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 16 – 20 August 2010, 
some  African  stock  markets  registered 
gains  while  others  fell  along  with  the 
major  global  stock  markets  which 
retreated  due  to  heightened  concerns 
about the  weak  U.S.  economy  and  high 
debt levels in Europe. The stock markets 
in Ghana and Kenya recorded significant 
gains  of  about  3.5%  and  2.3% 
respectively,  while  marginal  gains  of 
1.1%, 0.9%, and 0.4% were recorded in 
Tunisia, Egypt and Nigeria, respectively. 
The  market  in  Mauritius  remained 
virtually unchanged. In contrast, the stock 
markets in Côte d'Ivoire and South Africa 
recorded substantial losses of about 2.2% 
and  2%  respectively,  while  moderate 
losses  of  about  1.1%  and  0.4%  were 
posted  in  Morocco  and  Uganda, 
respectively. 
 
Equity Focus 
 
Ghana:  The  Ghana  stock  market 
continued its rally during the week. The 
GSE All Share Index rose by 3.5% over 
the  week,  representing  a  gain  of  19.3% 
this  year.  Blue  chips  such  as  Unilever 
Ghana,  Ecobank  Ghana  and  Enterprise 
Insurance led the rally, bringing renewed 
confidence to investors. 
 
Côte  d'Ivoire:  The  BRVM  Composite 
Index fell by 2.2% during the week, led 
by  losses  of  agricultural  stocks  such  as 
PALM CI, SAPH and SOGB.  
 
South Africa: The All Share Index fell for 
fourth consecutive week, dropping by 2% 
during  the  week.  The  stock  market’s 
movement followed those of global equity 
markets,  which  were  weighed  down  by 
persistent  worries  over  fragile  global 
economic recovery. 
 
1.2  Commodity Markets 
 
 Crude Oil (Brent):  The price of crude oil 
fell by 2.6% over the week to USD 73.46 
a barrel. The drop was driven by doubts 
about the global economic recovery.   
 
Gold:  The  price  of  gold  rose  by  0.8%, 
standing  above  USD  1,220  per  ounce  in 
international markets as concerns over the 
outlook for the global economy supported 
interests in the metal as a safe-haven from 
risk,  but  gains  were  capped  by 
strengthening of the US dollar.  
 
1.3  Exchange Rates 
 
Many  African  currencies  weakened 
together with Euro against the US dollar. 
The  U.S.  dollar  strengthened  as  safe-
haven  demand  rose  after  U.S.  jobless 
claims  and  weak  manufacturing  data 
prompted  some  investors  to  sell  risky 
assets.  Twenty  three  African  currencies 
depreciated  against  the  US  dollar  in  the 
inter-bank foreign exchange markets. The 
highest depreciation of 2% was recorded 
by  Mozambique  New  Metical,  followed 
by  the  Gambian  Dalasi  (-1.4%)  and  the 
Kenyan Shilling (-1.1%). Twelve African 
currencies appreciated, including the CFA 
Franc, which appreciated by 0.1% against  
Market Brief 
Volume1, Issue 34 
27 August, 2010 
 
Africa Economic & Financial Brief 
For the period 16 – 20 August, 2010 
Prepared by the following staff:  Gil Seong 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)                   
    
 
 
  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 
  
 
 
 
 
 
 “Tanzania Coffee Board 
(TCB)  reported  that 
coffee  crop  for  2010/11 
season  (June  -  April)  is 
expected  to  increase  by 
52.7%  to  55,000  tonnes, 
helped by good rains. ” 
 
the US dollar. The highest appreciation 
was  recorded  by  Zambian  Kwacha 
(2.6%), followed by the Sierra Leone’s 
Leone (1.3%). 
 
2.   Regional Developments 
 
Africa:  The  African  Union  (AU) 
recently launched a feasibility study as a 
step to set up Africa’s own space agency 
and to prepare a common space policy 
for  the  continent.  Meanwhile,  the 
organizers  of  Avex  International  Air 
Show  reported  that  an  estimated  USD 
3.2 billion worth of airport projects is to 
be invested in Africa over the next 15 
years,  particularly  in  countries  such  as 
Tunisia,  Egypt,  Libya,  Morocco  and 
South  Africa.  As  per  Airbus’  Global 
Market  forecast  for  2009-2028,  in  less 
than  ten  years,  total  new  aircraft 
deliveries  in  Africa  are  expected to  be 
455.  Boeing’s  latest  Current  Market 
Outlook  (CMO)  forecasts  the  value  of 
the airplane market in Africa to be USD 
80  billion  with  710  new  aircraft 
deliveries projected to take place to the 
continent by 2029. 
 
East  Africa:  The  East  African 
Community  (EAC)  reported  that  the 
East Africa needs to raise up to USD 25 
billion,  or  about  two-thirds  of  Kenya's 
annual  output  over  the  next  decade  to 
upgrade  its  railways.  The  EAC  will 
prepare a rail investment plan by the end 
of the year. Upgrading existing railways 
or building new ones will start in 2013. 
3.  Countries in Focus 
Rwanda: The Government reported that 
mobile telecom market grew by 20.9% 
in the second quarter. It is considering 
licensing  another  mobile  operator. 
Mobile  subscription  increased  to  about 
3.3  million  users  at  the  end  of  June 
2010,  from  2.7  million  in  March  this 
year.  Rwanda  is  targeting  6  million 
subscribers by 2012. 
 
Kenya: Coffee production in Kenya may 
fall  by  31%  during  the  2009/10  season 
(August  –  September)  as  unfavorable 
weather  cut  yields,  according  to  the 
Kenya  Coffee  Traders  Association. 
Output for 2009/10 season is expected to 
decline to 40,000 metric tons, from more 
than 58,000 tons last season. 
 
Tanzania: Tanzania Coffee Board (TCB) 
reported  that  coffee  crop  for  2010/11 
season  (June  -  April)  is  expected  to 
increase  by  52.7%  to  55,000  tonnes, 
helped by good rains. Output was 36,000 
tonnes in the previous crop year due to 
bad weather and the outbreak of bugs in 
major coffee-producing regions. 
 
Mauritius:  Tourism  revenues  rose  by 
8.5%  to  19.8  billion  rupees  (USD  625 
million) in the first half of 2010, due to a 
jump  in  visitors  from  Asia.  The 
Government  forecasts  a  5%  increase  in 
visitors this year (to 915,000). 
 
Morocco: The fiscal balance deteriorated 
from a surplus of 6 billion dirham (about 
USD 0.7 billion) in the first half of 2009 
to a deficit of 16.8 billion dirham (about 
USD 2 billion) in the first half of 2010. 
The deficit was largely attributable to an 
increase in government spending, as well 
as a drop in total revenues owing in part 
to  a  slowdown  in  overall  domestic 
economic  activity.  Additionally, 
scheduled  tax  cuts  also  contributed  to 
lower government revenues. 
 
Nigeria:  The  Cement  Manufacturers' 
Association of Nigeria (CMAN) reported 
that  cement  industry  is  expected  to 
sharply grow in the coming years, driven 
by  infrastructure  demand.  Cement 
production  is  expected  to  rise  to  20 
million  metric  tonnes  by  2012,  almost 
double  the  level  expected  this  year, 
turning Nigeria to a net cement exporter.  
 
The Government announced that Nigeria 
would achieve  the  11% average  growth 
target for the attainment of Vision 2020 – 
 
 
 
“In  Nigeria,  cement 
industry  is  expected  to 
sharply  grow  in  the 
coming years, driven by 
infrastructure  demand. 
Cement  production  is 
expected  to  rise  to  20 
million metric tonnes by 
2012, almost double the 
level expected this year, 
turning Nigeria to a net 
cement exporter.” 
 
   Africa Economic & Financial Brief: 16- 20 August 2010                                                                                                          Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
“By  2020  Nigeria  will  be  one  of  the  20 
largest  economies  in  the  world”. 
Inadequate  infrastructure,  high  graduate 
unemployment and subsistence agriculture 
were indentified as the key challenges to 
achieving  the  goal.  The  government 
estimates that it cost about 32 trillion naira 
(about USD 210 billion) to implement the 
Vision 2020 in the next four years. Of the 
projected  expenditure,  19  trillion  naira 
(about USD 125 billion) would come from 
the government, while the balance should 
come from the private sector.  
 
Uganda:  Uganda  will  take  at  least  five 
years  to  “fully”  introduce  inflation 
targeting as an economic policy. The Bank 
of  Uganda  is  starting  repurchase 
operations  in  the  secondary  market  for 
government debt to fine tune its control of 
money supply and inflation as part of the 
first  phase  of  the  system’s  introduction. 
Repurchase  operations,  which  started  in 
September  2009,  have  helped  reduce 
interbank lending rates to 3% – 4% from 
12%.  
 
Zimbabwe: The mining chamber reported 
that Zimbabwe produced about 4 tonnes of 
gold in the first half of this year and is on 
course to double last year's output despite 
regular disruptions to electricity supplies. 
Gold production fell to a record low of 3 
tonnes in 2008 from 6.8 tonnes in 2007. It 
marginally  recovered  to  4.9  tonnes  last 
year.  
  
4.   Development Partnerships 
 
Egypt  –  Europe:  Egypt  secured  a  300 
million  Euro  loan  from  the  European 
Investment Bank to fund a power project. 
The project will cost 120 billion Egyptian 
Pounds and is scheduled to start operations 
by 2014. The plant is part of the country's 
2007-2012  five-year  energy  plan  to  add 
9,200  megawatts  to  its  capacity,  set  up 
transformer  stations  and  extend  power 
lines.  
 
Cote  d'Ivoire  -  Singapore:  Singapore 
commodities  firm  Olam  International 
plans to invest USD 43.5 million in Cote 
d'Ivoire to set up a cocoa processing and 
storage facilities.  
“In Tanzania, inflation 
slowed to 6.3% in July 
2010 from 7.2% in the 
previous month, due to 
falling food costs.” 
 
5.  Summary 
 
During the week of 16 - 20 August, African 
stock  markets  showed  mixed  performance 
while  the  majority  of  African  currencies 
weakened  along  with  the  global  stock 
markets and the major commodity markets. 
In  the  real  sector,  signs  of  improving 
industrial  activities  continued:  a  report  on 
recovery  in  gold  production  in  Zimbabwe 
and  positive  outlooks  for  coffee  crop  in 
Tanzania and cement production in Nigeria. 
It  was  also  notable  that  the  number  of 
mobile phone subscribers in Rwanda grew 
rapidly. For agenda for future development, 
upgrading  railways  in  East  Africa  and 
improving  infrastructure  and  agriculture  in 
Nigeria  have  been  identified  as  the  main 
challenges for rapid economic growth. 
   
 
 
 
“Zimbabwe  produced 
about 4 tonnes of gold 
in the first half of this 
year  and  is  on  course 
to  double  last  year's 
output…” 
 
   Africa Economic & Financial Brief: 16 - 20 August 2010                                                                                                      Page 3 
 
 
 
 
   
 
Appendix Table 1: Stock market movements – Week ending on 20 August, 2010 
 
Côte d'Ivoire BRVM Composite Index BRVM CI 5,915 ▼ -2.18 ▼ -0.10 ▲ 13.8
Egypt* CASE 30 Index CASE30 18,006 ▲ 0.88 ▼ -1.15 ▲ 2.9
Ghana Ghana All Share GSE 12,662 ▲ 3.47 ▲ 2.78 ▲ 19.3
Kenya Nairobi SE Index- NSE 20 NSE 20 14,820 ▲ 2.26 ▼ -3.83 ▲ 41.5
Mauritius Mauritius AllShares SEMDEX 4,975 ▲ 0.04 ▼ -0.80 ▲ 4.2
Morocco* Casa All Share Index MASI 15,289 ▼ -1.11 ▼ -1.13 ▲ 10.1
Nigeria NGSE All Share Index NGSE 38,878 ▲ 0.36 ▼ -3.00 ▲ 20.5
South Africa All Share Index JALSH 605,279 ▼ -1.95 ▼ -2.67 ▼ -2.4
Tunisia* Tunis se Tnse Index STK TUNINDEX 6,737 ▲ 1.08 ▲ 0.28 ▲ 22.3
Uganda* Uganda SE All Share index USE 4,498 ▼ -0.42 ▲ 0.73 ▲ 43.1
Others
USA Dow Jones Industrial DJ Index 3,250,140 ▼ -0.87 ▼ -3.29 ▼ -2.1
France CAC 40 Index CAC40 823,969 ▼ -2.35 ▼ -2.83 ▼ -10.4
Japan Nikkei 225 Index N225 2,203,223 ▼ -0.80 ▼ -4.03 ▼ -13.0
Stock Markets
Week under 
review
Weekly % change                    
( 20-08-2010)
Region/Country Index Name Index Code
Previous week
Dec 31 - Aug 20
Market 
Capitalization  
(USD, million)               
(20-08-2010)
Year-to-date % 
Change
 
              * Value at end of 19 August, 2010 
 
 
   Africa Economic & Financial Brief: 16 - 20 August 2010                                                                                                 Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 20 August, 2010 
 
Africa 
Algeria Algerian Dinar DZD ▼ -0.03 ▼ -1.96 ▼ -3.0
Angola New Kwanza AON ▲ 0.25 ▲ 0.00 ▼ -3.5
Botswana Pula BWP ▲ 0.53 ▼ -1.37 ▼ -1.8
Burundi Burundi Franc  BIF ▲ 0.10 ▼ -0.04 ▲ 1.0
Cape Verde Escudo  CVE ▼ -0.80 ▼ -1.69 ▼ -13.3
Comoros Comoros Franc  KMF ▼ -0.79 ▼ -2.18 ▼ -11.0
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 0.57 ▲ 0.11 ▼ -11.2
Djibouti Djibouti Franc  DJF ▲ 0.50 ▼ -0.01 ▼ -1.9
Egypt Egyptian Pound  EGP ▼ -0.02 ▼ -0.49 ▼ -3.8
Ethiopia Birr  ETB ▼ -0.10 ▼ -0.10 ▼ -7.0
Gambia. The Gambian Dalasi  GMD ▼ -1.43 ▼ -6.03 ▼ -7.3
Ghana New Cedi  GHS ▼ -0.25 ▼ -0.31 ▼ -0.1
Guinea Guinea Franc  GNF ▼ -0.28 ▼ -0.85 ▼ -3.9
Kenya Kenyan Shilling  KES ▼ -1.12 ▼ -0.93 ▼ -6.8
Liberia Liberian Dollar  LRD  ▲ 0.68 ▼ -0.68 ▼ -4.1
Libya Libyan Dinar  LYD ▼ -0.23 ▼ -0.51 ▼ -3.4
Madagascar Ariary  MGA ▼ -0.90 ▼ -0.49 ▼ -10.2
Malawi Kwacha  MWK ▼ -0.65 ▼ -0.02 ▼ -3.8
Mauritania Ouguiya  MRO  ▼ -0.55 ▲ 0.49 ▼ -8.2
Mauritius Mauritius Rupee  MUR  ▼ -0.59 ▼ -1.44 ▼ -1.2
Morocco Dirham  MAD ▼ -0.18 ▼ -1.81 ▼ -8.6
Mozambique New Metical  MZN ▼ -1.95 ▼ -2.12 ▼ -28.7
Nigeria Naira  NGN ▼ -0.87 ▼ -0.22 ▼ -0.3
Rwanda Rwandan Franc  RWF ▼ -0.60 ▲ 0.54 ▼ -3.1
São Tomé & Príncipe Dobra  STD ▲ 0.05 ▼ -2.16 ▼ -16.9
Seychelles Seychelles Rupee  SCR ▼ -0.09 ▼ -0.43 ▼ -10.6
Sierra Leone Leone  SLL ▲ 1.26 ▼ -0.98 ▼ -0.3
Somalia Somali Shilling  SOS ▲ 0.47 ▲ 0.01 ▼ -7.0
South Africa Rand  ZAR ▲ 0.38 ▼ -0.64 ▲ 1.7
Sudan Sudanese Pound  SDG ▼ -0.52 ▲ 0.45 ▼ -2.2
Tanzania Tanzanian Shilling  TZS ▼ -0.91 ▲ 0.77 ▼ -12.0
Tunisia Tunisian Dinar  TND ▼ -0.59 ▼ -0.91 ▼ -9.8
Uganda Uganda Shilling  UGX ▼ -0.97 ▼ -0.35 ▼ -14.8
Zambia Zambian Kwacha  ZMK ▲ 2.60 ▼ -3.94 ▼ -5.1
CFA zone Countries CFA Franc XOF ▲ 0.09 ▼ -2.99 ▼ -10.4
Others
Europe Euro EUR ▼ -0.18 ▼ -2.44 ▼ -10.5
Japan Yen JPY ▲ 0.17 ▲ 0.47 ▲ 7.9
Year-to-date % 
Change
Previous week
Currency 
Code
Weekly % change                    
( 20-08-2010)
Exchange Rates (currency per US$)
Region/Country Currency Name
Week under 
review
Dec 31 -Aug 20
 
                Source: AfDB Statistics Department, August 2010 
 
   Africa Economic & Financial Brief: 16 - 20 August 2010                                                                                                 Page 5 
 
 
 
 
  

Market Brief-Africa Economic Financial Brief 16-20 August 2010

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/9.9-Africa%20Economic%20%20Financial%20Brief%2016-20%20August.pdf

Market Brief-Africa Economic Financial Brief 16-20 August 2010

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics