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  8  –  12  November 
2010, African stock markets showed mixed 
performance  while  a  bearish  sentiment 
prevailed on stock markets in the U.S. and 
Europe  on  intensifying  concerns  about 
Europe’s  debt  crisis  and  growing 
speculation that China would raise interest 
rates. The stock market in Tunisia led the 
gainers, recording a substantial increase of 
3%.  It  was  followed  by  the  markets  in 
Nigeria  and  Mauritius,  which  registered 
significant  gains  of  2.3%  and  1.4%, 
respectively.  Increases  of  less  than  1% 
were  posted  by  the  markets  in  South 
Africa,  Uganda,  and  Morocco.  On  the 
other hand, four African stock markets fell, 
with  Ghana,  Côte  d’Ivoire,  and  Kenya 
recording  losses  of  between  1.2%  and 
1.6%,  while  that  of  Egypt  registered  a 
marginal loss of less than 0.1%. 
 
Equity Focus 
Tunisia:  The  Tunis  Stock  Exchange’s 
TUNINDEX soared by 3% in the second 
week  of  November,  recovering  from  its 
October setbacks. The rally came after the 
Government provided details on the short-
term capital gains tax to be effective from 
January 1, 2011. Resources mobilized from 
the tax would be used to ensure adequate 
funding to the companies restructuring and 
upgrading their operations and, thus, would 
benefit the corporate sector. 
 
Nigeria:  The  NSE  All-Share  Index 
rebounded by 2.3% over the week, driven 
by the banking sector which was going to 
benefit  from  the  operations  of  the  Asset 
Management  Corporation  of  Nigeria 
(AMCON). The AMCON has announced 
that the toxic assets of rescued banks will 
be  taken  over  by  the  corporation  and 
converted  to  equity.  In  particular,  the 
state-owned  AMCON  will  buy  N  2.2 
trillion  (USD 14.5 billion)  of  bad  debts 
from banks at discounted prices. 
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude oil fell by 2.3%  over the week  as 
concern  over  Irish  debt  and  China’s 
interest rate increase spurred a retreat from 
riskier assets, strengthened the U.S. dollar, 
and  weakened  commodity  prices  in 
general.  
 
Cotton: The price of cotton fell by 1.5% 
over  the  week,  the  biggest  weekly  price 
drop  since  June,  amid  concern  that 
demand  will  ease  in  China,  the  world’s 
biggest consumer.  
 
 
Market Brief 
Volume1, Issue 45 
19 November, 2010 
 
Africa Economic & Financial Brief 
For the period 8 – 12 November, 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 
  
 
 
 
 
 
 “The  East  African 
Development  Bank  has 
launched  operations  in 
Rwanda  with  the  core 
objective  of  improving 
access to finances …” 
 
1.3  Exchange Rates 
 
The  majority  of  African  currencies 
depreciated  alongside  the  Euro,  which  fell 
by 3.1% to a six-week low against the U.S. 
dollar  on  Europe’s  growth  slowdown  and 
debt concerns. France’s GDP rose by 0.4 % 
in the third quarter, down from the 0.7 % 
gain  in  the  previous  quarter,  while  GDP 
growth in Germany slipped to 0.7 % from 
2.3 % during the same periods.  
 
Twenty nine African currencies depreciated, 
with the largest loss of 3.9% being recorded 
by the Comoros Franc. Also, the CFA Franc, 
the  Morocco  Dirham,  the  São  Tomé  & 
Príncipe Dobra, the Libyan Dinar, and the 
Tunisian Dinar registered losses of over 2% 
against  the  U.S.  dollar  in  line  with  the 
depreciation  of  the  Euro.  In  contrast,  six 
currencies  appreciated  with  the  Gambian 
Dalasi posting the largest gains against the 
U.S. dollar (4.5%). The currencies of DRC 
and Mozambique remained unchanged.  
 
2.   Regional Developments 
Africa:  Leaders  of  the  G-20  major 
economies  issued  a  Seoul  Development 
Consensus  for  Shared  Growth,  calling  for 
"inclusive, sustainable and resilient growth" 
to reduce poverty. They also recognized that 
foreign  aid  remains  essential  to  the 
development of most low-income-countries. 
In a joint communiqué, the leaders identified 
nine  key  pillars  which  required  action  to 
remove bottlenecks to growth in developing 
countries,  including  "infrastructure,  human 
resource  development,  trade,  private 
investment and job creation, food security, 
growth  with  resilience,  financial  inclusion, 
domestic  resource  mobilization  and 
knowledge sharing." 
East Africa: The East African Development 
Bank  has  launched  operations  in  Rwanda 
with the core objective of improving access 
to  finance.  The  Rwandan  Government 
expects the bank to create closer and more 
dynamic interactions with stakeholders in all 
member  states  of  the  East  African 
Community (EAC). 
3.  Countries in Focus 
 
Egypt:  The  Government  is  working  to 
develop the secondary market for government 
securities, which has lagged far behind that of 
its  equity  market,  with  only  a  handful  of 
Egyptian government and corporate securities 
trading each day. The thin trade has pushed 
up  the  government's  cost  of  borrowing  and 
reduced  options  for  corporations  seeking  to 
raise finance.  
 
Ghana: Ghana's annual inflation rate was flat 
at 9.4 % in October, bringing to an end a 15-
month string of monthly declines. The Bank 
of Ghana has lowered the policy rate by 500 
basis points to 13.5 % in a succession of cuts 
since  late  2009.  Ghana's  $750  million 2017 
Eurobond is yielding a 5.8 % interest, with 
the  year-to-date  depreciation  of  the  Cedi 
remaining at -0.1%.  
 
Kenya:  Kenya  is  in  negotiation  with  the 
International Monetary Fund to borrow about 
$500  million  over  the  next  three  years  to 
boost  foreign-currency  reserves.  The 
Government expects the funding to enable the 
country to spend more domestically without 
putting pressure on its balance of payments. 
Kenya  is  investing  in  road-building  and 
energy  projects  to  lift  economic  growth  to 
6 % in 2011, from an estimated 5 % this year.  
Libya:  Libyan  energy  company  Tamoil 
announced it will close a 90,000 barrels per 
day refinery in Cremona, Italy and gradually 
transform it into a depot by the end of 2011. 
Analysts  conjecture  the  closure  reveals  the 
high vulnerability of small and medium-size 
refiners  to  the  refining  sector  downturn, 
which  has  been  triggered  by  the  economic 
crisis and weak demand.  
 
“Kenya  is  in 
negotiation  with  the 
International 
Monetary  Fund  to 
borrow  about  $500 
million over the next 
three  years  to  boost 
foreign-currency 
reserves  … ” 
 
   Africa Economic & Financial Brief: 8 – 12 November 2010                                                                                             Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Niger: A United Nations study has reported 
that  Niger  will  produce  over  60%  more 
cereals this year than in 2009, when crops 
failed  due  to  poor  rains,  leading  to 
widespread  hunger.  But  the  U.N.  report 
warned  that  the  country  must  rein  in 
population growth, which could increase the 
population from the current 15 million to 50 
million by 2050, to prevent further crises. 
Nigeria:  The  Central  Bank  of  Nigeria 
announced  that  new  rules  prohibiting 
commercial banks from buying investment 
properties  or  giving  loans  for  people  to 
invest in the primary issues of bank shares 
come  into  effect  on  November  15.  Under 
the  new  rules,  banks  have  to  operate  as 
commercial,  merchant,  and  specialized 
lenders, not as universal banking units.   
Sierra Leone: The Government forecast in 
its  2011  budget  speech  that  economic 
growth  this  year  would  amount  to  4.5%, 
rising to 5.2% next year and reaching 6.0% 
in 2012. It also expects inflation to fall from 
16% in 2010, to 9.5% in 2011 and 8% in 
2012. 
South  Africa:  Growth  in  South  Africa's 
manufacturing  output  slowed  sharply  in 
September, weighed down by strikes during 
the  month.  Factory  production  contributes 
about 15 % to GDP, but remains depressed 
after  last  year's  contraction.  Output 
expanded  by  1.4%  in  volume  terms  in 
September,  less  than  the  5.3  %  posted  in 
August. 
Sudan:  The  Government  signed  10 
exploration  deals  for  gold  and  other 
minerals, part of a wider bid to diversify the 
nation's  resource-based  output  from  crude 
oil ahead of the expected independence of 
the  oil-producing  South.  From  the 
beginning  of  the  year  up  until  the  end  of 
October,  Sudan  has  mined  23  tonnes  of 
gold. The Government forecasts to mine no 
less than 60 tonnes next year.  
Uganda: The Uganda Coffee Development 
Authority  (UCDA)  expects  to  export 
250,000 60-kg bags of coffee in November 
this year, up 6.3 % against the same month 
in 2009 after good weather increased bean 
 
 “In Nigeria, new rules 
will  be  in  effect, 
prohibiting commercial 
banks  from  buying 
investment  properties 
or  giving  loans  for 
people  to  invest  in  the 
primary issues of bank 
shares …” 
production. 
Zimbabwe:  The  Government  has  chosen 
Essar Africa Holdings Ltd, an arm of India's 
Essar  Group,  to  take  majority  control  of 
troubled  state-owned  steel  maker  ZISCO. 
ZISCO  is  the  first  privatization  under  a 
power-sharing government formed last year. 
The Indian company will take over ZISCO’s 
$240 million debt. 
4.   Development Partnerships 
 
EIB-Morocco:  The  European  Investment 
Bank  (EIB)  has  lent  Morocco  420  million 
Euros to finance a section of a highway and 
expand a port. The North African country has 
plans  to  invest  around  $10  billion  over  the 
next 10 years to upgrade basic infrastructure, 
enhance  economic  competitiveness  and  lure 
foreign investment. 
 
5.  Summary 
 
During the week of 8 – 12 November 2010,  
African  stock  markets  showed  a  mixed 
performance. Large upward movements were 
recorded in Tunisia and Nigeria due to efforts 
by government to support the restructuring of 
industries  and  changes  to  bank  rules, 
respectively.  Other  positive  developments 
over  the  week  include:  substantial  recovery 
of cereal harvests in Niger, privatization of a 
debt-ridden state company in Zimbabwe, and 
stabilizing  prices  in  Sierra  Leone.  On  the 
other  hand,  South  Africa’s  manufacturing 
output slowed due to strikes. 
 
 
 
“In  Zimbabwe,  the 
Government  has  chosen 
Essar  Africa  Holdings 
Ltd,  an  arm  of  India's 
Essar  Group,  to  take 
majority  control  of 
troubled  state-owned 
steel  maker  ZISCO, 
recording  the  first 
privatization  under  a 
power-sharing 
government ….” 
  
 
    Africa Economic & Financial Brief: 8 – 12 November 2010                                                                                             Page 3 
 
 
 
 
   
 
   Appendix Table 1: Stock market movements – Week ending on 12 November, 2010 
 
Côte d'Ivoire BRVM Composite Index BRVM CI 5,561 ▼ -1.57 ▲ 3.66 ▲ 25.4
Egypt* CASE 30 Index CASE30 18,912 ▼ -0.02 ▲ 1.00 ▲ 8.9
Ghana Ghana All Share GSE 13,680 ▼ -1.57 ▲ 0.41 ▲ 22.1
Kenya Nairobi SE Index- NSE 20 NSE 20 15,083 ▼ -1.22 ▼ -0.16 ▲ 41.5
Mauritius Mauritius AllShares SEMDEX 5,520 ▲ 1.38 ▲ 0.04 ▲ 13.7
Morocco Casa All Share Index MASI 15,063 ▲ 0.05 ▲ 0.27 ▲ 17.2
Nigeria NGSE All Share Index NGSE 52,054 ▲ 2.29 ▼ -0.97 ▲ 21.8
South Africa All Share Index JALSH 750,542 ▲ 0.75 ▲ 3.37 ▲ 14.6
Tunisia Tunis se Tnse Index STK TUNINDEX 3,100 ▲ 3.04 ▲ 0.91 ▲ 24.1
Uganda* Uganda SE All Share index USE 5,554.7 ▲ 0.54 ▼ -0.02 ▲ 64.0
Others
USA Dow Jones Industrial DJ Index 3,535,671 ▼ -2.20 ▲ 2.93 ▲ 7.3
France CAC 40 Index CAC40 961,433 ▼ -2.19 ▲ 2.17 ▼ -2.7
Japan Nikkei 225 Index N225 2,369,285 ▲ 1.03 ▲ 4.60 ▼ -7.8
Weekly % change                    
( 12-11-2010)
Year-to-date % 
Change
Region/Country Index Name Index Code
Previous week
Dec 31 - Nov 12
Market 
Capitalization  
(USD, million)               
(12-11-2010)
Week under 
review
Stock Markets
 
* Value at end of 11 November, 2010 
 
 
 
    Africa Economic & Financial Brief: 8 – 12 November 2010                                                                                             Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 12 November, 2010 
Africa 
Algeria Algerian Dinar DZD ▼ -0.64 ▲ 1.13 ▼ -1.0
Angola New Kwanza AON ▲ 0.01 ▲ 0.52 ▼ -3.4
Botswana Pula BWP ▼ -1.51 ▲ 2.33 ▲ 1.9
Burundi Burundi Franc  BIF ▼ -0.53 ▲ 0.10 ▲ 0.9
Cape Verde Escudo  CVE ▼ -1.86 ▲ 1.89 ▼ -6.9
Comoros Comoros Franc  KMF ▼ -3.85 ▲ 1.99 ▼ -4.7
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 0.00 ▼ 0.00 ▼ -12.2
Djibouti Djibouti Franc  DJF ▼ -1.26 ▲ 1.50 ▼ -2.3
Egypt Egyptian Pound  EGP ▼ -0.29 ▲ 0.75 ▼ -4.6
Ethiopia Birr  ETB ▼ -0.48 ▲ 0.32 ▼ -22.9
Gambia. The Gambian Dalasi  GMD ▲ 4.53 ▼ -0.02 ▼ -2.8
Ghana New Cedi  GHS ▼ -0.07 ▼ -0.12 ▲ 0.1
Guinea Guinea Franc  GNF ▼ -0.28 ▲ 0.93 ▼ -29.3
Kenya Kenyan Shilling  KES ▼ -0.73 ▲ 0.03 ▼ -5.8
Liberia Liberian Dollar  LRD  ▲ 2.86 ▲ 0.69 ▲ 0.0
Libya Libyan Dinar  LYD ▼ -2.34 ▲ 5.64 ▲ 2.6
Madagascar Ariary  MGA ▼ -1.54 ▲ 1.56 ▼ -2.1
Malawi Kwacha  MWK ▲ 0.34 ▼ -0.16 ▼ -3.2
Mauritania Ouguiya  MRO  ▲ 2.42 ▲ 0.27 ▼ -4.7
Mauritius Mauritius Rupee  MUR  ▼ -0.90 ▲ 0.55 ▲ 1.7
Morocco Dirham  MAD ▼ -2.54 ▲ 1.81 ▼ -3.3
Mozambique New Metical  MZN ▲ 0.00 ▲ 0.00 ▼ -24.2
Nigeria Naira  NGN ▼ -0.51 ▲ 0.19 ▼ -0.2
Rwanda Rwandan Franc  RWF ▼ -0.33 ▼ -0.36 ▼ -2.7
São Tomé & Príncipe Dobra  STD ▼ -2.38 ▲ 2.31 ▼ -11.0
Seychelles Seychelles Rupee  SCR ▼ -0.67 ▲ 0.60 ▼ -8.7
Sierra Leone Leone  SLL ▼ -0.04 ▲ 0.04 ▼ -6.0
Somalia Somali Shilling  SOS ▼ -1.10 ▲ 1.33 ▼ -7.4
South Africa Rand  ZAR ▼ -0.97 ▲ 2.82 ▲ 7.4
Sudan Sudanese Pound  SDG ▲ 0.09 ▲ 0.18 ▼ -1.6
Tanzania Tanzanian Shilling  TZS ▼ -0.27 ▲ 0.61 ▼ -10.2
Tunisia Tunisian Dinar  TND ▼ -2.01 ▲ 1.50 ▼ -5.6
Uganda Uganda Shilling  UGX ▼ -0.14 ▲ 0.14 ▼ -16.4
Zambia Zambian Kwacha  ZMK ▼ -0.45 ▲ 0.89 ▲ 0.5
CFA zone Countries CFA Franc XOF ▼ -3.49 ▲ 2.61 ▼ -4.3
Others
Europe Euro EUR ▼ -3.12 ▲ 2.21 ▼ -4.1
Japan Yen JPY ▼ -1.73 ▲ 0.44 ▲ 12.1
Currency Name
Week under 
review
Dec 31 -Nov 12
Currency 
Code
Weekly % change                    
( 12-11-2010)
Exchange Rates (currency per US$)
Region/Country
Year-to-date % 
Change
Previous week
 
   Source: AfDB Statistics Department, November 2010 

Market Brief-Africa Economic Financial Brief 8-12 November 2010

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Market Brief-Africa Economic Financial Brief 8-12 November 2010

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Research Papers in Economics