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Stock Market / Finance in Africa

  • Is Kenya’s Tax Policy Optimal?

    KENYA, 2015/12/16 Last week a slate of new taxes were effected increasing the prices of goods such as bottled water, cars, beers and cigarettes. Although these items can be viewed as luxury items rather than essential commodities, the tax hike calls Kenya’s tax policy into question. The government has made it clear that it seeks to expand its tax base and rope in additional individuals and businesses into the tax net inclunding introduce new taxes to strengthen revenue generation. However, does the current tax policy contribute to or detract from revenue generation inclunding economic increase? On one hand are those of the view that current tax policies are subpar for several reasons. Firstly, some analysts argue that of the 2.4 million people who are formally employed, only 1.4 million (inclunding corporations) are taxed. This is significant because, according to the Institute of Economic Affairs (IEA), of the total tax revenue collected by the government over the last decade, the major contributors are gain tax, about 40% followed by VAT at 28%. Secondly, even of those taxed, the limited reach of the taxman, and laxity and corruption therein, facilitate tax evasion. For example, a lot of businesses particularly in the informal sector are not taxed; this should be rectified. Thus those in this camp are of the view that KRA can do additional to expand the tax base, curtail tax evasion and collect additional revenue.

  • More Market Instability? The Highly Leveraged Nature of our Financial System is Teetering

    WORLD, 2015/12/16 This week shapes up as one which could go down in the history books! Markets last week were tumultuous from weak equities, illiquid credit markets, FOREX markets in disarray and commodities hitting the skids …from presently on the Federal Reserve is intent on hiking rates? Have they taken this position because the markets are strong? Or because the economy…anywhere on the planet is overheating? Before looking at “this week”, I have seen it said by a lot of, “the Fed must raise rates to have any credibility left”. This is authentic to an extent but there is one core reason and one of their own making. You see, the fake data and outright lies have been coming out of Washington in such regularity and magnitude the Fed has been painted into a corner.

  • Rand falls while ANC Government shuffles finance ministers

    SOUTH AFRICA, 2015/12/16 During the second week of December the Minister of Finance Nhanhla Nene was summarily dismissed by the African National Congress (ANC) government in South Africa under President Jacob Zuma. Nene was restored instantly by David van Rooyen prompting an even deeper drop in the confidence in the Zuma government to address the decline in the key economic indicators. Next less than a week, Rooyen was relieved and restored by Pravin Gordhan, who had served in this position before from 2009-2014. This decision comes amid a worsening economic crisis inside the country, Africa’s most industrialized, which has seen a sharp rise in unemployment, the decline of the rand, energy generation and water shortages.

  • The Federal Executive Council (FEC) at an emergency meeting

    NIGERIA, 2015/12/08 The Federal Executive Council (FEC) at an emergency conference yesterday approved the Medium Term Spending Framework (MTEF) in preparation for the presentation of the 2016 budget. The conference, which was presided over by President Muhammadu Buhari, proposed an all-time high spending of N6 trillion for the 2016 budget. It as well pegged the crude oil price benchmark at an all-time low of $38 per barrel. The N6 trillion spending profile is the highest in the history of the country. It was N4.07 trillion in 2010, N4.22 trillion in 2011; N4.74 trillion in 2012, N4.92 trillion in 2013, N4.6 trillion in 2014 and N5.06 trillion in the current time(inclunding the N574.5 billion approved as supplementary budget). On the other hand, the crude oil benchmark, at $38 per barrel, is the lowest price used in recent times. It was $62 per barrel in 2011, $67 in 2012, $79 in 2013, $76 in 2014 and $53 per barrel in the current year.

  • Hard choices as Nigeria’s liquidity crunch deepens

    NIGERIA, 2015/12/03 Nigeria is in a tough spot. Oil prices are falling, President Buhari is six months into his term and has only begun to form a cabinet and foreign exchange reserves are dwindling. The naira, the national currency, is under increasing pressure to devalue once again – an eventuality the country’s leaders are resisting. As a result, institutional investors like JP Morgan are starting to back away, which could make it less palatable for other foreign investors to hold Nigerian deficit. But despite the bad news, there just may be a silver lining. The yield-chasing “hot money” that flowed into the region’s biggest economy during the boom years looks to be leaving the scene. Africa’s top oil producer presently has the opportunity to lay the groundwork for a additional sustainable investment base with the patient capital the country needs to restructure and upgrade infrastructure.

  • International finance institutions have largely neglected to offer assistance to sub-Saharan nations

    MOROCCO, 2015/12/03 International finance institutions have largely neglected to offer assistance to sub-Saharan nations on the markets but several are making their own way in an untapped emerging area. On a continent where access to markets is a novel phenomenon and where it is still difficult to attract investors due to legacy issues of poor macroeconomic management and fiscal discipline, inclunding persistent corruption and weak institutions, attempts to raise capital from the markets is a laudable goal. The discipline required by the process has no doubt helped nations that have been successful in recognizing the importance of market perceptions and the need for better macro-fiscal discipline. The number of international bond issuances by sub-Saharan African nations in recent years has accelerated. In addition to South Africa, eight nations in the region have tapped the international capital markets, inclunding initial-time issuers Ghana, Gabon, Senegal, Namibia, Nigeria, Tanzania, Zambia and Rwanda. Furthermore, market intelligence suggests that other sub-Saharan African nations may tap international markets in the near next. Cape Verde national company Imobiliária, which provides housing for disadvantaged people, carried out an $8.8 billion bond issue in October, its second foray into the securities exchange, while Kenya has seen two Eurobond issuances in the completed 12 months.

  • Traders of African Development Bank (ADB) at the Stock Exchange

    EUROPEAN UNION, 2015/11/21 The Maghreb Bank for Investment and Foreign Trade (Bcmice) will be operational by the end of December in Tunis, Rabat Kouider Lahoila, expert of the direction of economic affairs at the Arab Maghreb Union (AMU), has announced. He stressed that UMA taking a concrete step in the financial sector signified evolution for it. This is good news for Maghreb states, businessmen and entrepreneurs who will thus gain access to a new funding source for their activities. The new bank, with a capital of 500 million dollars, will have as a fundamental mission to finance projects promoting common infrastructures for the five UMA member states - Algeria, Morocco, Tunisia, Libya and Mauritania - develop commercial exchanges within the Maghreb area, considering the strong potential of a market of 90 million consumers.

  • The trading floor of the Ethiopia Commodity Exchange

    ETHIOPIA, 2015/11/19 The Ethiopia Commodity Exchange (ECX) began operations in 2008 bringing together buyers and sellers to trade produce such as coffee and sesame seeds, while assuring both parties timely delivery of payments and produce. The ECX was established with support from the Ethiopian government and donor organisations, including USAID. It has been hailed as a success, helping fix challenges such as unreliable market information, contract defaults, lack of quality standardisation, limited access to markets, and other inefficiencies along the value chain. Engineer Solomon Edossa is one of six professionals who founded the ECX. As chief information officer of the exchange his responsibility was to build the electronic trading platform and oversee all things technology. He held that position until about 18 months ago. Edossa now offers technical advisory services to the ECX through his consultancy company DESS Inc.

  • Berro, Al Hilal Bank: An Islamic bank doesn’t have to be old or rusty

    WORLD, 2015/11/01 Islamic finance is going mainstream, with Western nations planning to issue their initial sovereign sukuk. It still constitutes only a small % of total world financial assets, and most activity is concentrated in a handful of markets—but for how long? “Is the Islamic finance market going world? Of course, it is,” says Mohamed Berro, CEO of Al Hilal Bank, one of the fastest-growing banks in the United Arab Emirates. “World corporations, institutions and sovereign borrowers want to capture Islamic liquidity,” he says. “We can compete on a world basis, particularly at a time at the same time as the world is keen on ethical banking.”

  • IMF 2015 Article IV Consultation with Mozambique

    MOZAMBIQUE, 2015/10/31 A staff team from the International Monetary Fund, led by Michel Lazare, visited Mozambique during October 14-28, 2015 to complete discussions towards the completion of the fifth review under the three-year Policy Support Instrument (PSI) approved in June 2013 (see Press Release No. 13/231) and under the 2015 Article IV Consultation, and reach understandings on a new program to be supported under the IMF’s Stand-by Credit Facility (SCF). The team met with Prime Minister Carlos Agostinho do Rosario, Economy and Finance Minister Adriano Maleiane, Bank of Mozambique Governor Ernesto Gove, and other sectoral ministers, senior government officials, the private sector, civil society, and development partners. At the conclusion of the visit, Mr. Lazare issued the following statement:
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