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REPORT OF LAST WEEK (from 26/08/13 to 30/08/13)
by Dario Galluccio – This Blog is sponsored by http://www.reflexecogroup.com

Kenya: Barclays agrees to $13m oil exploration deal
With Kenya on its way to becoming the first East African oil producing nation after discovering oil last year, petroleum exploration companies are vying for a position in the race to secure local production fields. This became evident as Barclays bank agreed to fund, Marriot Drilling Africa Limited (MDAL), an oil exploration company and subsidiary of UK-based Marriot Drilling Group in a $13 million oil exploration financing agreement and said the funds will be used to acquire an oil drilling rig.
According to some analysts, the 5 year deal makes Barclays bank the first in East Africa to finance an oil exploration project, though other investment houses have struck deals to finance other oil support servicing projects. Recently, Kenya-based multi business investment company, TransCentury, provided a Sh1 billion ($11.43 million) war chest for its engineering Civicon Group, to provide oil field services (OFS) support. Similarly, Nigeria’s GT Bank acquisition of 70 percent stake in Fina Bank can be linked to a strategic foresight into penetrating Kenya’s oil and mineral sectors.
These alliances will help fasten the growth rate of the East African oil and gas industry as well as provide financial institution sand oil firms with a mutually beneficial collaboration.

Ghana: Government will sell long-dated bonds to finance projects
Government will soon begin selling 15 and 20 years bonds specifically to finance infrastructure projects in the country. The sale of these long-dated bonds by government is part of plans to reduce the country’s heavy dependence on donors and local banks for infrastructural projects.
Finance and Economic Planning Minister, Seth Terpker, told his outfit is analysing how these bonds would fare on the market before issuing them. He notes that a careful analysis of the long-dated bonds market will guide government towards making the best returns on them.

Ghana: Government will transform districts into industrial hubs
The government has initiated moves to turn the various districts in the country into industrial hubs. The initiative under the Rural Enterprises Programme (REP) together with related services is intended to drive the expansion of economies, nurture entrepreneurship, create technological dynamism, foster productivity, generate employment and contribute to increased agricultural productivity. The Minister of Trade and Industry, Mr Haruna Iddrisu, announced this when he distributed some vehicles and office equipment to 31 selected districts in the country.
The REP provides an opportunity for the districts to provide the enabling environment for rural enterprise development. The items distributed were mainly funded under the International Fund for Agricultural Development (IFAD) loan. The total cost including handling charges of the vehicles was US$980,000 while that of the computers was US$175,000.

Ghana: Ghana-US trade equals $817m in first-half 2013
Ghana and the United States recorded a two-way bilateral trade worth $817 million during the first-half of 2013. The US exported into Ghana, traded goods worth $594 million and imported $223 million value of goods during the first six months of the year, according to the figures compiled by the US International Trade Commission from official statistics of the US Department of Commerce.
Ghana’s trade export to the US during the period was mainly under the African Growth and Opportunity Act (AGOA) as the trade balance between both countries reduced to $370.9 million from $540 million during the same period in 2012. The trade balance between Ghana and the US in the first-half is the highest among countries in sub-Saharan Africa (SSA) that trade with the Americans.
In 2012, during the same period, trade between Ghana and the US was $856 million.

Liberia: Government concludes deals with China and India 
The Liberian Government says it has concluded financing deals for some of its major construction projects here with the Governments of China and India. Finance Minister Amara Konneh and delegation returning from separate bilateral talks with Chinese and Indian Export-Import (EXIM) Banks said discussions were fruitful and that all is set to fast track the loans for the project.
The discussion in India looked at the terms and conditions of a US$144 million concessional loan facility intended to finance a 373 km of transmission and distribution lines, and 2 power sub-stations. The lines will run from the Liberian border with the Ivory Coast through Ganta to Gbarnga, and from Gbarnga to Zorzor, Kakata and Buchanan.
In China, the delegation met with the President of China EXIM Bank and the heads of Corporate and Concessional banking departments to discuss the possibility of securing a loan package to finance key infrastructure projects including the pavement of the Gbarnga-Mendicorma and the Ganta-Fishtown highways; a new terminal and runway for the Robert International Airport (RIA), and the consolidation of power transmission and distribution (T&D) lines in the Monrovia area.
The Government has decided to work exclusively with the China EXIM Bank on this financing instrument because it has facilities that are more suitable to the needs of Liberia. These facilities include concessional loans not tied directly to the awarding of any concession.

Ghana: GSE records good performance for first half
The Ghana Stock Exchange (GSE) for the first six months of the year has recorded a very impressive performance as against the whole of last year. The two market indices, the GSE Composite Index and the GSE Financial Stock Index which are used to measure the performance of the market have recorded remarkable upward movements. From January to July 2013, the GSE Composite Index stands at 61.39 per cent, as against 6.06 per cent for the whole of 2012. The GSE Financial Stock Index equally stands at 61.66 per cent, as against 0.53 per cent for the entire 2012.
Total market capitalisation of the bank for the period under review stands at GH¢55.78 billion as against GH¢54.95 billion in 2012 with domestic capitalisation doubling from GH¢5.57 billion to GH¢10.57 billion. Total volume of trade is equally on the rise. At the close of business on July 31, total trade stood at 209.16 million as against 218.13 million, for the whole of last year. In terms of value, total trade stands at GH¢230.51 million, as against GH¢102.2 million for the whole of last year.
Reviewing the market, Bloomberg and other international news wire service described the market as “best performing market in Sub-Saharan Africa”.
Listed companies also recorded significant price increases during the first half year. Out of the 34 companies, CAL Bank Limited led the gainers with 194 per cent followed by Enterprise Group Limitedwith 191 per cent, BENSO Oil Palm Plantation LIMITED, 150 per cent, Ghana Commercial Bank Limited, 134 per cent, and PZ Cussons Ghana Limited, 122 per cent. Seven companies gained more than 50 per cent in their share price while eight companies gained above 10 per cent. Eleven companies maintained their prices with only four recording some level of depreciation.

Nigeria: World Bank will assist with GDP rebasing
Nigeria will be assisted by the World Bank, International Monetary Fund (IMF), Africa Development Bank, and other world development partners to produce a current and accurate GDP figure, the country’s Statistician-General, Dr. Yemi Kale has said. The proposed GDP rebasing will help correct Nigeria’s fiscal planning and economic policies at the Federal, state and local government levels which have been consistently hinged on an obsolete Gross Domestic Product (GDP) baseline carried out since 1990.
Rebasing, which is the process of replacing the present price and quantity structure of the base year used to compile real measures of GDP with a new or more recent price structure, involves changing the price and quantity base for individual process and quantity relatives, updating weights used in aggregating individual quantity relatives into sub-indexes and aggregating these sub-indexes into more aggregated indexes.
According to Statistician-General, the proposed rebasing will help Africa’s second-largest economy plan and measure development better. According to reports, Nigeria is poised to overtake South Africa as Africa’s largest economy after the exercise.

Ghana: Government seeks PPP for Boankra Port project
The government has renewed the search for private investors to partner it to build and operate the Boankra Inland Port and the Eastern Railway Line projects. The Chief Executive Officer of the Ghana Shippers’ Authority (GSA), Dr Kofi Mbiah, said the government had brought the two projects under its private public partnership (PPP) initiative.
The PPP initiative is being coordinated and executed by the Ministry of Finance and Economic (MoFEP) and the newly established ministry at the Presidency in-charge of PPPs.
A successful of the projects is expected to help decongest the Tema and Takoradi Ports, leading to a rise in the country’s maritime trade.This is because more cargo, especially those on transit to the sub-region as well as goods moving from the two seaports to the eastern, central and northern parts of the country, will be transported on the railway line to the Boankra Port prior to distribution.
A search for a transaction advisor to the proposed PPP for the two projects has already commenced and is expected to be concluded in August. Once this is done, Dr Mbiah said the government would now start the process of getting investors interested in partnering it to operate the two projects.

Nigeria: Transcorp boosts Obama Power-Africa initiative with $300m plant acquisition
President Barack Obama’s $7 billion US-backed Power Africa initiative has received a major boost with the announcement of the complete payment for the $300 million Ughelli power plant in Delta State, Nigeria by Transcorp Plc, the publicly quoted conglomerate managed by Tony Elumelu’s Heirs Holdings.
Transcorp Ughelli Power Limited (TUPL) which made an initial deposit of $75 million (25 per cent) for the plant, announced last week a $225 million balance payment to Nigeria’s Bureau of Public Enterprise (BPE) for the 1000 megawatts capacity plant.
TUPL, which has American company Symbion Power as an equity investor in the project, plans to increase the power generation of the plant from 300MW to over 1070MW over the next five years.
United Bank for Africa Plc (UBA) and the Africa Finance Corporation (AFC) as co-arrangers, and First City Monument Bank Plc (FCMB) and Fidelity Bank as co-financiers provided the debt financing facility for the acquisition of the plant, which is one of the six power generation companies unbundled as part of the privatization of the Power Holding Company of Nigeria (PHCN).
Last month, Heirs Holdings committed $2.5 billion toward the Power Africa Initiative, a multi-stakeholder partnership between the US government and seven sub-Saharan African countries, including Nigeria; with the purpose of accelerating investment in Africa’s power sector over the next five years.

Africa: Samsung says it has high hopes for Africa’s development
Samsung remains extremely positive about the ongoing developments within Africa, despite challenges such as transport/logistics and inadequate electricity infrastructure, George Ferreira, Vice President and Chief Operations Officer at Samsung Electronics Africa, has said.
A statement from Samsung Ghana said Samsung Electronics Africa was actively involved in providing resources to the ICT sector and had also introduced a number of products that would result in an increasing adoption of higher levels of primary, secondary and tertiary education levels.
The statement said: “Africa is considered the best continent for solar/bio-fuel. However, in order to see the projects brought to fruition, energy investment is immediately needed in the form of FDI and this is exactly what we are doing with our R&D into Solar Powered solutions. Samsung Electronics Africa will continue to identify and support projects that add to the economic and social growth of the continent by analyzing the very specific needs promoted by the often remote and rugged environment. It’s time for Africa to shine.”
The statement said while Foreign Direct Investment (FDI) into Africa dipped somewhat over the past two years, it has been forecasted that it would increase by more than 10 per cent in 2013.
Investment into Angola, Mozambique and South Africa appears to be the most prominent, according to the African Economic Outlook 2013 report.

South Sudan: Approved bill for oil sector regulation
After years of deliberations and consultative meetings, South Sudan has passed the long-awaited petroleum bill which will transform its mode of operation and attract investors. According to Reuters, the bill, pending President Salva Kiir’s approval, will afford the war-torn nation improved transparency by regulating how the government spends its revenues, making it more investor friendly.
Since it gained its independence from Sudan in 2011, the country has struggled to establish concrete laws to help stimulate growth. However the persistent push from western nations to ensure greater security for investment in the oil sector seems to be yielding positive dividends.
Western nations formerly ignored the country’s oil sector for development, citing not only the gripping violence but the lack of data on how oil proceeds were managed by the government. The landlocked Central African country is hopeful that this bill will encourage investors to embark on operational projects which will propel infrastructural development needed for the Sector’s growth.

Nigeria: To export technology to African countries
According to the Minister of Science and Technology, Prof. Ita Ewa, Nigeria would soon start exporting technologies to other African countries. During a courtesy visit from a team of UNESCO expert, the minister said the Sheda Science and Technology Complex (SHESTCO), Nigeria’s version of the United States’ “Silicon Valley”, in Kwali, FCT, would be a zone where technology would be exported to other African countries.
The minister stated that the ministry was working in collaboration with UNESCO and other experts in developing a roadmap for the valley. He further said that the would be where solar technology value chain could be used in promoting the technology in Nigeria.
The leader of the UNESO team, Dr Voslan Nur, reiterated that the organisation had agreed to collaborate with the Federal Government to establish the valley. Nur described the initiative of the ministry on the project as the right step in the right decision to make the nation’s technology park a productive centre.
Prof. Deog-song Oh, the Secretary-General, World Technopolis Association, Korea, said the establishment of the valley would make Nigeria one of the world technology giants in the nearest future.

East Africa: Kenya removes trade barriers
Kenya has moved to tear down some of the barriers that were responsible for slowing down the movement of persons and cargo along the Mombasa – Kampala trade corridor. As such, traders in the East Africa Community (EAC) are to witness smooth flow of goods and services after the introduction of the single border territory (SBT).
Uganda Revenue Authority (URA) Commissioner for Customs Richard Kamajugo said they had ordered the removal of all weighbridges on the Uganda side too.
Speaking at URA consultative forum in Kampala last week, Kamajugo said Kenya had been with the highest number of weighbridges between Mombasa and Malaba border, but all have been removed except one at Mombasa port. He also said that the 10 roadblocks that Kenya had between Mombasa and Nairobi have all been removed. SBT means goods will only be checked at the main port of entry, and once cleared, they will move with less interruption.

Ghana: US$1bn Eurobond listed on Ghana Stock Exchange
The government has successfully listed the US$1 billion Eurobond issued earlier this month on the Ghana Stock Exchange. This makes it the first Eurobond to be listed on the exchange of a country in sub-Saharan Africa (SSA). The bond is now being traded on the Irish Stock Exchange (ISE) at a rate of 8.17 per cent.
The Minister of Finance and Economic Planning, Mr Seth Terkper, symbolically listed the bond on the GSE, making it possible for foreign and domestic investors to buy and trade in the Eurobond on the Accra bourse. This is expected to help increase investor appetite on the local bourse while deepening capital market activities in the country in general.
Mr Terkper, who led a team of experts from the country to issue the bond on July 25, said the listing and subsequent trading of the bond on the GSE added to government’s commitment to develop the capital market. The country requires an estimated US$1.2 billion annually to fund its infrastructural needs, and the minister is confident a well-developed capital market would help mobilise the needed funds to support these capital expenditures.

Ghana: 170 percent oversubscription of Ghana’s first 7 year bond
The Government of Ghana through the Ministry of Finance and Economic Planning sold its first seven-year bond and it was over-subscribed by 170%. Government received GH¢ 270 million Ghana cedi offers from local and foreign investors but took GH¢102 million cedis. It would be paying those who participated in the bids, an interest or a yield of 17.5%. Most of the bids that government is likely to accept are from local investors.
Proceeds from the bond, would be used to finance infrastructure projects and settle some maturing debts. Government is however expected to receive the money by next Monday.

Ghana: AFD says it will keeps to financing power projects in Ghana
Mr. Yves Boudot, Director of Agence Francaise de Development (AFD) for Africa, said his office would continue to finance power projects in Ghana. He said the AFD had a wide range of financing options to support government’s efforts at achieving its power sector objectives.
A statement made available to the Ghana News Agency in Accra, by the Ministry of Energy and Petroleum, said Mr. Boudot made the promise at a meeting with the sector Minister, Mr Emmanuel Armah-Kofi Buah. Mr. Boudot said the AFD had demonstrated that efficient public companies could have access to direct international financing without state guarantee.
“AFD is financing the reinforcement and extension of the power grid in Northern Ghana and Burkina Faso, which would allow the Ghanaian national electricity transmission company, GRIDCO to scale up development in the region”, the statement said. It added that the extension of power grid in Northern Ghana would have substantial economic, political and environmental benefits for the West African sub-region.
“The programme’s main objective is to make Ghana’s existing power grid more reliable, and to scale up its capacity by reducing the current imbalance between the North and South of the country and support the development of Northern Ghana”, it noted.
Mr Buah, the sector Minister, said the relationship between Ghana and France would continue to grow from strength to strength, recalling the visit by President John Mahama to France.

Nigeria: AFC co-arranges $215m financing for Ughelli Power
Africa Finance Corporation (AFC) in conjunction with some Nigerian banks has provided a USD 215 million debt financing facility for the acquisition of Ughelli Power Plc.
Ughelli Power Plc is a gas fired thermal power plant acquired by Transnational Corporation of Nigeria Plc (Transcorp) in the first round of the Federal Government of Nigeria’s privatisation of power generation assets formerly owned by the Power Holding Company of Nigeria (PHCN). Ughelli Power Plc was incorporated in 2005, is situated in Delta State and has an installed capacity of approximately 900MW.
AFC, a multilateral finance institution established in 2007, was created to address the infrastructure investment deficit and as an African private sector investment solution, to drive economic growth and industrial development in Africa.
Commenting on the deal, Andrew Alli, President & CEO of AFC, said “AFC’s long term vision is to help address Africa’s infrastructure deficit and ensure sustainable economic growth for the continent. Growth of the Nigerian economy cannot be fully realised without an efficient and functioning power sector. Power is one of AFC’s high priority sectors for investment, and arguably Africa’s most significant need.

Ghana: WB committed to strengthening partnership
The World Bank says it is committed to strengthening its partnership with Ghana. According to the Bank, the architectural work of its new office in Accra, underscores its determination to continue with its pursuit of openness and accountability in its dealings with Ghana.
These assurances were given by Yusupha Crookes, World Bank Resident Representative in Ghana, during the commissioning of the Bank’s new office, located off the Independence Avenue, Accra. “I see the new building as a partial materialization of the Bank’s commitment to work as one institution and as a strong statement of dedication to our partnership with Ghana. The transparent glass exterior should be seen as our invitation to our clients, government and the general public to expect not only more efficient, one-stop service, but also to expect a more open, frank and accountable World Bank Group.”
The IFC Vice President for Sub-Saharan Africa, Latin America and the Carribean, Jean-Phillipe Prosper observed that the World Bank had provided more than $8 billion in funding to help the Government of Ghana to deliver services and build institutions. Similarly, the IFC had provided private sector investment of more than $2 billion within the past two fiscal years.

Africa: China’s investment in Africa increases 20.5% annually
China has been striving to enhance the investment in and financial cooperation with African countries, to improve the quality and level of China-Africa cooperation. China’s direct investment in Africa increased from 1.44 billion U.S. dollars to 2.52 billion U.S. dollars, with an annual growth of 20.5 percent from 2009 to 2012, says the paper on Sino-Africa economic and trade cooperation published by the Information Office of the State Council.
Currently, over 2,000 Chinese enterprises have invested in more than 50 African countries and regions, covering the industries such as traditional agriculture, mining, construction, resource product processing, industrial manufacturing, finance, commercial logistics and real estate.
By the end of 2012, China had signed bilateral investment treaties (BIT) with 32 African countries, and established joint economic commission mechanisms with 45 African countries.
At the 4th FOCAC Ministerial Conference in 2009, China announced the establishment of a special loan for small and medium-sized African businesses, of which the contract loans totalled 1.03 billion U.S. dollars by the end of 2012, with 666 million already granted. As a key investment sector, China’s manufacturing enterprises had directly invested 1.33 billion U.S. dollars in the 2009-2012 period towards African countries, including Mali, Ethiopia and other countries lack in resources.
Meanwhile, African enterprises started increasing the investment in China as Africa’s economic growth strengthened recently. Africa’s direct investment in China stood at 14.24 billion U.S. dollars by the end of 2012, up 44 percent from 2009.

Ghana: India-Ghana trade hits record $1.2b
Trade between India and Ghana has crossed the $1 billion mark, reaching $1.2 billion at the end of 2012, an increase of over 63 percent over the previous year. India’s exports to Ghana stood at about $800 million against imports of about $404 million.
A statement from the Indian High Commission said, “For the first time, the total trade between the two countries has crossed $1 billion and there exists much more potential to take the India-Ghana commercial engagement further to mutual advantage”.
The statement said India’s export strategy is aimed at helping Ghana establish developmental projects with a combination of investments, grants and loans, complemented by projects and exports to provide inputs for these projects and not to dump cheap products. It said these projects are undertaken under proposals authored by the Ghana government, according to its own development priorities, adding, “Where technology and knowledge-based items such as pharmaceuticals are exported from India, these are meant to bring down the cost of life-saving drugs and equipment.
The statement said India has so far extended and approved $230 million in credit lines to support various projects in Ghana including the construction of the Flagstaff House Presidential Palace, establishment of a Foreign Policy Training Institute and financing a rural electrification project. Other projects, it said, are the supply of agricultural and irrigation equipment, a fish processing plant and supply of waste management equipment.

Nigeria: Nigerian billionaire Aliko Dangote to borrow $3.3 billion for refinery project
Dangote Group, the West African conglomerate founded by Africa’s richest man, Aliko Dangote, has announced plans to borrow an additional $3.3 billion to invest in a $9 billion oil refinery and petrochemical complex in Nigeria.
According to a company official, a consortium of local and foreign banks will finance the project. The Dangote Group and the consortium of financial institutions will officially sign the term loan agreements on Wednesday, September 4.
The refinery, which will be located at the Olokola Liquefied Natural Gas (OKLNG) Free Trade Zone in Nigeria’s southwest region, will be Nigeria’s first private and Africa’s largest petroleum refinery, with a projected daily production output of 400,000 barrels a day. The refinery is expected to decrease Nigeria’s dependence on oil imports and boost Aliko Dangote’s fortune significantly in the medium to long term.
The refinery is expected to be fully operational by 2016.

Ghana: John Mahama remains President, Supreme Court affirms
The Supreme Court has upheld the validity of President John Mahama’s election as President of the Republic of Ghana, a decision of the court pronounced moments ago has affirmed.
Justice William Atuguba, presiding, read the decision as the parties sat attentively in open court.

Ghana: Producer price inflation drops
Ex-factory prices reduced from the 7 percent recorded in July 2012 to 5 percent in July 2013 year-on-year, representing a decrease of 2.0 percentage points.
According to Government Statistician, Dr Philomena Nyarko, who officially launched the producer price index (PPI) for July 2013, the month-on-month change in producer prices between June 2013 and July 2013 was also -0.5 percent.
Dr. Nyarko said the producer price inflation in the Mining and Quarrying subsector decreased substantially by 11.7 percent. She noted that producer price inflation for the manufacturing sector which constitutes more than two-thirds of total industry increased to 10.9 percent from a rate of 10.6 percent in June this year, adding that the rate for the utilities sub-sector decreased marginally by 0.39 percentage points in July 2013.

Ghana: Public debt stock up by 39.8 percent
Ghana public debt stock has increased by 39.8 percent over the 12 month period ended June 2013. The figures from the Central Bank show that cumulatively, the stock of total public debt stood at GH¢39,053.3 million representing 43.9% of Gross Domestic Product (GDP) at the end of June 2013. This represents an increase of 39.8 per cent over the GH¢27,942.6 million recorded at the end of June 2012. Of the total public debt, domestic debt constituted 53.4 per cent and external debt 46.6 per cent.