year’s currency crisis that raised the fears that sustained pressure could further deplete Nigeria’s reserves. However, there was no official explanation to the rising supply of foreign exchange at the bi-monthly auctions. (Source: Businessday Online)

The Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) have agreed to withdraw NGN 65bn (USD 436.9m) from the system next week through the 91-day, 182-day treasury bills and 364-day bonds windows.

The bank is planning to issue 91-day bills worth NGN 5bn, 182-day bills worth NGN 30bn and 364-day bonds worth NGN 30bn by next Wednesday using the Dutch auction system as part of monetary control measures to curb inflationary growth and help banks manage their liquidity. The results of the auction would be released the following day.

Last week, at the 91-day Treasury bill auction, a total of NGN 5.11b worth of securities were offered and sold. The bill was 418.47% subscribed and bid worth NGN 21.37bn was received. The bill was issued at a discount rate of 1.60%.

A total of NGN 5.11bn worth of matured bills were repaid into the system, bringing the transaction to a nil position. (Source: Reuters)

Nigeria's central bank (CBN) said on Sunday that it is planning to extend funds worth NGN 500bn (USD 3.3bn) to assist the country's troubled airline industry. Domestic airlines in Nigeria have gone through rapid expansion in recent years and are heavily indebted to the country's banks, themselves just recovering from the impact of a USD 4bn bailout last year.

The fund would assist the airlines which have already grounded some flights due to increased jet fuel prices. CBN’s spokesman, Mohammed Abdullahi said that the airlines which are indebted to banks can refinance their loans and amortise them over a period of 10-15 years, which would help in resolving the financial crisis in the aviation industry. (Source: Reuters)

Foreign reserves decline to USD 38.7bn

CBN to take off NGN 65bn next week to pay maturity bills

worth NGN 60.25bn

CBN provides credit fund worth NGN 500bn to airlines


The Africa Weekly

Minister of Petroleum Resources Diezani Allison-Madueke approved a 400% increase in gas prices to power for the domestic market. The Federal government announced that the new price of USD 1 per million metric British thermal units (mmbtu) up from USD 0.2 per mmbtu will be applicable by December which would further increase to USD 1.5 per mmbtu by FY11 and then to USD 2 per mmbtu by end of FY13.

The government decided to harmonise the domestic and export market rates to attract investment in the gas sector, making the domestic gas market more attractive for the operators. Allison-Madueke said that the new pricing arrangement has been taken positively by the industry and would assist in stimulating a major growth in new supplies.

Husaini Labo, Managing Director of Power Holding Company of Nigeria (PHCN), which is the major consumer of gas in the domestic market, said that when the increase in gas price takes off, the company would inform the Nigerians Electricity Regulatory Commission to adjust the electricity tariff. (Source: Daily Trust)

National Bureau of Statistics (NBS) released Nigeria’s labour force statistics and indicated that about 10m Nigerians were unemployed as at March 2009. The report further summarised that the total unemployment rate constitutes about 19.7% of the entire labour force, up from 14.9% recorded in March 2008.

NBS defines unemployment rate as the proportion of labour force that are qualified to work but did not work in the week preceding the survey period for at least 39 hours. (Source: Businessdayonline)

Nigeria’s Federal Government is optimistic of realising over USD 2bn from the non-oil export sector before FY10 end due to the sector’s increased foreign earnings worth USD 638m for 1Q10. David Adulugba, executive director, Nigerian Export Promotion Council (NEPC) said that the non-oil export’s volume recorded in 1Q10 indicated that the country was moving towards diversification from oil to non-oil targets.

Nigeria’s non-oil export earning has increased from USD 1.7bn in FY07 to USD 1.828bn in FY08. (Source: Businessdayonline)

COMPANY NEWS

Nigeria’s largest lender by market value, First Bank of Nigeria, accepted a USD 50m convertible-loan facility from the International Finance Corporation (IFC). First Bank’s shareholders voted unanimously to accept the loan at a meeting in the capital.

Stephen Onasanya, First Bank’s CEO, said that the full seven-year loan is worth USD 100m; half of which would be convertible into First Bank shares in two years and rest would be non-convertible. (Source: Financial Nigeria)

Standard Bank, one of South Africa’s top banks, with some other foreign concerns is planning to acquire commercial and retail banks in Nigeria and other countries. Ben Kruger, deputy CEO of Standard Bank, said that USD 1.35bn (NGN 200bn) has been set aside for the purpose.

The banking group at headquarter level has capital of USD 1bn for international expansions, including Nigeria, and would add USD 350m of excess capital to its Nigeria unit, Stanbic IBTC, that could be used to fund acquisitions in the country. (Source: Businessdayonline)

Gas prices increase 400%

Unemployed increase to 10m

Federal govt targets USD 2bn from non-oil sector before FY10

end

IFC lends USD 100m to First Bank

Standard Bank sets aside USD 1.4bn to acquire Nigerian

banks


The Africa Weekly

Swiss firm, Mediterranean Consulting Company (MCC) on Tuesday wrote to the Infrastructure Concession Regulatory Commission (ICRC) regarding its readiness to acquire up to USD 20bn; 25-year notes in the form of certificate of deposits, bond or medium-term notes under its debt financing and collateral trading programme over a 10-month period starting from 1 June, 2010.

The letter of intent was signed by Ing.Luigi Forino, the president of MCC Holding Group, who stated that the fund would be operated as private-public partnership (PPP) for funding the infrastructure in the country.

ICRC said that the proposal is on the top of agenda for discussions at its senior management’s meeting. (Source: Businessday Online)

A Nigerian tycoon, Jimoh Ibrahim expressed on Wednesday his plans to relaunch the country's troubled Nigerian Eagle Airlines - giving it its second rebranding in a year. Ibrahim bought an undisclosed stake in the airline a month ago and has decided to make it profitable again within six months.

He said that the re-branded Air Nigeria was buying new planes and aimed to double its fleet of five by 1 October. His aim is to have half of the fleet owned by Air Nigeria and half under lease agreements.

The airline was rebranded Nigerian Eagle Airlines from its original name Virgin Nigeria last September in a bid to cut its ties with Virgin Atlantic - despite the rebranding most Nigerians still know the airline as Virgin Nigeria. (Source: Reuters)

Shell Petroleum Development Company (SPDC) and Nigeria’s Caverton Helicopters Limited have sealed a contract worth NGN 93.73bn (USD 630m) for the provision of helicopters and associated services, both in the offshore and onshore operational areas. The contract would last for five years and can be extended for another two years. (Source: Businessdayonline)

Swiss firm, MCC proposes USD 20bn to enter infrastructure

bond market

Jimoh Ibrahim seeks to relaunch Nigerian Eagle

Airlines

Shell confirms NGN 94bn deal with Caverton


The Africa Weekly

MARKET ACTIVITY

In Nigeria, a 0.4% rise in the ALSI hid a lot of volatility during the week shortened by a public holiday on Monday. The market was strong last Friday, but the sentiment turned negative in the last two sessions, with a loss of almost 1% in Thursday’s trading. Unusually, the banking sector was almost flat, leaving the responsibility of determining market direction to the industrial counters. The building materials and construction sector was strong (Lafarge WAPCO up by 8.6% and Benue Cement 5.4% higher) and so were the oil marketing companies (Oando up by 4% and Mobil gaining 10.3%); however, Nigerian Breweries gave up 3.8% during the week, ending limit down in Thursday’s trading. Among the banks, Zenith was 4.4% lower, but Access Bank and Diamond Bank gained 13.6% and 14.2%, respectively.

Nigerian Stock Exchange


Diamond Bank 14.2 8.45 Bank PHB -10.8 1.40 Access Bank 13.5 8.80 Nig Bottling Co. -8.0 33.80

Afribank Nigeria 13.3 2.30 ETI (Nigeria) -7.2 16.43

Top trader NGN (m) USD (m) Total Traded NGN (m) USD (m)

Zenith Bank 1,759.4 11.6 NIGSE 11,667.5 77.0

Market Performance Level NGN (%) USD (%) NGN/USD % chg

NIGSE (NGN) 25,939 0.35 0.8 151.20 0.50



The Africa Weekly

EGYPT POLITICAL AND ECONOMIC NEWS

Egypt opened its border with the Gaza Strip on Tuesday, letting Palestinians cross. Egypt's Rafah crossing point is the only border post from Gaza which is not fully controlled by Israel. Cairo opened it sparingly since Hamas Islamists, who were allied to Egypt's opposition, seized control in Gaza three years ago. (Source: Reuters)

The official unemployment rate in Egypt witnessed a fall from 9.4% to 9.1% in 1Q10. (Source: Pharos, CAPMAS)

Government is currently planning of putting a limit to the commodity imports from any one country at 10% to 15%. (Source: Pharos, Al Alam Al Youm)

The minister of finance sanctioned a planned budget of EGP 97bn for social insurance funds during FY11. The total value of pensions and insurance benefits to be spent during the year are due at EGP 47bn, while the total value of insurance payments is expected to reach EGP 29bn during the same year. (Source: Pharos, Al Ahram)

Official trading on Nilex, the Egyptian small and mid cap companies’ bourse started on Thursday. Trading will commence on ten companies and trading hours will be from 11:00 am till noon. (Source: Pharos, Al Alam Al Youm)

COMPANY NEWS

Orascom Construction Industries announced 1Q10 results with net profit up by 19.1% y/y. The consolidated net profit in 1Q10 amounted to USD 985.5m as compared to USD 827.8m in 1Q09. (Source: Pharos, Company Press Release)

The National Telecommunications Regulatory Authority (NTRA) allowed Orascom Telecom Holding (OTH) to bid for a stake in Vodafone Egypt (VFE), as long as it maintains management rights in only one of the two local mobile operators.

Naguib Sawiris, OTH chairman, said that the company would plan to participate in a bid to acquire a stake in VFE, if it is tendered for sale. The company currently holds 35% non-controlling stake in Mobinil. (Source: Pharos, Al Mal)

In related news, Telecom Egypt (TE) confirmed on Tuesday that they are no longer in discussions with Vodafone Group for increasing their stake in Vodafone Egypt. Consequently, the current shareholder structure will be maintained. (Source: Pharos, Reuters)

Meanwhile, OTI’s Sawiris declared that South Africa’s MTN Group has offered USD 7.8bn for its Algerian unit, Djezzy. The Algerian government previously refused to approve the sale of Djezzy, but afterwards accepted Orascom’s request for negotiating the deal.

OTH stated that it is also amongst the potential bidders for a government stake being sold in Serbian-based Telekom Srbija. The Serbian government had announced a plan to auction a 40% stake in the telecom operator in September 2010. (Source: Pharos, Reuters, Al Masry Al Youm, Al Arabiya News Channel, Bloomberg, Wireless Federation)

Egypt opens Gaza border after Israel ship clash

Unemployment rate dropped to 9.1% in 1Q10

Govt in plans to set limit to commodity imports

Finance Minister approves EGP 97bn for social insurance funds

for FY11

Trading on Nilex commences

OCI’s 1Q10 results show net profit up 19.1% y/y

NTRA permits Orascom to bid stake in Vodafone Egypt

TE ceased discussions for increasing stake in Vodafone

MTN Group offers USD 7.8bn for Djezzy


The Africa Weekly

Ezzsteel has lowered its local steel prices by EGP 250 to reach EGP 3,550 per tonne due to a reduction in billet and scrap prices. (Source: Pharos, Al Mal)

The Algerian government is freezing USD 750m of investments by Ezzsteel and is also negotiating with other investors to build steel plans in Algeria. Other firms that are reportedly interested in replacing Ezzsteel are Acelor Mittal and Cevital.

Ezzsteel stated that it did not receive a formal notification from the Algerian authorities regarding the cancellation of its USD 750m Algerian project. (Source: Pharos, Arabfinance, Reuters, mergermarket.com)

The Central Bank of Egypt (CBE) approved international bond issue worth USD 1.5bn to National Bank of Egypt (NBE) whose proceeds will be used to finance a number of large scale projects. (Source: Pharos, Al Alam Al Youm)

This week National Bank of Egypt (NBE) and Banque Misr announced the following loan agreements:

For financing the execution of the first two phases of its new containers terminal in Damietta; Damietta International Ports Company (DIPCO) is planning to take a syndicated worth USD 600m from the NBE and Banque Misr. Other banks contributing to the loan are Bank of Alexandria, Ahli United Bank, Banque du Caire and Arab African International Bank (ABBK.CA) and the African Development Bank.

Banque Misr and NBE will jointly finance Egyptian Oil Tankers Company with debt facility of EGP 65m whose proceeds will be used to buy a new oil tanker.

Banque Misr will provide East Delta Electricity Production Company with EGP 920m which would be used to finance a part of its EGP 1.8bn new power plant. The remaining 50% will be provided by NBE. The proceeds will be used to finance electrical power station located in Ain El Sokhna. (Source: Pharos, Al Mal, Al Alam Al Youm)

HSBC-Egypt is arranging a loan worth USD 825m to finance the Benha Electricity Generation Station. The estimated cost of the station is EGP 5.4bn with a capacity of 750MW. It’s a Public Private Partnership (PPP) project between one of the subsidiaries of the Kuwait based Al Kharafi Group and the Egyptian Electricity Holding Company. (Source: Pharos, Al Alam Al Youm)

Japan Bank for International Cooperation (JBIC) is planning to provide a loan worth USD 1bn to the Egyptian Refining Company (ERC) to finance its expansions. ERC has an expansion plan worth USD 3.2bn. (Source: Pharos, Bloomberg)

SODIC’s sales soared since launch of west town projects

Sixth of October Development & Investment Company (SODIC) announced that its sales from newly launched projects - East Town and West Town - reached EGP 501m by end of FY09.

Both these projects contributed approximately EGP 385m to its total sales. Sub developed sales from West Town and East Town added EGP 60m and EGP 55m respectively to the company’s total sales. (Source: Pharos, Bloomberg)

Export Development Bank of Egypt (EDBE) is on track to complete the setting up of its investment banking arm named Egypt Capital Company. EDBE is due to receive the required permits for the practice before the end of the month.

Ezzsteel reduces its steel prices by EGP 250 per tonne

Algerian govt blocked USD 750m investments by Ezzsteel

CBE approves international bond issue worth USD 1.5bn to

NBE

NBE and Banque Misr announce new loans

HSBC Egypt arranging loan worth USD 825m to finance

power station

JBIC extending loan worth USD 1bn to ERC

EDBE finalising its investment banking arm


The Africa Weekly

EDBE would have 99.9% stake in Egypt Capital Company and the balance will be held by its workers’ fund. (Source: Pharos, Al Mal)

Pioneers Holding reported quarterly results for 1Q10 with net profits of EGP 0.37m, down by 98.8% compared to EGP 30.4m reported during the same period last year. (Source: Pharos, EGX)

MARKET ACTIVITY

Despite a hiccup on Tuesday, the Egyptian market managed to end the week in the green, largely thanks to the Friday and Thursday sessions; the EGX 30 was up by 2.9% for the week. The recovery was widespread, but the telecoms sector accounted for most of the market capitalisation gains as Orascom Telecom rose 14.1%, in what was slightly more than half of the week’s value traded. The building materials and construction sector was one of the few losers, with Orascom Construction falling 1.7% during the week. Among the banking stocks, CIB gained 1.6% but NSGB lost 2.7%.

Egyptian Stock Exchange


Orascom Telecom 14.0 6.17 Suez Canal Bank -4.7 7.22 South Valley Cement 12.1 6.13 Telecom Egypt -4.1 16.53

Arab Cotton Ginning 11.8 3.60 Remco Touristic Villages -2.2 4.39

Top trader EGP (m) USD (m) Total Traded EGP (m) USD (m)

Orascom Telecom 1,559.1 275.3 EGX 30 3,816.9 674.0

Market Performance Level EGP (%) USD (%) EGP/USD % chg

EGX 30 (EGP) 6,518 2.8 2.8 5.67 -0.08


Pioneers Holding 1Q10 net profits down 98.8% y/y


The Africa Weekly

MOROCCO POLITICAL AND ECONOMIC NEWS

A statement by the royal cabinet said this week that as part of the special interest given by King Mohammed VI to large-scale projects undertaken in the kingdom, the sovereign endeavoured to raise the funds required to carry out the Tangier-Casablanca high speed train project worth MAD 20bn (EUR 1.8bn).

Morocco will allocate MAD 5.8bn towards funding the project, the state contributes MAD 4.8bn, while the Hassan II Fund for Economic and Social Development will contribute MAD 1bn. France has agreed to provide a contribution of EUR 900m under an agreement signed in Marakech during the official visit by French President Nicolas Sarkozy, to the kingdom in October 2007.

To provide the remaining EUR 400m required for the project, King Mohammed contacted leaders of other countries, who have responded positively and expressed willingness to actively contribute to the achievement of the project. In this response, Saudi King Abdulla Ibn Abdulaziz granted Morocco some USD 200m. (Source: MAP)

According to Morocco’s trade bureau, the country’s trade deficit widened from MAD 46.3bn (USD 5.2bn) during the first four months of 2009 to MAD 53.2bn in the same period in 2010, as import growth exceeded export growth. The bureau said merchandise imports grew 12.6% y/y to MAD 93.7bn, as the import of crude oil more than doubled on the back of higher oil prices in the global markets. Imports of goods outside crude oil increased by 7.9% y/y. Merchandise exports grew by 9.7% y/y to MAD 40.5bn. Exports of phosphates and its derivatives surged 60.7%, but exports of other goods grew modestly.

IHS Global Insight expects Morocco’s merchandise trade deficit to continue widening in the short term due to rebounding import payments. Despite the wider trade deficit, the current account deficit is expected to narrow in 2010, owing to higher tourism revenues and expatriates’ remittances. Both tourism revenues and remittances posted double digit growth during the first four months of 2010, and are expected to increase robustly in the next coming months on the back of improving global economic conditions. (Source: IHS Global Insight)

King Mohammed to raise funds for high speed train project

Trade deficit widens between January and April 2010


The Africa Weekly

MARKET ACTIVITY

The Moroccan market opened on a low note last Friday, but the banking and building materials and construction sectors bounced back in the week to bring the total market up 0.5% at Thursday’s close. BCP (+2%) and BMCE (+6.4%) led the banking sector, but Attijariwafa declined by 0.6%. Among the building stocks, CGI gained 3.3% - accounting for most of the market capitalisation gains in the sector; Ciments du Maroc also did well, with the share price gaining 3.1%. Centrale Laitiere was down by almost 6%, dragging the agriculture sector into the red. ONA was one of the most actively traded stocks, but closed unchanged.

Casablanca Stock Exchange


SMI 8.7 1,350 Centrale Laitiere -6.0 11,980 Colorado 5.7 120.00 Sothema -4.3 1,340

BMCE Bank 5.4 246.00 Lesieur Cristal -3.4 1,352

Top trader MAD (m) USD (m) Total Traded MAD (m) USD (m)

ONA 157.9 17.6 MASI 812.0 90.5

Market Performance Level MAD (%) USD (%) MAD/USD % chg

MASI (MAD) 12,132 0.50 -0.68 9.03 -1.17



The Africa Weekly

TUNISIA POLITICAL AND ECONOMIC NEWS

The meeting, dealt with the latest developments recorded by the global financial and economic situation, mainly the developments in the euro zone.

The head of the IMF delegation stressed the resilience demonstrated by the Tunisian economy, saying that the global economic prospects remain uncertain despite the signs of improvement noted in some regions of the world, which requires a close follow-up of the situation. The IMF delegation is visiting Tunisia from June 2 to15, 2010 and will have meetings with senior officials in the economic and financial sectors. (Source: Tunisia Online)

During the 2009 -2010 campaign and until April 2010, exports of olive oil reached, 130,000t, an increase of 10,000t compared to the same period last year, whereas other products recorded a near stagnation including dates (60,000t), fishery products (20,000t) and citrus (25,000t).

The price of olive oil exports increased by 7.3% and exports of bottled olive oil reached 4.8% of overall exports, amounting to 3,008t against 2,240t during the last campaign. These results are due to efforts to brand Tunisian olive oil on foreign markets and the success this campaign was met with in the United States.

With a production estimated at 165,000 tons in 2008, Tunisia is the world's second largest olive oil producer after the European Union. (Source: TunisiaOnline):)

MARKET ACTIVITY

The Tunisian market gained 0.3% with good performance coming from BT (+1.7%) which recently had a 10:1 share split, and BIAT which gained 0.6%. A number of shares were marked down for dividend payments so the market capitalisation fell by 0.4%. Attijari Bank lost 3.4% and Poulina gave up 1.4%.

Tunis Stock Exchange


SOTETEL 3.7 18.05 Attijari Bank -3.4 22.79 SOTRAPIL 1.9 14.39 Tunisie Lait -3.3 5.82

ICF 1.7 55.35 Assad -3.1 11.45

Top trader TND (m) USD (m) Total Traded TND (m) USD (m)

Banque de Tunisie 3.59 2.38 TUNIS Index 19.3 12.7

Market Performance Level TND (%) USD (%) TND/USD % chg

TUNIS Index (TND) 4,954 0.30 -0.80 1.52 -1.10


Central bank governor receives IMF delegation

Olive oil exports on the rise


The Africa Weekly

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