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  22  –  26  November 
2010,  the  majority  of  African  stock 
markets  incurred  losses  alongside  the 
major global stock markets in the U.S. and 
Europe. The latter dropped as tensions in 
Korea mounted and concern deepened that 
Europe’s  debt  crisis  will  worsen.  Among 
the  ten  monitored  African  stock  markets, 
all except the one in Egypt recorded losses 
over the week. The stock market in Kenya 
registered  the  largest  loss  of  2.4%, 
followed  by  the  markets  in  Morocco, 
which  fell  by  1.7%.  Moderate  losses  of 
between 0.5% and 1.4% were observed for 
the  markets  in  Nigeria,  Uganda,  Ghana, 
Tunisia,  South  Africa,  and  Mauritius.  On 
the  other  hand,  the  market  in  Egypt 
recorded a marginal gain of 0.2%.  
 
Equity Focus 
 
Kenya: The Nairobi Stock Exchange Index 
decreased  by  2.4%  over  the  week, 
reflecting  the  globally  subdued  risk 
appetite of investors and the Central Bank 
of  Kenya’s  decision  to  leave  its  key 
lending rate unchanged at 6%.  The latter 
suggests the possibility that the monetary 
easing cycle may now be over. The bank 
has  been  cutting  rates  since  December 
2008  to  drive  down  commercial  bank 
lending  rates  and  spur  an  economic 
recovery. Six interest rate cuts since March 
last year helped the volume of bank loans 
to rise by 6 % in the third quarter.  
 
South  Africa:  The  All  Share  Index 
declined  by  0.7%  over  the  week  as  risk 
aversion fed by debt woes in Europe hit 
riskier emerging market assets in general. 
The mining sector led the decline of the 
index on faltering metal prices.   
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude  oil  rebounded  by  2.8%  over  the 
week,  on  signs  of  increased  demand  as 
refiners  in  China,  the  world’s  second-
largest oil user, increased processing rates. 
 
Cotton:  The  price  of  cotton  tumbled  by 
9.5%  over  the  week,  heading  for  its 
biggest weekly drop since February 2009 
as  China,  the  world’s  biggest  consumer 
and  importer,  broadened  efforts  to  curb 
speculation and cool inflation. 
 
1.3  Exchange Rates 
 
The  majority  of  African  currencies 
depreciated  against  the  U.S.  dollar 
alongside the Euro. The Euro fell against 
the U.S. dollar by 1.9% over the week, as 
investors took refuge in the U.S. dollar in 
view of the Irish debt crisis which raised 
worries  over  the  Euro’s  future.  Twenty 
seven  African  currencies  depreciated 
against the U.S. dollar, but most of them 
by  less  than  the  Euro.  The  CFA  Franc 
suffered  the  most  pronounced  losses, 
recording  a  depreciation  of  2.4%  in  the 
interbank  currency  markets,  followed  by 
the Libyan dollar, the Comoros Franc, 
Market Brief 
Volume1, Issue 47 
27 November, 2010 
 
Africa Economic & Financial Brief 
For the period 22 - 26 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 Partnerships 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 Egypt, the number of 
mobile  phone 
subscriptions  rose  by 
more  than  10.5  million, 
or  20  %,  from  a  year 
earlier …” 
 
Cape Verde Escudo, the Morocco Dirham, 
and the Zambian Kwacha, which registered 
significant losses of between 1.8% and 2.3% 
in line with the Euro which depreciated by 
1.9%  vis-à-vis  the  U.S.  dollar.  The  other 
twenty  one  currencies  registered  losses  of 
less than 1.5% against the U.S. dollar. The 
South African Rand, which had gained 5 % 
against the U.S. dollar earlier this year due 
in large part to foreign investors purchasing 
its relatively high-yielding debt, fell by 0.9% 
over the week as risk aversion fed by debt 
woes in Europe hit riskier emerging market 
assets in general. On the other hand, seven 
African currencies rose with the largest gain 
of  1.7%  being  posted  by  the  Gambian 
Dalasi, recovering from the loss of 4.6% in 
the previous week. The currency of Angola 
remained  unchanged  vis-à-vis  the  U.S. 
dollar over the week.  
 
2.   Regional Developments 
Africa: A report by the UN Conference on 
Trade  and  Development  (UNCTAD) 
showed  that  GDP  growth  in  most  Least 
Developed  Countries  (LDCs)  has  not  yet 
translated into people's wellbeing; poverty is 
still rising. According to the Report, during 
the  economic  boom  period  between  2000 
and 2007, the economies of LDCs grew on 
average  by  over  7  %  annually.  However, 
over 50 % of the population in LDCs still 
lived  in  extreme  poverty  by  2007.  The 
absolute number of the poor in Tanzania, for 
instance,  increased  by  1.3  million  during 
that period of high growth.  It argues that 
only two out of 49 LDCs - Botswana and 
Cape  Verde  -  have  graduated  from  LDC 
status in 30 years.  
3.  Countries in Focus 
Egypt:  The  number  of  mobile  phone 
subscriptions  in  Egypt  rose  by  more  than 
10.5 million, or 20 %, from a year earlier to 
63.9  million  in  September.  Egypt  is  a 
country with 79 million inhabitants. 
Ghana:  The  government  has  stepped  up 
pressure  on  commercial  banks  to  lower 
interest rates, as part of renewed efforts to 
ease credit to small and medium businesses. 
Average  bank  lending  rates  in  Ghana  are 
around 28 % per year, which compares with 
the Bank of Ghana key policy rate that has 
fallen to 13.5 % thanks to a cumulative 500 
basis points of rate cuts over the past year. 
Kenya: The Government is looking to launch 
a $500 million Eurobond by the end of the 
financial  year  ending  June  as  the  peaceful 
approval of a new constitution in an August 
referendum  has  bolstered  confidence  in 
Kenya.  Ratings  agency  Standard  &  Poor's 
raised Kenya's credit rating this month to B+ 
from B.  
Malawi:  The  country's  inflation  slowed  to 
6.7 % year-on-year in October from 7 % in 
September, driven by a deceleration of food 
inflation.  Non-food  inflation  has  remained 
fairly stable at 10 %. 
Mauritius: The Bank of Mauritius sold just 
257  million  rupees  (USD  8.6  million)  or 
6.69% of the five-year government bonds on 
auction.  The  central  bank  had  offered 
2 billion  rupees  (USD  67  million)  of  the 
bonds maturing on June 4, 2015. It received 
bids  worth  2.8  billion  rupees  (USD  93.9 
million) but rejected most. The bids ranged 
from a yield of 6.25 % to 7.50 %.  
Morocco: The country's textile and clothing 
export revenues are likely to reach the level 
achieved in 2009 as demand from European 
countries has been recovering. The industry 
has been rebounding over the past five to six 
months after export revenues fell 30 % in the 
first half of 2010.  
Nigeria:  The  Central  Bank  of  Nigeria 
expected  real  GDP  to  grow  8.3  %  in  the 
fourth quarter compared to 7.9 % in the third 
quarter.  Full-year  economic  growth  is 
forecast at 7.9 %, up from 7.0 % in 2009. 
Senegal:  The  government  plans  a  $500 
million  Eurobond  issue  for  the  first  half  of 
next  year,  replacing  a  $200  million  bond 
launched in 2009. The government plans to 
capitalize on improving market conditions on 
improving market conditions to secure better 
“In Malawi, inflation 
slowed to 6.7 % year-
on-year  in  October 
from  7.0  %  in 
September,  driven  by 
a deceleration of food 
inflation.… ” 
 
   Africa Economic & Financial Brief: 22-26 November 2010                                                                                          Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
borrowing terms than on its existing 8.75 % 
coupon 2014 bond. 
South Africa: Nedbank, the South African 
lender,  has  reshuffled  the  structure  of  its 
ailing  retail  unit  to  emphasize  entry-level 
banking,  small  businesses  and 
entrepreneurs, as it looks to turn around the 
money-losing  business.  Nedbank  has  been 
hit hard by soured home and vehicle loans.  
Sudan: The Central Bank of Sudan asked 
banks and exchange bureau to buy foreign 
currency at a premium of 16.3 %, virtually 
matching the black market rate, as it seeks 
to  counter  a  shortage  of  foreign  currency. 
The Sudanese Pound, which is controlled as 
a  managed  float,  has  been  under  pressure 
because  of  risks  ahead  of  the  country's 
referendum in January. 
Tanzania:  The  Central  Bank  of  Tanzania 
reported that the country’s overall balance 
of  payments  swung  to  a  deficit  of  $25.7 
million  in  the  year  to  September  from  a 
surplus  of  $619.8  million  a  year  ago. 
Imports  of  goods  and  services  rose  by 
13.4 % while exports increased 5 %. 
Zambia:  The  country's  annual  inflation 
slowed to 7.1 % in November from 7.3 % in 
October due to easing food prices, putting it 
on  course  to  end  2010  well  below  the 
central bank's year-end target of 8 %. 
Zimbabwe: The  government  will increase 
royalties on diamond sales to 15 % from the 
current  10  %.  Royalties  on  gold  and 
platinum  would  also  go  up  to  4.5  %  and 
5 %, respectively, from the current 4 %. 
4.   Development Partnerships 
African  Agriculture  Fund  (AAF):  The 
private equity fund, designed to respond to 
the food crisis on the continent, reached its 
first closing. The Fund will invest across the 
value chain and in all of Africa. The support 
to AAF, whose total target size is US$ 300 
million, is part of a coordinated response of 
a pool of European DFIs and African DFIs 
including  the  African  Development  Bank 
(AfDB) as limited liability partner investors.  
 
 “In  Senegal,  the 
government  plans  a 
$500 million Eurobond 
issue  for  the  first  half 
of next year, replacing 
a  $200  million  bond 
launched in 2009. …” 
China-Africa: While China sees Africa as a 
prime  source  for  oil  and  minerals,  it  eyes 
consumer  markets  for  Chinese  goods  in 
Africa  too.  Chinese  consumer  goods  are 
making  substantial  inroads  in  African 
markets.  According  to  analysts  at  Standard 
Bank,  20%  of  which  is  owned  by  the 
Industrial  and  Commercial  Bank  of  China, 
the key trend is that Africa is seeing hundreds 
of thousands of micro Chinese entrepreneurs, 
procuring from China; Textiles make up 16 % 
of  African  purchases  from  China  while 
footwear  and  clothing  account  for  another 
14 %. 
Kenya-IMF: The IMF and Kenya reached a 
preliminary  agreement  for  a  $500  million 
loan  to  support  infrastructure  and  energy 
projects.  The  loan  also  aims  to  help 
implement the country's new charter, which 
includes  augmenting  foreign  exchange 
reserves, reducing the government debt as a 
percentage of GDP to below 45 % by 2013-
14, simplifying the tax code and overhauling 
value added tax, and implementing financial 
sector reforms, such that transaction costs are 
reduced. 
5.  Summary 
 
During the week of 22 – 26 November 2010, 
most  African  stock  and  currency  markets 
declined in line with the major global stock 
and commodity markets. Nevertheless, there 
was an influx of high-yield seeking capital in 
Mauritius’  bond  auction  and  the  African 
Agriculture Fund reached its first closing of 
fund  raising.  To  tap  the  global  liquidity  of 
high–yield  seeking  capital,  governments  in 
Senegal and Kenya plan to issue Eurobonds. 
Other  positive  developments  continued  to 
emerge  in  the  continent  –  deceleration  of 
inflation in Malawi and Zambia, acceleration 
of  growth  in  Nigeria,  recovery  of  textile 
manufacturing exports in Morocco, and rapid 
growth  of  the  mobile  phone  industry  in 
Egypt.  On  the  other  hand,  challenges  also 
emerged – a shortage of foreign currency in 
Sudan,  and  a  switch  from  a  surplus  to  a 
deficit  position  in  Tanzania’s  balance  of 
payments. 
 
 
 
“In  Tanzania,  the 
overall  balance  of 
payments  swung  to  a 
deficit  of  $25.7  million 
in the year to September 
from a surplus of $619.8 
million a year ago.….” 
  
 
    Africa Economic & Financial Brief: 22-26 November 2010                                                                                           Page 3 
 
 
 
 
   
 
   Appendix Table 1: Stock market movements – Week ending on 26 November, 2010 
 
Côte d'Ivoire BRVM Composite Index BRVM CI 5,402 ▼ -0.04 ▲ 0.07 ▲ 25.4
Egypt* CASE 30 Index CASE30 19,041 ▲ 0.18 ▲ 0.92 ▲ 10.1
Ghana Ghana All Share GSE 13,591 ▼ -0.89 ▲ 2.90 ▲ 24.6
Kenya Nairobi SE Index- NSE 20 NSE 20 15,123 ▼ -2.38 ▼ -0.33 ▲ 37.7
Mauritius Mauritius AllShares SEMDEX 5,498 ▼ -0.52 ▲ 1.62 ▲ 14.9
Morocco Casa All Share Index MASI 14,656 ▼ -1.71 ▲ 0.74 ▲ 16.0
Nigeria NGSE All Share Index NGSE 50,561 ▼ -1.38 ▼ -1.61 ▲ 18.2
South Africa All Share Index JALSH 721,788 ▼ -0.69 ▼ -0.93 ▲ 12.7
Tunisia Tunis se Tnse Index STK TUNINDEX 3,013 ▼ -0.86 ▲ 0.04 ▲ 23.1
Uganda* Uganda SE All Share index USE 5,587.6 ▼ -1.00 ▲ 1.99 ▲ 65.6
Others
USA Dow Jones Industrial DJ Index 3,470,214 ▼ -1.00 ▲ 0.10 ▲ 6.4
France CAC 40 Index CAC40 908,387 ▼ -3.41 ▲ 0.76 ▼ -5.3
Japan Nikkei 225 Index N225 2,382,894 ▲ 0.17 ▲ 3.06 ▼ -4.8
Stock Markets
Market 
Capitalization  
(USD, million)               
(26-11-2010)
Week under 
review
Region/Country Index Name Index Code
Previous week
Dec 31 - Nov 26
Weekly % change                    
( 26-11-2010)
Year-to-date % 
Change
 
       * Value at end of 25 November, 2010 
 
 
 
    Africa Economic & Financial Brief: 22-26 November 2010                                                                                         Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 26 November, 2010 
 
 
    Africa Economic & Financial Brief: 22-26 November 2010                                                                                      Page 5 
 
 
 
 
  
Africa 
Algeria Algerian Dinar DZD ▼ -0.83 ▼ -0.55 ▼ -2.4
Angola New Kwanza AON ▲ 0.00 ▲ 0.00 ▼ -3.4
Botswana Pula BWP ▼ -1.32 ▼ -0.67 ▼ -0.1
Burundi Burundi Franc  BIF ▼ -0.26 ▲ 0.05 ▲ 0.7
Cape Verde Escudo  CVE ▼ -1.86 ▼ -1.86 ▼ -10.3
Comoros Comoros Franc  KMF ▼ -1.91 ▼ -0.28 ▼ -6.8
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 1.20 ▼ -0.02 ▼ -11.1
Djibouti Djibouti Franc  DJF ▲ 0.42 ▲ 0.01 ▼ -1.9
Egypt Egyptian Pound  EGP ▼ -0.41 ▲ 0.02 ▼ -4.9
Ethiopia Birr  ETB ▼ -0.09 ▼ -0.11 ▼ -23.0
Gambia. The Gambian Dalasi  GMD ▲ 1.66 ▼ -4.56 ▼ -5.7
Ghana New Cedi  GHS ▼ -0.89 ▼ -0.08 ▼ -0.9
Guinea Guinea Franc  GNF ▲ 1.23 ▼ -0.54 ▼ -28.9
Kenya Kenyan Shilling  KES ▼ -0.18 ▲ 0.37 ▼ -5.7
Liberia Liberian Dollar  LRD  ▼ -1.43 ▲ 1.45 ▲ 0.0
Libya Libyan Dinar  LYD ▼ -2.28 ▼ -0.72 ▼ -0.4
Madagascar Ariary  MGA ▼ -0.39 ▲ 0.20 ▼ -2.3
Malawi Kwacha  MWK ▲ 0.29 ▼ -0.37 ▼ -3.3
Mauritania Ouguiya  MRO  ▼ -0.81 ▼ -0.77 ▼ -6.2
Mauritius Mauritius Rupee  MUR  ▼ -0.31 ▼ -1.48 ▼ -0.1
Morocco Dirham  MAD ▼ -1.79 ▼ -0.57 ▼ -5.6
Mozambique New Metical  MZN ▼ -0.28 ▲ 1.97 ▼ -23.0
Nigeria Naira  NGN ▼ -0.87 ▲ 0.98 ▼ -0.1
Rwanda Rwandan Franc  RWF ▼ -1.01 ▼ -0.33 ▼ -4.0
São Tomé & Príncipe Dobra  STD ▼ -0.05 ▼ -3.22 ▼ -13.9
Seychelles Seychelles Rupee  SCR ▼ -0.24 ▲ 0.08 ▼ -8.9
Sierra Leone Leone  SLL ▼ -1.18 ▲ 0.00 ▼ -7.1
Somalia Somali Shilling  SOS ▲ 0.52 ▼ -0.05 ▼ -7.0
South Africa Rand  ZAR ▼ -0.91 ▼ -1.35 ▲ 5.0
Sudan Sudanese Pound  SDG ▼ -0.13 ▼ -0.40 ▼ -2.1
Tanzania Tanzanian Shilling  TZS ▲ 0.98 ▼ -0.35 ▼ -9.6
Tunisia Tunisian Dinar  TND ▼ -1.32 ▼ -0.68 ▼ -7.5
Uganda Uganda Shilling  UGX ▼ -0.36 ▲ 0.03 ▼ -16.7
Zambia Zambian Kwacha  ZMK ▼ -1.78 ▼ -0.55 ▼ -1.8
CFA zone Countries* CFA Franc XOF ▼ -2.35 ▼ -0.47 ▼ -7.0
Others
Europe Euro EUR ▼ -1.92 ▼ -1.02 ▼ -6.9
Japan Yen JPY ▼ -0.26 ▼ -1.25 ▲ 10.4
Sources: ADB Statistics Department  November 2010.
Currency Name
Week under 
review
Dec 31 -Nov 26
Currency 
Code
Weekly % change                    
( 26-11-2010)
Exchange Rates (currency per US$)
Region/Country
Previous week
Year-to-date % 
Change
* In the interbank currency market  

Market Brief-Africa Economic Financial Brief 22-26 November 2010

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Market Brief-Africa Economic Financial Brief 22-26 November 2010

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