January 31, 2011

Birth of a Nation: Welcoming South Sudan

If you have ever wanted to buy a map, now may not be the time. On Sunday, Southern Sudan's referendum commission said that nearly 99% of voters had chosen to secede from the North in this month's referendum, paving the way for the establishment of a new nation in July.

Officials hope that the transition, like the vote itself, will remain smooth and peaceful. Negotiations over oil rights and border demarcation have yet to be completed, and South Sudanese president Salva Kiir has promised that the nation will not declare independence prior to the agreed-upon July 9th.

Foreign investors are excited about the opportunity the split presents. While a number of multinationals have shied away from investing in Sudan because of political turmoil, violence, and popular pressure, investors hope that the promise of peace will make it possible to gain access to the wealth of oil resources in the area. Peace is also an encouraging development for infrastructure and consumer goods companies, who hope to find new markets for their goods and services.

January 28, 2011

Protests in Egypt Gain Momentum

In recent days, protesters have taken to the streets to demand reform of the Egyptian government. These protests, which were encouraged by similar actions in Tunisia, have continued in the face of government bans on public demonstration, arrests, a shutdown of electronic communication systems, and the use of rubber bullets, tear gas, and water hoses on crowds. The military has also been called in to support police efforts to quell the violence. Protesters are demanding the retirement of Hosni Mubarak, the nation's longtime ruler, as well as a crackdown on corruption, and demands for better employment opportunities.

Although the Egyptian market is closed on Fridays for religious reasons, shares of the Market Vectors Egypt ETF (EGPT) were down over 20% for the year today.

January 18, 2011

Massmart Shareholders Accept Wal-Mart Bid

South African retail giant Massmart's shareholders have approved Wal-Mart's bid to purchase 51% of the company, allowing Wal-Mart to step into the African market for the first time. A previous post had described the deal, which now must be approved by South African anti-monopoly regulators.

SABMiller Posts Larger than Forecast Results

SABMiller has again posted strong results, largely driven by its emerging-market operations in Asia and Africa. The Wall Street Journal reports that "in Africa, third-quarter lager volumes soared 12% as investment in capacity and expansion of (SABMiller's) brand portfolio delivered 'robust growth.'"

The Journal also notes that "the London-based group, which is also listed in Johannesburg, now gets more than 80% of its profits from emerging economies."

Zimbabwe Launches Commodity Exchange

Zimbabwe has openened a new exchange for commodities, although trading has yet to commence. The Commodities Exchange of Zimbabwe (COMEZ) is the first in the country since 2001, when the prior exchange was closed to give the government a monopoly on corn and wheat trading. Initially, the exchange is expected to host trading of grains, cereals, and oil seeds, and shares of the exchange will be available to private investors.

January 17, 2011

Rio Tinto Expands Presence in Africa

Mining giant Rio Tinto's $3.9BN deal to purchase Riversdale Mining Ltd will double the firm's African gross assets according to an article in the Wall Street Journal. The acquisition notably doubled the firm's managed production of hard coking (or metallurgical) coal, which will be sourced from Mozambique.

Rio Tinto has in the past been careful to note that over 80% of its investments are made in Organization for Economic Cooperation and Development (OECD) countries, thus the move is seen as opening for risk in exchange for the significant possibility of the operation.

January 14, 2011

Fighting for the Kenyan Cell Phone Market

In conjunction with it's Africa Rising series, the Wall Street Journal highlighted the fight between major telecoms for the growing cell phone business in Kenya. While the UK's Vodafone Group PLC has dominated the market with a 77% share, India's Bharti Airtel has been steadily growing, and according to the Journal has been capturing 60% of new mobile consumers per month.

The article points out that "telecom is one of the continent's more robust industries as the cellphone market expands to include Internet access, mobile banking, and retail transactions." According to global consulting firm McKinsey, Africa has about 400MM cell phone subscribers, with $12-$15BN in telecom revenue being generated by 2012.

January 13, 2011

Wall Street Journal Highlights Growing African Consumer Class

An article in the Wall Street Journal today highlighted the "gold rush under way for the African consumer," in which firms selling anything from cereal to cell phones are targeting the expanding African middle class in their quest for market expansion. The article cites McKinsey & Co, who points out that "the number of middle-income consumers - those who can spend for more than just the necessities - in Africa has exceeded the figure for India." McKinsey also predicts that consumer spending in Africa will grow from about $860BN in 2008 to $1.4TN in 2010.

January 12, 2011

IMF: Emerging Africa Expected to See Rise in Investment

An article published today in the International Monetary Fund's Magazine highlights the IMF's opinion that investment in Sub-Saharan Africa are likely to rise in coming years. This investment is expected to be led by Africa's trading partners in Asia, most notably China.

The article highlights expected investments in infrastructure, much of it financed by natural resource extraction, while mentioning possible political and economic pitfalls.

World Bank: Developing Nations are Driving Growth, Risks Remain

The World Bank released a report today which projected growth in the developing world to be "more than twice the rate projected for high-income countries." Developing countries as a whole are expected to see growth of 7% in 2010, and 6% and 6.1% in 2011 and 2012 respectively, compared to 2.8% growth in high-income countries for 2010, 2.4% in 2011, and 2.7% in 2012. Sub-Saharan Africa is expected to be a major component of that growth, and is expected to be up 4.7% in 2010, 5.3% in 2011, and 5.5% in 2012.

January 10, 2011

The Economist: IMF Growth Data Shows African Opportunity

A recent article in the Economist has pointed out that growth in sub-Saharan Africa has been making waves over the past decade, and will likely continue to do so over the next few years. The article notes that although there has been a focus on the emerging ‘BRIC’ economies, over the past ten years “no fewer than six of the world’s ten fastest-growing economies were in sub-Saharan Africa.” Seven of the top 10 fastest expansions over the next five years are also expected to come from the African continent. This compares with the two decades prior to 2000, when only one African economy made the top 10. In fact, the Economist notes that “Standard Chartered forecasts that Africa’s economy will grow at an average annual rate of 7% over the next 20 years, slightly faster than China’s.”

Street Authority: How to Profit from Africa

A post found here on StreetAuthority points out the growth potential of Africa, as well as comparing the size of the African economy as a whole to Brazil or Russia (at this point, total continental GDP exceeds $1.6TN). The article mentions Nile Capital's fund as a good opportunity to achieve diversified exposure to the African continent.

January 7, 2011

Barrons on African Investment

An article found here on the Barrons blog has cited Nile's Pan Africa Fund as a good play, noting that "Arica just may be a decent place to park some investment assets."