PIC to decide on $5.3 billion Africa investment plan by April

24 Nov 2011

South Africa’s Public Investment Corp., Africa’s biggest money manager, will decide by April where to spend the 45 billion rand ($5.3 billion) it has allocated to investments in other countries on the continent.

"We are finalizing the asset allocation plan together with the Government Employees Pensions Fund,” said Chief Executive Officer Elias Masilela in an interview from Pretoria, where the company is based, yesterday. The PIC manages about 1 trillion rand in government employee pensions and the GEPF accounts for about 90 percent of the funds under the PIC’s management.

The PIC wants to invest elsewhere on the continent to take advantage of a growth rate that has been more than double that of South Africa over the last decade, according to International Monetary Fund data.

The PIC will prioritize equities, private equity and development projects such as dams and roads, said Masilela.

Another 45 billion rand will be invested in assets outside the continent, he said. "There are many spin offs for the PIC and for South Africa in this decision to invest in Africa,” said Masilela. In addition to the obvious need for diversification, the 100-year- old money manager will help facilitate economic growth, he said.

Anglophone, Lusophone: The PIC will prioritize Anglophone countries with growing economies and transparent regulatory environments, said Masilela. Political and social stability will also play a major role in attracting investments, he added. Nigeria, a former British colony, has the biggest stock exchange in sub-Saharan Africa outside South Africa.

"We will be guided by opportunities that present themselves in the Francophone and Lusophone countries,” Masilela said. Ivory Coast and Senegal in West Africa are among former French colonies while oil producer Angola and Mozambique were colonized by Portugal before winning independence in 1975.

As part of its centenary celebrations on Nov. 25, the PIC will host a summit with major finance and investment institutions that do work in Africa, including the World Bank’s International Finance Corp., which said on its website that its investments in Sub-Saharan Africa have topped $2 billion for a second consecutive year during financial 2011. The summit will discuss ways to accelerate investments into the continent, said Masilela. "We’ll use that summit as a sounding board to finalize our strategy.”

At least 20 African countries will achieve an annual 3 percent to 4 percent economic growth during the next 10 years, the IFC said in its Africa 10-year vision report on its website.

Source: Bloomberg

Kenya starts FTSE-based stock indexes. Next.. bonds

09 Nov 2011

Nairobi Securities Exchange has launched two stock indexes in conjunction with FTSE Group, and said on Tuesday 8th November 2011 it planned to start one for Treasury bonds next year.

The FTSE NSE Kenya 25 Index will comprise the bourse's 25 most liquid stocks, while the FTSE NSE Kenya 15 Index will be made up of the exchange's 15 largest stocks by market capitalisation.

The two tradable indexes, which went live on Tuesday, will be priced in dollars and Kenyan shillings, and will initially be based on the NSE-20 Share Index and the NSE-All Share Index.

"They reflect the growing interest in new domestic investment and diversification opportunities in Kenya," NSE chief executive Peter Mwangi said.

The top five constituents of the FTSE NSE Kenya 25 Index are alcoholic drinks group East African Breweries Ltd, telecoms operator Safaricom, Equity Bank, Kenya Commercial Bank and Barclays Kenya. They have a total 69.19 percent weighting.

The five firms are also the top on the FTSE NSE Kenya 15 Index and have a total of 71.91 percent weighting. Both indexes have January 1, 2008 as their base date and their composition will be reviewed every June and December.

FTSE operates such indexes as the FTSE 100 in Britain. In Africa, it runs indexes in Morocco and South Africa. It also operates ETFs in countries including China, Germany, Japan, and the United States.

NSE and FTSE plan to launch a Treasury bond index in 2012.

"It is something we are working on. I hope we will make an announcement very early next year about that index," said Jonathan Cooper, FTSE Group managing director for Middle East and Africa.

The Nairobi Securities Exchange has said the FTSE indexes were meant to pave the way for products like exchange traded funds.

An ETF comprises a basket of assets, usually the main constituents a major share market index, and can be traded on an exchange, sold short or bought on margin. ETFs trade like stocks and allow investors to diversify risk over a spread of assets.

"The regulatory framework for issuing exchange traded funds domestically is not ready. So, we are working with the authority to have those regulations in place next year," said Donald Ouma, NSE head of market and product development. "However, with FTSE, one can get a licence to issue exchange traded funds offshore."

Reuters

Okonjo-Iweala aims to diversify Nigeria's economy

12 Aug 2011

Ngozi Okonjo-Iweala departs the World Bank as managing director on Friday and said her biggest challenge as Nigeria's new economic chief will be to develop an economy that is less dependent on oil and gas.

Okonjo-Iweala, who will take up the role of Nigeria's Coordinating Minister for the Economy and Minister of Finance next week, has been a steady hand at the world's largest development institution since 2007, where she has had unique insights into the growing role of developing nations in the global economy.

Nigeria is one of Africa's most dynamic economies but it has enormous problems, including an over-reliance on commodity exports, mismanagement, low investment and a history of powerful vested interests.

"Nigeria has to make some fundamental changes, it has to really diversify its economy," Okonjo-Iweala told Reuters in an interview on Thursday. "The time is now because investors are interested in the country," she said.

She said the country's manufacturing sector had lost competitiveness due to increasing power shortages and bureaucratic hurdles, while its agriculture and services sectors had a lot more room to grow, and a flourishing entertainment industry held great potential.

One lesson Okonjo-Iweala takes with her is that consistent policies and a stable political environment are essential for any economy to flourish.

"We have to show policy consistency in all kinds of ways. It builds trust in the economy, it builds a resilience and that helps enormously," Okonjo-Iweala said.

It is the second time in eight years that Okonjo-Iweala has left a World Bank job to return to Nigeria to help transform the huge oil-rich nation's economy.

In 2003 she shook up the country's finances, fired corrupt officials, boosted transparency and negotiating the cancellation of nearly two-thirds of Nigeria's $30 billion Paris club debt.

"Why am I going back? I ask myself that question too. I'm passionate about my country and if you have skills and your country calls on you to come and help, at the end of the day it's very difficult to say no."

Okonjo-Iweala said she was encouraged by President Goodluck Jonathan's political commitment to reform Nigeria.

Source: http://af.reuters.com/article/investingNews/idAFJOE77B03V20110812?sp=true