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Africa’s economic growth lowest in 5 years

JOHANNESBURG – Economic growth across the continent remains resilient but figures are likely to come in at their lowest in five years.

This is according to EY’s Africa attractiveness survey. Although foreign direct investment (FDI) projects fell, foreign direct capital investment into the continent surged.

The EY survey saw over 500 global business leaders, in over 30 countries, give their views on the potential of the African market.

It reports that although Africa faces a lower growth forecast, the continent remains resilient.

Sub-Saharan Africa will still experience the second highest economic growth rate in the world this year.

Last year the region became the leading recipient of capital investment. However, the value of funds invested in African projects declined to R1-trillion. In 2014, the investment was R88,5-billion (R1,27-trillion).

Nigeria, the continent’s largest economy, has slowed down in growth. It was further affected by the decline in the oil price and currency devaluation pressure.

South Africa, the second largest economy in Africa, has been hit by stagnant growth this year, but has managed to avoid downgrades by ratings agencies.

Economic growth across the region is expected to remain slower compared to the past 10 to 15 years.

North Africa experienced 8,5 percent year-on-year growth in FDI projects.

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UK and Swiss regulators question debt financing for Mozambique

EVEN by the standards of Africa, it has been a wild ride for Mozambique. There is little sign it will end well.

Blowing through more than $2bn of borrowed money just as the currency and the price of commodity exports plunged has left the former Portuguese colony with near-empty coffers. Its creditors, which bought debt sold by Credit Suisse Group and VTB Group, may be left holding the bag. Nor does it help that the IMF is raising questions about the government’s transparency and its finances.

“Mozambique is not in a state of development where it can maintain a credible foothold in the global financial markets,” said Jan Dehn, head of research at Ashmore Group, whichmanages $53bn of emerging market assets and opted not to buy Mozambican bonds. “It was more like, someone got an idea one day to issue a bond.”

That was back in 2013, when the desperately poor country was a symbol of postwar recovery and Africa’s rise. Anadarko Petroleum and Eni had discovered offshore gas fields so big that Standard Bank Group said Mozambique could turn into the next Qatar. Growth since the end of a 16-year civil war in 1992 had averaged 7.4%.

Credit Suisse and Russia’s VTB provided financing to companies to help build the economy. The banks then went on to package and sell the debt to other investors hungry for high returns at a time when yields in the developed world were reaching record lows.

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How Japan Intends to Support Africa to Be Self-Reliant

Japan has said it will continue to support Africa to become self-reliant through skills transfer programs, talent development initiatives and the provision of advanced technology to build high-quality infrastructure.
The African continent is moving from aid reliance to self-sustainability with support from various development partners including Japan.

On Tuesday (July 19), the Royal African Society (RAS) in association with the Government of Japan held talks to brainstorm on how Japan can work with African nations to attain development.

The event, called ‘Japan and Africa: A new kind of relationship?’ took place in London and focused on the agendas that will be discussed during the 6th Tokyo International Conference on African Development (TICAD VI), which will be held in Nairobi next month. TICAD VI will take place from 27-28 August.

The event featured Prof Akihiko Tanaka of University of Tokyo who is also former President of Japan International Cooperation Agency (JICA).

Speaking ahead of the event, Prof Tanaka expressed his optimism about African countries noting that they will become invaluable to Japan in the coming decades, as growing business partners with huge market potential.

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Carlyle Group Eyes More Opportunities In Africa After Making First Exit

US-based private equity firm Carlyle Group is looking at a number of investment opportunities for its African fund after it made its first ever exit on the continent this month, its top official said.

Marlon Chigwende, managing director and co-head of the Carlyle Sub-Saharan Africa Fund, said the $700 million investment vehicle was looking to increase its investments on the continent after it exited Export Trading Group, a Tanzanian-based continental supply chain manager.

Carlyle, which has so far made at least five buys in Africa, has been taking on partnerships in its investments on the continent including with Africa’s richest man Aliko Dangote, to buy in energy infrastructure, and with ex-Barclays chief executive Bob Diamond to buy the banks stake in Africa.

“We are very busy. Potentially we might close a deal [by the end of this year], a lot depends on the discussions we are having with potential vendors of the businesses. We are in a detailed diligence on a number of opportunities,” Chigwende told Africa Global Funds.

Largest PE in Africa

To date the fund has invested approximately $300 million across a variety of industries and countries, including J&J Africa, a logistics business in Mozambique; Diamond Bank, a Nigerian Tier II Bank; Tiger Automotive (TiAuto), a leading tyre retailer and wholesaler in South Africa; and Traxys Group, a physical metals and minerals commodity merchant, logistics and trading firm with Africa presence.

Chigwende said that the Sub-Saharan Africa Fund, which was established in March 2012 to make buyout and growth capital investments in private and public companies from offices in Johannesburg and Lagos, hasn’t closed any deals this year.

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