Anouar Chaouch

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 11 – 15 October 2010, 
most  African  stock  markets  rallied 
alongside stock markets in Europe and the 
United  States.    The  latter  rose  on 
expectations that the U.S. Federal Reserve 
would  provide  additional  monetary 
stimulus in the near term. Among African 
stock  markets,  those  in  Nigeria  and 
Mauritius  led  the  winners,  recording 
substantial  appreciations  of  5.5%  and 
4.1%,  respectively.  The  stock  markets  in 
Uganda,  Côte  d’Ivoire,  and  South  Africa 
registered moderate gains of between 1.4% 
and  2.5%  while  those  in  Ghana,  Kenya, 
and  Egypt  posted  marginal  gains  of  less 
than 0.6%. In contrast, the stock market in 
Tunisia declined by 2.4%.  
 
Equity Focus 
 
Nigeria: The Nigeria Stock Exchange All-
share Index rose by 5.5% over the week. 
The  appreciation  was  led  by  the  food, 
beverages, and tobacco subsector. On the 
other  hand,  trade  volume  increases  were 
most prominent in the banking subsector. 
In  particular,  the  shares  of  Access  Bank, 
UBA, and First City Monument Bank were 
heavily traded. 
 
Tunisia: The Tunis Stock Exchange Index 
fell by 2.4% over the week, continuing the 
previous  week’s  decrease.  The  recent 
declines of the Index reflected in part the 
planned  replacement  of  the  zero  tax  on 
export  activity  income  with  a  10%  tax 
from January 1, 2011.  
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude oil fell by 1.7% to USD 81.30 per 
barrel  over  the  week.  The  decline  was 
driven  by  the  U.S.  Energy  Department’s 
report on a decrease in fuel consumption 
to the lowest level since November 2009 
and  a  decline  in  the  capacity  utilization 
rate  of refiners to  81.9%, i.e. the lowest 
level since March 2010, as units closed for 
maintenance before demand for the winter 
season picks up. 
 
Commodities: Despite the decline of crude 
oil  prices,  the  Standard  &  Poor’s  GSCI 
Index of 24 raw materials headed for an 
eighth  straight  weekly  gain,  the  longest 
streak  since  1996,  on  speculation  that  a 
weaker  dollar  will  boost  the  appeal  of 
metals,  grains,  and  energy  as  alternative 
investments.  Gold  and  tin  climbed  to 
record highs; silver rose to a 30-year high; 
and cotton reached an all-time high during 
the week.  
 
1.3  Exchange Rates 
 
The  majority  of  African  currencies 
strengthened against the US dollar, which 
slumped  on  speculation  that  the  Federal 
Reserve will buy more assets to spur the 
U.S. economy.  
 
Market Brief Market Brief Market Brief Market Brief    
Volume1, Issue 41 
22 October, 2010 
Africa Economic & Financial Brief    
For the period 11 – 15 October, 2010 
Prepared by the following staff:  Hee-Sik Kim (h.kim@afdb.org, Tel 216 7110 2689); Chaouch Anouar  
( a.chaouch@afdb.org , Tel +216 7110  3989).  Peter Walkenhorst (p.walkenhorst@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 
 
  Léonce Ndikumana 
  l.ndikumana@afdb.org 
  +216 7110 2076 
  
 
 
 
 
 
 “In  Kenya,  Diamond 
Trust  Bank,  a 
commercial  bank 
specializing  in  SME 
lending  realized  net 
profit  of  16.2%  over  the 
third quarter of the year 
…” 
 
Twenty-two African currencies, appreciated 
against  the  US  dollar  in  the  inter-bank 
foreign  exchange  markets.  The  largest 
appreciation of 3.2% was observed for the 
Zambia Kwacha, followed by the Sao Tomé 
&  Principe  Dobra  and  the  South  African 
Rand, which registered substantial gains of 
2.5% and 1.3%, respectively. On the other 
hand,  thirteen  African  currencies 
depreciated,  with  those  of  Sierra  Leone, 
Tanzania,  and  Sudan  posting  substantial 
reductions  in  value  ranging  from  1.5%  to 
1.9% against the US dollar. Meanwhile, the 
currencies  of  Kenya,  Egypt,  Cape  Verde, 
Rwanda,  DRC,  Djibouti,  Guinea,  and 
Ethiopia  remained  stable  against  the  US 
dollar, fluctuating by less than ±0.1% over 
the week. As for  year-to-date changes, the 
South African Rand stood out, recording the 
largest appreciation of 9.1% vis-à-vis the US 
dollar,  mainly  due  to  portfolio  capital 
inflows  through  the  bond  markets.  The 
inflows in the nine months to September this 
year exceeded USD 13 billion. 
 
2.   Regional Developments 
 
Africa: An analysis from Frost & Sullivan, 
an annual renewable energy project tracker, 
forecasts that the African renewable energy 
(RE)  market  will  experience  exponential 
growth  with  governments  in  the  region 
announcing  new  RE  projects  on  a  regular 
basis.  The  early  projects  include  several 
wind projects in North Africa that will be 
operational  in  2010.  Besides,  the  off-grid 
solar power market in Sub-Saharan Africa 
is  expected  to  grow  at  more  than  10  % 
annually between 2009 and 2015. However, 
the  Report  argues  that  the  slow  pace  of 
introducing renewable energy feed-in tariff 
laws and continued state monopoly utilities 
are major impediments to progress.  
East  Africa: Diamond Trust Bank  (DTB), 
whose shareholders include the International 
Finance  Corporation  (IFC),  has  secured 
USD 26 million of long-term funding. The 
IFC  expects  the  funds  to  enhance  DTB's 
capacity  to  support  the  small  and  medium 
enterprise (SME) sector by providing long-
term credits in Kenya and trade financing in 
Tanzania  and  Uganda.  DTB  Tanzania  and 
DTB  Uganda  signed  separate  trade  finance 
guarantee agreements of USD 3 million each 
to  increase  the  trade  finance  instruments 
issued on behalf of SMEs that import goods 
into East Africa. The bank’s performance has 
been  bolstered  by  the  expansion  and 
resilience of SMEs, which account for 70 % 
of its business. DTB Kenya’s net profit rose 
by 16.2 % to KES 901 million (about $11.2 
million)  over  the  third  quarter  of  the  year. 
DTB plans to continue expanding across East 
Africa,  from  the  current  57  to  nearly  70 
branches by the end of the year and over 100 
by 2013. The expansion of the bank stands in 
contrast to other commercial banks in Kenya 
whose net lending to households declined by 
KES 31.4 billion (about USD 387.5 million) 
in the year to August. 
3.  Countries in Focus 
Angola:  The  Government  forecasts  the 
economy  to  grow  by  4.5  %  this  year,  a 
substantial reduction from their forecast three 
months ago of  9.7 %. This  correction is in 
part due to the start of paying up to USD 9 
billion of unpaid bills to foreign construction 
companies,  of  which  the  Government  has 
paid USD 2.7 billion so far.  
Botswana:  The  trade  account  swung  into 
surplus for the first time in 20 months in June 
as  sales  of  diamonds  rose  significantly.  
Apart  from  this  positive  development, 
Government Officials expect the economy to 
grow by about 4.5 % this year, significantly 
slower  than  the  International  Monetary 
Fund's estimate of 8.4 %.  
Côte  d’Ivoire:  Aggreko,  a  provider  of 
temporary  power  and  temperature  control 
services, has transferred a gas-fuelled 70 MW 
rental power plant to the Societé de Gestion 
du  Patrimoine  du  Secteur  de  l'Electricite 
(SOGEPE)  and  the  Societé  d'Operation 
Ivoirienne  d'Electricité  (SOPIE).  The  power 
plant  has  been  provided  as  a  turn-key 
package,  with  Aggreko  having  designed, 
mobilized,  and  installed  90%  of  power 
capacity  by  June  2010,  that  is  within  two 
months of contract signature.  
 
“In  Botswana,  the 
trade  account  swung 
into  surplus  for  the 
first  time  in  20 
months  in  June  as 
sales  of  diamonds 
rose… ” 
 
   Africa Economic & Financial Brief: 11 – 15 October 2010                                                                                             Page 2 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liberia:  Port  operator  APM  Terminals,  a 
unit of Danish shipping and oil group A.P. 
Moller-Maersk,  announced  the  conclusion 
of  a  25-year  concession  agreement  to  run 
the Port of Monrovia in Liberia. It expects 
the  port's  privatization  to  result  in 
investment  of  USD  120  million  in  the 
facility over the course of the contract term.  
Namibia:  Namibia's  commercial  banks 
have agreed to cut lending costs by reducing 
the spread between their prime interest rates 
and the central bank's repo rate by 100 basis 
points  to  3.75  percentage  points,  as 
demanded  by  the  government.  Namibia's 
main  banks  are  local  units  of  neighboring 
South  Africa's  four  big  lenders:  Standard 
Bank, Nedbank, FirstRand, and FNB. 
Nigeria: The Government has approved the 
privatization  of  the  USD  2.5  billion  state 
telecommunications  company, NITEL. The 
winning  bidder  was  the  New  Generation 
Telecommunications  Consortium  including 
a  unit  of  China  Unicom,  Dubai-based 
Minerva, and a Nigerian firm, GiCell.  
The Central Bank of Nigeria remarked that 
five or six of the Nigerian banks rescued in a 
USD  4  billion  bailout  last  year  would 
announce  acquisition  negotiations  with 
potential suitors. It also expects that the state 
asset  management  company  AMCON,  set 
up  to  purchase  non-performing  loans  and 
chase  the  recovery  of  bad  loans,  would 
begin purchasing assets in the next two to 
three weeks. 
Rwanda:  Consumer  prices  fell  by  0.4% 
year-on-year in September compared with a 
fall  of  1.4  %  in  August.  Inflation  in 
neighboring  Kenya,  Uganda  and  Tanzania 
has  also  been  benign  this  year  after  food 
harvests rose following good rains.  
The  Government  announced  that  the 
economy expanded by 9.4 % in the second 
quarter of 2010 from a year earlier, driven 
by 15 % growth in services, after slowing to 
6.1 % in 2009 from 11.5 % in 2008.  
Sierra  Leone:  The  Government  expects 
new low-tax industrial zones will boost local 
processing of its natural resources. The first 
 
 “In  Rwanda,  prices 
fell  by  0.4  %  year-on-
year  in  September 
compared with a fall of 
1.4 % in August …” 
phase of the 54-acre Special Economic Zone 
at  Newton  outside  the  capital  Freetown  is 
scheduled for completion at the end of March 
2011. The Newton site will initially focus on 
processing  agricultural  products.  The 
Government plans at least three other zones at 
locations to be confirmed. 
South Africa: Japan's Nippon Telegraph and 
Telephone Corp  (NTT)  secured its  takeover 
of  South  Africa's  Dimension  Data,  a 
multinational  IT  services  provider,  when 
holders of 93.4 % of the shares accepted its 
cash  offer.  NTT  announced  the  USD 
3.2 billion deal agreed in July in a move to 
increase its presence in emerging markets in 
Africa, South America and the Middle East.  
4.   Development Partnerships 
 
World Bank-Tunisia: Tunisia has received a 
USD 206 million loans from the World Bank 
to fund water, environmental and job-creation 
projects.  
 
EIB-AfDB-Cape  Verde:  The  European 
Investment  Bank  and  African  Development 
Bank agreed to provide € 45million to design, 
build and operate onshore wind farms on four 
islands  in  the  Cape  Verde  archipelago.  The 
project will provide over 28MW of electricity 
generating capacity and help the island reach 
an ambitious target of ensuring that 25% of 
local  power  needs  are  provided  from 
renewable energy sources by 2012 and 50% 
by 2020.  
 
5.  Summary 
 
During the week of 11 – 15 October 2010, 
most African stock markets and the majority 
of the currencies rallied alongside the Euro. 
Favorable  developments  over  the  week 
include  growth  acceleration  in  Rwanda,  a 
shift  in  the  trade  balance  to  a  surplus  in 
Botswana,  the  launch  of  renewable  energy 
projects  in  Cape  Verde,  foreign  direct 
investment  following  privatization  of  port 
infrastructure in Liberia, the near completion 
of  the  Special  Economic  Zone  in  Sierra 
Leone,  and  the  imminent  privatization  of 
restructured  banks  in  Nigeria.  On  the  other 
hand,  negative  developments  include 
downward adjustment of growth forecasts in 
Angola and Botswana.  
 
 
 
“In  Nigeria,  the 
Government  has 
approved  the 
privatization of the USD 
2.5  billion  state 
telecommunications 
company, NITEL ….” 
  
 
    Africa Economic & Financial Brief: 11 – 15 October 2010                                                                                             Page 3 
  
 
   Appendix Table 1: Stock market movements – Week ending on 15 October, 2010 
 
Côte d'Ivoire BRVM Composite Index BRVM CI 6,882 ▲ 1.52 ▼ -0.35 ▲ 19.9
Egypt* CASE 30 Index CASE30 19,419 ▲ 0.00 ▲ 3.69 ▲ 10.8
Ghana Ghana All Share GSE 13,650 ▲ 0.61 ▼ -3.71 ▲ 20.8
Kenya Nairobi SE Index- NSE 20 NSE 20 14,893 ▲ 0.12 ▼ -0.34 ▲ 42.4
Mauritius Mauritius AllShares SEMDEX 5,476 ▲ 4.09 ▲ 2.72 ▲ 12.5
Morocco Casa All Share Index MASI 15,462 ▲ 2.12 ▲ 0.31 ▲ 16.0
Nigeria NGSE All Share Index NGSE 39,777 ▲ 5.49 ▲ 3.13 ▲ 20.4
South Africa All Share Index JALSH 724,840 ▲ 1.41 ▲ 1.30 ▲ 8.7
Tunisia Tunis se Tnse Index STK TUNINDEX 10,555 ▼ -2.42 ▼ -2.69 ▲ 25.6
Uganda* Uganda SE All Share index USE 5,106.3 ▲ 2.50 ▲ 1.42 ▲ 58.6
Others
USA Dow Jones Industrial DJ Index 3,459,268 ▲ 0.51 ▲ 3.23 ▲ 6.1
France CAC 40 Index CAC40 901,959 ▲ 1.71 ▲ 1.83 ▼ -2.8
Japan Nikkei 225 Index N225 2,280,093 ▼ -0.92 ▲ 1.24 ▼ -9.9
Weekly % change                    
( 15-10-2010)
Year-to-date % 
Change
Region/Country Index Name Index Code
Previous week
Dec 31 - Oct 15
Market 
Capitalization  
(USD, million)               
(15-10-2010)
Week under 
review
Stock Markets
 
* Value at end of 14 October, 2010 
 
 
 
    Africa Economic & Financial Brief: 11 – 15 October 2010                                                                                             Page 4 
 Appendix Table 2: Exchange rate movements – Week ending on 15 October, 2010 
Africa 
Algeria Algerian Dinar DZD ▼ -0.85 ▲ 1.69 ▼ -1.6
Angola New Kwanza AON ▼ -0.19 ▼ -0.34 ▼ -3.3
Botswana Pula BWP ▲ 0.93 ▲ 1.42 ▲ 3.7
Burundi Burundi Franc  BIF ▼ -0.14 ▼ -0.27 ▲ 0.9
Cape Verde Escudo  CVE ▲ 0.08 ▲ 3.26 ▼ -6.5
Comoros Comoros Franc  KMF ▲ 0.25 ▲ 2.06 ▼ -2.7
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 0.01 ▼ -1.30 ▼ -11.7
Djibouti Djibouti Franc  DJF ▲ 0.00 ▼ -0.61 ▼ -2.4
Egypt Egyptian Pound  EGP ▲ 0.09 ▼ -0.09 ▼ -3.6
Ethiopia Birr  ETB ▼ -0.08 ▼ -0.02 ▼ -22.6
Gambia. The Gambian Dalasi  GMD ▼ -0.69 ▼ -5.38 ▼ -6.9
Ghana New Cedi  GHS ▼ -0.62 ▲ 0.31 ▲ 0.5
Guinea Guinea Franc  GNF ▼ -0.04 ▼ -9.33 ▼ -29.7
Kenya Kenyan Shilling  KES ▲ 0.09 ▲ 0.32 ▼ -5.8
Liberia Liberian Dollar  LRD  ▲ 0.69 ▲ 0.00 ▼ -3.4
Libya Libyan Dinar  LYD ▼ -1.84 ▲ 1.61 ▼ -1.0
Madagascar Ariary  MGA ▲ 0.15 ▲ 0.80 ▼ -2.0
Malawi Kwacha  MWK ▼ -0.22 ▲ 0.25 ▼ -3.1
Mauritania Ouguiya  MRO  ▲ 0.87 ▲ 0.52 ▼ -6.8
Mauritius Mauritius Rupee  MUR  ▲ 0.79 ▲ 0.86 ▲ 2.0
Morocco Dirham  MAD ▲ 0.65 ▲ 2.05 ▼ -1.4
Mozambique New Metical  MZN ▲ 0.28 ▲ 0.41 ▼ -23.7
Nigeria Naira  NGN ▲ 0.28 ▲ 2.00 ▼ -0.5
Rwanda Rwandan Franc  RWF ▲ 0.02 ▼ -0.16 ▼ -2.4
São Tomé & Príncipe Dobra  STD ▲ 2.48 ▲ 0.01 ▼ -9.9
Seychelles Seychelles Rupee  SCR ▲ 0.95 ▼ -0.03 ▼ -8.5
Sierra Leone Leone  SLL ▼ -1.93 ▼ -1.72 ▼ -4.8
Somalia Somali Shilling  SOS ▲ 0.11 ▼ -0.75 ▼ -7.3
South Africa Rand  ZAR ▲ 1.29 ▲ 1.47 ▲ 9.1
Sudan Sudanese Pound  SDG ▼ -1.47 ▲ 1.51 ▼ -2.0
Tanzania Tanzanian Shilling  TZS ▼ -1.60 ▲ 0.38 ▼ -11.6
Tunisia Tunisian Dinar  TND ▲ 0.70 ▲ 1.96 ▼ -4.3
Uganda Uganda Shilling  UGX ▼ -0.52 ▼ -0.46 ▼ -15.5
Zambia Zambian Kwacha  ZMK ▲ 3.23 ▲ 1.84 ▲ 1.4
CFA zone Countries CFA Franc XOF ▲ 0.67 ▲ 2.29 ▼ -1.9
Others
Europe Euro EUR ▲ 0.94 ▲ 2.34 ▼ -1.8
Japan Yen JPY ▲ 1.44 ▲ 1.14 ▲ 13.4
Year-to-date % 
Change
Previous week
Exchange Rates (currency per US$)
Region/Country Currency Name
Week under 
review
Dec 31 -Oct 15
Currency 
Code
Weekly % change                    
( 15-10-2010)
 
   Source: AfDB Statistics Department, October 2010 

Market Brief-Africa Economic Financial Brief 11- 15 October 2010

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Market Brief-Africa Economic Financial Brief 11- 15 October 2010

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