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The Africa Weekly

In this week's issue 26 February 2010

Market moves Week % YTD %

Botswana ‐0.2 6.2Malawi 0.0 0.0Mauritius ‐0.8 ‐0.6Namibia 0.2 0.9Zambia 0.7 ‐6.0Zimbabwe ‐7.1 ‐1.4Kenya 2.6 11.7Tanzania 0.3 ‐0.9Uganda 1.5 11.0BRVM 2.3 3.8Ghana 0.4 1.5Nigeria ‐0.6 10.4Egypt ‐2.1 8.2Morocco 0.9 6.1Tunisia ‐0.3 8.7MSCI EM ‐1.3 7.6FTSE ‐0.9 ‐2.5Johannesburg ‐2.0 ‐3.4Nikkei ‐2.3 ‐4.2S&P 500 ‐0.3 ‐1.1 Currency moves Level* Week %

BWP 7.00 1.33MWK 150.80 0.00MUR 30.85 0.65ZMK 4,745.0 1.50KES 76.85 ‐0.04TZS 1,362.0 1.45UGX 2,025.0 0.45XOF 485.14 0.57GHS 1.43 ‐0.45NGN 150.38 ‐0.31EGP 5.49 ‐0.03MAD 8.28 0.50TND 1.40 0.52EUR 0.74 0.51GBP 0.66 2.39JPY 88.93 ‐2.59ZAR (NAD, SZL, LSL) 7.84 2.97* relative to USD

Regional

Belgian carrier to launch African airline; Southern Africa power projects set to boost supply.

Southern Africa

Angola: External reserves drop in December; Central bank employees arrested for embezzling; Eni strikes oil in two wells offshore; IGE and Pangea DiamondFields to merge.

Botswana: Govt to reduce subventions to parastatals; Construction of the Morupule B phase 1 expansion commences; RPC Data’s 1H10 results to be lower than comparatives.

Lesotho: January inflation records 4.1%; P&T workers call for bailout.

Malawi: IMF grants USD 79.4m credit facility; IMF projects slip in Malawi GDP; Diamonds discovered; Zain and CAMA clash over new rates.

Mauritius: Listing rules changed to target funds growth; External debt on the rise; Tourist arrivals in 2010 to increase 5%; PDL and Caudan announce 1H10 results.

Namibia: Central bank holds rates, sees 4.2% growth; Banks subject to new capital adequacy standards; Absa to buy control of Capricorn.

Swaziland: Minister of Finance presents 2010/11 budget.

Zambia: Govt increases land tax by 1,000%; Ndola Lime Company to remain a state enterprise; Zain Zambia announces cautionary on Bharti Airtel deal.

Zimbabwe: IMF voting rights restored; Over 11% of maize crop written‐off; Dual‐listed PPC shares now fungible; Meikles resumes trading on the ZSE.

East Africa

Kenya: Fiscal deficit to GDP ratio rises to 1.8%; Kenya becomes world’s biggest tea exporter in 2009; NIC and KCB release FY09 results.

Rwanda: Opposition parties plan merger to contest elections; Tea plantations to be increased by 75% by 2012.

Tanzania: Donors pledge to build Zanzibar power project.

Uganda: New Democratic Party leader vying for opposition candidature; Uganda starts palm oil production; New Vision reports 18.5% EPS growth in 1H10.

West Africa

BRVM: Junta graft crackdown could delay Niger polls; Ivory Coast brings opposition into new government; Debt restructuring in Ivory Coast may be delayed.

Ghana: The ECO expected in 2015; Govt lists 2 and 3‐year bonds on the GSE; AGA suspends operations at Iduapriem mines; Guinness and SG‐SSB announce results.

Nigeria: Acting president keeps full powers as president returns; Nigeria defends oil reforms after industry backlash; Excess liquidity drives down interbank rates; China Unicom denies bid for NITEL.

North Africa

Egypt: Egypt should stand ready to raise rates – IMF; Current account and FDI in 1H10 worse than in 1H09; Suez Cement 2009 profit rises 25%.

Morocco: Maroc Telecom FY09 earnings slide 1% to MAD 9.4bn; Lafarge Morocco unit presses ahead with investments.

Tunisia: Corporate tax reduction for new listed Tunisian Companies; Fitch affirms BBB foreign‐currency rating; Assurances SALIM IPO.

Randolph Oosthuizen Head of Research +27 11 214 8384 [email protected] Maciek Szymanski Group Economist +27 11 214 8338 [email protected] Rob Brownlee Head of International Sales and Trading +27 11 214 8464 [email protected]

26 February 2010 African Alliance Pan‐African Securities Research 2 of 59

The Africa Weekly

Table of contents Market snapshot ..................................................................................................3

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

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

Regional................................................................................................................8

Angola ................................................................................................................10

Botswana............................................................................................................12

Lesotho...............................................................................................................14

Malawi................................................................................................................16

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

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

Swaziland............................................................................................................25

Zambia................................................................................................................27

Zimbabwe...........................................................................................................29

Kenya..................................................................................................................31

Rwanda...............................................................................................................35

Tanzania .............................................................................................................36

Uganda ...............................................................................................................37

BRVM..................................................................................................................39

Ghana .................................................................................................................42

Nigeria ................................................................................................................45

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

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

Tunisia ................................................................................................................55

Recently published research ..............................................................................58

Regular publications...........................................................................................58


The Africa Weekly

MARKET SNAPSHOT Weekly market moves (%chg local)

‐2.01%

‐0.17%

South Africa

BotswanaNamibiaNamibia

‐0.82%

Mauritius

0.94%Morocco

‐0.32%Tunisia:

‐2.06%Egypt

2.56%Kenya

0.70%Zambia

1.55%Uganda:

Swaziland

Ghana

0.31%Tanzania

2.32%BRVM

Malawi

Zimbabwe

0.23%‐7.06%

‐0.56%Nigeria

0.36%

Source: African Alliance database

Market Index name

Botswana Domestic

Mauritius Semdex (All )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

Botswana Domestic

Mauritius Semdex

Malawi All Share

Namibia Local

Swaziland All Share

Zambia All Share

Kenya Top 20

Tanzania All Share


The Africa Weekly

African and global markets heat map (%chg local)

MARKET COMMENTARY The Moroccan market had another good week, closing up by 0.9% on Thursday. Trading last Friday pushed the market above the 11,000 level on the ALSI and the market closed above that level during each of the remaining trading sessions. Most of the support came from the banking, cement and telecoms sectors. Attijariwafa was the large‐cap gainer, up by 2.9%, supported by CIH (+5.1%) and CDM (+3.7%), offsetting losses on BMCE (‐2.2%). Lafarge Morocco gained almost 9% after releasing FY09 results in line with expectations, while Maroc Telecom gained 0.8% after its EPS fell 1% y/y.

The Egyptian market continued in the negative trend set the previous week; the large caps bore the brunt of foreign investor selling. However, there was some positive activity in the last two trading sessions of the week; as a result the EGX 30 index fell by only 2.1% for the week. Most of the top 30 shares were down; EFG‐Hermes lost 5.5%, OCI was down 3.9%, OTH fell 2.5% and Telecom Egypt was 2.7% lower. NSGB bucked the trend with a 1.3% gain, albeit on very low volumes.

The Nigerian market was pulled down 0.6%, mainly by the banking sector, as investors eagerly await the FY09 financial results. The banking sector lost 1.1% as heavy‐weight UBA (‐4.3%), FBN (‐1.6%), Access Bank (‐3.4%) and Stanbic IBTC (‐3.7%) came under selling pressure, but Ecobank Nigeria surged 26%, initially on light volumes which gathered momentum later in the week. Nigerian Breweries also fell 5% for the week in reasonable trading as investors negatively assessed market guidance for 1Q10 to

Date 14F 15F 16F 17F 18F 21F 22F 23F 24F 25F 18‐Feb‐10 25‐Feb‐10 1‐Jan‐10 25‐Feb‐10 %chBotswana 0.9 0.2 ‐0.0 0.2 0.1 ‐0.0 ‐0.1 0.1 ‐0.1 ‐0.0 1.5 ‐0.2 7,241.9 7,688.8 6.2BRVM ‐0.7 2.4 ‐1.3 0.0 0.8 ‐0.1 0.9 1.0 0.3 0.1 1.3 2.3 132.1 137.1 3.8Egypt ‐0.0 1.1 0.2 0.6 ‐1.3 ‐1.6 ‐2.2 ‐0.1 ‐1.9 0.5 0.6 ‐5.2 6,208.8 6,608.2 6.4Ghana ‐0.2 0.2 0.1 0.1 0.0 0.1 0.1 ‐0.1 0.1 0.2 0.1 0.4 5,572.3 5,654.9 1.5Kenya 0.4 ‐0.2 ‐0.8 ‐1.4 0.4 0.5 0.2 0.9 1.1 ‐0.2 ‐1.5 2.6 3,247.4 3,627.3 11.7Malawi ‐ 0.0 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0.0 ‐ 5,155.0 5,155.1 0.0Mauritius ‐ ‐1.1 ‐0.8 ‐0.4 ‐0.2 0.4 ‐0.3 ‐0.2 ‐0.2 ‐0.5 ‐2.5 ‐0.8 1,660.9 1,651.5 ‐0.6Morocco 0.9 ‐0.5 0.0 ‐0.3 ‐0.3 0.7 0.2 ‐0.1 ‐0.3 0.4 ‐0.2 0.9 10,443.8 11,079.8 6.1Namibia 0.1 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 0.2 0.1 0.2 154.8 156.2 0.9Nigeria ‐0.3 0.4 0.0 ‐0.2 0.4 0.2 ‐0.5 ‐0.4 0.3 ‐0.2 0.3 ‐0.6 20,827.2 22,985.0 10.4Swaziland ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 218.0 218.0 0.0Tanzania ‐ ‐ ‐ 0.0 ‐ 0.3 ‐ ‐ ‐ ‐ 0.0 0.3 1,192.4 1,181.9 ‐0.9Tunisia 0.0 0.0 0.2 ‐0.0 ‐0.4 0.2 0.3 ‐0.0 ‐0.2 ‐0.5 ‐0.2 ‐0.3 4,291.7 4,666.7 8.7Uganda ‐ 1.4 ‐0.5 ‐ ‐1.4 ‐ 0.4 0.0 ‐ 1.1 ‐0.5 1.5 732.5 813.5 11.0Zambia 1.5 ‐0.3 0.1 0.9 1.5 ‐0.7 0.4 1.6 ‐0.4 ‐0.0 3.7 0.7 2,794.9 2,626.7 ‐6.0Zimbabwe ‐0.6 ‐0.3 ‐0.6 ‐0.4 0.0 ‐1.0 ‐2.4 ‐1.9 ‐0.7 ‐1.2 ‐1.8 ‐7.1 141.6 139.5 ‐1.4

South Africa ‐0.3 1.7 0.9 0.9 0.3 ‐0.8 0.8 ‐0.8 ‐0.5 ‐0.7 3.5 ‐2.0 27,666.5 26,731.9 ‐3.4

FTSE 100 ‐0.4 0.5 1.5 0.6 0.9 0.6 ‐0.1 ‐0.7 0.5 ‐1.2 3.2 ‐0.9 5,412.9 5,278.2 ‐2.5Nikkei 225 1.3 ‐0.8 0.2 2.7 0.3 ‐2.1 2.7 ‐0.5 ‐1.5 ‐0.9 3.7 ‐2.3 10,546.4 10,102.0 ‐4.2S&P 500 ‐0.3 ‐ 1.8 0.4 0.7 0.2 ‐0.1 ‐1.2 1.0 ‐0.2 2.6 ‐0.3 1,115.1 1,102.9 ‐1.1Shanghai Composite 1.1 ‐ ‐ ‐ ‐ ‐ ‐0.5 ‐0.7 1.3 1.3 1.1 1.4 3,277.1 3,060.6 ‐6.6

MSCI World ‐0.1 0.0 1.6 0.8 0.5 ‐0.4 0.5 ‐1.0 0.4 ‐0.8 2.8 ‐1.3 1,168.5 1,124.0 ‐3.8MSCI EFM Africa ex ZA ‐0.1 0.7 0.2 ‐0.7 ‐0.6 0.0 ‐1.2 ‐1.0 0.2 0.7 ‐0.5 ‐1.3 565.9 609.1 7.6MSCI EM Index ‐0.1 0.3 0.8 1.3 ‐0.2 ‐1.0 1.1 ‐0.3 ‐0.7 ‐1.1 2.2 ‐2.1 989.5 922.9 ‐6.7

Year‐to‐date changeWeekly chg (%)Daily price changes (%) (14‐Feb ‐ 25‐Feb 2010)


The Africa Weekly

March 2010. African Petroleum was the star performer of the week as it gained almost 23%; Dangote Sugar also did well gaining 2.9%, matched by 3.1% rise in the price of UACN.

In Kenya, after poor performance over the past two weeks, the equity market re‐bounded with the NSE 20 share index rising by 2.6%. With balanced trading across listed counters all week, only five counters ended the week lower. Interestingly, local investors dominated trading during the week with agricultural stocks registering the highest gains. Rea Vipingo was the week’s top gainer up 20.5%. Over the past week, the normally inactive counter witnessed unusually high movement in shares. Car and General was the week’s top losing stock, down 10.5%.

Other markets:

In Botswana, the DCI closed the week to Thursday 0.2% lighter at 7,688.76 points on reduced activity. Turnover declined to BWP 10.1m this week, compared to BWP 99.7m last week on volume of 891,251. Most activity was spread between Sechaba (‐0.4%) and BIHL (flat), collectively accounting for 77.6% of turnover (BWP 7.8m). Sechaba emerged the highest trader after moving a single block of 500,000 shares on Tuesday. Olympia was the week’s top loser, down 4% on trade of 400 shares on Monday.

The BRVM market gained another 2.3% this week, with most of the momentum coming in Monday’s and Tuesday’s trading sessions when Sonatel gained 3.9% in heavy trading. The telecoms counters was supported by Unilever CI which gained 7.7% in thin trading. Banks were mixed; SGB lost 7.5% but BICC gained 8.2% for the week.

Trading activity continues to improve on the Ghana Stock Exchange; the GSE ALSI gained 0.36% to close at 5,654.88 points, representing YTD gain of 1.48%. The week under review recorded total market turnover of GHS 2.17m, representing a marginal increase of 5.9% over the previous week. Block trades recorded in Ecobank Transnational Incorporated (ETI), Ecobank Ghana (EBG), Ghana Commercial Bank (GCB) and SIC Insurance Company (SIC) together accounted for 84.8% of the value traded on the market, with ETI the most traded equity by value, accounting for 34.1% of market turnover. Seven price changes were recorded, five equities led by SIC (3.5%), recorded price gains while two equities led by CAL (‐10.5%) recorded losses.

The Malawi ALSI remained unchanged, with most of the trading concentrated in NBS Bank (21% of weekly turnover of USD 325,000), NBM (40%) and NITL (30%).

The Mauritius market retreated another 0.8% as banking and hotel sectors came under selling pressure. Both MCB (‐0.7%) and SBM (‐1.3%) were down, and among the hotels NMH lost 2.3% and Sun Resorts fell 3%. Only Naiade Resorts ended the week higher (+1.6%), after recording gains on reasonable volumes on Monday.

Trading on the Rwanda Over the Counter was limited to 600 KCB shares at an unchanged price of RWF 160.

The Tanzanian DSE ALSI gained 31bp to 1,182 points owing to price movements in Tanzanian Breweries (+ 2.3%) and Tanga Cement (+3.4%). Trade reached USD 580,000 for the week.

The Tunisian market opened on a positive note, but profit taking in banks accelerated towards the end of the week; the ALSI lost 0.3% as a result. Banks were 0.5% lower as BIAT lost 1.6%, BT was down 1.1% and STB also down 1.1%. However, BNA closed 3.1% higher after a really good start early in the week. Elsewhere, Ciments du Bizerte lost 7.1% but Poulina gained 2.7%.


The Africa Weekly

In Uganda trading opened the week strongly led by interest in the financial sector before easing in the Tuesday and Thursday trading sessions. Activity was concentrated in DFCU Limited, which accounted for 68% (UGX 413m) of the weekly UGX 604m traded value. Stanbic Uganda maintained the UGX 165‐170 trading range, accounting for 25% of market turnover. Bank of Baroda fell 4.4% to top the losing counters.

In Zambia, active trading in Zain Zambia (93% of market turnover) continued during the week as it released FY09 results in line with market expectations; however the strong run‐up the previous week could not be sustained and the counter edged 2% higher for the week to ZMK 510. Elsewhere on the upside, Lafarge Zambia and CEC gained 9.8% and 1%, respectively on very thin volumes. On the down side, Zambeef and Zanaco fell 12.5% and 1%, respectively, also on thin volumes.

After a poor showing the previous week, the Zimbabwe Stock Exchange had another dismal week as investors concerned about the implementation of the Indigenisation laws sold their positions. The Industrial Index fell 7.1% on turnover of USD 4.6m. Most of the activity was concentrated in Delta (‐4%, 19% of value traded), AICO lost 21.8%, while Econet fell 3% on much thinner volumes seen last week. However, there were a few gainers; Innscor gained 5%, Interfresh surged 100% on a USD 830,000 trade on Wednesday, and PPC rose 28.6% after an announcement that its shares are now fully fungible up to a limit of 40% of its shares listed on ZSE.


The Africa Weekly

ECONOMIC INDICATORS Country Prime (%) CPI (%) MonthSouthern Africa Angola 15.54 13.83 Jan Botswana 11.50 6.10 Jan Lesotho 11.83 4.10 Jan Malawi 19.50 7.80 Jan Mauritius 8.48 1.47 Dec Namibia 11.25 6.30 Jan Swaziland 10.00 4.10 Jan Zambia 23.10 9.60 JanEast Africa Kenya 14.03 4.70 Jan Rwanda 17.56 4.54 Jan Tanzania 15.14 12.20 Dec Uganda 21.49 8.80 JanWest Africa Cote d'Ivoire (BRVM) 0.80 Jun Ghana 18.00 15.97 Dec Nigeria 18.96 12.30 Jan North Africa Egypt 9.75 13.60 Jan Morocco 3.25 0.70 Nov Tunisia 4.50 4.20 Nov

Source: Central banks, statistical agencies


The Africa Weekly

REGIONAL PAN-AFRICA

African gold players are tipped to face fresh corporate interest from Australia in the wake of Barrick Gold’s USD 3.7bn (AUD 4.2bn) plan to spin off its African assets. Barrick’s USD 80m bid for Perth junior Tusker Gold earlier this month had already sparked speculation the big miners were on the acquisition trail. The African assets will be listed on the London Stock Exchange in a move Barrick chief executive Aaron Regent said would expand the “range of growth options and ability to finance those options”.

Australian companies in the field include those in production, such as Resolute Mining in Mali, and explorers with well‐advanced projects, like Perseus Mining and Adamus Resources. Those with smaller resources include Azumah Resources, Ampella Mining, Castle Minerals and Chalice Gold, which is tipped to start drilling a new target aimed at lifting its 944,000oz resource.

Azumah Managing Director Stephen Stone said he expected to see consolidation “up and down the corporate food chain” in West Africa. “There was enormous interest in West African gold stocks at the Mining Indaba [in Cape Town last week], and it is very clearly the world gold industry hot spot,” he said. “Where else have 15 new mines come on‐stream in the last seven years and where else are five and 10m ounce resources still being discovered?” (Source: The West Australian)

Belgian carrier Brussels Airlines will this year launch a new regional African airline to be based in the Democratic Republic of Congo (DRC), its chief executive said in Paris on Tuesday. "Our aim is to create an intra‐African company and give an alternative for intra‐African air traffic in difficult security conditions," Bernard Gustin, the airline's joint chief executive told reporters.

Gustin said he wanted to launch the project this year, on the 50th anniversary of Congo's independence from Belgium. The Congolese company would be based in Lubumbashi in the southeast of the country. The airline would be owned 50% by Brussels Airlines and 50% by the Forrest Group, which is run by influential Belgian businessman Georges Forrest and is already active in DRC's mining sector.

The company will start with a Lubumbashi to Kinshasa route and then extend to other routes within Democratic Republic of Congo and in the region. Brussels Airlines also announced it would start flying new routes to Benin, Burkina Faso, Ghana and Togo, brining its number of African destinations to 18. (Source: Agence France Presse)

NORTH AFRICA

Ongoing and planned investments in new power generation capacity in the southern African region will add some 35,500MW by 2015 and ease shortages in the region, a Southern Africa Power Pool (SAPP) official said on Tuesday. Lawrence Musaba, Coordination Centre Manager at the SAPP, said the projects will help raise the reserve margin ‐ or spare capacity ‐ to at least 10%.

Musaba said that a more flexible and active electricity trading pool, which SAPP developed to boost power trading in the region, has been operating since earlier this month and has seen a gradual increase in electricity trade. "Power is flowing... it is traded competitively on the market and the volumes are increasing," he said.

Africa excites Australian gold miners

Belgian carrier to launch African airline

Southern Africa power projects set to boost supply


The Africa Weekly

Most of the power exchanged in the region ‐ some 20% of the region's supply of around 42,000MW ‐ has so far been traded via bilateral long‐term contracts with fixed tariffs. With the new system SAPP is aiming at boosting trade and allowing utilities to cover short‐term supply shortages. With a more competitive system, prices will be set on a spot basis based on demand and supply between the utilities in the countries where SAPP operates.

Musaba said in the initial week’s trade has peaked at 50MW/hr, but the pool is hoping to increase that. "The idea is to get at least 5‐10% of the energy traded in the region to be traded on the spot market," he said. So far three utilities were participating in the market, although the pool plans to soon include all utilities from the region and also from elsewhere in the continent.

Musaba said the Zambia‐Kenya‐Tanzania interconnector, currently under discussion by the three governments, should help boost trade between east and southern Africa, especially because of the power differentials between the regions. He said power in southern Africa cost one‐third of that in east Africa, adding that the line could be built within five years from the time an investment decision has been made. (Source: Reuters)


The Africa Weekly

ANGOLA POLITICAL AND ECONOMIC NEWS

According to the central bank, Banco Nacional de Angola (BNA), foreign‐exchange reserves dropped from USD 12.9bn in November to USD 12.3bn in December 2009. Reasons for the decline include the government's drawdown of forex deposits to finance fiscal deficits and foreign‐exchange market intervention to stabilise the kwanza.

The kwanza's unofficial peg to the US dollar has been loosened, forcing a sharp depreciating trend in 2009. Oil revenues, although on a rebounding trend, remain lower than their mid‐2008 peak average and relatively weak foreign‐exchange reserves during the last four quarters have constrained the central bank's ability to maintain a stable currency through the selling of US dollars. (Source: IHS Global Insight)

Angolan authorities have arrested 18 central bank employees for allegedly embezzling over USD 130m, the public prosecutor has announced. The employees were arrested for money allegedly transferred out of the Banco Nacional de Angola between September and November last year, according to Joao Maria de Sousa. The official said almost USD 100m has been retrieved, while luxury cars including Mercedes, BMWs, Bentleys and Porsches have also been seized from the employees.

In December, Angola's President of 30 years, Jose Eduardo dos Santos, called for "zero tolerance" on corruption and an end to the "squandering of state resources". Last week he also announced plans for a new anti‐graft law. (Source: AfrolNews)

COMPANY NEWS

Italian major Eni has struck oil at both its Nzanza‐1 and Cinguvu‐1 wells, according to Upstream. The company says the Nzanza‐1 well tested at 1,600bpd of 18°API crude oil, while Cinguvu‐1 tested at 6,400bpd of 23°API oil. Both wells are located in waters around 1,400 metres deep in Block 15/06, approximately 350km north‐west of the Angolan capital, Luanda.

Eni is the block operator with a 35% stake. Its partners are Sonangol Sinopec International (SSI, 20%), Sonangol (15%), Total (15%), and Statoil, Petrobras, and Falcon Oil, each with respective shares of 5%. Nzanza‐1 and Cinguvu‐1 are Eni's fourth and fifth discoveries in the permit after Ngoma‐1 ST1 (2008), Sangos‐1 (2008), and Cabaca North‐1 (2009). (Source: IHS Global Insight)

The Australia‐based Roc Oil has reported a promising oil flow from its Castanha‐1 onshore exploration well in the Cabinda South block, Upstream has reported. According to Roc, the oil is flowing at the rate of 2,275bpd. Roc has a 10% stake at the Cabinda South joint venture (JV) through its subsidiary Lacula Oil. The block is operated by Argentina's Pluspetrol, which holds 45% in the JV. Force Petroleum and the Angolan state oil company Sonangol each hold 20%. The remaining 5% is controlled by the Cuban state oil company CUPET. (Source: IHS Global Insight)

South Korea's Daewoo Shipbuilding & Marine Engineering said Monday it has clinched a USD 347m order to build five crude carriers for Angola's state oil company Sonangol. Under the contract, Daewoo, the world's second‐largest ship builder, would deliver the five crude oil carriers, with a capacity of 160,000mt each, to Sonangol between 2011 and 2013. (Source: Platts Commodity News)

External reserves drop in December

Central bank employees arrested for embezzling

Eni strikes oil in two wells offshore

Roc Oil sees promising flow rates from onshore well

Daewoo wins USD 347m order to build crude carriers


The Africa Weekly

Angola had a relatively modest total of 303,000 fixed line telephone connections at the end of 2009. However, this represents significant growth of 39% compared to the previous year’s figure of 218,000, according to the National Communication Institute (INACOM). Meanwhile, the mobile market continued to grow steadily, with the number of subscriptions reaching 8.7m at the end of December 2009, up from 6.8m at end December 2008 (up 28%). (Source: TeleGeography)

Portuguese infrastructure company, Mota‐Engil said Wednesday that it signed an agreement for the creation of Mota‐EngilAngola, with an estimated value of USD 325m. In a regulatory filing, the company said Mota‐EngilAngola will be responsible for the development of its activities in the country, including construction of public and private works. Mota‐Engil will own 51% of Mota‐EngilAngola, while its Angolan partners Sonangol, BPA ‐ Banco Privado do Atlantico, Finicapital, Investimentos e Gestao, Globalfactum and Gestao de Activos will hold the remaining 49%. Mota‐Engil expects to close the transaction during 2010, the company added. (Source: Dow Jones)

International Gold Exploration (IGE) has stated that it will purchase Efidium Ltd, a subsidiary of Pangea DiamondFields, in a deal that will merge the two companies' diamond assets. The merger, announced by Pangea on Monday, will consolidate Pangea’s five diamond projects in Angola, the Democratic Republic of the Congo (DRC) and South Africa with IGE's four diamond ventures in Angola.

IGE will issue 495m new shares, estimated at USD 48m, in exchange for the entire issued share capital of Efidium. Once the deal is finalised, Pangea will hold 38.4% of International Gold Exploration’s issued share capital.

"The diamond operations of IGE and Pangea are an excellent fit. The combined interests will comprise a well balanced project portfolio, highly experienced exploration and operational staff and sufficient critical mass to be an important player in African diamond mining. In particular, combining our respective operations in Southern Africa creates opportunities to maximize the efficiency and reach of the merged organisation,” said Pangea CEO Boris Kamstra.

Kamstra will lead the management of IGE's diamond activities following the completion of the merger, the company announced. (Source: IDEX Online)

Mobile phone subscribers reach 8.7m

Portugal's Mota‐Engil signs partnership agreement

IGE and Pangea DiamondFields to Merge


The Africa Weekly

BOTSWANA POLITICAL AND ECONOMIC NEWS

Finance Minister Kenneth Matambo announced this week that the amount of subventions to parastatals would be reduced on a case by case basis as part of government’s ongoing efforts to cut back on costs. Some of the eleven commercial public enterprises and the public institutions have been receiving subventions from government's recurring budget to sustain their operations.

The minister noted that government has looked at individual funding requests from concerned entities and revised downwards those it felt could be revised. He also noted that the government's decision to enforce the rule entitling it to 25% of parastatal's profits is consistent with efforts to raise its revenue. He indicated that the majority of the heads appreciated the constraints on government's cash resources and realised the urgent need to address the situation as best as possible. (Source: Mmegi)

The construction of the Morupule B phase 1 power station has commenced, with the first output expected in January 2012. Speaking at the ground breaking ceremony, the minister of Minerals Energy and Water Resources, Ponatshego Kedikilwe, indicated that the project is a medium‐term solution to the country's power supply‐demand mismatch. He noted that Botswana currently imports 80% of its power needs, has only one power station which was commissioned 24 years ago and produces only 132MW.

Though the country's needs are met through imports, the minister noted that the region is running out of surplus generating capacity. The contractor, China National Electric Equipment Corporation (CNEEC), will import 1,800 Chinese staff members for the project, while 600 locals will be employed. The project entails the engineering design, manufacturing, procurement, construction and commissioning of four 150MW units. (Source: Monitor)

COMPANY NEWS

South African‐based retail bank, Absa, is set to take over Bank Gaborone through the acquisition of its Namibian‐based parent company, Capricorn Investment Holdings (CIH) ‐ a move that could result in a merger in the local financial market. Absa, which is 60% owned by Barclays PLC, announced a takeover bid for CIH on Friday. CIH is a majority shareholder in Bank Windhoek and Bank Gaborone. Absa announced plans to buy a controlling stake in CIH, which owns 88% of Bank Gaborone, for an undisclosed amount.

The deal is subject to several conditions that include shareholder and regulatory approvals. Bank Gaborone Marketing Manager, Sandra Mokobi confirmed that their parent company has received the offer from Absa and that negotiations, which could take between one and three months, are ongoing. It remains to be seen what will happen to Bank Gaborone and Barclays Bank in the local market if the deal goes through, as the two fall under the same principal shareholder. (Source: Mmegi)

RPC Data issued a trading update advising shareholders that management is finalising 1H10 (November 2009) results and anticipates that the results will be lower than the comparative period. (Source: Company filing)

Govt to reduce subventions to parastatals to cut costs

Construction of the Morupule B phase 1 expansion commences

ABSA tables a takeover bid for Bank Gaborone’s parent

company

RPC Data’s 1H10 results to be lower than the comparatives


The Africa Weekly

MARKET ACTIVITY

The DCI closed the week to Thursday 0.2% lighter at 7,688.76 points on reduced activity. Turnover declined to BWP 10.1m this week, compared to BWP 99.7m last week on volume of 891,251. Most activity was spread between Sechaba (‐0.4%) and BIHL (flat), collectively accounting for 77.6% of turnover (BWP 7.8m). Sechaba emerged the highest trader after moving a single block of 500,000 shares on Tuesday. Olympia was the week’s top loser, down 4% on trade of 400 shares on Monday.

Botswana Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceABCH Botswana 3.1 1.34 Olympia Capital ‐4.0 0.48Primetime 2.2 1.82 FNB Botswana ‐1.7 2.90Stanchart Botswana 2.2 16.45 Sechaba ‐0.4 12.80 Top trader BWP (m) USD (m) Total Traded BWP (m) USD (m)Sechaba 6.40 0.92 BSE DCI 10.1 1.45 Market Performance Level BWP (%) USD (%) BWP/USD % chgBSE DCI (BWP) 7,689 ‐0.17 ‐1.48 7.00 ‐1.31


Dividends (BWP)

Company Financial Year Type Amount Last cum dateFNBB June 10 Interim 0.05 12 Mar 10

Source: Company results


The Africa Weekly

LESOTHO POLITICAL AND ECONOMIC NEWS

According to the Lesotho Bureau of Statistics (LBOS), Lesotho’s y/y inflation for January declined by 10bp to 4.1%, compared to 4.2% y/y in December. The report indicates that the main contributors to the decline were Food and non‐alcoholic beverages (down 10bp), Furnishings, household equipment and routine maintenance of house (‐20bp) and Clothing and footwear (‐20bp).

The risk to domestic inflation remains on the cost‐push side, with the threat of South African Eskom’s price hikes the key danger. The strength of the rand combined with weak domestic demand were the two main factors helping to push inflation down, particularly of durable and semi‐durable goods, during the latter half of last year and the beginning of this year. (Source: Lesotho Bureau of Statistics)

The African Development Bank (AfDB) and the government of Lesotho have signed a protocol agreement on the Lesotho Poverty Reduction Support Programme. The programme aims at promoting transparency and accountability in management and the prudent use of public resources. It focuses on budget processes, public procurement, auditing and accounting. The fiscal policy stance aims at protecting the poorest and increasing overall revenues. Estimated at Units of Accounts USD 10m, the operation is seen as an integral part of a programme jointly supported by four other donors – the World Bank, the European Union, DFID and Irish Aid.

Since the AfDB started its operations in Lesotho, more than 35 years ago, almost USD 400m has been approved and provided to the country, mainly to develop infrastructure and the social sector. (Source: Afrol News)

The meeting of the Troika of the Organ on Politics, Defence and Security Cooperation (OPDSC) of the Southern African Development Community (SADC) has emphasised dialogue as a lasting solution to Lesotho's political differences. Addressing the media on Monday, the chairperson of the organ, President Armando Emilo Guebuza of Mozambique, said dialogue could be a lasting solution for political challenges facing the nation. Guebuza reassured Basotho of complete support from SADC with a team of facilitators to work jointly with the Christian Council of Lesotho (CCL) in the mediation. He said that SADC would also assist in mobilising financial resources to support the process.

He added that in the process, the CCL and SADC will bring stakeholders together to agree through an inclusive and participatory process on a roadmap, which among others will indicate a period for reviewing the constitution and electoral law. He further noted that the roadmap would form a basis for monitoring the progress achieved in the post‐electoral political dialogue.

The government and opposition have been locked in a long‐running dispute over the allocation of seats in the National Assembly following the February 2007 general election. At the centre of the dispute are opposition claims that the ruling party corrupted the Mixed Member Proportional (MMP) model. The government, on the other hand, has dismissed the opposition claims after the High Court dismissed the matter.

A SADC initiative led by Sir Ketumile Masire – the former president of Botswana – ended abruptly in July last year after he cited a breakdown of dialogue with the

January inflation records 4.1%

AfDB and Lesotho sign poverty reduction support programme

SADC Troika emphasis political dialogue


The Africa Weekly

government. Following the departure of Masire, the Christian Council of Lesotho (CCL) took the deadlocked talks forward. Four months after the CCL took over there is no indication that the dispute will be resolved any time soon. (Source: Lesotho government)

COMPANY NEWS

Hundreds of P&T workers marched through Maseru this week to present a petition to the minister of Trade and Industry, Popane Lebesa, calling on the government to bail out beleaguered textiles firm P& T. The company faces imminent closure following the global economic meltdown which saw its textile exports to the United States decline. (Source: Intelserv)

P&T workers call for a bailout


The Africa Weekly

MALAWI POLITICAL AND ECONOMIC NEWS

The International Monetary Fund (IMF) said on Friday it has entered into new programmes with the nation, approving a three‐year USD 79.4m extended credit facility to support the country’s economic programme. It said that the amount represented 75% of the nation’s special drawing rights quota in the fund.

The country has for the past few months been without programmes with the IMF, a development that led to speculations that government failed to effectively implement some of the previous programmes for the monetary fund. (Source: IMF website)

The International Monetary Fund (IMF) has projected a decrease in GDP for 2010 to 6%, from 7.6% last year. The IMF, which is the country's major donor, has, however, projected an increase in the GDP to 6.3% come 2011. According to a press release on the fund's website, Malawi's annual average for consumer prices has also been projected to increase from the current 7.8% to 10.1%. (Source: The Daily Times)

The government of Japan has decided to extend environmental programme grant aid (the project for introduction of clean energy by solar electricity generation system) totalling JPY 660m (USD 7.3m) to Malawi. Notes to this effect were exchanged on 17 February 2010 in Lilongwe between Japanese ambassador to Malawi, Motoyoshi Noro, and Minister of Finance Ken Kandodo.

In Malawi, most energy consumption is provided by biomass fuel, which produces large amounts of carbon dioxide. Malawi is working to reduce the ratio of biomass fuel and to diversify energy sources under the objective of increasing the utilisation rate of renewable energy. This project will provide the necessary funds to install a solar power generation system connected to the power system in Kamuzu Airport, which is Lilongwe’s international airport. In this way, it will contribute to reducing greenhouse gas emissions and also to the smooth operation of airport facilities. (Source: African Press Organization)

Malawi is slowly joining the club of mineral‐rich nations with recent revelations indicating the availability of diamonds, the Malawi Mineral Sector Review done by the World Bank has shown. (Source: The Nation)

COMPANY NEWS

Friction between the Consumer Association of Malawi (CAMA) and mobile phone provider Zain Malawi over new airtime rates continues to escalate with the former calling for Reserve Bank of Malawi's action. However, Zain has defended its rates hike of around 20%, saying the new rates were actually long over due. CAMA Executive Director John Kapito wants the central bank to penalise Zain for discreetly pegging its rates to the US dollar, describing the practices as illegal. Kapito said this was the reason Zain has hiked its air time rates soon after the slip of the kwacha against the green back. He accused the company of operating as if it pays for its expenses in US dollars. (Source: The Daily Times)

IMF grants USD 79.4m credit facility

IMF projects slip in Malawi GDP

Japan grants JPY 660m for clean energy

Diamonds discovered

Zain and CAMA clash over new rates


The Africa Weekly

MARKET ACTIVITY

The Malawi ALSI remained unchanged, with most of the trading concentrated in NBS Bank (21% of weekly turnover of USD 325,000), NBM (40%) and NITL (30%).

Malawi Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceNo gainers No losers Top trader MWK (m) USD (m) Total Traded MWK (m) USD (m)NBM 19.9 0.13 MSE ALSI 49.6 0.33 Market Performance Level MWK (%) USD (%) MWK/US % chgMSE ALSI (MWK) 5,155 0.00 0.00 150.80 0.00



The Africa Weekly

MAURITIUS POLITICAL AND ECONOMIC NEWS

Mauritius has changed its listing regulations with a view to attracting global funds and collective investment schemes looking for investment opportunities in Africa, according to the head of the stock exchange. The island's growing offshore financial sector pitches itself as a financial platform bridging Africa, the Indian sub‐continent and Asia. The Stock Exchange of Mauritius (SEM) previously catered only for investment companies, unit trusts and open‐ended funds. The listing regulations were amended to include global schemes, professional collective investment schemes, expert funds, closed‐end funds and specialised collective investment schemes.

The SEM is going through a strategic reorientation of its activities and gradually moving away from an equity‐based domestic exchange to a multi‐product internationally‐oriented exchange. These changes have now positioned the SEM as an attractive venue for the listing of global funds. While competition for dwindling business at the start of 2009 led to a drop in new activity for Mauritius' offshore sector, it still countered the global downturn last year by posting a 25% gain in annual pre‐tax profits. The development of the financial sector is part of the island's diversification away from traditional sugar, textile and tourism, into ICT, business outsourcing and offshore banking. Mauritius' finance industry expanded by an annual average rate of 7.6% over the last four years, making it the most resistant sector to the global financial crisis.

The chief executive of the Mauritius Financial Services Commission (FSC) said the future of the global business industry was in funds. There are more than 1,000 funds under management in Mauritius, although they are not listed on the stock exchange. "Having more international funds listed on the SEM will boost Mauritius' image as a financial centre," Finance Minister Ramakrishna Sithanen said at the launch of an information campaign on new listing rules. (Source: Reuters)

Mauritius' external debt is expected to rise to 13.2% of GDP at the end of 2010 from 12.3% at the end of last year, according to the central bank reflecting increased recourse by government to foreign borrowing to finance its budget deficit, according to the report by the central bank. The government unveiled a USD 340m stimulus package in late 2008 to cushion the island's almost tourism and export dependent economy from the global economic slowdown.

The finance minister said in December that the economy's debt ratios were falling, even though the government had turned to foreign aid partners to help mitigate the economic fallout (The external debt ratio was 15% at the end of 2005). The central bank also said public sector debt, which consists of general government debt and public enterprises debt, was estimated at 60% of GDP at the end of 2009, but is projected to fall to 58.7% by the end of 2010. (Source: Reuters)

Total passenger arrivals in 2009 numbered 1.16m, a decrease of 5.7% over the 1.23m in 2008, while tourist arrivals reached 0.87m, a decrease of 6.4% y/y. Arrivals from Europe decreased 4.7%, although arrivals from France (Mauritius’ leading market) increased by 6%.

Gross tourism receipts for 2009 were estimated by the Bank of Mauritius at MUR 35,693m, a decrease of 13.4% compared to 2008. At the end of December 2009, there were 102 registered hotels in operation, with a total room capacity of 11,456

Listing rules changed to target funds growth

External debt on the rise

Tourist arrival in 2010 expected to increase 5%


The Africa Weekly

and 23,235 bed‐places. The average room occupancy rate for all hotels for 2009 was 61%, while the bed occupancy rate averaged 54%.

Based on data available on tourist arrivals and information gathered from stakeholders, it is expected that arrivals for 2010 will be around 915,000 ‐ representing an increase of 5% over 2009. According to the Bank of Mauritius, tourism receipts for 2010 will be around MUR 40,150m, up 12% compared to 2009. (Source: Central Statistic Office)

Shoprite has chosen Four Equal and its South African partner Abacus Management Ltd as its partners to open a hypermarket of 48,000ft2, which will be the largest hypermarket in the country. Shoprite Checkers has already signed the contract to lease space in the future commercial complex Mall of Mauritius in Ebene City. The signing of this agreement gives the promoters of the mall a considerable advantage, as it will impact on the decision of other brands to choose the commercial complex due to increased foot traffic. (Source: The Independent Daily)

COMPANY NEWS

The board of directors of the Mauritius Union Assurance Company Limited (MUA) is considering the acquisition of the insurance activities of La Prudence Mauricienne Assurances Limitée, subject to the necessary regulatory approval. The proposed acquisition is in line with the previously announced strategy to further develop MUA Group’s activities and seize growth opportunities through the creation of synergies. (Source: Semdex)

Results for Promotion and Development Ltd were adversely affected by the drop in the dividend payout of its investments and the increased financial costs associated with the reduced cash flow position, following the purchase of new offices and investments in available‐for‐sale financial assets.

At group level, in addition to the above, the performance of its subsidiary, Caudan, was adversely affected during the period by the tough economic environment and sluggish office demand. Furthermore, its share of results from associates were down on last year, reflecting a reduced contribution from its main associate, Medine, which was affected by the drop in the sugar revenue and delays in the realisation of property sales projects.

Notwithstanding the above, the group’s NAV increased from MUR 177.65 at the start of the financial year to MUR 183.98 at 31 December 2009, whilst the company NAV increased from MUR 124.01 to MUR 136.28. (Source: Semdex)

Promotion and Development Limited 6m to Dec (MURm) 1H09 1H10 % chg Revenue 232 241 4 Operating expenses ‐146 ‐171 17 Operating profit 86 70 ‐19 Net finance costs ‐24 ‐40 68 Share of profit from associates 85 9 ‐90 Profit before tax 162 42 ‐74 Profit for the year 154 35 ‐77

Source: company reports

Shoprite to open a hypermarket in Mauritius

Proposed acquisition by MUA

PDL affected by lower payouts from its investments and

higher financial costs


The Africa Weekly

Results for Caudan Development Limited for the six months ended 31 December 2009 have continued to be adversely affected by the tough economic environment and sluggish office demand. Major contributors to higher operational costs included: extensive building repairs and upgrades, costs associated with its new advertising campaign, the poor performance of its associate (Le Caudan Waterfront Casino), and the increased financial costs unmatched by sufficient revenue pending full occupancy of the Dias Pier Building.

As previously announced by management, it is clear that FY10 will be a difficult year. However, with its unique assets, Caudan has potential for long‐term capital growth, both from its existing property and the development of future phases of the Caudan site as they are completed and let. (Source: Semdex)

Caudan Development Limited 6m to Dec (MURm) 1H09 1H10 % chg Revenue 195 209 7 Operating expenses ‐129 ‐148 15 Operating profit 68 62 ‐9 Net finance costs ‐28 ‐33 20 Share of profit from associates 10 ‐2 ‐120 Profit before tax 50 26 ‐47 Profit for the year 45 20 ‐55 Source: company reports

MARKET ACTIVITY

The Mauritius market retreated another 0.8% as banking and hotel sectors came under selling pressure. Both MCB (‐0.7%) and SBM (‐1.3%) were down, and among the hotels NMH lost 2.3% and Sun Resorts fell 3%. Only Naiade Resorts ended the week higher (+1.6%), after recording gains on reasonable volumes on Monday.

Stock Exchange of Mauritius

Top gainer(s) % chg Price Top loser(s) % chg PriceMauritius Union 24.3 138.00 Fincorp ‐4.9 15.60Harel Mallac 6.0 106.00 Mauritius Oil Refineries ‐4.8 20.00Plastic Industry 2.7 75.00 Gamma Civic ‐4.3 176.00 Top trader MUR (m) USD (m) Total Traded MUR (m) USD (m)MCB 81.5 2.65 MAUR 212.6 6.91 Market Performance Level MUR (%) USD (%) MUR/USD % chgMAUR (MUR) 1,652 ‐0.82 ‐1.47 30.85 ‐0.65


Dividends (MUR)

Company Financial Year Type Amount Last cum dateSun Resorts Dec 09 Final 0.60 2 Mar 10Gamma‐Civic Jun 10 Interim 0.75 21 Apr 10Forward Investment Jun 10 Interim 1.10 2 Mar 10Ciel Textile Jun 10 Interim 0.20 26 Feb 10

Source: Semdex

Caudan Development relies on long‐term prospects


The Africa Weekly

NAMIBIA POLITICAL AND ECONOMIC NEWS

The central bank left its repo rate steady at 7% on Wednesday and predicted higher‐than‐expected economic growth of at least 4% for 2010 after last year's contraction. Bank of Namibia Governor Tom Alweendo said the economy was recovering but that near‐term inflation risks were low, allowing for an unchanged rates decision. The mineral‐rich economy ‐‐ the world fourth largest uranium producer and a big diamond producer ‐‐ contracted by about 1% in 2009 but is seen recovering this year, led by a rebound in mining and strong performances from tourism and construction.

The Bank of Namibia cut interest rates by 350bp between December 2008 and June last year to try to boost flagging growth, after the global downturn hit demand for exports from its key mining sector. Inflation is largely under control, having eased to a near‐three‐year low of 6.3% y/y in January from a peak of 12% in August 2008. However, the central bank has warned that higher oil prices and sharp increases in commodity prices could pose risks to the inflation outlook.

A Reuters poll last week showed a consensus forecast for 3.1 percent economic growth in 2010. (Source: Reuters)

"It is my honour to announce that Namibia is now a Basel II Regulatory Regime, which officially makes Namibia the third country in Africa, after Mauritius and South Africa, to implement this regulatory framework", said Bank of Namibia assistant governor, Ipumbu Shiimi, said when he introduced the new banking standards to the Namibian financial services industry.

The Bank of Namibia, as regulator of the banking sector, officially introduced the Basel II accord, which is an international initiative to start a process of improving risk management in bank's capital structures and on their balance sheets. Shiimi said in developing the Basel II framework, a number of key objectives were taken into consideration. One of these objectives was to develop a more meaningful link between banks' on‐ and off‐balance sheet risk exposures, and the capital supporting them. Another was to strengthen the links between sound regulatory capital and risk‐based supervision as a way to create incentives for strong risk management practices at banks. (Source: Namibia Economist)

Changes to the Banking Institutions Act of 1998 tabled in parliament will give the Bank of Namibia (BoN) more power in its oversight of commercial banks, their restructuring plans, notifications of appointments of bank bosses and directors and foreign bank ownership. According to the Finance Ministry, the amendments to the act would give BoN the power to regulate and supervise holding companies of banking institutions. The Amendment Bill was tabled in parliament on 18 February 2010. (Source: IJG Securities)

Finance Minister Saara Kuugongelwa‐Amadhila yesterday tabled amendments to the Payment System Management Act of 2003, which will give the BoN the power to "assess and, where necessary, regulate payment system charges". The amendments will allow the BoN to evaluate the costing and pricing practices of banks in order to determine and implement cost‐effective pricing. Another important amendment will be that the possession of bank card skimming devices will be made illegal. These devices are used by fraudsters to illegally copy the owners' banking details in order to empty their bank accounts.

Central bank holds rates, sees 4.2% growth

Banks subject to new capital adequacy standards

Proposed, banking act to restrict commercial banking

independence

BoN to regulate bank charges


The Africa Weekly

Any bank or other registered financial service provider charging fees not adhering to the regulations set by the BoN would have to pay a fine up to NAD 1m and could be imprisoned up to ten years, or both. "The public is being charged exorbitant fees at every stage of their interaction with banking institutions, discouraging lower‐income groups from accessing the national payment system. The Namibian public still relies heavily on the use and the safeguarding of cash outside the banking system due to the perception that bank charges are too high," the finance minister told parliament.

"Namibia has for the past few years been inundated with complaints that banking institutions charge high and complex bank fees, that there is a lack of pricing competition among banks and that over 50 per cent of the economic population is still unbanked; they have no accounts," she added. "Government has encouraged the banking industry to reach out to the unbanked and low‐income groups. The banking industry has failed to do this satisfactorily although they have achieved large growth profits," Kuugongelwa‐Amadhila criticised.

"Government is of the opinion that due to the critical nature of the national payment system, certain components should be viewed as public utility and thus [be] regulated to allow for fair and cost‐effective access by the public. It is against this background that these amendments to the Act are made," the minister said. (Source: The Namibian)

Namibia Wildlife Resorts (NWR) ended March 2009 with an accumulated loss of approximately NAD 99m, loan debt of more than NAD 71m and an overdraft exceeding NAD 17m. Although the company managed to make a net profit the last two years, it remains ‘technically bankrupt’ with liabilities in the vicinity of NAD 241m, exceeding assets by NAD 88m, according to Managing Director Tobie Aupindi. The 2008‐09 statement show the parastatal paid no dividends to the government, but instead retained NAD 98,96m of its earnings to stay in the business. In addition, government pumped a grant of NAD 27m into NWR coffers last year to clear long outstanding debt and cover other operational expenses. (Source: IJG Securities)

The government has "effectively ceded its sovereignty to the Chinese government", a company which tendered for the northern railway extension project said in a strongly worded affidavit filed with the High Court in October last year. The company, Shetu Trading CC, the only tenderer for the project, lodged a review application in the High Court in Windhoek to have the tender to a Chinese company reviewed or set aside. In its review application filed on 13 October, Shetu cites the minister of Works, the chair of the Tender Board of Namibia, China National Machinery and Equipment Import and Export Corporation (CMEC) and Teko Trading CC as respondents.

In her founding affidavit, Anna Mbundu, the executive director of Shetu Trading, accuses government of breaking its own laws and ignoring its own policy in return for a loan. The tender was for the supply of rails for the extension of the northern railway line, and was published in 3 February 2009. However, Mbundu claims that she discovered in her subsequent investigations, after the tender was cancelled, that the permanent secretary in the Ministry of Works and Transport had applied to the Tender Board of Namibia that no open tenders be invited for the northern railway extension project. She alleges that "such exemption may have been granted on 14 November 2008," although the tender was published in February the following year. In her affidavit she accuses the Ministry of Works and Transport for putting out a fake tender in order to "test the market" while negotiations with a Chinese company to supply and construct railway lines in the north and south of Namibia were ongoing. (Source: The Namibian)

Indebted parastatal discloses financial results

Railway tender to Chinese firm heading to court


The Africa Weekly

The recently concluded deal that saw Weatherly International plc (Weatherly) selling its Tsumeb smelter to Dundee Precious Metals Inc, will have to be approved by the newly formed Namibian Competition Commission. This will be the first instance that a transaction of such a nature is brought before the commission. Weatherly filed the necessary information in connection with the disposal on 29 January 2010 and the commission has had 30 business days from this date to confirm whether the disposal will be considered for further investigation. (Source: IJG Securities)

A NAD 350m tourism development project in the Oshikoto region is in danger of collapsing as villagers of the King Kauluma Settlement fight the Centre for Resources and Transformation (CERET) over ownership of the settlement in which the project is to be built.

According to a letter dated 10 January 1990, which was co‐signed by King Elifas Kauluma and the headman of the Ondongo Tradional Authority , the settlement was placed in the hands of CERET for income and development projects, which in turn has to benefit the community. CERET's ownership of the land was further endorsed by a cabinet decision taken in 1996. However, in spite of the letter and the cabinet decision, the vilagers are threatening to stop the building of the tourism project as they claim that the land rightfully belongs to them. (Source: Namibia Economist)

COMPANY NEWS

Cameroon recently became the third country to market Windhoek Lager. Guinness Cameroon SA (GCSA), a subsidiary of Diageo, launched the brand in the Cameroonian market as part of Namibian Breweries’ global brewing and licensing agreement with Diageo. (Source: IJG Securities)

South African banking group Absa plans to buy a controlling stake in Namibian financial services firm Capricorn Investment Holdings for an undisclosed amount, it said on Friday. Absa, majority owned by Britain's Barclays, said the deal was subject to several conditions that include shareholder backing from Capricorn and regulatory approvals. Capricorn is a financial services group whose businesses include the flagship brand Bank Windhoek, which is a leading Namibian bank with over NAD 13bn in assets. (Source: Reuters)

Production at Namibia’s only gold mine, Navachab, improved by 6% to 17,000 ounces of gold in 2009. AngloGold Ashanti said the improvement was mainly due to an improvement in yields from the higher grade ore body at the mine. They also noted that volumes mined declined due to the harder blend of ore. Total cash costs increased by 19% to USD 730 per ounce because of higher contractor costs as well as gold‐in‐process and deferred stripping adjustments. (Source: IJG Securities)

leo, Namibia's third mobile telecommunications provider, has launched a product aimed at making business communication affordable for entrepreneurs. The product, Business Lite, allows leo's clients to make use of it outside the country's borders as well by allowing them to roam on foreign networks. Business Lite offers clients 150 minutes and 150 SMSs to all fixed and mobile Namibian networks, 150 megabytes of data and free on‐net calls at night and over weekends. It is estimated that Namibians make about 80% of international calls to destinations such as South Africa, Angola, Hong Kong and Germany. "In order to benefit their clients, leo has decided to charge NAD 2.50 per minute for calls made to these destinations, irrespective of whether these calls are made to a fixed or mobile line." "We are here to do business and leo Business Lite will change the way that people communicate. The beauty of our packages is the convenience of not needing to go to special outlets or buy special

New competition commission set to rule on its first deal

NAD 350m tourism project in danger

Windhoek Lager launched in Cameroon

Absa to buy control of Namibia's Capricorn

Yields increase at Anglo Gold Ashanti’s Navachab mine

Business Lite to reduce call costs


The Africa Weekly

recharge vouchers. Simply buy your airtime anywhere, recharge, register and you are set to go," said Chris Keeping, Chief Commercial Officer of leo.

leo currently covers 75% of the population spread in Namibia which includes all major cities, towns and road networks, the company said. There are 11 leo shops and more than 2,000 distributors throughout Namibia, where customers can recharge with airtime and purchase any of the offered phone deals. (Source: The Namibia Economist)

MARKET ACTIVITY

There was no trading in Namibia this week.

Namibian Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceNo gainers No losers Top trader NAD (m) USD (m) Total Traded NAD (m) USD (m)No Trade 0.00 0.00 NMB LOCAL 0.00 0.00 Market Performance Level NAD (%) USD (%) NAD/USD % chgNMB LOCAL (NAD) 156.18 0.23 ‐2.66 7.84 ‐2.88



The Africa Weekly

SWAZILAND POLITICAL AND ECONOMIC NEWS

The Minister of Finance today presented the national budget for the year 2010/11. The budget is set in an environment where ‘belt‐tightening’ has become a priority. Some of the key points are:

Domestic economic conditions are expected to improve in 2010, with growth projected as 1.1%, in line with the improving global economic conditions. Growth in economic activity in Swaziland is expected to remain below potential for quite some time, mainly constrained by the narrow domestic market and the continued slowdown in FDI inflows.

Profitability indicators for the Swazi banks deteriorated in 2009 as a result of slow growth in lending activities and high operating costs in the banking sector. The industry’s cost‐to‐income ratio depicted a worsening movement from 62.7% in September 2008 to 68.4% in September 2009. Loans and advances, which are the core earning assets in banking, constituted 59.7% of total assets in September 2009, a decline from 61.8% posted in September 2008.

The implementation of the Retirement Funds Regulation that requires all retirement funds to invest at least 30% of their assets in the country by the end of 2008, boosted the deposit base of the banking sector. Deposits grew by 12.9% in the year to September 2009. These positive effects were, however, dampened by the slow‐down in economic activity, which resulted in excess liquidity in the banking sector.

Total government revenue, including grants for 2010/11, is estimated at SZL 6.3bn compared to SZL 9.2bn in 2009/10, reflecting a drastic reduction of 30.8%.

This year’s appropriated recurrent expenditure stands at SZL 7.7bn, a decline of 6.5% on the previous year’s appropriation. The largest component remains expenditure on wages and salaries, which accounts for 51% of the recurrent budget.

The budget makes a provision of SZL 2.6bn to cater for the government’s capital programme.

The 2010/11 fiscal year consequently shows an overall budget deficit of 13.0% of GDP.

Total debt stock to GDP stands at 14.9%, whilst debt service as a share of exports of goods and services stands at 4.8%; both figures are below the critical debt ratio levels of 60 and 15%, respectively. (Source: Ministry of Finance)

Minister of Finance presents 2010/11 budget


The Africa Weekly

MARKET ACTIVITY

In Swaziland, the market remained flat with no trade taking place.

Swaziland Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceNo gainers No losers Top trader SZL (m) USD (m) Total Traded SZL (m) USD (m)No Trade 0.00 0.00 SSX ALSI 0.00 0.00 Market Performance Level SZL (%) USD (%) SZL/USD % chgSSX ALSI (SZL) 218.03 0.00 ‐2.88 7.84 ‐2.88



The Africa Weekly

ZAMBIA POLITICAL AND ECONOMIC NEWS

The Zambia National Farmers Union (ZNFU) said government’s increase of the ground rent by 1,000% poses a threat to the domestic agricultural sector. The Ministry of Lands issued a Statutory Instrument effective 1 January 2010 declaring that land taxes would go up by about 1,000%. The increase came less than two years since the Ministry of Lands had previously increased the ground rent by between 500‐600% on all farming and agricultural land. Opposing the increment, ZNFU management accused government of inconsistency by continuously making statements to promote agriculture and national food security, yet imposing laws that actually stifled growth in the sector. (Source: Post Zambia)

President Rupiah Banda met his Chinese counterpart Hu Jintao and signed a mining co‐operation pact that should bolster ties between the two countries. There were no values placed on the memorandum of understanding (MOU) covering geology and mining, but China has already invested more than USD 1.2bn into the country, mostly for Chinese access to Zambia’s mineral wealth. Four other agreements covered road construction and an industrial park, as well as technical and cultural co‐operation.

Hu praised Banda for seeking closer ties with China. Banda, who faces a presidential election in 2011, is probably seeking concrete results from the relationship with China. However, opposition politicians say Chinese mining firms have created “slave labour” conditions in the country. In 2005, about 50 Zambians died in an explosives accident at the Chambishi copper mine, run by state‐owned China Nonferrous Metals Industry. In later pay protests, five Zambians were shot by Chinese managers. Chinese mining firms say they offer reasonable wages and operate within Zambian labour laws. Earlier this year more than 50 Zambian workers were arrested and released for alleged sabotage of a Chinese‐owned mine after a wage dispute. (Source: Business Day South Africa)

The Mines and Minerals Development Ministry said government had suspended plans to privatise Ndola Lime Company, declaring that it was now up to the company management and workers to save the company from collapse. The ministry believes Ndola Lime is a potentially viable company with potential to transform itself into the region's largest producer of lime for mining and agricultural activities.

The government, through the Zambia Consolidated Copper Mines‐Investments Holdings, wholly owns Ndola Lime, which has an export market for its lime in the Democratic Republic of Congo (DRC), Zimbabwe and Malawi. Ndola Lime management said the company had embarked on a USD 74m development project aimed at increasing production and installing modern equipment, which would make the company environmentally‐friendly. (Source: Times of Zambia)

COMPANY NEWS

Celtel Zambia, trading as Zain Zambia, released its FY09 results (December) with EPS up 2% y/y to ZMK 52. Net profit improved by 2% to ZMK 269bn, impacted by non‐recurring charges in 4Q09, but excluding these charges, adjusted net profit improved 14%. EBITDA margin declined by 360bps to 46.3%, also impacted by non‐recurring items; however, excluding these items, margins remained stable. The subscriber base increased by 15% to 3.1m customers. Zain Zambia’s market share stood at 69% compared to 73% in 2008. Management is aiming to set‐up a fibre optic connectivity network in 4Q10 phasing out satellite connectivity, which should impact margins favourably. Other FY10 objectives include launching a 3G service and a mobile money

Govt increases land tax by 1,000%

Govt strengthens ties with China

Ndola Lime Company to remain a state enterprise

Zain Zambia FY09 results released with EPS up 2% y/y


The Africa Weekly

programme called "ZAP". Additionally, Zain is likely to start an international voice gateway service in 1H10. (Source: Company data, African Alliance)

Zain Zambia

12m to Dec (ZMKm) FY08 FY09 % chgTurnover 1,217,170 1,383,497 13.7%Gross profit 1,064,551 1,168,979 9.8%EBITDA 605,900 640,485 5.7%Profit before tax 386,218 415,980 7.7%Profit after tax 263,732 268,886 2.0%

Source: Company report

Pursuant to the provisions of the Securities Act, Caption 354, the Securities (Takeovers and Mergers) Rules, 1993, and the Lusaka Stock Exchange Listing Rules, Celtel Zambia PLC (trading as and hereby referred to as "Zain Zambia" or the "Company") wishes to inform the market and shareholders that the Board of Directors of Mobile Telecommunications Company KSC (“Zain”), the ultimate majority shareholder in Zain Zambia, after meeting on 14 February 2010, issued a resolution to accept a proposal from Bharti Airtel Limited (“Bharti”) to enter into exclusive discussions until 25 March 2010 regarding the sale of Zain's African subsidiary, Zain B.V. (“Zain Africa”). This proposal does not include Zain's operations in Sudan or its investments in Morocco.

Bharti's proposal implies an enterprise value of approximately USD 10.7bn with USD 10bn to be paid upon closing the deal, whereas the remaining USD 700m will be paid one year after the conclusion of the deal. There is a break‐up fee of USD 150m applicable to both parties. (Source: Lusaka Stock Exchange)

MARKET ACTIVITY

Active trading in Zain Zambia (93% of market turnover) continued during the week as it released FY09 results in line with market expectations; however the strong run‐up the previous week could not be sustained and the counter edged 2% higher for the week to ZMK 510. Elsewhere on the upside, Lafarge Zambia and CEC gained 9.8% and 1%, respectively on very thin volumes. On the down side, Zambeef and Zanaco fell 12.5% and 1%, respectively, also on thin volumes.

Lusaka Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceInvestrust Bank 12.5 18 Bata Zambia ‐22.2 70Cavmont Capital Zambia 12.5 9 Zambeef ‐12.5 3,500Lafarge Zambia 9.8 5,050 ZANACO ‐1.0 510 Top trader ZMK (m) USD (m) Total Traded ZMK (m) USD (m)Celtel 5,735.5 1.22 LuSE ALSI 6,332.3 1.34 Market Performance Level ZMK (%) USD (%) ZMK/USD % chgLuSE ALSI (ZMK) 2,627 0.7 ‐0.79 4,745 ‐1.48


Zain Zambia cautionary statement on Bharti Airtel deal


The Africa Weekly

ZIMBABWE POLITICAL AND ECONOMIC NEWS

The Executive Board of the International Monetary Fund (IMF) has decided to restore the country’s voting and related rights, and its eligibility to use resources from the IMF's General Resources Account (GRA). This decision follows a request from the Ministry of Finance. Notwithstanding the restoration of the eligibility to use GRA resources, the country will not be able to use resources from the GRA or the Poverty Reduction and Growth Trust (PRGT) until it fully settles its arrears to the PRGT (about USD 140m). Access to IMF lending resources is also subject to IMF policies on the use of such resources, including a track record of sound policies and the resolution of arrears to official creditors, which would require donor support. Following this decision any remaining issues on further normalisation of relations will be addressed over time.

Hence, a number of remedial measures remain in place, as the country still has outstanding arrears to the PRGT. These are the declaration of non‐cooperation, the suspension of IMF technical assistance, except in targeted areas and the removal of the country from the list of PRGT‐eligible countries. (Source: IMF Press Release – edited)

According to the Ministry of Agriculture about 11.6% of the maize crop planted in the 2009/2010 cropping season has been declared a write‐off. The First Round Crop and Livestock Assessment report indicated that poor rains and hailstorms had affected 200,574ha of maize out of a total 1,723,990ha planted this season. The most affected regions are Matabeleland South, Midlands, Masvingo, Manicaland and Mashonaland Central. Further, the report established that land placed under cotton farming declined by 18% from 316,656ha to 261,19ha from 2009. The decline was attributed to a lack of insufficient inputs after cotton companies restructured their contract farming programmes and low producer prices. (Source: The Herald)

A South African court has granted civil rights watchdog AfriForum an order to register and enforce a South African Development Community (SADC) tribunal ruling. The ruling, which was made in November 2008, will help protect South African farmers in Zimbabwe from persecution under that government's land reform programme. The SADC tribunal ruled that Zimbabwe was violating international law with its 2005 constitutional amendment, allowing the seizure of white‐owned farms without compensation.

The order will also ensure that the affected farmers are compensated for their expropriated Zimbabwean farms and that they can approach South African courts to do so. In their argument, three South African farmers in Zimbabwe said government has continued to victimise commercial farmers despite the SADC ruling. About 4,000 farmers in Zimbabwe are affected and will be able to benefit from the ruling. AfriForum has indicated that Zimbabwean property in South Africa would be attached and sold to compensate farmers, if compensation is not paid spontaneously. (Source: Silobreaker)

The Grain Marketing Board is owed more than USD 3m by the Zambian government for maize delivered about 10 years ago. GMB management said the debt was initially about USD 1.8m and had increased over time owing to interest accumulation. (Source: The Herald)

IMF voting rights restored

Over 11% of maize crop written‐off

SA court grants evicted farmers order to attach Zimbabwean

property

Zambia owes GMB USD 3m for grain deliveries


The Africa Weekly

COMPANY NEWS

Zimbabwe Stock Exchange listed PPC has been granted full fungibility of shares by the Reserve Bank of Zimbabwe’s exchange control division. PPC is dual‐listed on the Zimbabwe Stock Exchange (ZSE) and JSE Securities Exchange (JSE). Up to 40% of the shares listed on the ZSE can be traded locally and transferred and registered onto the JSE. Both local and foreign investors can benefit from the fungibility of the shares. (Source: Zimbabwe Stock Exchange)

Kingdom Meikles Africa Limited (KMAL) had its suspension from trading on the Zimbabwe Stock Exchange (ZSE) lifted this week. Subsequently the company changed its name to Meikles Limited. (Source: Zimbabwe Stock Exchange)

Platinum miner Zimplats indicated that it would seek clarification with Government over the latest indigenisation regulations and other matters still outstanding. Implats management said that clarity was required in order to ascertain whether or not to carry our further expansion plans. (Source: The Herald)

Willowvale Mazda Motor Industries (WMMI) is on the verge of collapse after failing to secure USD 3.4m to repay its debt to a Japanese company, which supplies it with vehicle assembly parts. Vehicle stock is valued at about USD 5m, but owing to a lack of sales the assembly plant has not been able to service its debts. The closure of WMMI will likely affect its suppliers such as windscreen manufacturers, tyre and paint suppliers as well as other spare parts suppliers. (Source: The Herald)

MARKET ACTIVITY

After a poor showing the previous week, the Zimbabwe Stock Exchange had another dismal week as investors concerned about the implementation of the Indigenisation laws sold their positions. The Industrial Index fell 7.1% on turnover of USD 4.6m. Most of the activity was concentrated in Delta (‐4%, 19% of value traded), AICO lost 21.8%, while Econet fell 3% on much thinner volumes seen last week. However, there were a few gainers; Innscor gained 5%, Interfresh surged 100% on a USD 830,000 trade on Wednesday, and PPC rose 28.6% after an announcement that its shares are now fully fungible up to a limit of 40% of its shares listed on ZSE. Zimbabwe Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceRadar Holdings 38.5 0.18 Barclays Zimbabwe ‐28.6 0.10Bindura Nickel Corp 12.2 0.20 AICO ‐21.7 0.18Hwange Colliery 9.7 0.34 DZL Holdings ‐20.0 0.08 Top trader USD (m) USD (m) Total Traded USD (m) USD (m)Interfresh 0.83 0.83 ZSE Ind 3.89 3.89 Market Performance Level USD (%) USD (%) USD/USD % chgZSE Ind (USD) 139.54 ‐7.06 ‐7.06 1.00 0.00


Dual‐listed PPC shares now fungible

Meikles resumes trading on the ZSE

Zimplats seeks clarity on indigenisation law

Car assembly plant faces closure over USD 3.4m debt


The Africa Weekly

KENYA POLITICAL AND ECONOMIC NEWS

In the first half of the current fiscal year, the overall fiscal deficit rose to 1.8% of GDP compared with 0.6% of GDP in the same period the previous year. Despite the increase, total government expenditure and net lending was 19.5% below the target of KES 376bn, mainly due to lower expenditure, especially developmental.

In the current fiscal year, the government is targeting a deficit of KES 101.9bn (USD 1.33bn), or 4.0% of GDP, on a commitment basis and excluding grants. (Source: Reuters)

Recent statistics released by Kenya Tea Boarding (KTB) show that in 2009 the country exported 342m kilograms of tea, surpassing Sri Lanka – previously the world’s number one tea exporter. According to the figures, Kenyan tea was sold across 47 markets and accounted for 22% of the world’s tea exports. Success for the sector was attributed to continued research and development, which has expanded the country’s product offering to 50 varieties. Currently, the country boasts of about 150,000ha of land under tea, with each hectare yielding 10,977kg of green tea.

In 2009, Sri Lanka exported 280m kilograms of tea, marking a 9.4% y/y dip. Low production was recorded mainly due to poor weather (Source: Daily Nation)

COMPANY NEWS

Through a press statement, East African Breweries Limited (EABL) announced that it had reached a settlement with Tanzania Breweries Limited (TBL) and SABMiller Africa (SABMA) relating to its planned cancellation of its manufacturing and distribution deal with TBL. Under the agreement, TBL will cease to brew and distribute EABL’s brands in Tanzania following an un‐disclosed transitional period.

The dispute that resulted in a court hearing in London arose late last year, when EABL moved to acquire a stake in Serengeti Breweries, a local brewing firm in Tanzania and end its relationship with TBL in which it holds a 20% equity stake. As a result of the settlement, all claims and counter claims on the matter have been withdrawn with both parties agreeing not to pursue any further action regarding the matter. TBL and SABMiller brands will continue to be brewed and distributed in Kenya (Source: Standard News Paper)

NIC Bank (NIC) released its FY09 results (31 December) with EPS increasing 4.2% y/y (‐8.2% q/q). A final DPS of KES 0.25 was declared, bringing the FY09 total DPS to KES 0.50. As has been customary over the past three years, management declared a bonus share issue. Shareholders on the register at close of business on 25 March 2010 will receive one additional share for every ten held.

While net interest income grew 19.8% y/y (‐7.4% q/q), NIM declined 30bp to 5.9%, following a 30bp decline in WAIR on lending. In 2010, NIM is expected to improve as the bank continues to cut its cost of deposits and increase its appetite for lending. In FY09 customer deposits and total advances grew 12.1% and 8.5% y/y (+1.7% & 8.2% q/q), respectively.

Total non‐funded income grew 24.2% y/y (+3.6% q/q), boosted by 30.2% y/y growth in forex earnings. Consequently, the non‐funded to total income ratio rose by 80bp to 37.7%.

Fiscal deficit to GDP ratio rises to 1.8%

Kenya becomes world’s biggest tea exporter in 2009

EABL and SABMiller to settle out of court

NIC Bank’s FY09 EPS up 4.2% y/y


The Africa Weekly

Total NPL’s increased 36.8% y/y (4.1% q/q). NPLs to net loans grew to 4.3% from 3.5% in FY08. Meanwhile, loan loss provisioning increased 138.2% y/y, with the 4Q09 figure comprising 45% of total impairments. Despite the increase, the bank’s loan book is primarily secured with less than 15% of loans un‐secured (personal loans).

For FY10, NIC’s NIM is expected to remain at risk due to rising industry cost of deposits, following last year’s licensing of deposit taking MFI’s. NIC’s main value proposition is its differentiated service to a small, high‐end retail market and its broad corporate clientele linked to its asset financing business. (Source: Company filing, African Alliance)

NIC Bank (NIC)

12m to Dec (KES m) FY08 FY09 % chg Interest income 3,747 4,425 18.1 Interest expense 1,732 2,011 16.1 Net interest income 2,015 2,414 19.8 Other operating income 221 267 20.9 Fees and commission income 570 692 21.5 Income from forex dealings 386 502 30.2 Total income 3,191 3,876 21.4 Less operating expenses ‐1,513 ‐1,885 24.6Operating profit before bad debt charge 1,679 1,990 18.6 Bad debt charge ‐195 ‐463 138.2 Operating income 1,484 1,527 2.9 Less tax ‐446 ‐441 ‐1.2Earnings 1,038 1,086 4.6Minority interest ‐2 ‐7 244.2Attributable profit 1,036 1,079 4.2 Year end shares (m) 326 326 EPS (KES) 3.17 3.31 4.2 DPS (KES) 0.50 0.50

Source: Company announcements

KCB Bank Limited (KCB) released its FY09 results (31 December 2009) with EPS down 6.7% y/y (‐47% q/q) to KES 1.84, owing to share dilution and a higher effective tax rate of 35.2% (+490bp y/y). The bad debt charge was down 57.5% y/y (+164.8% q/q), coming off highs caused by increased provisioning in FY08 (KCB provided in full for Triton’s loan default amounting to KES 2.2bn). A final DPS of KES 1.00 was declared.

Net interest income grew 22.9% y/y (‐7.8% q/q), supported by higher NIM 110bp y/y on interest earning assets. Continued pressure from mobile money transfer facilities, lower forex volatility and fall in other income ‐35.1% y/y resulted in non‐interest income to total income declining 730bp y/y (+990bp q/q) to 39.1%.

Further branch expansions in the region (+14 branches), mostly into Rwanda, resulted in an 11.7% y/y (+18.1% q/q) increase in operating costs. As a result, the cost to income ratio was up 1120bp y/y (+600bp q/q) to 66.9%. Total NPL’s increased 48.1% y/y (+20.3% q/q). The NPL ratio was up 140bp y/y (+130bp q/q) to 10.6%. Loan loss provision decreased 57.5% y/y (+164.8% q/q), representing 1.3% of net loans (3Q09: 0.2%).

Customer deposits grew 28.3% y/y (+7.7% q/q), while loans were up 28.8% y/y (+5.4% q/q) ‐ the LTD ratio rose to 74.1%, up 30bp y/y (‐160bp q/q). KCB’s capital adequacy remains constrained at 14.8% (280bp above the minimum requirement). The bank has

KCB’s FY09 EPS down 1.84%


The Africa Weekly

resolved to raise long‐term funds of KES 15bn in 2H10 (subject to approval by the Capital Markets Authority, the Nairobi Stock Exchange, central bank and shareholders).

For FY10, we expect sound earnings growth on the back of a positive return on investments from new regional operations. However, KCB’s NIM remains at risk due higher cost of deposits from a change in deposit mix (27% of deposits are fixed/call, up from 10% in FY08). We also expect better DPS (KES 1.25) in FY10. (Source: Company filing, African Alliance)

KCB Bank Limited (KCB)

12m to Dec (KES m) FY08 FY09 % chgInterest income 14,746 17,968 21.9Interest expense ‐2,970 ‐3,499 17.8Net interest income 11,775 14,470 22.9Fees and commission income 5,779 5,850 1.2Income from forex dealings 1,629 1,648 1.2Other operating income 2,760 1,792 ‐35.1Total income 21,949 23,761 8.3Less operating expenses ‐12,236 ‐15,886 29.8Operating profit before bad debt charge 9,713 7,876 ‐18.9Bad debt charge ‐3,701 ‐1,574 ‐57.5Profit before tax 6,013 6,301 4.8Less tax ‐1,822 ‐2,216 21.6Profit after tax 4,191 4,084 ‐2.5 Weighted shares (m) 2,123 2,218Year end shares (m) 2,218 2,218 EPS (KES) 1.97 1.84 ‐6.7DPS (KES) 1.00 1.00

Source: Company announcements

After months of shareholder jostling, Citadel Capital, an Egyptian private equity firm, confirmed it had acquired a 17.5% in Rift Valley Railways (RVR) through the acquisition of a 49% stake in Sheltam Railways (Sheltam). Sheltam holds 35% in RVR, a firm that was awarded a 25‐year concession in 2006, to upgrade and run the Kenya‐Uganda railway system.

Citadel’s move comes barely two months after Kenyan‐owned Trans‐Century (with an existing 20% stake in RVR) said it had agreed with the two governments that at least 40% of the railway should be owned by nationals from the region. Citadel said it hopes to acquire Sheltam’s 35% stake in RVR and inject more than USD150m in the railway over the coming five years. (Source: Reuters)

MARKET ACTIVITY

After poor performance over the past two weeks, the equity market re‐bounded with the NSE 20 share index rising by 2.6%. With balanced trading across listed counters all week, only five counters ended the week lower. Interestingly, local investors dominated trading during the week with agricultural stocks registering the highest gains. Rea Vipingo was the week’s top gainer up 20.5%. Over the past week, the normally inactive counter witnessed unusually high movement in shares. Car and General was the week’s top losing stock, down 10.5%.

Citadel acquires 17.5% effective stake in RVR


The Africa Weekly

Nairobi Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceRea Vipingo 20.5 15.30 BOC Kenya ‐8.4 142.00Kakuzi 17.6 43.50 CMC Holdings ‐1.8 11.10Sasini 6.4 8.30 EABL ‐0.7 152.00 Top trader KES (m) USD (m) Total Traded KES (m) USD (m)Safaricom 276.1 3.59 NSE 20 1,046.1 13.6 Market Performance Level KES (%) USD (%) KES/USD % chgNSE 20 (KES) 3,627 2.6 2.6 76.85 0.04


Dividends (KES)

Company Financial Year Type Amount Last cum dateSasini Limited Sep 09 Final 0.20 18 Feb 10Barclays Bank Dec 09 Final 2.00 11 Mar 10East African Breweries Jun 10 Interim 2.50 18 Mar 10Equity Bank Dec 09 Final 0.40 25 Mar 10Rea Vipingo Sep 09 Final 0.50 26 Mar 10KCB Bank Dec 09 Final 1.00 10 May 10

Source: Nairobi Stock Exchange


The Africa Weekly

RWANDA POLITICAL AND ECONOMIC NEWS

Three emerging opposition parties in Rwanda said they were considering linking up to fight incumbent President Paul Kagame in the upcoming April elections. The Social Party Imberakuri (PS‐Imberakuri) and two unregistered parties, the Democratic Green Party (DGP) and the United Democratic Forces (UDF), said in a joint statement they had formed a forum to discuss common problems.

The head of DGP, said the parties face harassment, intimidation and legal and administrative barriers to registration, and may form one party to oppose the ruling Rwandan Patriotic front (RPF). If not registered in time, the parties will explore the possibilities of building a common candidate for the elections. (Source: Reuters)

The changing trends of the world’s economy have forced the government to rethink the way forward in realising the country’s 20‐year plan, referred to as Vision 2020. The vision, as conceived 10 years ago, targets to transform Rwanda into a middle income country. Under the vision, per capita income for the country was projected at USD 900 (2008 actual per capita income USD 490), but this figure has to be revised given a global per capita income estimate for middle income countries of USD 3,500 by 2020.

To boost its chances of surpassing its targets, the government plans to explore opportunities in regional trading blocs, make the land system simpler, iron out delays that are preventing investments into Rwanda and minimise bureaucracy across government. Plans are also underway to add 100,000ha to the crop intensification programme in 2010, protect farmers from unpredictable weather and increase storage for crops. (Source: New Times)

The Rwanda Tea Authority announced plans of increasing tea plantations by 75%, from 12,000ha to 21,000ha by 2012. To achieve its target, the authority is encouraging tea growers to expand plantations outside traditional areas of production in order to increase national output of green leaf. They estimate that they could generate 60,000 new jobs by 2012, double the current workforce employed by the sector.

By October last year, production stood at 20,000t, below the targeted 24,000t, generating USD 48m against a targeted USD 54m. Despite the decrease in output and revenues, the drive to expand tea plantations is advised by the current high international tea prices. (Source: New Times)

MARKET ACTIVITY

Trading on the Rwanda Over the Counter was limited to 600 KCB shares at an unchanged price of RWF 160.

Opposition parties plan merger to contest elections

Vision 2020 to be revised

Tea plantations to be increased by 75% by 2012


The Africa Weekly

TANZANIA POLITICAL AND ECONOMIC NEWS

The UK, Sweden and Norway will build a 25MW emergency backup power facility in Zanzibar to ease electricity shortages. However, the government said last week that it would tackle the power blackout by the end of this month after failing to do so by 20 February as it had initially promised. The power crisis has reduced government revenue collections and increased household, corporate and government spending.

Tourism is one of the most affected industries and hotel operators have been forced to buy generators to ensure power supplies. Operators fear that they will be forced to shed labour if the power problem persists. Power woes have worsened the performance of the industry, which also suffered from the global economic crisis. (Source: All Africa – The Citizen)

A new law to protect new plant varieties and give local researchers leeway to patent their discoveries is in the offing. The government said they will soon have a new law to allow Tanzanian breeders to register within the international system new varieties for protection. Tanzania was planning to go to court to stop the US and Brazilian governments, jointly with two multinational firms, from patenting a sorghum gene isolated from Tanzanian farms.

According to Dr Rolf Jordens, the Vice Secretary General of the Geneva‐based International Union for the Protection of Plants (Upov), joining the organisation was the best way for the country to incentivise breeders, as it would trigger more public and private investment in research and breeding while enjoying intellectual property rights. This will encourage breeders to come up with better varieties that would commercially benefit both innovators and growers. (Source: The Citizen).

MARKET ACTIVITY

The DSE ALSI gained 31bp to 1,182 points owing to price movements in Tanzanian Breweries (+ 2.3%) and Tanga Cement (+3.4%). Trade reached USD 580,000 for the week.

Dar es Salaam Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceTanga Cement 3.4 1,820 No losersTanzania Breweries 2.3 1,760 ‐‐ Top trader TZS (m) USD (m) Total Traded TZS (m) USD (m)CRDB Bank 350.2 0.26 DSE 788.5 0.58 Market Performance Level TZS (%) USD (%) TZS/USD % chgDSE (TZS) 1,182 0.31 ‐1.12 1,362 ‐1.43


Donors pledge to build Zanzibar power project

Govt to enact law for plant varieties


The Africa Weekly

UGANDA POLITICAL AND ECONOMIC NEWS

Mr. Norbert Mao, district chairman for Gulu, is Democratic Party (DP) president after winning the party elections held over the weekend, he replaces John Ssebaana Kizito. Mao amassed 708 votes compared to 321 votes in favour of Kampala’s mayor Nasser Sebaggala. Members of the DP national executive council opposed to the elections, however, branded them as fraudulent, claiming that the voting was organised by a break‐away faction. Mr. Norbert Mao becomes the first non‐Muganda president and will lead DP into next year’s presidential election.

The new DP president has also stated his intention to be the opposition’s joint presidential candidate should the Democratic Party join the Inter‐Party Cooperation (IPC), an alliance of opposition parties seeking one representative in the coming elections. The IPC consists of the Forum for Democratic Change (FDC), Uganda Peoples Congress (UPC), Conservative Party (CP) and Justice Forum. (Source: The New Vision)

Uganda and Southern Sudan will establish a joint trade committee to boost and regulate cross‐border trade following the signing of a Memorandum of Understanding last week. The overall authority in trade matters between the two states will rest in the joint trade committee. The committee is expected to address issues including double taxation of merchandise and the establishment of a trade dispute arbitration sub‐committee. Trade between Sudan and Uganda is estimated to have increased to USD 91.7m (+181%) between 2006 and 2008. (Source: The New Vision)

The USD 10m palm oil processing plant situated on Bugala Island, Lake Victoria, has started operations. In addition to converting palm oil fruits into crude palm oil, the facility will produce 1.5MW of electricity for the island estates. At full scale, the plant will produce 140,000t of crude palm oil and 14,000t of palm kernel oil annually, resulting in an estimated USD 60m in import savings for the country. The project is a component of the Vegetable Oil Development Project, a joint effort between the government, International Fund for Agriculture Development (IFAD), the World Bank and Oil Palm Uganda. (Source: The New Vision)

The government has allocated UGX 60bn to fund the Electoral Commission’s (EC) activities ahead of the 2011 general elections. UGX 30bn will be used to procure and facilitate the implementation of a biometric system to capture thumb prints and voters’ facial features. The EC had earlier received UGX 31bn out of a total planned UGX 88bn expenditure in the 2009/10 budget. (Source: The New Vision)

COMPANY NEWS

New Vision Limited (NVL) released its results for the six months ending 31 Dec 2009, with PBT declining 20% y/y. Profit after tax, however was up 18.5% to UGX 1.88bn due to a 0% tax rate applied in the period. The favourable tax accounting is premised on a tax regime allowing firms undertaking investments to record up to 50% wear and tear tax allowance in the initial year of roll‐out of investments.

Turnover grew 21%, fuelled by higher advertising uptake from print and electronic media (mainly radio) platforms, commercial printing and increased vernacular paper sales. The gross profit margin increased 410bp to 38.2% as cost of sales increased at a slower rate (13.6%).

New Democratic Party leader vying for opposition

candidature

Uganda and Southern Sudan sign trade pact

Uganda starts palm oil production

Govt avails UGX 60bn for Electoral Commission

New Vision 1H10 results; EPS up 18.5%


The Africa Weekly

Administrative expenses surged 37.6%, with the increased costs stemming from increased staff and operating expenses due to the running its new radio and TV stations. New Vision launched Bukedde TV in November last year in addition to Etop Radio and Radio Rupiny in the Eastern and Northern parts of the country, respectively. NVL’s operating profit margin, however, grew 120bp to 10% over the period. (Source: Company filing)

New Vision Limited

6m to Dec (UGXk) 1H09 1H10 % chgTurnover 21,045,147 25,467,060 21.0Cost of Sales ‐13,862,703 ‐15,741,746 13.6Gross Profit 7,182,444 9,725,314 35.4Administrative expenses ‐4,873,949 ‐6,706,866 37.6Operating profit 1,857,407 2,538,067 36.6Net finance (costs) / income 500,224 ‐652,575PBT 2,357,630 1,885,492 ‐20.0PAT 1,591,400 1,885,492 18.5 EPS (UGX) 20.8 24.65 18.5DPS (UGX) ‐ ‐Source: Company filing

MARKET ACTIVITY

In Uganda trading opened the week strongly led by interest in the financial sector before easing in the Tuesday and Thursday trading sessions. Activity was concentrated in DFCU Limited, which accounted for 68% (UGX 413m) of the weekly UGX 604m traded value. Stanbic Uganda maintained the UGX 165‐170 trading range, accounting for 25% of market turnover. Bank of Baroda fell 4.4% to top the losing counters.

Uganda Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceNew Vision 0.9 464.00 Bank of Baroda ‐4.4 282.00‐‐ Stanbic Uganda ‐2.9 165.00 Top trader UGX (m) USD (m) Total Traded UGX (m) USD (m)DFCU 413.1 0.20 USE ALSI 579.2 0.29 Market Performance Level UGX (%) USD (%) UGX/USD % chgUSE ALSI (UGX) 813.45 1.5 1.1 2,025 ‐0.44



The Africa Weekly

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

A drive by Niger's new military rulers to clean up politics will be welcomed by corruption‐weary citizens but could end up delaying a promised transition to civilian rule and the return of much‐needed aid, diplomats warn. The military junta that ousted President Mamadou Tandja in a coup last week said on Wednesday that while it was committed to democratic elections it was also determined to root out corruption in the uranium‐exporter.

Any campaign to probe or prosecute leading politicians, civil servants and businessmen implicated in dozens of investigations into graft is likely to complicate hopes for an election over the coming months. A protracted political transition could in turn hurt Niger's precarious finances. Donors, who fund half of the country's XOF 700bn budget, imposed sanctions after moves by Tandja to extend his rule last year and diplomats say they are unlikely to rush back while the military remains in charge. (Source: Reuters)

Ivory Coast announced a new government on Tuesday which included both main opposition parties, a vital step towards ending street protests and putting the country back on the path to elections. The announcement followed days of demonstrations against President Laurent Gbagbo's decision on 12 February to dissolve the government and the electoral commission, which delayed a poll already years overdue and which had been loosely set for March.

"I have great hope that in 48 hours the government will have started its work," Prime Minister Guillaume Soro said. The opposition had initially said it wanted nothing to do with the new government.

The regional mediator for Ivory Coast's political crisis now says there will be presidential elections in less than three months. A written statement from the office of Burkinabe President Blaise Compaore says Ivory Coast's rival political factions have agreed on a new electoral calendar with the goal of having the first round of presidential elections in late April or early May. (Source: Reuters, Voice of America)

Ivory Coast announced the formation of a new electoral commission on Friday, a key step towards resolving a political crisis in the top cocoa producer that provoked days of violent street demonstrations. The opposition had vowed to continue protests against President Laurent Gbagbo until he reinstated the electoral commission he dissolved, along with the government, this month. Gbagbo disbanded them on 12 February, after accusing former electoral commission Chief Robert Mambe, a PDCI member, of illegally adding names to the voter register in a boost the opposition. Mambe has denied trying to add the names. That decision has delayed a poll that was already years overdue when it was scheduled for March, sparking a public outcry that led to bloody street protests.

Getting the electoral commission back on track is regarded as more important than the government, which has in any case been transitional since its mandate expired in 2005. (Source: Reuters)

Ivory Coast has suspended satellite TV news station France 24 over a headline reporting many deaths during a protest, the government said on Wednesday, despite the fact that five people were killed. The National Council for Audiovisual

Junta graft crackdown could delay Niger polls

Ivory Coast brings opposition into new government

Ivory Coast announces new electoral commission

Ivory Coast suspends France 24 television station


The Africa Weekly

Communication scrambled France 24's signal late on Monday and it has not been restored. The council (CNCA) President Franck Kouassi told Reuters the station would remain suspended until further notice. (Source: Reuters)

A political crisis in the Ivory Coast may delay plans to restructure some EUR 2.2bn of defaulted sovereign debt with the London Club of commercial creditors. The Ivory Coast in September invited holders of Brady bonds to exchange such bonds for a new US dollar denominated bond with a term of 23 years and a six‐year grace period. The exchange was due to occur no later than 31 March 2010. However, the head of the London Club committee of private creditors for the Ivory Coast told Reuters last week that political uncertainty could delay the debt swap.

The deal is part of the Heavily Indebted Poor Countries (HIPC) initiative, a debt relief programme managed by the International Monetary Fund and the World Bank. The Ivory Coast also agreed a debt restructuring with Paris Club sovereign creditors last year, and said in October it was planning debt restructuring for holders of Sphynx financial instruments and BNI securitisations. (Source: Reuters)

Thousands of pro‐opposition youths in Togo will have to take it easy vis‐à‐vis a 12,000 strong force that the government says it will deploy to ensure a riot‐free presidential election on 4 March. Togolese Colonel Yark Damehane has accused the 'Movement citoyen pour l'alternance' or Citizens's Movement for Change to which the youths belong of inciting citizens to violence as it vows to use "any means" in order disrupt the polls nationwide.

The movement has recruited youths throughout the country and is in the process of obtaining explosives, Colonel Yark told the press in the capital, Lomé, and vowed not to allow the movement to succeed it its plans. (Source: The Nation)

French troops will leave Senegal under an agreement to be signed shortly before the West African country celebrates 50 years of independence from France in April, the Senegalese presidency said on Sunday. France has about 1,200 military personnel stationed at an air base in the capital Dakar, one of three French bases in Africa.

"It has been decided that the French ... will leave Senegal under an agreement which will be signed before 4 April," the presidency said in a statement after talks between President Abdoulaye Wade and French Defence Minister Herve Morin. On 4 April, Senegal will mark the 50the anniversary of independence from France. (Source: Reuters)

COMPANY NEWS

The latest sampling results at Riverstone Resources' Karma project in Burkina Faso have returned encouraging grades as the company heads into a formal drilling programme in the area. Riverstone took panel samples from artisanal shafts located about 4km north of the other four deposits at Karma, where the company doubled its gold count last year.

The new area is known as the Nami prospect. Out of 182 samples from Nami, nine returned values greater than 10 grams gold per tonne, 41 were greater than 1 gram gold, and 64 were greater than 0.3 grams gold. The best sample returned a grade of 89.2 grams gold. (Source: Canada Business News Network)

The latest batch of assays from Volta Resources' Kiaka gold project in Burkina Faso continues to show long widths of gold mineralisation fairly close to surface. Volta has

Debt restructuring Ivory Coast may be delayed

Govt deploys 12,000 troops for Togo polls

French troops to leave Senegal

Riverstone reports solid sampling from Burkina Faso

Volta gets good grades at Kiaka, Burkina Faso


The Africa Weekly

received results for 14 holes of the 36 holes completed so far ‐ about 5,400 metres of a 22,000‐metre drill programme at the project. The company has been hitting mineralisation anywhere from the surface all the way down to a depth of 320 metres.

The company bought the project from Randgold Resources (GOLD‐Q, RRS‐L) last November and quickly switched its focus to the new project. Volta aims to complete a resource estimate on the project by next June. (Source: Northern Miner)

MARKET ACTIVITY

The BRVM market gained another 2.3% this week, with most of the momentum coming in Monday’s and Tuesday’s trading sessions when Sonatel gained 3.9% in heavy trading. The telecoms counters was supported by Unilever CI which gained 7.7% in thin trading. Banks were mixed; SGB lost 7.5% but BICC gained 8.2% for the week.

Bourse Regionale des Valeurs Mobilieres

Top gainer(s) % chg Price Top loser(s) % chg PriceFILTISAC CI 14.8 3,100 SICOR ‐20.0 5,000Bollore Africa Logistics 10.6 47,010 SIVOM CI ‐7.5 5,550BICI CI 8.2 33,005 SETAO CI ‐7.5 4,625 Top trader XOF (m) USD (m) Total Traded XOF (m) USD (m)Sonatel SN 1,626.1 3.36 IC Comp 1,836.1 3.80 Market Performance Level XOF (%) USD (%) XOF/USD % chgIC Comp (XOF) 137.13 2.3 1.7 485.14 ‐0.56



The Africa Weekly

GHANA POLITICAL AND ECONOMIC NEWS

Minister of Foreign Affairs and Regional Integration Alhaji Mohammed Mumuni said countries consenting to the monetary integration of West Africa have recommitted themselves to achieving the convergence criteria by 2015. The deadline continues to be delayed as countries continue to miss it, with Gambia being the only country to have met the criteria so far. Liberia is the latest country to sign the protocol to join the ECO monetary zone.

The ECO is expected to facilitate trade among member countries and help to promote regional integration. The convergence criteria include, single digit inflation; fiscal deficit/gross domestic product ratio of less than 4%; central bank financing of deficit of less than 10% and a gross external reserve that could finance no less than three months of imports. The five initial countries are Gambia, Ghana, Guinea, Nigeria and Sierra Leone. (Source: Ghana News Agency)

The Ghana Stock Exchange (GSE) has admitted to its Official List the government’s 2‐year and 3‐year notes and bonds issued between 1 September 2008 and 31 January 2010. The government 2‐year fixed rate notes and the 3‐year bonds are worth GHS 969.30m and GHS 310.89m, respectively, with coupon rates of between 20.50% and 25.5% p.a for the notes and 19% p.a for the bonds. (Source: Ghana Stock Exchange)

Cadbury Dairy Milk has transferred over GBP 500,000 to cocoa farmers in Ghana to fund projects identified by farmers, including building wells, mobile health clinics and funding for carbon reduction schemes. Mr James Boateng, managing director of Cadbury Ghana, said alongside the community investment, the money is also being used to fund farmer training, used as incentives and provision of tools. Cadbury has launched a fair trade campaign to encourage more people to get involved in the fair trade movements. (Source: Ghana News Agency)

The CEO of Millennium Development Authority (MIDA), Martin Esson‐Benjamin, said Ghana is on course to fully utilising the first compact of USD 547m from the Millennium Challenge Account (MCA) fund within the five‐year duration of the project and confident of getting a second compact at the end of the five years. Mr Eson‐Benjamin said the authority had committed 67% of compact funds (USD 367m) and re‐disbursed 23% (USD 127m) through the Bank of Ghana since the beginning of the programme in 2007.

The programme is categorised under three areas, namely agricultural productivity and value‐added development project (six projects); transformation infrastructure development project (three projects) and rural services development project (three project activities). Currently, the project is financing irrigation development in the Northern Region, Central, Eastern, Greater Accra and the Volta Regions. The funds have also been used in the construction of roads, the building and rehabilitation of schools, provision of water and the construction of 230km of power lines to connect several rural communities. (Source: Ghana News Agency)

COMPANY NEWS

AngloGold Ashanti (AGA) has announced the suspension of operations at its Iduapriem mine in Ghana to find a new storage facility for environmentally harmful mine tailings. The decision to suspend operations at the mine was taken after discussions with the

The ECO expected in 2015

Govt lists 2 and 3‐year bonds on the GSE

Cocoa farmers receives GBP 0.5m from Cadbury

MiDA confident of exhausting the compact under the MCA

fund

AGA suspends operations at Iduapriem mines


The Africa Weekly

Environmental Protection Agency of Ghana (EPA) over potentially adverse environmental impacts arising from the current arrangement. AGA is working with the EPA on an identified interim location for tailings storage. Also, AGA is developing a new tailings storage facility water treatment plant, which is expected to be commissioned by early 2011. The Iduapriem mine produced 190,000 ounces of gold last year, making up about 4% of AGA’s total gold output. (Source: Company filing)

Guinness Ghana Breweries Limited (GGBL) released its 1H10 results ended 31 December 2009 with turnover up 19% to GHS 111.34m. As a result of sharp increase in financial charges from GHS 4.06m to GHS 15.67m, GGBL recorded a net loss of GHS 2.49m compared to a profit of GHS 9.03m for a comparable period last year. The higher financial charges were as a result of external borrowings to finance inter‐company obligations. (Source: Company filings)

Guinness Ghana Breweries Limited (GGBL)

6m to Dec (GHSk) 1H09 1H10 % chgTurnover 93,551 111,339 19.0Gross profit 30,741 34,878 13.5Operating profit 15,197 13,289 ‐12.6Profit/(loss) before tax 10,537 ‐2,490 ‐123.6Profit/(loss) after tax 9,026 ‐2,490 ‐127.6EPS (GHS) 0.0548 ‐0.0151 ‐127.6Source: Company filing

SG‐SSB Limited (SG‐SSB) released its FY09 results recording a 31.0% increase in interest income to GHS 62.28m, which contributed to a net profit of GHS 19.29m, an increase of 24.3% over a year ago. However, EPS for the period decreased as a result of bonus and rights issues in 2009. SG‐SSB also declared a final dividend of GHS 0.04 per share. (Source: Company filing)

SG‐SSB Limited (SG‐SSB)

12m to Dec (GHSk) FY08 FY09 % chgInterest income 47,533 62,285 31.0Net interest income 40,531 51,465 27.0Profit/(loss) before tax 21,867 26,910 23.1Profit/(loss) after tax 15,522 19,293 24.3Loans and advances to customers 287,120 296,219 3.2Customer deposits 298,859 388,647 30.0EPS (GHS) 0.1089 0.0578 ‐46.9Source: Company filing

Golden Star Resources (GSR) has listed 20m ordinary shares on the Ghana Stock Exchange (GSE). The listing was as a result of the public offer in Canada and the United States of America in December 2009 to raise USD 75m to fund capital projects, exploration activities and for general corporate purposes. (Source: Ghana Stock Exchange)

Mechanical Lloyd Company (MLC) has announced the appointment of Ms Johanna Kuukua Awotwi as a non executive director of the company with effect from 29 January 2010. Ms Awotwi currently works as a Deputy Superintendent at the Ghana Immigration Service. (Source: Company filing)

Guinness records loss for 1H10 due to higher finance cost

SG‐SSB records 24.3% increase in profit in FY09

GSR lists additional shares on the GSE

MLC appoints director


The Africa Weekly

MARKET ACTIVITY

Trading activity continues to improve on the Ghana Stock Exchange; the GSE ALSI gained 0.36% to close at 5,654.88 points, representing YTD gain of 1.48%. The week under review recorded total market turnover of GHS 2.17m, representing a marginal increase of 5.9% over the previous week. Block trades recorded in Ecobank Transnational Incorporated (ETI), Ecobank Ghana (EBG), Ghana Commercial Bank (GCB) and SIC Insurance Company (SIC) together accounted for 84.8% of the value traded on the market, with ETI the most traded equity by value, accounting for 34.1% of market turnover. Seven price changes were recorded, five equities led by SIC (3.5%), recorded price gains while two equities led by CAL (‐10.5%) recorded losses.

Ghana Securities Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceSIC Insurance 3.4 0.30 Cal Bank ‐10.5 0.17Total Petroleum 2.9 7.00 Mechanical Lloyd ‐10.0 0.18Ecobank Ghana 1.3 3.16 ‐‐ Top trader GHS (m) USD (m) Total Traded GHS (m) USD (m)ETI (Ghana) 0.79 0.56 GSE ALSI 2.23 1.56 Market Performance Level GHS (%) USD (%) GHS/USD % chgGSE ALSI (GHS) 5,655 0.36 0.8 1.43 0.46


Dividends (GHS)

Company Financial Year Type Amount Last cum dateProduce Buying Company Dec 09 final 0.0037 16 Mar 10

Source: Company filings


The Africa Weekly

NIGERIA POLITICAL AND ECONOMIC NEWS

Nigerian Vice President Goodluck Jonathan will keep full executive powers for now, the presidency said on Thursday, in an apparent bid to ease fears of a power struggle after the return of ailing President Umaru Yar'Adua. Yar'Adua's surprise arrival on Wednesday after three months in a Saudi hospital raised concern that a cabal around him was fighting to sideline Jonathan and retain influence. His return in the early hours was so shrouded in secrecy that even Jonathan and most ministers were unaware he was coming. Yar'Adua's spokesman announced in a special television broadcast that Jonathan remained Nigeria's acting leader and commander‐in‐chief.

Any return to uncertainty could again paralyse government decision making in Nigeria and endanger hopes of cementing an amnesty for rebels in the oil‐producing Niger Delta. Fears of a power struggle were fanned by the role of Yar'Adua's wife Turai, who controls access to a leader not seen in public for three months. Sources say Yar'Adua is in a mobile intensive care unit. Jonathan has not spoken with him since his return.

Information Minister Dora Akunyili said the atmosphere was tense as ministers waited on Wednesday for a cabinet meeting that was finally cancelled. (Source: Reuters)

Nigeria launched a robust defence of planned reforms to the oil and gas sector on Wednesday, dismissing industry claims that the legislation could deter billions of dollars of investment. Oil firms including Royal Dutch Shell told an industry conference on Tuesday the plans could slow development of key deep water reserves and help Angola eclipse Nigeria as Africa's biggest oil producer. Under the current version of the proposed Petroleum Industry Bill (PIB), the government would be allowed to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore.

But Pedro Van Meurs, a consultant to the government on the planned reforms, fought back against industry concerns that the new framework would make Nigeria an exceptionally costly investment destination for deepwater projects. "Someone said here that the government is 'killing the goose that laid the golden egg.' Nothing could be further from the truth," he told the Nigeria Oil & Gas conference, attended by industry and government officials, in the capital Abuja. "We heard a presentation from Shell on deepwater that said investment would disappear. Again, nothing could be further from the truth ... In fact the terms to be proposed are internationally competitive," Van Meurs said.

The legislation has been stalled by the dispute between government and the industry, which already complains of funding difficulties and has suffered years of unrest in the oil‐producing Niger Delta region. There is support for industry reforms from both President Umaru Yar'Adua, and Vice President Goodluck Jonathan, who is running state affairs. The bill is still being shaped in parliament before it will be sent for the presidency's approval and executives expect no impact as a result of Yar'Adua's return. "It makes no difference to us," Alex Musa, Total's deputy managing director for exploration and production in Nigeria, told Reuters. "Nigeria has its own institutions and traditions and we respect them."

Some industry executives complain they have not been properly consulted on the planned reforms. "Of course the government doesn't give up everything but I think they have bent over backwards ... During discussions here there have been

Acting president keeps full powers as president returns to

the country

Nigeria defends oil reforms after industry backlash


The Africa Weekly

misunderstandings of what has been in the government memorandum," Van Meurs said. (Source: Reuters)

Total and its partners will invest USD 20bn in deepwater oil and gas exploration in Nigeria over the next four to five years, the country's acting president and the French firm said on Tuesday. Total said its share of the total investment in the four Nigerian energy projects, offshore fields Usan, Ofon II and Egina and the upgrade of the OML 58 licence, would be around USD 7bn.

It said its partners in the investments included ExxonMobil, Chevron and Canada's Nexen for Usan, Nigerian state‐run oil firm NNPC for Ofon II and OML 58, and NNPC, Sapetro, China's CNOOC and Brazil's Petrobras for Egina. "The idea is that Total is operating with partners over the long term on four projects for a total investment of around USD 20bn," a spokesman at Total in Paris said.

The announcement of the investment plans comes as Nigeria's oil partners and the government are struggling to agree on legislation to overhaul the OPEC member's energy sector.

Total has a 20% stake in Usan, a 40% stake in Ofon II, a 24% in Egina and 40% stake in OML 58. (Source: Reuters)

Nigerian oil services firms are set to gain the most from plans to increase local participation in the industry but funding their growth could prove a challenge, executives and government officials said on Thursday. Wide‐ranging reform plans for Africa's biggest oil and gas industry include measures to encourage greater involvement by Nigerian companies as the OPEC member tries to leverage greater benefit from its natural resources. "The real opportunities are in service companies. IOCs (International Oil Companies) outsource most of this work to foreign companies," Ernest Nwapa, General Manager of Capacity Building at state‐run oil firm NNPC told a conference in Abuja.

The building of infrastructure, including oil rigs and pipelines, is often contracted to foreign companies. But an ambitious Petroleum Industry Bill (PIB) is currently before parliament which could redefine the country's decades‐old relationship with its foreign partners and allow Nigerian firms greater involvement.

Olubunmi Obembe, General Manager of Nigerian Content for Total Exploration and Production Nigeria, said local firms faced issues over funding when competing against foreign companies for business because oil contract negotiations are long, requiring extended loans. "Funding can be a problem. The financial system in Nigeria is not mature enough, banks borrow for the short‐term and so they can only lend short‐term," he said. (Source: Reuters)

Nigerian interbank rates fell to an average 2.23% this week, from 2.58% last week, as large inflows of cash from budgetary allocations and limited lending windows created excess liquidity, traders said on Thursday. The secured Open Buy Back rate dropped to 2.05% from 2.25%, below the central bank's 6.0% benchmark rate, while the overnight rate dipped to 2.15% from 2.50% and the call money rate fell to 2.50% from 3.0%.

Traders said the release of monthly budgetary allocations to public sector accounts, which began last week, and limited channels for investing the funds led to excess liquidity in the system, forcing the rates down. "The market (interbank) is virtually non‐

Total to invest USD 20bn in gas, deepwater

Nigeria's oil services firms set to gain from reforms

Excess liquidity drives down interbank rates


The Africa Weekly

active because all the banks are liquid," one dealer said. "No bank is willing to take funds, even at the low rate."

Dealers said the market closed on Thursday with a surplus of more than NGN 625bn (USD 4.2bn) and would remain this liquid for the next couple of weeks because of limited cash outflows, which is mainly to forex purchases. The release of more than USD 2bn from Nigeria's windfall oil savings to government agencies this week also helped swell liquidity in the system, traders said.

Nigerian banks depend largely on the cyclical disbursement of funds from the central account to three tiers of government, federal, state and local, for their operations. But a credit freeze has forced many banks to resort to depositing their surplus cash with the central bank for as low as 2.0% rate overnight. Dealers said the rates could remain unchanged next week as the system was expected to remain liquid with no anticipated major transactions. (Source: Reuters)

The Nigerian naira firmed against the U.S dollar on the interbank market on Tuesday, buoyed by large month‐end dollar sales by some oil companies to selected banks, traders said. The naira also strengthened at the central bank's auction on Monday after CBN sold USD 250m at USD/NGN 148.60 compared to USD 150m at USD/NGN 148.71 on Thursday. Demand stood at USD 289.2m on Monday.

The naira appreciated to USD/NGN 150.42 on the interbank from USD/NGN 150.52 the previous day after dollar sales by state‐run energy firm NNPC and news of plans by two oil majors to sell more dollars on Tuesday. "The NNPC sold about USD 300m to some banks on Friday, but the money actually hit the system on Monday, while oil firms Chevron, Total and Addax, sold USD 45.6m to selected banks on Tuesday. Traders said the expected additional dollar inflows from the oil firms helped tame demand pressure at the bi‐weekly auction, providing support for the naira. (Source: Reuters)

Nigeria's anti‐corruption police have arrested a former state governor accused of embezzling up to NGN 15bn (USD 100m), the first such detention in nearly a year, the agency said on Tuesday. Acting President Goodluck Jonathan pledged to fight corruption when he assumed executive powers two weeks ago. The Economic and Financial Crimes Commission (EFCC) said it had arrested former Nasarawa State governor Abdullahi Adamu on Monday. He served under former President Olusegun Obasanjo from 1999 to 2007 in the central state.

More than a dozen former governors and ministers face corruption charges in Nigeria, but Adamu is the first governor arrested since March 2009. He is also a senior member of the ruling People's Democratic Party. (Source: Reuters)

COMPANY NEWS

China Unicom, China's No. 2 mobile carrier, on Monday denied it was bidding for Nigeria's former state telecoms monopoly. "The company has not participated in any direct discussions or negotiations with any relevant parties involved in the proposed privatisation," Unicom said in a statement. "The company will continue to observe the development of the proposed privatisation, and will make announcements as and when appropriate." Unicom also said it was very concerned about recent media reports it was participating in the proposed privatisation and said it had not authorised any person to comment on the deal.

Unicom's remarks are the latest twist in Nigeria's ongoing effort to sell its former telecoms monopoly, Nitel. Nigeria's National Council on Privatisation, responsible for

Naira firms as oil firms sell dollars

Former state governor arrested for graft

China Unicom denies bid for NITEL


The Africa Weekly

privatising Nitel, said last Tuesday that a consortium including Unicom had bid USD 2.5bn for Nitel. But Unicom fired back two days later by denying involvement in the project by its Hong Kong‐listed company, its state‐run parent or any of their units.

The managing director of GiCell, the small Nigerian operator fronting the bid, responded by saying, "We did not pull all this out of the air." GiCell also provided copies of a letter that allegedly came from Unicom's European unit saying the company was willing to be a technical partner to the consortium and would consider equity participation of 20% or more. The confusion over Nitel's sale highlighted the unpredictability of cross‐border African telecoms deals at a time India's Bharti Airtel Ltd is bidding USD 9bn for the African assets of Kuwait's Zain

Reports of Unicom's participation in the Nitel bid surprised many, as the company has little experience in overseas mergers and acquisitions. Nigeria tried to sell Nitel in 2001, but preferred bidders failed to pay the USD 1.3bn price tag by the deadline. (Source: Reuters)

MARKET ACTIVITY

The Nigerian market was pulled down 0.6%, mainly by the banking sector, as investors eagerly await the FY09 financial results. The banking sector lost 1.1% as heavy‐weight UBA (‐4.3%), FBN (‐1.6%), Access Bank (‐3.4%) and Stanbic IBTC (‐3.7%) came under selling pressure, but Ecobank Nigeria surged 26%, initially on light volumes which gathered momentum later in the week. Nigerian Breweries also fell 5% for the week in reasonable trading as investors negatively assessed market guidance for 1Q10 to March 2010. African Petroleum was the star performer of the week as it gained almost 23%; Dangote Sugar also did well gaining 2.9%, matched by 3.1% rise in the price of UACN.

Nigerian Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceEcobank Nigeria 26.9 5.99 Sterling Bank ‐9.9 1.73African Petroleum 23.0 47.46 Nigerian Breweries ‐5.0 57.00Honeywell Flour Mills 15.6 7.40 UBA ‐4.3 13.01 Top trader NGN (m) USD (m) Total Traded NGN (m) USD (m)Zenith Bank 1,645.9 10.9 NIGSE 11,424.1 75.9 Market Performance Level NGN (%) USD (%) NGN/USD % chgNIGSE (NGN) 22,985 ‐0.56 ‐0.25 150.38 0.32



The Africa Weekly

EGYPT POLITICAL AND ECONOMIC NEWS

Egypt should be prepared to raise interest rates if inflation does not abate and should work to cut its budget deficit, the International Monetary Fund (IMF) said in a report. Core urban inflation, the country's most closely watched price indicator, still remains high at 13.6% after having soared to above 23% in August 2008.

The IMF said recent rate holds were appropriate and that inflationary pressures driven by higher fruit and vegetable prices were "likely to be mostly idiosyncratic and not demand induced." Egypt's central bank has held rates steady since September after cutting them six times earlier in 2009. The IMF also said Egypt, which is targeting a deficit of 8.4% of gross domestic product (GDP) this fiscal year, should seek to shave 1.5‐2.0 percentage points off of that next year to signal to investors its reforms are on track. (Source: Reuters)

The Central Bank of Egypt reported a decline in the current account deficit for the six month period ending December 2009 to USD 1.3bn, down from USD 2.5bn a year earlier. The decrease was due to a 17% decline in imports to USD 23.4bn, while exports were down 15.3% to USD 11.5bn.

On a separate note, foreign direct investment dropped by 35% in the first half of FY10 to USD 2.6bn compared to USD 4.0bn recorded during the same period in FY09. (Source: Reuters, Bloomberg, Pharos)

The number of vessels passing through the Suez Canal during January 2010 reached 1,418 vessels, up 8% compared to January 2009 but down by 2.3% compared to December 2009. Net tonnage during the same period stood at 66.4mt, showing a y/y growth of 16.1% but a monthly decline of 1.6%. Tolls recorded for the month reached USD 383.6m, up 15.4% compared to 2009. (Source: Pharos, Bloomberg)

According to a recent report by the Ministry of Economic Development, investments in the industrial sector during the first six months of FY10 reached EGP 12.8bn. The private sector is responsible for 80% of the amount, economic and government authorities accounted for 3%, and public sector companies contributed by 17%. Investment in the second quarter alone was EGP 7.2bn, up 28% from the first quarter. (Source: Pharos, Al Mal)

Egypt will rely increasingly on private companies to provide social services and infrastructure through public‐private partnerships (PPP) and expects to offer a string of new projects soon, officials said. The government awarded the first such contract, to build and run a wastewater treatment plant near Cairo, last May and will invite bids for more wastewater plants and hospitals in coming months. They typically involve operating the projects 20 years. (Source: Reuters)

The Japanese government agreed to provide a syndicated loan of USD 432m to build a wind farm in the Oil Mountain Gulf located in the western coast of Gulf of Suez. The farm has a total production capacity of 220MW. This comes as part of the USD 15bn allocated by the Japanese government to finance public and private partnerships in developing markets. (Source: Pharos, Al Ahram)

Egypt should stand ready to raise rates ‐ IMF

Current account and FDI in 1H10 worse than in 1H09

Traffic through Suez up 8% y/y in January

Investment up in 1H10

Govt inviting private firms to build and run services

Japan helps fund wind farm


The Africa Weekly

COMPANY NEWS

El Ezz Aldekheila Steel, Alexandria, standalone net profits for the year ending December 2009 came in at EGP 724.4m. This is a 75.6% decline compared to EGP 2,966m reported in 2008. Revenues for the year came in at EGP 8,161m showing a y/y decline of 29.9%. (Source: Pharos, Company filing)

Citadel Capital announced the acquisition of a 49% stake in Sheltam Railways Company, which is the largest shareholder in Rift Valley Railways of Kenya and Uganda (RVR). Sheltam Railways currently owns a 35% stake in RVR, giving Citadel Capital an effective ownership of 17% in RVR. A member of Citadel's Capital stated that the company is considering injecting USD 150m in RVR over the coming five years and has intentions to acquire 100% of Sheltam Railways. (Source: Pharos, Company filing)

Suez Cement reported earnings growth of 25% for the year to December 2009. Revenue growth of 15% was the result of volume sales increasing 700,000t or 6% and an increase in average price realisations of 8%. Operating profit margin was stable at 29%, however PAT margin improved 160bp to drive earnings growth of 25%.

Cement consumption in Egypt increased 25% to 50mt in 2009 driven by increased activity in the residential and construction sectors, supported by government stimulus packages. Egypt's largest listed cement maker, a subsidiary of Italcementi, said on Thursday it made a profit of EGP 1.3bn (USD 237m), on sales up 15% to EGP 6.38bn on the back of growing construction activities.

Egypt aims to boost cement output by 40% to 80mt by 2015 to meet growing local demand. (Source: Company filing, Reuters)

Suez Cement Company

12m to Dec (EGPm) FY08 FY09 %chRevenue 5,542.5 6,380.1 15.1Gross profit 2,381.8 2,179.3 ‐8.5Operating income 1,601.5 1,836.1 14.6Profit after tax 1,040.9 1,300.8 25.0 Shares in issue (m) 181.9 181.9 EPS (EGP) 5.72 7.15 25.0PE (x) 7.6 6.1 Operating margin (%) 28.9 28.8 PAT margin (%) 18.8 20.4 Sales (mt) 11.1 11.8 6.3Av price per tonne (EGP) 499 541 8.3 Capacity (mt) 12.0 12.0 Capacity utilisation (%) 92.5 98.3 Source: Company report

Profits at El Ezz Aldekheila fall in FY09

Citadel acquires 17% of Rift Valley Railways

Suez Cement 2009 profit rises 25%


The Africa Weekly

MARKET ACTIVITY

The Egyptian market continued in the negative trend set the previous week; the large caps bore the brunt of foreign investor selling. However, there was some positive activity in the last two trading sessions of the week; as a result the EGX 30 index fell by only 2.1% for the week. Most of the top 30 shares were down; EFG‐Hermes lost 5.5%, OCI was down 3.9%, OTH fell 2.5% and Telecom Egypt was 2.7% lower. NSGB bucked the trend with a 1.3% gain, albeit on very low volumes.

Egyptian Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceOriental Weavers 10.6 37.58 Cairo Poultry ‐9.8 32.13EG Tourism Resorts 10.2 2.27 Remco Touristic Villages ‐6.8 7.16Credit Agricole Egypt 2.3 11.13 Egyptian Media ‐5.9 7.53 Top trader EGP (m) USD (m) Total Traded EGP (m) USD (m)Orascom Construction 330.5 60.2 EGX 30 3,055.2 556.4 Market Performance Level EGP (%) USD (%) EGP/USD % chgEGX 30 (EGP) 6,719 ‐2.06 ‐2.03 5.49 0.03



The Africa Weekly

MOROCCO POLITICAL AND ECONOMIC NEWS

The 1st Morocco‐EU summit, which is due to be held on 7‐8 March in Granada, Spain, is expected to consolidate Morocco’s status as a strategic partner of the European Union (EU). Morocco has been developing solid bilateral ties with Europe since it obtained advanced status with the EU. Foreign Minister Miguel Angel Moratinos of Spain said the Spanish‐Moroccan relations are marked by intense contacts between the two countries’ civil society and the strong presence of Spanish companies in the Moroccan market. The Spanish official also highlighted the strong economic ties between the two countries, noting that Moroccan‐Spanish trade exchanges increased by 20% in 2009 to reach EUR 5bn. (Source: Maghreb Arabe Presse)

Morocco was this week granted MAD 1.2bn (USD 148m) by the European Union to help the kingdom carry out its national education strategy, which was crafted to modernise and improve the country’s educational system. The grant will help the country guarantee education to all children especially those from poor background, update teacher’s skills, reduce school dropout and promote good governance in schools management. The grant will also be directed towards backing up Morocco’s efforts for the construction and rehabilitation of schools in rural areas. (Source: Maghreb Arabe Presse)

COMPANY NEWS

Maroc Telecom published its FY09 results to December reporting a 1% decline in net earnings, as it invested in operations to extend its mobile customer base. The company said net earnings declined to MAD 9.42bn (USD 1.2bn), while revenue increased by 2.8% to MAD 30.3bn. Mobile customer numbers continued to expand in the 4Q09, increasing by 5.6% to 15.3m for the full year. Chairman of the board, Abdeslam Ahizoune noted that the company exceeded its forecasts for both revenue growth and a stable operating margin, despite the difficulties posed by the global economic crisis.

The company has maintained an active investment policy focused on enhancing the quality of its services and spurring innovation for clients, in spite of the acquisition of a 51% stake of Sotelma in Mali and a dividend payout ratio of 100%. The group’s 2009 consolidated earnings from operations increased marginally by 0.9% to MAD 14bn, with the increase being achieved in spite of maintaining promotional initiatives aimed at stimulating markets, and the increased amortisation expenses arising from the on‐going capital expenditure programme. The operating margin came in at 46.2%. Following a distribution of a MAD 9.5bn dividend to shareholders in respect of fiscal year 2008 and network capital expenditures of over MAD 5.8bn, the group’s consolidated net cash position amounted to a negative MAD 3.6bn at year end, compared to MAD 376m in December 2008.

Regarding the outlook, management said, based on current market conditions and barring any unforeseen disruptions to operations, Maroc Telecom is expected to achieve moderate growth in revenues in 2010. Revenue growth is expected to be driven by growth of subsidiaries and will maintain profitability at high levels, while a sustained capital expenditure programme will be pursued. (Source: Maghreb Arabe Presse)

First Morocco‐EU summit to be held in March

EU grants Morocco MAD 1.2bn for education reforms

Maroc Telecom FY09 earnings slide by 1% to MAD 9.4bn


The Africa Weekly

Maroc Telecom

12m to December (MADbn) FY08 FY09 % chgTurnover 29.5 30.3 2.8Gross profit 25.1 25.5 1.7Profit before tax 14.2 13.9 ‐2.2Profit after tax 10.0 9.8 ‐2.3

Source: Company report

Kuwaiti telecom company, Zain is said to be in exclusive talks with India’s Bharti Airtel to sell its African assets. The company, however, indicates that it will keep its stake in its Moroccan venture, Wana. Zain acquired its 31% stake in Wana – the telecoms division of Morocco’s largest conglomerate, ONA, for USD 324m in March 2009. The acquisition came less than a month after Wana won the concession to operate the North African country’s third wireless phone network, in a move by government to liberalise the telecoms sector and reduce prices.

Wana launched its mobile phone operation this week under the trade name Inwi, to join Maroc Telecom and Meditel, which are operating the two existing networks in the kingdom of a population of more than 30m people. Wana’s managing director, Frederic Debord, told reporters that Inwi’s mobile network capacity is ready to receive 2m customers from the first day if operation. He added that there is a huge potential growth in the mobile phone market in the kingdom, where more than 80% of the population own a mobile phone. (Source: Reuters)

The Moroccan affiliate of French building materials maker Lafarge has decided to press ahead with an expansion plan after sales began to pick up in the second half of 2009, the company said on Wednesday.

Lafarge Ciments, a listed subsidiary of Lafarge and its Moroccan partner SNI reported a 10% gain in 2009 net income to MAD 1.86bn. Operating profit climbed 19% to MAD 2.73bn. The company said it would propose an annual dividend of MAD 66 per share, up 10% from 2009.

Lafarge Ciments and its rivals Holcim Maroc and Ciments du Maroc grappled with a stagnant market last year after years of growth fed by infrastructure upgrades, low‐income housing projects and a tourism boom. The Casablanca‐based company said sales had begun to pick up again in the second half of 2009 due to continued demand for housing and infrastructure, which offered the prospect of further market growth.

"Nonetheless, the launch of new cement plants from the first half of 2010 is likely to provoke over‐capacity, especially in the greater Casablanca area," Lafarge said in a statement carried in newspapers.

It said the management board had decided to press ahead with new investments after the successful launch of a second production line in the northern city of Tetouan. Construction of a new cement plant in the southern Souss region would begin as soon as possible, it added. (Source: Reuters)

Zain in talks to dispose African assets, but plans to retain

Moroccan venture

Lafarge Morocco unit presses ahead with investments


The Africa Weekly

MARKET ACTIVITY

The Moroccan market had another good week, closing up by 0.9% on Thursday. Trading last Friday pushed the market above the 11,000 level on the ALSI and the market closed above that level during each of the remaining trading sessions. Most of the support came from the banking, cement and telecoms sectors. Attijariwafa was the large‐cap gainer, up by 2.9%, supported by CIH (+5.1%) and CDM (+3.7%), offsetting losses on BMCE (‐2.2%). Lafarge Morocco gained almost 9% after releasing FY09 results in line with expectations, while Maroc Telecom gained 0.8% after its EPS fell 1% y/y.

Casablanca Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceColorado 11.8 950.00 RISMA ‐3.7 242.00Lafarge Morocco 9.0 1,618 BMCE Bank ‐2.2 254.25Eqdom 6.0 1,600 Douja Prom. Addoha ‐1.8 111.00 Top trader MAD (m) USD (m) Total Traded MAD (m) USD (m)Douja Prom. Addoha 90.9 11.0 MASI 805.4 97.5 Market Performance Level MAD (%) USD (%) MAD/USD % chgMASI (MAD) 11,080 0.9 0.44 8.28 ‐0.49



The Africa Weekly

TUNISIA POLITICAL AND ECONOMIC NEWS

In the coming five years, Tunisia will endeavour to become a regional financial hub through the development of its financial market and by creating a propitious business environment likely to attract foreign direct investment. On Wednesday, a bill was examined at a cabinet meeting to enable companies to integrate in initial public offerings (IPO) by enabling them to benefit from a lower corporate tax at a rate of 20% for a period of five years, provided that the operation takes place before 31 December 2014.

Companies have to place their ordinary shares at the Tunis Stock Exchange by opening their capital to a minimum proportion of 30% in order to benefit from this 20% of tax reduction. (Source: Amen Invest)

Fitch Ratings last Friday affirmed Tunisia’s long‐term foreign‐currency rating at BBB, with a stable outlook. The BBB rating and stable outlook balance the country's macroeconomic stability and resistance to adverse shocks against government debts which are higher than its peers, weak banking system, and external balance sheet which are weaker than its peers. According to Fitch, the political scene remains stable, with President Zine al‐Abidine Ben Ali being re‐elected for another five‐year term in October 2009 with 89.62% of the vote. Meanwhile, the domestic economy grew 3.1% in 2009, despite a contraction in manufacturing industries due to the meltdown in European economies. Growth was helped by the good agriculture harvests, the government's assistance of firms operating in manufacturing sector, and the success by the authorities in maintaining private‐sector confidence. Moreover, both remittances and tourism revenue were resilient to the global crisis, according to Fitch.

On the other hand, non‐performing loans in the banking system fell from 21% in 2005 to 13.2% four years later. However, the impact of the global downturn on bank asset quality is not yet known. IHS Global Insight has maintained its current risk score for Tunisia's medium‐term sovereign credit at 35 (equivalent to BBB on the generic scale) and the outlook at stable. Our rating reflects our expectation of the continuation of prudent policies by the authorities and the implementation in reforms in the short term. However, the pace of reforms is expected to be slow. (Source: IHS Global Insight)

Output of manufacturing, Tunisia's most labour‐intensive business, fell by 6% in 2009 from a year earlier due to slowing performance of key textile and machinery sectors, official data showed on Friday. Output of textile, leather and clothing, the country's main foreign currency earner, fell by 14.9% in 2009 due to slowing demands of Europe, Tunisia's main market, and fierce competition from low‐cost Asian markets, according to the figures issued by the state‐run Statistics Institute.

The textile sector represents 36% of the total manufacturing exports with an average value of EUR 3bn (USD 4.08bn). Mechanical and electrical production fell by 8.7%, while food processing production fell 2.2% last year, according to the data. The North African country expects manufacturing output to rise by 2.4% in 2010 as Europe recovers. (Source: Xinhua)

The Central Bank of Tunisia (BCT) announced on Thursday the appointment of Mr. Ibrahim Saada as deputy governor of the Tunisia Central Bank. (Source: UMCI News)

Corporate Tax reduction for new listed Tunisian Companies

Fitch affirms BBB foreign‐currency rating

Manufacturing production fell 6% in 2009

New deputy governor of Tunisia central bank appointed


The Africa Weekly

COMPANY NEWS

Capital Intelligence (CI), the international credit rating agency, this week announced that it has affirmed the Foreign Currency ratings of Tunisia’s Amen Bank at BB‐ (Long‐term) and B (Short‐term) and the Financial Strength rating at BB‐. The Support rating was affirmed at 4. Due to Amen Bank’s improved financial position with regard to asset quality, capital adequacy and profitability, the Outlook for its Foreign Currency and Financial Strength ratings was raised to Stable from Negative.

Amen Bank maintains a good position in the Tunisian banking sector, controlling around 9% of banking sector assets. Over the last couple of years, the bank has improved its loan asset quality through a reduction in the level of non‐performing loans and an increase in the provisioning coverage. However, more still needs to be done to improve both to more satisfactory levels. A recent capital increase in late 2009 through a long‐term subordinated issue has strengthened the bank’s capital adequacy position. The gap between bad loans and loan‐loss provisions has narrowed, but needs to fall further. Amen Bank’s liquidity position is considered adequate, balancing a high proportion of loans relative to total assets against a good base of customer deposits and a reasonable level of liquid assets.

Amen Bank’s net profit performance to end June 2009 was good with stronger levels of net interest and non‐interest income. This improved performance in the first half of 2009 was achieved despite lower growth in the Tunisian economy. At end‐June 2009, with total assets of USD 2.7bn, Amen Bank was Tunisia’s fifth‐largest bank. It operates a 112‐branch network with staff of around 1,025. (Source: MENAFN)

Insurance company Assurances SALIM will be listed on the Tunis Stock Exchange through a cash call to increase its capital by issuing 660,000 new shares at TND 15 each (a par value of TND 5 plus a premium of TND 10). The offer will be split up into four categories:

Category A: (50% of the offer) Tunisian/foreign individual investors and/or Tunisian/foreign institutional investors other than collective investment schemes, (banks, insurance companies, close‐ended funds, private equity funds, and pension funds) with a minimum ticket to buy worth between 200 shares and 13,300 shares.

Category B (30% of the offer): Tunisian collective Investment Schemes (mutual funds, unit trusts, open ended funds) with a minimum ticket to buy worth between 200 shares and 66,000 shares.

Category C (15% of the offer): Tunisian/foreign individual investors and/or Tunisian/foreign institutional investors with a minimum ticket to buy worth between 10 shares and 200 shares.

Category D (5% of the offer): BH group and Assurances SALIM staff (1% will be strictly reserved to Assurances SALIM staff). The subscription period will last from 1 March to 12 March 2010. Right to dividend will run from 1 January 2009. (Source: Tunisie Valeurs)

CI ratings of Amen Bank affirmed with outlook raised to

stable

Assurances SALIM IPO


The Africa Weekly

MARKET ACTIVITY

The Tunisian market opened on a positive note, but profit taking in banks accelerated towards the end of the week; the ALSI lost 0.3% as a result. Banks were 0.5% lower as BIAT lost 1.6%, BT was down 1.1% and STB also down 1.1%. However, BNA closed 3.1% higher after a really good start early in the week. Elsewhere, Ciments de Bizerte lost 7.1% but Poulina gained 2.7%.

Tunis Stock Exchange

Top gainer(s) % chg Price Top loser(s) % chg PriceTunisie Lait 14.0 4.81 Ciments de Bizerte ‐7.1 7.82SIMPAR 6.7 40.97 SOTRAPIL ‐2.4 12.38BNA 3.1 13.40 Tunisair ‐2.1 2.38 Top trader TND (m) USD (m) Total Traded TND (m) USD (m)UIB 3.38 2.43 TUNIS Index 25.8 18.5 Market Performance Level TND (%) USD (%) TND/USD % chgTUNIS Index (TND) 4,667 ‐0.32 ‐0.83 1.40 ‐0.52Source: African Alliance database


The Africa Weekly

RECENTLY PUBLISHED RESEARCH

26 Feb Egypt Company News ‐ Suez Cement Company FY09 Results Flash

25 Feb Kenya Company News ‐ KCB Bank Ltd FY09 Results Flash

24 Feb Kenya Company News ‐ NIC Bank FY09 Results Flash

24 Feb Morocco Company News ‐ Maroc Telecom FY09 Results Flash

24 Feb Zambia Company News ‐ Zain Zambia FY09 Results Flash

18 Feb Kenya Company News ‐ Barclays Bank of Kenya Limited FY09 Results Flash

18 Feb Kenya Company News ‐ Equity Bank Ltd FY09 Results Flash

18 Feb Nigeria Company News ‐ Guinness Nigeria 1H10 Results Flash

17 Feb Kenya Company News ‐ East African Breweries Limited 1H10 Results Flash

15 Feb Kenya Banking Research ‐ Sector Update

09 Feb Nigeria Banking Research ‐ Banking Sector Update

28 Jan Nigeria Company News ‐ Comment on First Bank’s credit exposure

19 Jan Nigeria Banking Research ‐ Banking Sector Update

18 Jan Africa Equity Research ‐ 2010 Outlook and Strategy

11 Jan Uganda Company Research ‐ National Insurance Company IPO

10 Dec Zambia Company News ‐ Zambeef FY09 Results

07 Dec Africa Cement Research ‐ 2009 Sector Report

03 Dec Nigeria Banking Research ‐ Sector Update

02 Dec Kenya Banking Research ‐ Sector Update

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