April 23, 2014

The Ghanaian Economy in One Chart!

                                                                          chart courtesy of Bloomberg Finance L.P.
Ghanaian Cedi vs. U.S. Dollar
- The Ghanaian government has failed to reign in the country's fiscal and current account deficit, and the Cedi (Ghanaian currency) is down about 20% Y-T-D.
- We don’t believe the measures taken to date will be sufficient to stem the weakness in the GHS performance relative to the dollar.
- According to Standard Bank, the forth coming bond auction is likely to see yields in excess of 26-28% from foreign investors – and the government is likely to accept such high rates.

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

April 16, 2014

WSJ Opinion: Africa is Refuting the Usual Economic Pessimism

Nile Capital presents pan Africa mutual fund

Goldman Sachs predicts that Nigeria's economy will be bigger than Canada's or Italy's by 2050 -- and not far behind Germany's.
Writing about Nigeria and Africa for The Wall Street Journal, Ian Birrell says, "There is nothing illusory about the rapid growth and rampant change across the continent. Profound problems remain, as in other parts of the world -- but much of Africa stands on the brink of takeoff comparable to China's. Those who fail to see this are likely to regret their anachronistic attitude."
To benefit more from Mr. Birrell's perspective, click through the following link to read his complete column: Africa is Refuting the Usual Economic Pessimism.

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

April 11, 2014

Global Monetary Policy: A View from Emerging Markets -- Brookings Institute

Exits from unconventional monetary policies (think QE in the US, Japan, and soon the ECB) pose risk to emerging countries...

The following are highlights from a recent speech by Raghuran Rajan, governor of India's central bank, currently on leave from the University of Chicago, where he is the Distinguished Service Professor of Finance.

"Investment managers may fear underperforming relative to others. This means they will hold a risky asset only if it promises a risk premium (over safe assets) that makes them confident they will not underperform holding it.  A lower path of expected returns on the safe asset makes it easier for the risky asset to meet the required risk premium, and indeed draws more investment managers to buy it – the more credible the forward guidance on “low for long”, the more the risk taking. However, as investment managers crowd into the risky asset, the risky asset is more finely priced so that the likelihood of possible fire sales increases if the interest rate environment turns. Every manager dumps the risky asset at that point in order to avoid being the last one holding it."

"Asset prices may not just revert to earlier levels on exit, but they may overshoot on the downside, and exit can cause significant collateral damage."

We recommend: 1) watch the above video, 2) check out "Ben Bernanke's Gift to Africa," and, 3) review our related whitepaper - Why QE3 Will Be a Boon to Africa's Frontier Markets.

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820


April 9, 2014

Bloomberg: Zambia Sells Africa’s First 2014 Eurobond After Deficit Jump

Bloomberg reported today that Zambia, Africa's second largest Copper producer, attracted more demand from investors in Africa’s first dollar-bond sale of 2014 than the $1 billion it offered, according to the Finance Ministry of the continent’s second-biggest copper producer.

“The second bond just like the first was significantly oversubscribed -- an expression and affirmation of the confidence the international investor community has in Zambia,” said Edgar Lungu, acting finance minister, who is also the country’s defense minister.

To read more of the Bloomberg coverage, click through Zambia Says $1 Billion Eurobond Was "Oversubscribed".

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

April 6, 2014

Bloomberg: Nigerian Economy Overtakes South Africa’s on Rebased GDP

Global investors have been eyeing Nigeria as a potential boom market, along the lines of the BRIC countries (Brazil, Russia, India and China) 10 years ago. (Reuters)
Bloomberg reported today that Nigeria’s economy has surpassed South Africa’s as the largest on the African continent after the West African nation overhauled its gross domestic product data for the first time in two decades.

The size of the economy is now estimated at 80.3 trillion naira ($491 billion) for 2013, as compared to the World Bank’s 2012 GDP figures of $262.6 billion for Nigeria and $384.3 billion for South Africa.

The agricultural sector's share of GDP in 2013 declined from 34.69% in the old GDP series, to a forecast 21.97% in the new series. Industry saw a similar drop from 36.26% under the old series to a 25.64% forecast for 2013. The oil and gas sub-sector was the biggest loser. It showed a decline from 32.43% in 2013 under the old series, to a much lower 14.4% share.
Meanwhile, the services sector's share of GDP went from around 29% in 2013 under the old series to a forecast 51.89% in the new series.

The rebasing also revealed the emergence of new growth sectors, Kale noted, although these came off a very low base. They include the electricity, gas, steam and air-conditioning supply sectors, which grew at a rate of 44% in 2013; as well as Nigeria's sound recording and music production industry that incorporates Nollywood, which grew over 33% in 2013.

The rebasing exercise also saw a drop in the West African state's debt ratio, with its debt to GDP ratio falling from 19% to 11%. Under the new data series, the country's GDP per capita rose to from $1 555, in 2012 to $2 689.

Nigeria, a country of an estimated 170 million people, is an OPEC member and Africa's biggest oil producer. The government is targeting 7.16 trillion Naira ($43.8 billion) in income from oil and gas this year. To read the complete report from Bloomberg, follow this link to Nigerian Economy Overtakes South Africas on Re-Based GDP.
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

March 21, 2014

Top Lipper Award for Emerging Markets Goes to Africa-focused Fund

Nile Capital Management's Andy Chen and Larry Seruma

Nile Pan Africa Fund Recognized by Lipper as
Top Performing Fund

Princeton, New Jersey, March 21, 2014 – Nile Funds is pleased to announce that the Nile Pan Africa Fund (NAFIX) has received the 2014 Lipper Award for best Emerging Market Fund for the three year performance period ending December 31, 2013 out of 335 Emerging Market funds.  The Lipper awards recognizes mutual funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers.
This award recognizes our investment process and approach to identifying growth businesses trading at value prices in Africa and frontier markets.   We are very pleased with the win – especially as it highlights the Africa investment case – for investors who might not yet have heard of our “pure play Africa investment opportunity”.
“Africa represents about 4% of global GDP today and is projected to exceed 12% by 2050, according to economists at Citigroup.  We believe an Africa allocation should be a core holding in every global portfolio,” said Larry Seruma, Portfolio Manager.
The fund is open to investors and is available for purchase at Charles Schwab, TD Ameritrade, and other major brokerages.  The minimum initial investment is $1,000 for Class A (NAFAX) and $250,000 for Institutional Class shares (NAFIX).
 About Nile Capital Management.
Nile Capital Management is a Princeton-based asset management firm with in-depth expertise in frontier markets. Since 2010, Nile has served as investment adviser to Nile Pan Africa Fund, a pioneering fund focused on capturing Africa's economic growth and the Nile Global Frontier Fund, an actively managed fund investing in the global frontier.   Nile seeks to identify and capitalize on attractive investment opportunities in Africa and other frontier markets. Additional information is available at www.nilefunds.com.

Past performance and ratings are no guarantee of future results. Rankings and ratings are only one form of performance measurement. For current performance information please visit www.nilefunds.com

Investors should carefully consider the investment objectives, risks, charges and expenses of the Nile Funds. This and other important information about the Funds is contained in the prospectus, which can be obtained by calling 1-877-682-3742. The prospectus should be read carefully before investing. The Nile Funds are distributed by Northern Lights Distributors, LLC. Nile Capital Management, LLC is not affiliated with Northern Lights Distributors, LLC.

Mutual Funds involve risk, including possible loss of principal. Frontier market countries generally have smaller economies and even less developed capital markets than traditional developing markets, and, as a result, the risks of investing in developing market countries are magnified in frontier market countries.

Lipper Fund Awards are based on Lipper’s Consistent Return calculation.  Lipper scores for Consistent Return reflect funds’ historical risk-adjusted returns relative to funds in the same Lipper classification and include each fund’s expenses and reinvested distributions, but exclude sales charges.  Consistent Return values are calculated with all eligible share classes for each eligible classification.  The highest Lipper Leader for each Consistent Return value within each eligible classification determines the fund classification winner over three, five or 10 years.

Lipper Award winners are recognized for being the top-risk adjusted performing funds in their respective Lipper peer groups for the listed periods ending December 31, 2013.  Past performance or ranking is not indicative of future results.  Lipper ratings are not intended to predict future results, and Lipper does not guarantee the accuracy of this information. More information is available at www.lipperweb.com. Lipper Leader Copyright 2014.


Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

March 12, 2014


Savita Iyer-Ahrestani writing for ThinkAdvisor asks a question on the minds of many investors around the globe, "Is Robert Mugabe's health failing?" Many are waiting to see what will happen in the inevitable post-Mugabe Zimbabwe.

"Larry Seruma, chief investment officer and managing principal at Nile Capital Management, said Zimbabwe’s highly educated population—it has an adult literacy rate of 90%, one of the highest in Africa—is one of the country’s greatest strengths and a building block for the future.
“There is a silver lining in that whoever succeeds Mugabe will see the need to have a different environment and a need to change the growth profile of country,” he said. However, the current policies are counter-productive for Zimbabwe and frustrating for foreign investors, and they are affecting a number of Zimbabwe’s key industries, Seruma said, notably agriculture.
Several years of repossessed farms and land grabs have resulted in experienced Zimbabwean farmers leaving the country and taking their expertise elsewhere. Rampant corruption and weak institutions have exacerbated the situation, and while other African nations are now benefiting from Zimbabwe’s agricultural expertise, the country itself has gone from being a food exporter to a food importer and is facing a massive food security issue that’s a drain on an already stretched economy, Seruma said."
Follow the link to read the complete article, "Investors Can Find Opportunities in Zimbabwe Despite 'Mugabe Rules'
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

March 10, 2014

"Nigeria's soaring economy has met its match: old-style politics"

Former Nigerian central bank governor Sanusi with MasterCared CEO Ajay Banga
"On February 20, President Goodluck Jonathan suspended central bank governor Lamido Sanusi amid the latter's claims that $20 billion in revenue was missing from the state oil corporation. The move sparked widening bond spreads and tumbling currency valuation in Africa's most populous state."

Jake Bright, Whitehead Fellow of the Foreign Policy Association, covered the complexity and complications of this event for Quartz, an Atlantic Media digital outlet. In Bright's article, Nile Capital Managements Larry Seruma is quoted as having said, "The market did not take his (Sansui's) suspension very well of for a number of reasons. Sanusi has been a good governor. He's been an inflation hawk. Current inflation is about 8%, the benchmark bank rate is about 12%, so you are getting a real rate of return of about 4% -- pretty unusual in frontier markets."

Bright wrote: "Foreign investor jitters immediately after the suspension led to a sell-off in Nigerian assets, a 3.2% one day drop in the naira, and an 11-basis point yield spike on Nigeria's 10-year eurobonds. Not all the blame rests with the Sanusi shake-up, though. Nigeria has been contending with the same economic flu affecting many emerging markets that have been dependent on US Federal Reserve policy and reacting to its taper

Nile's Seruma added, " As the Fed tapers, the interest differential between the high-yielding assets in Nigeria and developed market asset has shrunk. Because of that you are seeing more investors pull out of Nigerian equities and fixed income."

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

March 7, 2014

from The Africa Report: Africa in 2064 -- an Afrocentric future

Illustration by Emeric Therund
illustration by emeric therond

"With an African tech boom amidst continental unity and a meltdown in Europe, Stephan Chan, Professor of International Relations, School of Oriental and African Studies, London, imagines that Africa could be like in 50 years."

"It is 2064 and the sun shines over the Mediterranean. African Union drones fly in the blue skies and automatically drop life buoys onto the waters below, where Greek workers, fleeing a country of unemployment and financial meltdown – the fifth Greek default on its loans since 2012, with no further bailout in sight – struggle to stay afloat after their boat sank into the lifeless sea."

"The European part of the West is finished.  The United States has returned to splendid isolation, and Africa is the new great star of global capital and international relations..."

For more of Professor Chan's vision click through this link to read "Africa in 2064 - an Afrocentric future."

Nile Capital Management
We Know Africa: From Cairo to Cape Town

For more information please call 646-367-2820

March 5, 2014

For Investors Heading For The Frontier: Active Management Adds

Nile Capital presents pan Africa mutual fund
The once-vaunted BRICs have lost their mojo, at least temporarily, as the place to look for stock market diversification. Since April 2011, emerging market equities have generated negative returns.
Surprisingly, part of this void has been filled by the strong performance of frontier markets. In 2013, the gap between performance of the MSCI Frontier Markets Index (25.90 percent) and the MSCI Emerging Markets Index (-2.60 percent) was the widest since 2005.

For institutional and individual investors alike, frontier markets are becoming a viable asset class to include in a well-diversified portfolio, and high rates of economic growth are the main attraction. Of the 30 fastest growing economies in the world (measured by real GDP growth), 23 are frontier markets.

The easiest way to implement a frontier market allocation is to participate in an index fund. Just as investors flocked into emerging markets a decade ago through passively managed vehicles such as iShares MSCI Emerging Marketing Fund, they now are showing interest in frontier index funds such as iShares MSCI Frontier 100 Fund (FM). With a goal of tracking the MSCI Frontier Markets Index, FM has grown rapidly in recent months, surpassing $500 million in assets.

Buyer beware.

Three Advantages Of Active Management
Is an index fund the best choice for participating in frontier market growth?

We believe the dynamics of frontier markets favor active management over indexing. Nile Capital Management, one of the few firms to actively manage frontier market funds, has demonstrated three key advantages an active manager can identify and exploit in frontier markets.

1. Portfolio Stability – Nile seeks to identify well-managed companies operating on the African continent, and then hold their stocks over extended periods. In comparison, index funds can be relatively unstable. Currently, the top three country weights in FM are Kuwait (18 percent), UAE (17 percent) and Qatar (16 percent). However, in May the MSCI index methodology will reclassify UAE and Qatar from the frontier to the emerging category. Millions of dollars invested in FM will then be reshuffled among other frontier markets, for reasons unrelated to frontier market growth or company profitability. Since frontier markets are dynamic, index re-classifications occur frequently and can be unsettling to investors.

2. Diversification – About 54 percent of the weight of the MSCI Frontier Markets Index is in the financials sector. This does not represent the diverse economic activities that are driving frontier market economies, especially the three themes that we seek to include: natural resources; infrastructure growth and a rising consumer sector. Across the African continent, we see countries with uncorrelated economic cycles, and we are identifying attractive companies operating under diverse business models.

3. Population and demographics – The high economic growth of frontier market economies is directly related to population and demographic trends. Africa’s population, currently estimated at one billion people, is projected to double by 2040. The average age of the continent’s people is 21, compared to 45 for developed countries. The average GDP per capita in Sub-Saharan Africa is $1,400 compared to $30,000 for the Arab States of the Gulf Corporation Council. (GDP per capita in the US is $51,000).
Of course, it’s the younger generation that forms new households, creates families, and drives consumer sector growth. An active manager can emphasize countries with emerging consumer economies such as Nigeria and Uganda. In comparison, a frontier index fund may be heavily weighted toward more mature economies such as Kuwait, the United Arab Emirates, Qatar and even Saudi Arabia (in some classifications).

In summary, we believe the smartest way to invest in the frontier is to take a long-term perspective and focus on well-managed companies trading at attractive valuations. Our portfolio concentrates on about 30-40 companies, and we look for opportunities to identify businesses trading below intrinsic value. We are very comfortable with the valuations of our leading companies, some of which are not covered by any Wall Street analysts. Indeed, the frontier markets are much less “efficient” than developed or emerging markets.
We believe frontier market knowledge and in-depth research gives active managers an edge in these markets, relative to a passive indexed approach.
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

February 14, 2014

Statoil, BG to Build Tanzania LNG Plant in Lindi, Minister Says

Bloomberg reported today that Statoil ASA (STL) and BG Group Plc (BG/) will build Tanzania’s first liquefied natural gas plant in Lindi and are due to meet with authorities about the project’s schedule and details in April. Production could start in 2021 or 2022 and investments could be $20 billion to $30 billion. Partners in the offshore blocks include Exxon Mobil Corp. (XOM), Ophir Energy Plc (OPHR) and Pavilion Energy Pte.
To read the entire article, click through here.
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

February 12, 2014

German Development Minister: "For us, Africa is the continent of opportunities."

Bonn-based international broadcaster, Deutsche Welle recently interviewed German Development Minister Gerd Muller on the topic of Africa's role in the future of German development -- over the course of the interview Muller was quoted as saying,"For us, Africa is the continent of opportunities...the population will double in the next 30 to 50 years...this continent, which is 100 times bigger than Germany, is enormously dynamic."
For more of the Minister's thoughts on Germany's interest in trade development and investing in Africa, click on the following link to review the complete interview -- Gerd Muller: "For us Africa is the continent of opportunities."

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

February 10, 2014

Bloomberg News: Lenovo to Expand in Africa as Smartphones Debut in Nigeria

Recently, Bloomberg reported that Lenovo Group Ltd., the world’s largest maker of personal computers, plans to expand its smartphone business in three west African countries this year as it builds on a surge in demand in Nigeria. The company may start sales in Ghana and Ivory Coast later in the year. “Smartphones are fast becoming a primary platform for work, entertainment and social networking” in Nigeria, said Graham Braum, Lenovo’s general manager for Africa. Given that Nigeria is Africa’s most populous nation with 170 million people is the next big market for Lenovo following a “successful” entrance in the United Arab Emirates and Saudi Arabia, he said.
To read the entire article, click through here.
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

January 14, 2014

German Firms Seed Web Shopping in the Developing World - WSJ

It's not just the Chinese and the Japanese that are targeting the African continent for corporate expansion and promising investment returns, the Germans are getting in on the act, too...
From today's Wall Street Journal:
LAGOS, Nigeria—The message from his boss on the phone from Germany was straightforward, recalls Hendrik Harren, a former website manager in Africa: "I want you to build the Amazon of Nigeria for me."
The caller was Oliver Samwer, an Internet tycoon in Berlin who had already cloned American e-commerce businesses for Europe's market. By 2012, his focus was shifting to the developing world.
Mr. Harren found his new assignment daunting. "I had never founded an Amazon," he says.
Two years after the call, Nigerian men on motorbikes ply the streets of the chaotic megacity of Lagos delivering toothpaste, English soccer jerseys and women's wigs in a small and unprofitable, but growing, online shopping business.
To read the entire article, click through here.
Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820

January 8, 2014

"What Makes Lagos a Model City"

In a recent New York Times Op-Ed column, Seth D. Kaplan, a professorial lecturer in the Paul H. Nitze School of Advanced International Studies at John Hopkins University, and the author of "Betrayed: Poltics, Power and Prosperity," posits that Nigeria is "arguably the worst run of the world's seven most populated countries." But interestingly, Kaplan asserts, Lagos -- Nigeria's largest city, seems to have turned a corner.
Nigeria, of all places, Kaplan writes, may be pointing the way to a strategy by which fragile states might begin to succeed. In other words, using Lagos as his primary example, Kaplan suggests cities can help save countries.
To get the full benefit of Prof. Kaplan's reasoning, follow this link to read "What Makes Lagos a Model City." 

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820 

December 24, 2013

In Namibia, Home Buyers Are Entering Bidding Wars for Scarce Housing -- Wall Street Journal

According to a recent report by the Wall Street Journal's Devon Maylie, Namibia, with a population of 2 million, ranked fourth globally in 2012 for the biggest housing price increases, after Hong Kong, Dubai and Brazil, according to South Africa-based First National Bank. Although price gains eased a bit in 2013, average prices still are double what they were six years ago. The rapid increase in property valuations is pricing many first-time buyers out of the market and increasing competition for the meager supply in the $100,000 to $300,000 bracket that is available. The average home price in Namibia today is $120,100, six times as high as the average price in 2000 of $18,800, according to the FNB data.
For more, click through this link to read Maylie's WSJ coverage in its entirety.

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820 

December 20, 2013

A Giant Awakens: Inside Africa's Economic Upsurge

“When Kirinya drops into the iHub café to buy a latté, he pays his bill of 100 Kenyan shillings (€0.85 or $1.16) by text message. First he types in the café's telephone number and enters a PIN. Then he hits "send" and the transaction is complete.”

In roughly a decade, Africa has gone from being labeled "the hopeless continent" to enjoying an unprecedented boom. In a three-part series, SPIEGEL Online explores this transformation -- its drivers, winners and losers -- and asks if it can last.
Here are the facts beyond fiction:
  1. No other continent has developed as rapidly in the last decade as Africa, where real economic growth was between 5 and 10 percent annually. In oil-rich countries, such as Angola, it was a possibly record-breaking 22.6 percent in 2007.
  2. A World Bank study shows that 17 of the 50 national economies currently displaying the greatest economic progress are in Africa.
  3. China the world's largest economy has overtaken the West to become Africa's most important trade partner. The volume of Sino-African trade amounted to nearly $200 billion last year.
  4. Many countries have become better governed, and Africa as a whole is more peaceful and democratic than it once was.
  5. At the same time, a revolution is taking place in the information and communications sector, as Africa connects itself to the world via modern data highways. Nowhere is the spread of the Internet as all-encompassing as it is between Cairo and Cape Town, and nowhere is mobile-phone use increasing as explosively. There are now 650 million African mobile-phone users -- more than in North America.
  6. By 2050, at least 2 billion people will live in Africa, accounting for one quarter of the world's labor force.
  7. Child mortality, illiteracy rates and AIDS infection rates are declining, and life expectancy has increased by 10 percent.

To access the SPIEGEL Online series, follow this link -- A Giant Awakens: Inside Africa's Economic Upsurge.

Nile Capital Management
We Know Africa: From Cairo to Cape Town
For more information please call 646-367-2820