More on EASSy cable and the private sector players involved

This business day article highlights the difficulty theat lies in a partnership between public and private actors, each with their own agenda and objectives, in providing low-cost and efficient access to a broadband connection originating from a cable to be installed around the Eastern rim of Africa and coming inland to reach landlocked countries.  Reliance and Alcatel-Lucent both seem to be willing to lay the ground work for actually providing the infrastructural needs but other private players will not tap into the network unless it is a profitable venture.  Meanwhile, the governments of those countries that stand to benefit from the cable are demanding cheap access be provided to drive growth in the IT and Communications sectors, generating exponential growth in these service industries, more FDI and SME development.  This is an interesting story that is playing out and a valuable lesson in Public-Private Partnerships P3s.

Lesley Stones
Johannesburg

ARGUMENTS about the cost of bandwidth on a telecommunications cable to be laid around Africa’s east coast could see more money pumped into a duplicate cable laid in direct competition to the original R300m project.

A second multimillion-dollar cable to replicate the planned East Africa Submarine System (EASSy) may be laid because of a clash between private investors wanting to profiteer and governments demanding cheaper bandwidth to reduce the cost of doing business and stimulate economic growth.

Some positive light thrown on corporate ’survivors’ in Zimbabwe

I get the feeling more and more as of late that there are hordes of investors standing eagerly by as the Zim crisis appears to be reaching some sort of climax.  A recent rise in the ZSE is partly “underpinned by weak money market interest rates, higher exchange rate movements coupled with negative inflation projections”.  How sustainable is this with the tightening of liquidity due to treasury bill deficits and approaching maturities couple with the printing of more and more Zim dollars? Talk about a bubble being blown (and burst) again from the same old balloon that continues to wreak havoc on the Zim economy. But how much do past infrastructure developments and the sound economic and business principles that made Zim the ‘breadbasket’ of Southern Africa keep wary eyed investors anxious in the wake of a potential overturn of a dictator who seems to be getting more and more desperate in finding support locally, regionally and internationally? Expected returns could be what puts Zim back on the fast track to finding its way back to the ‘breadbasket’ label it once adorned. Also see discussion on Ryan Shen-Hoover’s site.

Zim corporate survivors in strong position – Imara

Published: 03-APR-07

Harare – Zimbabwe’s listed companies are proven survivors that are well placed for the long haul. That’s the positive message drawn from Zimbabwe’s corporate reporting season by the investment professionals at Harare-based Imara Asset Management Zimbabwe, part of the Imara financial services group.

African Finance Corporation set to begin operations by mid-April 2007

Notice IT services is not mentioned as one of the key sectors where it seems that if the public and private sector were aligned in individual countries, this sector would also deserve much attention as it has in Rwanda.

“The key sectors have been identified as: Agriculture, Power, Energy, Telecommunications, Financial Services, Mining and Fast Moving Consumer Goods, with Tourism mentioned as an additional area of investment”.
  

Nigerian team in South Africa to sell African Finance Corporation

27 March 2007
Central Bank of Nigeria

The Central Bank of Nigeria today visited South Africa as part of an international road show to interest business in investing in the African Finance Corporation, a private sector-driven African investment bank that will commence operations in mid-April 2007.

At an investor forum held in Sandton, Central Bank of Nigeria (CBN) Governor Prof Charles Soludo outlined the background to the institution, the business case for its existence and future prospects. The AFC, modelled on the lines of the International Finance Corporation, the private sector arm of the World Bank, is an initiative of the Federal Government of Nigeria, driven by the CBN.

Alcatel-Lucent wins $240 million African cable deal

In January, Flag Telecom, a unit of Indian firm Reliance Communications, said it planned to build a submarine cable around the east of Africa.  On March 9, 2007, Reuters Africa reported that the French company, Alcatel-Lucent  has been awarded a $240 million contract to build a telecoms cable around East Africa. Flag Telecom had stated in January that it was willing to invest $1.5 billion in their own project while an advisor to the East African Submarine Cable System (EASSy) (now in Alcatel-Lucent’s hands), was quoted as saying that the Flag project would need to get approval from the same African governments who have just completed the EASSy agreement.  For more information on the EASSy project, go to NEPAD’s e-Africa Commission website.

Ghana looks to raise $500 million via the bond market

Just as Ghana is reaching its 50 year mark since independence and the subsequent socialist leadership of the ‘pan-Africanist’ Kwame Nkrumah, the prospects for new and continued growth remain positive.   The World Bank Group reports,”In a major new state-of-the-art move on March 1, practically all donors (covering 95% of flows to Ghana) signed an innovative commitment, the Ghana Joint Assistance Strategy – G-JAS.  Covering a four-year program, with as much as US$5.3 billion, the G-JAS partners commit to back Ghana’s national development strategy at the highest best-practice levels, harmonizing work and backing results with efficient resource utilization.”

“For 2007 the Bank is committing to more than $400 million in new finance.  The World Bank Group is also seeking to combine the tools of the whole World Bank Group, including IFC and MIGA, for innovative financing solutions to expensive infrastructure investment.”

AllAfrica.com pulled a recent article from the Public Agenda in Accra that describes Ghana’s plans for its first international sale of of bonds “to help spur a market for corporate debt” (http://allafrica.com/stories/200703050502.html).

Ghanaweb.com (http://www.Ghanaweb.com) reported today on Paul Wolfowitz and the World Bank’s engagment in Ghana as well as specific projects in cocoa processing, horticulture product storage facilities, internet service provision and municipal governance (as well as one project near and dear to my heart – mushroom farming (http://www.ghanaweb.com/GhanaHomePage/economy/artikel.php?ID=120242)) that are helping to diversify the economy that is still largely commodity/natural resource-based.

Ghana has been the recent beneficiary of increased commodity prices (i.e. gold) and debt relief that is allowing the country more favorable credit ratings (see article at allAfrica.com that mentions recent Fitch ratings) and to become a more attractive destination for investors looking for higher returns but more importantly, a much safer asset class in African countries less burdened by debt overhang and showing signs of sustained growth and sound governance.

Regionally, Cote D’Ivoire has signed a peace accord that if held by all parties involved, could see the re-emergence of the world’s largest cocoa producer and West African success story of the 1990s (http://news.bbc.co.uk/2/hi/africa/6417349.stm). 

Arcelor Mittal makes another West African project investment

After all of the controversy surrounding and now subsiding with regards to the giant steel company’s (claiming to produce 10% of total world output) dealings with Liberia’s transitional government and newly elected government of President Sirleaf, Arcelor Mittal has announced a similar $2.2 billion mining project in Senegal.  As in the case of the Liberia project, Arcelor Mittal has placed emphasis on railway and port construction but this time, instead of rehabiltation of exisitng infrastructure, will build a new 750 km railway linking the mines to a newly developed  port near Dakar.  See Arcelor Mittal website http://www.arcelormittal.com/ and recent articles on the Liberia and Senegal projects http://allafrica.com/stories/200702090922.html and http://news.bbc.co.uk/2/hi/business/6389237.stm.

Actis Africa Agribusiness Fund Pumps money into GBHL in Mombasa

Tom Mogusu from The Standard Reports:

Actis, a private equity investor in emerging markets, has invested Sh1.05 billion ($15 million) in the Mombasa-based Grain Bulk Handlers Limited (GBHL).

The firm on Tuesday announced that it had made its first investment in the agri-business infrastructure in Kenya since it was launched in April 2006.

The new funding will go towards putting up what it described as state-of-the-art integrated grain terminal at the Mombasa port.

“This investment makes Actis a significant minority shareholder in GBHL,” said Mr Andrew Tillery, an Investment Principal at Actis.

Discussions continue on private capital flows from the U.S. to Africa

Article from Panapress. 

African, US executives promote investment in Africa

Published: 01-FEB-07

Nairobi – At least 500 African and American business executives are expected to meet in Houston, USA on February 7th to promote foreign direct investments into Sub-Saharan Africa.

Organisers said the executives will be participating in the first US International Investment and Finance Forum for Projects, Trade, Development and Capital Equipment.

The forum is being hosted by a US-based equipment company, EquipXp in conjunction with Nigeria Community and Friends/NCF Investment Inc., an organisation of Nigerian businessmen and women based in the US.

Interesting Analysis on World Cup 2010 and the Construction Sector in SA

From Sean’s Investment Review http://investreview.wordpress.com/2007/01/23/construction-sector-update/

Construction sector update

January 23, 2007 at 8:53 am | In Companies, Economy |

The Construction and Materials Index has been a sector of the market that has received quite a bit of attention since South Africa was awarded the rights to host the 2010 Soccer World Cup in May 2004. This attention has been justified, owing to South Africa’s shortage in stadia with sufficient capacity to host the largest sporting event on the earth.

Companies such as Murray and Roberts, PPC, and Group 5 will all be beneficiaries in the massive infrastructure spend over the next few years, both directly in the stadia, but also to the supporting systems, such as roads, rail (Gautrain) and upgrading of the airports.

Press Corp. Ltd. leads the pack of stocks gaining value on Malawi Stock Exchange (MSE)

From The Malawi Nation http://www.nationmalawi.com/articles.asp?articleID=20435

 Expectations of good results from most listed companies has created some panic buying on the local bourse with investors dying to make a quick killing through dividends.
According to last week’s Malawi Stock Exchange (MSE) trading commentary, the market saw seven of the 11 listed companies having their shares gaining in value as investors scrambled for the limited stocks on the bourse.
Topping the list of price gainers was Press Corporation Limited (PCL) which has been enjoying good times on the equity market. Its shares gained a massive K15.50 to close the week at K117.50 each.