April 23, 2014

The Ghanaian Economy in One Chart!

                                                                          chart courtesy of Bloomberg Finance L.P.
Ghanaian Economy | Africa Investing
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

Nigerian Economy Now Largest in Africa
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