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 6 – 10 December 2010, 
African  stock  markets  showed  mixed 
performance  despite  rallies  in  the  major 
global  stock  markets  due  to  a  tax  cut 
package  negotiated  by  President  Obama 
and congressional Republican leaders and 
submitted  to  the  Senate,  higher-than-
expected  consumer  confidence,  and 
speculation in Europe that profits will be 
strong despite the sovereign-debt crisis.  
 
Four  out  of  the  ten  monitored  African 
stock markets recorded gains in line with 
the  major  global  markets  over  the  week. 
The largest gain of 3.5% was registered by 
the  stock  market  in  Ghana,  followed  by 
substantial increases of 3.3% and 2.7% in 
the  markets  in  Morocco  and  Egypt, 
respectively.  On  the  other  hand,  six 
African  markets  reported  losses  in  value. 
The market in Nigeria recorded the largest 
fall  of  1.5%,  followed  by  the  market  in 
Côte d’Ivoire, which posted a loss of 1.3%. 
The  markets  in  Tunisia,  Uganda, 
Mauritius,  and  Kenya  registered  minor 
losses (less than 0.8%).  
 
 
Equity Focus 
 
Ghana: The Ghana All Share Index picked 
up  by  3.5%  over  the  week  on  optimism 
that Ghana's first crude oil exports will hit 
the market early January. According to the 
government’s budget speech the economy 
is now forecasted to double its growth rate 
to 12.3 % next year. The budget speech 
also  envisioned  a  hike  in  fuel  prices  of 
between 0.02 and 0.08 Cedis per litre to 
fund the repayment of debt owed by state-
owned  Tema  Oil  Refinery  to  creditors 
including  Ghana  Commercial  Bank 
(GCB). GCB shares rose by nearly 12 % 
on the news. 
 
 
Nigeria: The NGSE All Share Index fell 
by 1.5% over the week, as a majority of 
the blue chip companies on the Nigerian 
Stock Exchange, including Cutix Plc and 
Vitafoam  Plc,  incurred  losses.    The 
negative  sentiment  was  partly  driven  by 
the  negative  profit  before  taxation 
reported by UNIC Insurance. 
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude oil dropped by 1.6% on concern that 
Europe’s  debt  crisis  and  the  expected 
increase  in  interest  rate  by  China,  the 
world’s largest energy user, will hurt fuel 
consumption.  Besides,  the  strengthening 
of the U.S. dollar over the week reduced 
investor appetite for commodities.  
 
Cotton: The price of cotton rose by 3.0% 
over the week, after the U.S. government 
slashed its forecast for inventories to the 
lowest in 14 years. U.S. stockpiles for the 
year ending July 31 will total 1.9 million 
bales,  down  14  %  from  the  November 
estimate. Cotton prices have surged 81 % 
this year, heading for the biggest annual 
gain since 1973. 
Market Brief 
Volume1, Issue 49 
17 December, 2010 
 
Africa Economic & Financial Brief 
For the period 6 - 10 December, 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 
  
 
 
 
1.3  Exchange Rates 
 
The  African  currencies  showed  mixed 
performance  against  the U.S.  dollar,  while 
the  Euro  remained  almost  unchanged  over 
the week. The upward pressure on the Euro 
due to the U.S. Federal Reserve’s openness 
to  injecting  more  funds  into  the  economy 
has  been  offset  by  the  downside  forces 
driven  by  European  ministers  ruling  out 
immediate aid for debt-ridden Portugal and 
Spain,  as  well  as  President  Obama’s 
agreement  to  a  tax-cut  proposal  which 
improved  the  growth  outlook  for  the  U.S. 
economy.  
 
Twenty two African currencies rose against 
the  U.S.  dollar.  The  Mozambique  New 
Metical led the winners, recording a gain of 
2.5  %  in  the  interbank  foreign  exchange 
markets, followed by the Congolese Franc, 
the  Zambian  Kwacha,  the  Liberian  Dollar, 
the  Guinea  Franc,  and  the  South  African 
Rand,  which  registered  significant  degrees 
of appreciation of between 1.1% and 2.2 %. 
Sixteen other currencies registered gains of 
less  than  0.9%  against  the  U.S.  dollar, 
reflecting the tendency at the end of the year 
that  imports  by  the  manufacturing  sector 
decline  while  receipts  of foreign  exchange 
from  tourism  and  remittances  rise.  On  the 
other hand, thirteen African currencies fell 
vis-à-vis the U.S. dollar over the week, with 
the largest loss of 1.6% being posted by the 
Mauritania Ouguiya.  
 
2.   Regional Developments 
 
Africa:  A  memorandum  of  understanding 
has  been  signed  by  the  Alliance  of  Small 
Island  States  (AOSIS),  the  World  Bank, 
UNDP,  and  the  Danish  Government.  The 
agreement  recognizes  the  disproportionate 
harm  of  climate  change  for  small  island 
developing states in the Africa, Caribbean, 
and  Pacific  Islands  regions  and  aims  to 
support  island  countries  to  scale  up  their 
renewable energy efforts and shift towards 
greater  energy  efficiency.  An  80  million 
Danish kroner ($US14.5 million)  has been 
pledged by the Government of Denmark to 
kick-off the initiative.  
 
Citigroup  Inc  announced  its  intention  to 
expand  its  presence  in  Africa.  The  bank 
viewed  Africa  and  the  continent's  biggest 
economy, South Africa, to have major roles to 
play in the new financial world where growth 
will  be  driven  by  emerging  markets  and 
globalization.  Being  the  third  largest  U.S. 
bank by assets, Citigroup has a presence in 
more  than  15  countries  on  the  continent.  It 
faces stiff competition as other Western banks 
target the growing trade flows between Asia 
and  resource-rich  Africa.  For  example, 
Standard Chartered makes about 10 % of its 
pre-tax profit from Africa, while Barclays has 
a controlling stake in South Africa's Absa and 
a  presence  in  9  others  countries  on  the 
continent. 
3.  Countries in Focus 
Côte  d’Ivoire: Cocoa volumes registered at 
Ivory Coast's ports have slowed sharply. Only 
16,174 tons of beans were registered by the 
official  marketing  body  Bourse  du  Cafe  et 
Cacao during the week ending November 28, 
down from 128,090 tonnes the week before. 
The  drop-off  came  in  the  lead-up  to  the 
country’s presidential election, with exporting 
companies  shutting  down  their  port 
operations  for  fear  of  poll-related  violence. 
Cocoa futures hit four-month highs this week 
after the two presidential candidates claimed 
victory  in  the  run-off,  raising  worries  the 
West  African  country  could  tip  back  into 
conflict. 
Egypt: The state statistics agency CAPMAS 
announced  that  the  year-on-year  urban 
consumer  price  inflation  had  fallen  from 
11 % in October to 10.2 % in November. In 
contrast,  the  core  inflation,  which  excludes 
subsidized goods and volatile items such as 
fruit and vegetables, surged from 7.7 % year-
on-year  in  October to  8.6  %  in  November. 
The  discrepancy  between  the  two  price 
indicators  partly  reflects  a  pronounced 
increase  in  subsidies  on  essential  goods 
during the 2009 crisis period.  
 
“In  Ghana,  the 
parliament  approved 
an  amendment  to  the 
Petroleum  Revenue 
Management Bill that 
would  allow  up  to 
70%  of  the 
government's share of 
oil revenues to be used 
as  collateral  for 
loans.… ” 
 
   Africa Economic & Financial Brief: 6 – 10 December 2010                                                                                        Page 2 
 
 
 
 
  
“In  Côte  d’Ivoire,  
cocoa  volumes 
registered  at  Ivory 
Coast's  ports  have 
slowed  sharply.  Only 
16,174  tons  of  beans 
were registered by the 
official  marketing 
body  Bourse  du  Cafe 
et  Cacao  during  the 
week  ending 
November  28,  down 
from 128,090 tons the 
week before.… ”  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ghana:  The  parliament  approved  an 
amendment  to  the  Petroleum  Revenue 
Management  Bill  that  would  allow  up  to 
70%  of  the  government's  share  of  oil 
revenues - estimated initially to be roughly 
6% of total budget receipts - to be used as 
collateral  for  loans.  Some  analysts  worry 
Ghana's oil wealth may trigger a borrowing 
and  spending  spree,  in  the  context  of  the 
Government’s  agreements  to  borrow  more 
than $14 billion from China.  
Mauritius:  The  central  bank  kept  its 
benchmark repo rate at 4.75 %, but several 
members  of  the  Monetary  Policy 
Committee (MPC) noted inflation could rise 
faster than previously anticipated. Average 
annual inflation remained benign at 2.5 % 
in November, though up from 2.3 % in the 
previous  month.  The  MPC  assessed  the 
economic  recovery  to  be  on  track  and 
forecast growth of around 4.2 % in 2010. 
Mozambique:  The  Government  has 
estimated its 2011 budget at $3.8 billion, up 
from  $3.4  billion  in  the  previous  year.  It 
expects to cover 54 % of the budget through 
taxes,  with  the  remainder  coming  from 
loans and donations. 
Seychelles: The country has cut its external 
debt to $449 million from $789 million two 
years  ago  following  restructuring  deals.  It 
defaulted  on  some  debt  payments  as  the 
global financial crisis hit in October 2008 
and  the  International  Monetary  Fund 
stepped in with an emergency $26 million 
rescue package a month later. Since most of 
the  Paris  Club  creditor  countries  signed 
individual restructuring agreements with the 
government in 2010, the average life of its 
debt portfolio has risen from 6 months to 13 
years.  
South  Africa: Manufacturing output grew 
by 2.5% year-on-year in October, compared 
with the 1.3 % rise in September. Analysts 
said  growth  in  manufacturing  output  was 
still  weak,  reflecting  a  strong  Rand  and 
sluggish  global  and  local  economic 
recovery.  The  Reserve  Bank  worried  that 
austerity  measures  in  Europe  could  derail 
growth.   
 
 “Seychelles has cut its 
external  debt  to  $449 
million  from  $789 
million  two  years  ago 
following  restructuring 
deals …” 
Tanzania:  The  Government  has  revived 
plans  to  issue  a  debut  sovereign  Eurobond 
worth $500 million to finance infrastructure 
projects. It is expecting the first credit rating 
within 6 months. Analysts say the country's 
large fiscal deficit and significant structural 
current  account  shortfall  present  downside 
risks to the rating process. Tanzania has been 
criticized  for  imposing  foreign  exchange 
restrictions  and  not  allowing  foreign 
investors to purchase domestic fixed income 
securities. 
4.   Development Partnerships 
EIB/AFD/KfW-Tunisia: Tunisia obtained a  
297  million  Euro  loan  from  the  European 
Investment  Bank  (EIB),  the  French 
Development Agency (AFD) and the German 
KfW to finance part of a rail network project. 
The  EIB  provided  a  177  million  Euro  loan 
while the  French and German agencies lent 
50 million and 70 million Euros, respectively, 
for  the  rail  scheme  whose  overall  costs 
amount to 1.8 billion Euro.  
5.  Summary 
During the week of 6 – 10 December 2010, 
African  stock  markets  recorded  a  mixed 
performance, largely in line with the mixed 
performance  in  the  commodity  markets. 
While some global financial institutions like 
Citigroup  eyed  Africa  for  their  expansion, 
African  governments  such  as  Ghana  and 
Tanzania plan to tap the global liquidity of 
long-term  capital  seeking  high  returns  to 
finance  their  development  projects. 
Seychelles  succeeded  in  making  its  debt 
more sustainable through restructuring deals. 
Besides, manufacturing output growth picked 
up slightly in South Africa.  
 
 
 
“In  Tanzania,  the 
Government has revived 
plans  to  issue  a  debut 
sovereign  Eurobond 
worth  $500  million  to 
finance  infrastructure 
projects….” 
  
 
    Africa Economic & Financial Brief: 6 – 10 December 2010                                                                                        Page 3 
 
 
 
 
   
 
   Appendix Table 1: Stock market movements – Week ending on 10 December, 2010 
 
Côte d'Ivoire BRVM Composite Index BRVM CI 5,333 ▼ -1.27 ▲ 0.80 ▲ 24.8
Egypt* CASE 30 Index CASE30 19,104 ▲ 2.74 ▼ -2.16 ▲ 10.7
Ghana Ghana All Share GSE 13,594 ▲ 3.54 ▲ 0.72 ▲ 29.9
Kenya Nairobi SE Index- NSE 20 NSE 20 15,028 ▼ -0.04 ▼ -1.93 ▲ 35.0
Mauritius Mauritius AllShares SEMDEX 5,451 ▼ -0.32 ▲ 0.85 ▲ 15.5
Morocco Casa All Share Index MASI 15,383 ▲ 3.33 ▲ 2.35 ▲ 22.7
Nigeria NGSE All Share Index NGSE 47,144 ▼ -1.46 ▲ 0.78 ▲ 17.4
South Africa All Share Index JALSH 746,298 ▲ 0.36 ▲ 0.63 ▲ 13.8
Tunisia Tunis se Tnse Index STK TUNINDEX 2,948 ▼ -0.83 ▼ -0.62 ▲ 21.3
Uganda* Uganda SE All Share index USE 5,460.3 ▼ -0.78 ▼ -1.50 ▲ 61.8
Others
USA Dow Jones Industrial DJ Index 3,603,517 ▲ 0.25 ▲ 2.62 ▲ 9.4
France CAC 40 Index CAC40 933,888 ▲ 2.85 ▲ 0.59 ▼ -2.0
Japan Nikkei 225 Index N225 2,419,146 ▲ 0.33 ▲ 1.38 ▼ -3.2
Stock Markets
Market 
Capitalization  
(USD, million)               
(10-12-2010)
Week under 
review
Region/Country Index Name Index Code
Previous week
Dec 31 - Dec 10
Weekly % change                    
( 03-12-2010)
Year-to-date % 
Change
 
       * Value at end of 9 December, 2010 
 
 
 
    Africa Economic & Financial Brief: 6 – 10 December 2010                                                                                       Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 10 December, 2010 
Africa 
Algeria Algerian Dinar DZD ▲ 0.03 ▼ -0.06 ▼ -2.4
Angola New Kwanza AON ▼ -0.02 ▼ 0.00 ▼ -3.4
Botswana Pula BWP ▲ 0.69 ▲ 0.15 ▲ 0.7
Burundi Burundi Franc  BIF ▲ 0.02 ▲ 0.17 ▲ 0.9
Cape Verde Escudo  CVE ▲ 0.06 ▼ -0.71 ▼ -10.9
Comoros Comoros Franc  KMF ▼ -0.01 ▼ -1.06 ▼ -7.8
Congo. Dem. Rep. of Congolese Franc  CDF ▲ 2.15 ▼ -2.21 ▼ -11.2
Djibouti Djibouti Franc  DJF ▲ 0.31 ▼ -0.50 ▼ -2.1
Egypt Egyptian Pound  EGP ▲ 0.16 ▼ -0.36 ▼ -5.1
Ethiopia Birr  ETB ▼ -0.11 ▼ -0.10 ▼ -23.2
Gambia. The Gambian Dalasi  GMD ▲ 0.81 ▼ -2.38 ▼ -7.2
Ghana New Cedi  GHS ▼ -0.40 ▲ 0.11 ▼ -1.2
Guinea Guinea Franc  GNF ▲ 1.10 ▼ -2.05 ▼ -29.6
Kenya Kenyan Shilling  KES ▲ 0.23 ▲ 0.24 ▼ -5.2
Liberia Liberian Dollar  LRD  ▲ 1.44 ▼ -0.71 ▲ 0.7
Libya Libyan Dinar  LYD ▲ 0.51 ▼ -0.83 ▼ -0.8
Madagascar Ariary  MGA ▼ -1.35 ▼ -3.38 ▼ -6.8
Malawi Kwacha  MWK ▼ -0.82 ▲ 0.56 ▼ -3.5
Mauritania Ouguiya  MRO  ▼ -1.59 ▲ 0.49 ▼ -7.3
Mauritius Mauritius Rupee  MUR  ▲ 0.29 ▼ -1.65 ▼ -1.5
Morocco Dirham  MAD ▲ 0.22 ▼ -0.98 ▼ -6.3
Mozambique New Metical  MZN ▲ 2.47 ▲ 1.13 ▼ -20.2
Nigeria Naira  NGN ▼ -0.91 ▲ 0.23 ▼ -0.8
Rwanda Rwandan Franc  RWF ▼ -0.52 ▲ 1.03 ▼ -3.5
São Tomé & Príncipe Dobra  STD ▲ 0.88 ▼ -2.49 ▼ -15.3
Seychelles Seychelles Rupee  SCR ▼ -0.04 ▼ -0.09 ▼ -9.0
Sierra Leone Leone  SLL ▼ -0.35 ▲ 0.93 ▼ -6.5
Somalia Somali Shilling  SOS ▲ 0.03 ▼ -0.54 ▼ -7.4
South Africa Rand  ZAR ▲ 1.07 ▲ 1.13 ▲ 7.3
Sudan Sudanese Pound  SDG ▼ -0.28 ▼ -0.76 ▼ -3.1
Tanzania Tanzanian Shilling  TZS ▲ 0.81 ▼ -0.38 ▼ -9.3
Tunisia Tunisian Dinar  TND ▲ 0.12 ▼ -0.84 ▼ -8.1
Uganda Uganda Shilling  UGX ▼ -0.67 ▼ -0.09 ▼ -17.4
Zambia Zambian Kwacha  ZMK ▲ 1.63 ▼ -1.77 ▼ -2.0
CFA zone Countries* CFA Franc XOF ▲ 0.37 ▼ -1.26 ▼ -7.8
Others
Europe Euro EUR ▲ 0.00 ▼ -1.38 ▼ -8.2
Japan Yen JPY ▲ 0.21 ▼ -0.61 ▲ 10.0
Currency Name
Week under 
review
Dec 31 -Dec 10
Currency 
Code
Weekly % change                    
( 10-12-2010)
Exchange Rates (currency per US$)
Region/Country
Year-to-date % 
Change
Previous week
 
  Sources: ADB Statistics Department  December 2010.     
  Note: The exchange rates are from the interbank foreign exchange markets.     

Market Brief-Africa Economic Financial Brief 6-10 December 2010

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Market Brief-Africa Economic Financial Brief 6-10 December 2010

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Research Papers in Economics