Anouar Chaouch

Gil Seong Kang

Hee-Sik Kim

English

Research Papers in Economics

        The African Development Bank Group 
      Chief Economist Complex 
  
 
 
 
 
 
 
 
 
   
 
 
 
 
Contents: 
1.  Market Commentary 
 
  1.1 Stock Markets 
  1.2 Commodity Markets 
  1.3 Exchange Rates 
 
2.  Regional Developments 
 
3.  Countries in Focus 
 
4.  Development 
Partnerships 
 
5.  Summary 
 
 
 
 
 
 
 
 
1.  Market Commentary 
 
1.1  Stock Markets  
 
During  the  week  of  27  September  –  1 
October 2010, most African stock markets 
rose, alongside strong commodity markets, 
a  weak  U.S.  dollar,  and  an  optimism 
bolstered  by a  higher-than-estimated 
consumer  spending  in  the  U.S.  Ghana 
recorded  the  largest  gain  of  4.2%.  Some 
moderate gains of between 0.9% and 1.9% 
were  registered  in  Morocco,  Kenya, 
Uganda,  Nigeria,  Côte  d’Ivoire,  Tunisia, 
and South Africa. The two markets which 
recorded  declines  were  Egypt  and 
Mauritius, which posted losses of 1.3% and 
1.1%, respectively.   
 
Equity Focus 
 
Ghana: The All Share Index rose by 4.2% 
over  the  week,  driven  by  gains  of  bank 
stocks. Particularly, the shares of Ecobank 
Ghana  Limited  (+12.5%)  and  Ghana 
Commercial Bank (+7%) rose substantially 
on  hopes  that  banking  stocks  will  post 
strong results for the third quarter. 
 
Egypt: The CASE 30 Index fell by 1.3% 
during the week, dragged down by reports 
of  the  Algerian  government  imposing 
further  retrospective  taxes  on  Djezzy,  the 
Egypt-based mobile operator and Orascom 
Telecom’s  subsidiary  in  Algeria.  Orascom 
Telecom reported  that  it  has  received 
notification  from  the  Algerian 
authorities that Djezzy owes an extra USD 
230 million on top of the USD 600 million 
fines and back taxes it has already paid. 
 
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude  oil  rose  by  8.9%  to  USD  81.6,  a 
fresh seven-week high after stronger-than-
expected U.S. and Chinese economic data 
raised  hopes  of  demand  recovery  in  the 
world's largest markets.  
 
Gold: The price of gold rose in a steady 
upward trend on the back of a weak US 
dollar. The weekly gains, however, were 
reduced to 1.5% from 4% in the previous 
week, affected by the improving data on 
the global economic strength. 
 
 
1.3  Exchange Rates 
 
Most  African  currencies  strengthened 
against the US dollar, which fell vis-à-vis 
the Euro and Japanese Yen. The Euro hit a 
five-month  high  against  the  US  dollar 
after  upbeat  Chinese  economic  data 
increased demand for riskier assets, while 
the US dollar weakened due to investors’ 
speculation on a further monetary easing 
by  the  U.S.  Federal  Reserve.  Among 
African  currencies,  the  Guinea  Franc 
registered  the  largest  appreciation  of 
14.5%  against  the  US  dollar,  partly 
offsetting  the  previous  week’s 
depreciation of 23.6%.  
 
Market Brief 
Volume1, Issue 39 
8 October, 2010 
 
Africa Economic & Financial Brief 
For the period 27 September – 1 October, 2010 
Prepared by the following staff:  Gilseong Kang (g.kang@afdb.org, Tel 216 7110 2524), Hee-Sik Kim 
(h.kim@afdb.org, Tel 216 7110 2689); Chaouch Anouar  ( a.chaouch@afdb.org , Tel +216 7110  3989).  
Abdul B. Kamara (a.b.kamara@afdb.org), Manager, Research Division, supervised the work.  
 
 
  Mthuli Ncube 
  m.ncube@afdb.org 
  +216 7110 2062 
 
  Charles Leyeka Lufumpa 
  c.lufumpa@afdb.org 
  +216 7110 2175 
 
  Leonce Ndikumana 
  l.ndikumana@afdb.org 
  +216 7110 2076 
  
 
 
“In Ghana, Fitch 
Ratings has revised 
Ghana's outlook to 
stable from negative 
following the 
economic 
stabilization through 
tight monetary and 
fiscal policy and the 
imminent start of oil 
production. …”a 
year earlier, due to 
an increase in 
tourism earnings…” 
 
The  Gambian  Dalasi,  CFA  Franc,  and 
Comoros  Franc  recorded  appreciations  of 
between 2% and 2.6%. All other currencies 
posted minor gains in value of less than 2% 
against  the  US  dollar.  The  exceptions 
include the currencies of Nigeria, Zambia, 
Angola,  and  Ethiopia  which  recorded 
marginal  depreciations  of  less  than  0.5% 
and the New Metical of Mozambique which 
remained unchanged.  
 
 
2.   Regional Developments 
 
Southern Africa: The Board of Directors 
of  the  African  Development  Fund  (ADF) 
approved a USD 95.6 million loan to fund 
the Nacala Corridor Phase II Road project 
(NCRP)  in  Zambia.  The  NCRP  aims  at 
promoting  economic  growth  and  regional 
integration  within  the  Southern  African 
Development Community (SADC) through 
a  reliable  and  efficient  transport 
infrastructure to improve sub-regional trade 
and  the  region's  overall  competitiveness. 
The NCRP covers over 1,00km of roads in 
Zambia, Malawi and Mozambique and two 
border posts.  
 
 
3.  Countries in Focus 
 
Angola: Foreign exchange reserves rose to 
USD 15.8 billion in August 2010 from USD 
15.3  billion  in  the  previous  month.  The 
country  stocked  up  the  foreign  reserves, 
helped  by  the  increases  in  prices  and 
exports  of  crude  oil,  which  is  the  major 
source of its foreign exchange earnings. 
 
Burundi: The Tea Board expects revenues 
from  its  tea  exports  to  rise  to  USD  24 
million, a 50% increase from 2009, due to 
higher export volumes. In 2009, the country 
earned USD 16 million from the exports of 
7,000 tonnes, which is expected to increase 
to 7,500 tonnes for 2010. 
 
Côte d’Ivoire: The International Monetary 
Fund  (IMF)  announced  that  Cote  d’Ivoire 
has  met  all  but  one  of  the  conditions  for 
completing  an  IMF  and  World  Bank 
program of $3 billion debt relief under the 
Heavily Indebted Poor Countries scheme. 
The  exception  related  to  delays  in 
implementing  cocoa  sector  reforms 
consisting of changing the tax regime and 
restructuring  the  cocoa  authorities.  The 
Republican  President  has  vowed  to 
complete  cocoa  reforms  as  soon  as  the 
polls scheduled on October 31 are over. 
 
Djibouti:  Annual  inflation  rate  rose  to 
5.1% in September 2010 from 2.8% in the 
previous  month,  pushed  by  higher  food 
prices.  Food  prices  rose  by  2.3%  in 
September compared with August, due to 
higher costs of meat, fish, fresh fruit and 
vegetables.  
Egypt:  The  Investment  Minister  has 
announced  that  the  country  is  close  to 
completing a new legal framework for its 
secondary market for bonds, while taking 
other measures to improve bond trading. 
The  measures  include  a  plan  to  allow 
non-Egyptian  organizations  such  as  the 
World  Bank,  International  Financial 
Corporation,  and  AfDB  to  issue  bonds 
denominated in Egyptian pounds so that 
local  currency  bond  markets  can  be 
deepened.  
Ghana:  The  Government  raised  cocoa 
producer prices for the 2010-11 season by 
a third to 3,200 Cedis (USD 2,200) per 
tonne.  The  move  was  intended  to 
discourage  smuggling  of  cocoa  to 
neighboring West African states. 
 
Fitch Ratings has revised Ghana's outlook 
to  stable  from  negative  following  the 
economic  stabilization  through  tight 
monetary  and  fiscal  policy  and  the 
imminent  start  of  oil  production.  The 
agency has also affirmed Ghana's Long-
term  foreign  and  local  currency  Issuer 
Default Ratings (IDR) at 'B+' and Short-
term foreign currency IDR at 'B'. 
 
 
 
 
“In Djibouti: Annual 
inflation  rate  rose  to 
5.1%  in  September 
2010  from  2.8%  in 
the  previous  month, 
pushed  by  higher 
food prices … ” 
 
   Africa Economic & Financial Brief: 27 September – 1 October 2010                                                            Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kenya:  The  current  account  swung  into  a 
surplus  of 15.5 billion shillings  (USD 180 
million)  in  the  first  half  of  2010  from  a 
deficit  of  54  billion  shillings  (USD  640 
million) a year earlier, due to an increase in 
tourism earnings. However, the trade deficit 
widened  by  17%  to  242  billion  Kenya 
shillings (USD 2.9 billion) during the same 
period, due partly to an increase in imports. 
  
Mauritius: The Bank of Mauritius reduced 
its benchmark lending rate by 1 percentage 
point, citing a risk of a significant economic 
slowdown next year and a benign inflation 
outlook.  The  central  bank  added  that  the 
move signaled a major shift in its monetary 
policy stance. 
 
The unemployment rate fell to 7.6% during 
the second quarter of 2010 from 8.3% in the 
same period a year earlier. Even though the 
global economic downturn has hurt demand 
for tourism and key export sectors such as 
textiles,  two  stimulus  packages  and  an 
aggressive  easing  of  monetary  policy  have 
helped the economy weather the crisis. 
 
Morocco: The Government is reviewing the 
issuing of Eurobonds, following a three-year 
gap, as a 1 billion Eurobond with a 10-year 
tenure was oversubscribed. Bids totaled 2.3 
billion Euros.  
 
The  Government  reported  that  Morocco's 
economic  growth  slowed  to  3%  in  the 
second  quarter this  year from  4.2%  in the 
same  period  of  last  year  due  to  the 
slowdown  in  the  agriculture  sector.  The 
economic  activity  saw  a  rise  in  non-
agricultural GDP of 4.8% compared to the 
same period in 2009, and a 7.6% decline in 
the agricultural value added. 
 
South  Africa: The country recorded a big 
jump  in  weekly  yellow  maize  exports 
boosted by sales to South Korea and Kuwait, 
while maize futures ended lower in line with 
international  prices.  The  country,  which  is 
the  continent's  biggest  maize  producer, 
exported 94,200 tonnes of yellow maize in 
the  week  to  September  24,  compared  to 
5,300 tonnes in the previous week.  
 
 
 
 
 “In Kenya, the current 
account swung into a 
surplus of 15.5 billion 
shillings (USD 180 
million) in the first half 
of 2010 from a deficit 
of 54 billion shillings 
(USD 640 million) a 
year earlier…” 
4.   Development Partnerships 
 
Botswana-AfDB: The Bank Group Board of 
Directors approved a USD 25 million equity 
investment  to  support  the  Summit 
Development Group Fund (SDG), a 10-year 
first  generation  private  equity  fund 
registered  in  Botswana.  The  SDG  Fund  is 
seeking to raise USD 125 million in capital 
commitments to make equity investments in 
financial  institutions  with  growth  potential 
in  Sub-Saharan  Africa  and  a  focus  on 
lending  to  SMEs,  the  un-banked  and  the 
under-banked. 
 
The  EU  –  Zimbabwe:  Zimbabwe  will 
receive  a  130  million  Euro  loan  from  the 
10th  European  Development  Fund.  In 
addition,  the  European  Commission 
announced  that  a  complementary  envelope 
of 8.6 million Euros would be available to 
Zimbabwe to cover unforeseen needs such 
as emergency assistance. 
 
Iran – Senegal: To cultivate an international 
presence, Iran Khodro - Iran's biggest auto 
manufacturing  company  -  has  planned  to 
inaugurate a car production plant in Senegal. 
Iran's state owned Iran Khodro is the largest 
carmaker  in  the  Middle  East,  Central  Asia 
and North Africa with an annual production 
of more than 1 million vehicles of various 
models including cars, trucks, minibuses and 
buses.  
 
5.  Summary 
 
During  the  week  of  27  September  –  1 
October  2010,  most  African  stock  and 
currency  markets  rallied,  partly  reflecting 
heightened commodity prices and enhanced 
risk  appetite  of  investors.  Favorable 
developments observed in Africa during the 
week  include  an  increase  in  foreign 
exchange  reserves  in  Angola,  improved 
sovereign credit rating outlook in Ghana, a 
switch  of  current  account  from  deficit  to 
surplus in Kenya, and oversubscription of a 
Eurobond  issue  by  Morocco.  However, 
challenges  also  emerged,  including  a 
substantial increase in inflation in Djibouti, 
a  decline  in  agricultural  value  added  in 
Morocco,  and  a  significant  economic 
slowdown expected in Mauritius.    
   
 
“The AfDB Board of 
Directors approved a 
USD 25 million equity 
investment to support 
the Summit 
Development Group 
Fund (SDG), a 10-
year first generation 
private equity fund 
registered in Botswana   
…” 
  
 
    Africa Economic & Financial Brief: 27 September – 1 October 2010                                                            Page 3 
 
 
 
 
   
 
   Appendix Table 1: Stock market movements – Week ending on 1 October, 2010 
Côte d'Ivoire BRVM Composite Index BRVM CI 6,577 ▲ 1.66 ▲ 0.86 ▲ 18.5
Egypt* CASE 30 Index CASE30 18,739 ▼ -1.28 ▲ 2.91 ▲ 6.9
Ghana Ghana All Share GSE 13,625 ▲ 4.18 ▼ -1.84 ▲ 24.7
Kenya Nairobi SE Index- NSE 20 NSE 20 13,944 ▲ 1.19 ▲ 0.70 ▲ 42.7
Mauritius Mauritius AllShares SEMDEX 5,099 ▼ -1.10 ▼ -0.89 ▲ 5.2
Morocco Casa All Share Index MASI 14,624 ▲ 0.91 ▲ 0.29 ▲ 13.2
Nigeria NGSE All Share Index NGSE 35,745 ▲ 1.59 ▼ -1.33 ▲ 10.7
South Africa All Share Index JALSH 689,652 ▲ 1.92 ▲ 1.06 ▲ 5.8
Tunisia Tunis se Tnse Index STK TUNINDEX 7,533 ▲ 1.71 ▲ 0.41 ▲ 32.3
Uganda* Uganda SE All Share index USE 4,989.8 ▲ 1.45 ▲ 0.76 ▲ 52.6
Others
USA Dow Jones Industrial DJ Index 3,459,268 ▲ 1.57 ▲ 0.51 ▲ 3.9
France CAC 40 Index CAC40 901,959 ▼ -0.09 ▼ -0.71 ▼ -6.2
Japan Nikkei 225 Index N225 2,280,093 ▼ -0.71 ▼ -1.60 ▼ -10.8
Dec 31 - Sep 24
Market 
Capitalization  
(USD, million)               
(01-10-2010)
Year-to-date % 
Change
Weekly % change                    
( 01-10-2010)
Week under 
review
Previous week
Region/Country Index Name Index Code
Stock Markets
 
* Value at end of 30 September, 2010 
 
 
 
    Africa Economic & Financial Brief: 27 September – 1 October 2010                                                            Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 1 October, 2010 
Africa 
Algeria Algerian Dinar DZD ▲ 0.36 ▲ 1.07 ▼ -2.4
Angola New Kwanza AON ▼ -0.18 ▼ -1.00 ▼ -2.8
Botswana Pula BWP ▲ 1.10 ▲ 0.70 ▲ 1.3
Burundi Burundi Franc  BIF ▲ 0.37 ▲ 0.09 ▲ 1.4
Cape Verde Escudo  CVE ▲ 0.62 ▲ 2.66 ▼ -9.5
Comoros Comoros Franc  KMF ▲ 2.00 ▲ 2.17 ▼ -4.9
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 1.41 ▼ -0.08 ▼ -10.5
Djibouti Djibouti Franc  DJF ▲ 0.72 ▼ -0.08 ▼ -1.8
Egypt Egyptian Pound  EGP ▲ 0.19 ▲ 0.06 ▼ -3.6
Ethiopia Birr  ETB ▼ -0.04 ▲ 0.04 ▼ -22.5
Gambia. The Gambian Dalasi  GMD ▲ 2.59 ▲ 9.10 ▼ -0.9
Ghana New Cedi  GHS ▲ 0.52 ▼ -0.25 ▲ 0.8
Guinea Guinea Franc  GNF ▲ 14.53 ▼ -23.64 ▼ -22.4
Kenya Kenyan Shilling  KES ▲ 0.33 ▼ -0.27 ▼ -6.2
Liberia Liberian Dollar  LRD  ▲ 0.07 ▼ -0.75 ▼ -4.1
Libya Libyan Dinar  LYD ▲ 1.22 ▲ 0.68 ▼ -0.7
Madagascar Ariary  MGA ▲ 0.34 ▼ -0.74 ▼ -2.9
Malawi Kwacha  MWK ▲ 1.67 ▼ -1.64 ▼ -3.2
Mauritania Ouguiya  MRO  ▲ 0.06 ▼ -0.05 ▼ -8.1
Mauritius Mauritius Rupee  MUR  ▲ 1.13 ▲ 1.21 ▲ 0.3
Morocco Dirham  MAD ▲ 1.55 ▲ 1.59 ▼ -4.0
Mozambique New Metical  MZN ▲ 0.00 ▼ -2.75 ▼ -24.2
Nigeria Naira  NGN ▼ -0.46 ▼ -1.64 ▼ -2.7
Rwanda Rwandan Franc  RWF ▲ 0.72 ▼ -0.20 ▼ -2.3
São Tomé & Príncipe Dobra  STD ▲ 1.83 ▲ 3.11 ▼ -12.1
Seychelles Seychelles Rupee  SCR ▲ 0.71 ▼ -0.13 ▼ -9.3
Sierra Leone Leone  SLL ▲ 1.85 ▼ -0.59 ▼ -1.3
Somalia Somali Shilling  SOS ▲ 0.21 ▲ 0.96 ▼ -6.7
South Africa Rand  ZAR ▲ 1.14 ▲ 1.03 ▲ 6.1
Sudan Sudanese Pound  SDG ▲ 0.04 ▼ -0.02 ▼ -2.0
Tanzania Tanzanian Shilling  TZS ▲ 1.42 ▲ 0.17 ▼ -10.5
Tunisia Tunisian Dinar  TND ▲ 1.41 ▲ 1.14 ▼ -6.8
Uganda Uganda Shilling  UGX ▲ 0.53 ▼ -0.02 ▼ -14.7
Zambia Zambian Kwacha  ZMK ▼ -0.25 ▲ 0.62 ▼ -3.5
CFA zone Countries CFA Franc XOF ▲ 2.38 ▲ 1.89 ▼ -4.7
Others
Europe Euro EUR ▲ 2.04 ▲ 2.24 ▼ -5.0
Japan Yen JPY ▲ 1.24 ▲ 1.39 ▲ 10.6
Weekly % change                    
( 01-10-2010)
Year-to-date % 
Change
Previous week
Exchange Rates (currency per US$)
Region/Country Currency Name
Week under 
review
Dec 31 -Oct 01
Currency 
Code
 
 
   Source: AfDB Statistics Department, September 2010 
 
    Africa Economic & Financial Brief: 27 September – 1 October 2010                                                            Page 5 
 
 
 
 
  

Market Brief-Africa Economic Financial Brief 27-1 October 2010

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Market Brief-Africa Economic Financial Brief 27-1 October 2010

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Research Papers in Economics