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  15  –  19  November 
2010,  the  majority  of  African  stock 
markets gained alongside the major global 
stock markets. Global stocks rebounded as 
higher-than-expected U.S. corporate profits 
and expectations of an imminent resolution 
of  Ireland's  banking  crisis  outweighed 
renewed talk of further policy tightening in 
China. The stock market in Ghana led the 
winners  among  African  stock  markets, 
recording  a  substantial  increase  of  2.9%, 
followed  by  the  markets  in  Uganda  and 
Mauritius,  which  registered  significant 
gains  of  2%  and  1.6%,  respectively. 
Moderate  gains  of  less  than  1%  were 
posted by the markets in Egypt, Morocco, 
Côte  d’Ivoire,  and  Tunisia.  On  the  other 
hand, three African stock markets fell, with 
the  Nigerian  stock  market  recording  the 
largest loss of 1.6%, while those of South 
Africa  and  Kenya  registered  moderate 
losses of 0.9% and 0.3%, respectively.  
 
Equity Focus 
 
Uganda:  The  All  Share  Index  of  the 
Uganda  Securities  Exchange  (USE)  rose 
by 2% over the week, reflecting in part the 
inertial  force  of  speculative  demand  for 
stocks.  During  the  third  quarter  of  this 
year,  the  turnover  in  USE  halved  from 
UGX 8.6 billion to UGX3.9 billion, while 
the  All  Share  Index  rose  by  8.2%, 
reflecting  the  strength  of  speculative 
demand amid limited supply of shares due 
to an expectation of continued increases in 
equity prices.  
 
South  Africa:  The  All  Share  Index 
declined  by  0.9%  over  the  week  amid 
concern that the People’s Bank of China’s 
move to contain inflation will slow down 
global growth and put downward pressure 
on commodities and related stocks  
 
1.2  Commodity Markets 
 
Crude  Oil  (Brent):  The  price  of  Brent 
crude oil fell sharply by  4%, posting its 
biggest weekly loss in three months. The 
sharp drop reflected the worries regarding 
the Irish debt crisis and the possibility that 
the  People’s  Bank  of  China  will  take 
further actions to prevent inflation.  
 
Gold: The price of gold declined by 3.3%, 
recording a second straight weekly loss, as 
moves by China to fight inflation and slow 
growth eroded demand for precious metals 
and raw materials. The sensitive response 
of  the  gold  price  to  Chinese  actions 
reflects in part the increased influence of 
Chinese  investors  in  determining  the 
demand for gold.  
 
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%  over  the  week, 
driven by a rise in the yield rate of U.S. 
Treasury  Bonds  and  concerns  about 
Ireland’s debt crisis.  
Market Brief 
Volume1, Issue 46 
26 November, 2010 
 
Africa Economic & Financial Brief 
For the period 15-19 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 
  
 
 
“In  West  Africa, 
inflation  will  average 
1.2  %  at  the  end  of  the 
year …” 
 
Twenty  three  African  currencies 
depreciated,  with  the  largest  loss  of  4.6% 
being  recorded  by  the  Gambian  Dalasi, 
offsetting the previous week’s gain of 4.5%. 
The  Dalasi  was followed by  São Tomé  & 
Príncipe’s Dobra which lost 3.2% in value. 
The  remaining  twenty  one  currencies 
registered losses of less than 2% against the 
U.S.  dollar.  On  the  other  hand,  ten 
currencies appreciated with the largest gains 
of  2%  posted  by  the  Mozambique  New 
Metical. The currencies of Sierra Leone and 
Angola  remained  unchanged  vis-à-vis  the 
U.S. dollar over the week.  
 
2.   Regional Developments 
West Africa: The BCEAO, the central bank 
of  the  West  African  Economic  and 
Monetary  Union  (UEMOA)  countries 
predicted that  inflation across West  Africa 
will average 1.2 % at the end of the year. 
The rate is lower than the earlier projection 
of  1.3  %  in  September  despite  the  bank’s 
own warning in September of a risk linked 
to a surge in wheat prices.  
3.  Countries in Focus 
Angola: The Minister of Finance predicted 
economic growth rates of 6.7 % this year 
and  7.6  %  next  year,  leading  to  a  budget 
surplus next year, due to improved output 
from  oil  and  other  sectors.  The  growth 
forecast  for  the  next  year  is  much  higher 
than  the  International  Monetary  Fund’s 
projection  this  week  of  2.5  %.  The  2010 
estimate  also  substantially  exceeds  the 
4.5 % forecast by the President in October.  
Cameroon: The country plans to issue the 
first  treasury  bonds  of  200  billion  CFA 
francs  yielding  5.6  %  and  maturing  from 
2012  to  2015.  The  funds  will  support 
infrastructure  projects  including  the  Lom 
Pangar dam to increase power output from 
downstream  hydroelectric  plants,  and  to 
allow construction of new energy capacity.  
Democratic  Republic  of  Congo:  Exports 
from  Congo's  southern  copper  lands  is 
expected to rise by 25 % to over 1 million 
tonnes  next  year  due  to  renewed  investor 
confidence  following  a  government  mining 
contract review.  
Ethiopia: The country announced its plan to 
introduce  one-year  Treasury  bills  and  hold 
weekly  auctions  by  December.  The  Central 
Bank  issues  Treasury  bills  sporadically.  It 
recently  invited  tenders  for  28-day  bills 
worth 910 million Birr with a maturity date 
of December 15, 2010. 
Ghana:  The  Minister  of  Finance  predicted 
economic growth would double to 12.3 % in 
2011  as  its  first  oil  was  produced.  He 
announced  a  series  of  tax  hikes  aimed  at 
financing  substantial  new  infrastructure 
spending, pledging to narrow the fiscal deficit 
and warning that oil revenues would not be 
enough  in  themselves  to  transform  the 
country still marked by widespread poverty.  
Kenya:  CDC  Group  PLC,  a  British 
development  finance  institution,  announced 
that it was focusing the bulk of its 57 million 
pound  Kenyan  investment  portfolio  on 
infrastructure and financial services. CDC’s 
Kenya  portfolio  had  shrunk  slightly  in  the 
past few years. However, it plans to put the 
capital  back  into  the  east  Africa's  largest 
economy,  on  expectation  that  the  rapid 
population  growth  in  the  country  will 
increase the demand for infrastructure. 
Morocco:  The  country's  foreign  currency 
reserves fell 5.5 % year-on-year in September 
as  higher  phosphate  export  revenues  and 
expatriate remittances failed to offset soaring 
import bills for oil and grains.  
Mozambique:  Consumer  inflation  was 
steady near a two-year high at 15.3 % year-
on-year in October compared with the same 
rate  in  September.  The  country  is  heavily 
dependent  on  imports  from  neighboring 
South Africa. The high inflation reflected in 
part  the  depreciation  of  its  currency,  the 
Metical, by more than a quarter of its value 
against the South African rand this year. 
 
“In  Cameroon,  the 
country plans to issue 
treasury bonds of 200 
billion CFA … ” 
 
   Africa Economic & Financial Brief: 15 – 19 November 2010                                                                                          Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Namibia:  The  central  bank  has  reported 
that  falling  inflation  has  cushioned  the 
country's exports from the effect of a strong 
currency.  The  Central  Bank  expected  no 
dramatic  increase  next  year  in  annual 
inflation, which stood at a five-year low of 
3.9 % in October, despite expected food and 
oil price increases.  
Nigeria: The Government sold NGN 89.2 
billion  in  20-year,  7-year  and  3-year 
sovereign bonds at its eleventh debt auction 
of the year. The amount of bonds sold was 
27 % above the level initially advertised by 
the debt office, but short of the NGN 126.9 
billion  demanded.  Partly  as  a  result,  the 
marginal yield rate on the 3-year bonds rose 
to 11.5 % from 10.5 % last month, that of 
the  7-year  paper  was  up  to  13.2  %  from 
11 %, while the 20-year bond rate edged up 
to 15.5 % from 14 %.    
Rwanda: The central bank cut its key repo 
rate  by  one  percentage  point  to  6  %,  the 
second  reduction  this  year  designed  to 
stimulate  lending  to  the  private  sector.  It 
also expressed its plan to keep the lending 
rate  on  hold  through  the  first  quarter  of 
2011, when inflation rates are likely to start 
picking up. 
Tanzania: A 10-year Treasury bond auction 
was undersubscribed and the Central Bank 
sold less than half the amount of bonds on 
offer. The Bank of Tanzania had offered 20 
billion  shillings  of  the  fixed-rate  Treasury 
bonds with an 11.44 % coupon. It received 
bids  worth  18.5  billion  and  sold  just  9.5 
billion shillings of bonds. 
Zambia:  The  country  has  secured  export 
markets  for  125,000  tonnes  of  its  surplus 
maize and may soon conclude deals for an 
additional 258,000 tonnes.  
Zimbabwe:  Total  bank  deposits  increased 
to US$2.3 billion in October from less than 
US$0.2 billion in February last year when 
the  economy  adopted  the  multi-currency 
system.  Strong  growth  in  deposits  and 
loans,  in  part  reflected  the  increasing 
confidence in the country’s financial sector 
and  the  cumulative  impact  of  a  growing 
economy in line with the recently restored 
 
 “In  Mozambique, 
consumer inflation was 
steady near a two-year 
high at 15.3 % year-on-
year  in  October  in 
tandem  with  the 
depreciation  of  the 
Metical …” 
lender-of-last-resort role of the Reserve Bank 
of Zimbabwe.  
4.   Development Partnerships 
AfDB:  The  African  Development  Bank 
(AfDB)  has  launched  a  two-year  technical 
assistance  program  -  the  African  Carbon 
Support  Program,  which  is  geared  toward 
assisting  Bank  clients  in  regional  member 
countries  to  access  carbon  finance.  The 
program  involves  a  screening  process 
whereby  the  carbon  finance  potential  of 
investment proposals received by the Bank is 
identified  and  assessed.  At  the  same  time, 
capacity building activities will be undertaken 
for  host  country  government,  where  such 
carbon- finance eligible projects are going to 
be developed. 
 
IMF-Ethiopia:  The  International  Monetary 
Fund (IMF) announced it would give Ethiopia 
$62.7  million  from  its  Exogenous  Shock 
Facility, the final tranche of a $240.2 million 
package.  The  IMF  stated  that  Ethiopia  had 
successfully  implemented  good 
macroeconomic  policies,  such  as  bringing 
soaring  inflation  down  and  building 
international reserves to about 2.1 months of 
import cover. Ethiopia, one of Africa's fastest 
growing  economies,  reported  that  the  year-
on-year  inflation  was  10.6  %  in  October 
down from 64.2 % in July 2008. 
 
5.  Summary 
 
During the week of 15 – 19 November 2010, 
the majority of African stock markets gained 
alongside  the  major  global  stock  markets. 
Growth  acceleration  has  been  forecast  in 
Ghana and Angola, while inflation has been 
falling  in  West  Africa,  Ethiopia,  and 
Namibia.  Other  positive  developments 
include: exports of surplus maize in Zambia, 
increasing copper exports in DRC, a strong 
rise  of  bank  deposits  in  Zimbabwe,  and 
oversubscription  of  bond  issued  in  Nigeria. 
On the other hand, Tanzania’s bond auction 
was  under-subscribed,  while  Morocco  has 
seen  a  reduction  in  foreign  reserves. 
Governments in Cameroon and Ethiopia plan 
to  issue  bonds  with  a  view  to  financing 
infrastructure  and  deepening  domestic  debt 
markets, respectively.  
 
 
 
“In  Zimbabwe,  total 
bank  deposits  increased 
to  US$2.3  billion  in 
October  from  less  than 
US$0.2  billion  in 
February last year ….” 
  
 
    Africa Economic & Financial Brief: 15 – 19 November 2010                                                                                           Page 3 
 
 
 
 
   
 
   Appendix Table 1: Stock market movements – Week ending on 19 November, 2010 
 
Côte d'Ivoire BRVM Composite Index ▲ 0.07 ▼ -1.57 ▲ 25.5
Egypt* CASE 30 Index ▲ 0.92 ▼ -0.02 ▲ 9.9
Ghana Ghana All Share ▲ 2.90 ▼ -1.57 ▲ 25.7
Kenya Nairobi SE Index- NSE 20 ▼ -0.33 ▼ -1.22 ▲ 41.0
Mauritius Mauritius AllShares ▲ 1.62 ▲ 1.38 ▲ 15.5
Morocco Casa All Share Index ▲ 0.74 ▲ 0.05 ▲ 18.0
Nigeria NGSE All Share Index ▼ -1.61 ▲ 2.29 ▲ 19.8
South Africa All Share Index ▼ -0.93 ▲ 0.75 ▲ 13.5
Tunisia Tunis se Tnse Index STK ▲ 0.04 ▲ 3.04 ▲ 24.2
Uganda* Uganda SE All Share index ▲ 1.99 ▲ 0.54 ▲ 67.2
Others
USA Dow Jones Industrial ▲ 0.10 ▼ -2.20 ▲ 7.4
France CAC 40 Index ▲ 0.76 ▼ -2.19 ▼ -1.9
Japan Nikkei 225 Index ▲ 3.06 ▲ 1.03 ▼ -5.0
Stock Markets
Week under 
review
Region/Country Index Name
Previous week
Dec 31 - Nov 19
Weekly % change                    
( 19-11-2010)
Year-to-date % 
Change
 
       * Value at end of 18 November, 2010 
 
 
 
    Africa Economic & Financial Brief: 15 – 19 November 2010                                                                                         Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 19 November, 2010 
Africa 
Algeria Algerian Dinar DZD ▼ -0.55 ▼ -0.64 ▼ -1.5
Angola New Kwanza AON ▲ 0.00 ▲ 0.01 ▼ -3.4
Botswana Pula BWP ▼ -0.67 ▼ -1.51 ▲ 1.2
Burundi Burundi Franc  BIF ▲ 0.05 ▼ -0.53 ▲ 0.9
Cape Verde Escudo  CVE ▼ -1.86 ▼ -1.86 ▼ -8.6
Comoros Comoros Franc  KMF ▼ -0.28 ▼ -3.85 ▼ -5.0
Congo. Dem. Rep. of Congolese Franc  CDF ▼ -0.02 ▲ 0.00 ▼ -12.2
Djibouti Djibouti Franc  DJF ▲ 0.01 ▼ -1.26 ▼ -2.3
Egypt Egyptian Pound  EGP ▲ 0.02 ▼ -0.29 ▼ -4.6
Ethiopia Birr  ETB ▼ -0.11 ▼ -0.48 ▼ -22.9
Gambia. The Gambian Dalasi  GMD ▼ -4.56 ▲ 4.53 ▼ -7.2
Ghana New Cedi  GHS ▼ -0.08 ▼ -0.07 ▲ 0.0
Guinea Guinea Franc  GNF ▼ -0.54 ▼ -0.28 ▼ -29.7
Kenya Kenyan Shilling  KES ▲ 0.37 ▼ -0.73 ▼ -5.5
Liberia Liberian Dollar  LRD  ▲ 1.45 ▲ 2.86 ▲ 1.4
Libya Libyan Dinar  LYD ▼ -0.72 ▼ -2.34 ▲ 1.9
Madagascar Ariary  MGA ▲ 0.20 ▼ -1.54 ▼ -1.9
Malawi Kwacha  MWK ▼ -0.37 ▲ 0.34 ▼ -3.5
Mauritania Ouguiya  MRO  ▼ -0.77 ▲ 2.42 ▼ -5.5
Mauritius Mauritius Rupee  MUR  ▼ -1.48 ▼ -0.90 ▲ 0.2
Morocco Dirham  MAD ▼ -0.57 ▼ -2.54 ▼ -3.9
Mozambique New Metical  MZN ▲ 1.97 ▲ 0.00 ▼ -22.8
Nigeria Naira  NGN ▲ 0.98 ▼ -0.51 ▲ 0.8
Rwanda Rwandan Franc  RWF ▼ -0.33 ▼ -0.33 ▼ -3.0
São Tomé & Príncipe Dobra  STD ▼ -3.22 ▼ -2.38 ▼ -13.9
Seychelles Seychelles Rupee  SCR ▲ 0.08 ▼ -0.67 ▼ -8.6
Sierra Leone Leone  SLL ▲ 0.00 ▼ -0.04 ▼ -6.0
Somalia Somali Shilling  SOS ▼ -0.05 ▼ -1.10 ▼ -7.5
South Africa Rand  ZAR ▼ -1.35 ▼ -0.97 ▲ 5.9
Sudan Sudanese Pound  SDG ▼ -0.40 ▲ 0.09 ▼ -2.0
Tanzania Tanzanian Shilling  TZS ▼ -0.35 ▼ -0.27 ▼ -10.5
Tunisia Tunisian Dinar  TND ▼ -0.68 ▼ -2.01 ▼ -6.2
Uganda Uganda Shilling  UGX ▲ 0.03 ▼ -0.14 ▼ -16.4
Zambia Zambian Kwacha  ZMK ▼ -0.55 ▼ -0.45 ▼ 0.0
CFA zone Countries CFA Franc XOF ▼ -0.47 ▼ -3.49 ▼ -4.8
Others
Europe Euro EUR ▼ -1.02 ▼ -3.12 ▼ -5.1
Japan Yen JPY ▼ -1.25 ▼ -1.73 ▲ 10.7
Currency Name
Week under 
review
Dec 31 -Nov 19
Currency 
Code
Weekly % change                    
( 19-11-2010)
Exchange Rates (currency per US$)
Region/Country
Year-to-date % 
Change
Previous week
 
   Source: AfDB Statistics Department, November 2010 
 
    Africa Economic & Financial Brief: 15 – 19 November 2010                                                                                        Page 5 
 
 
 
 
  

Market Brief-Africa Economic Financial Brief 15-19 November 2010

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Market Brief-Africa Economic Financial Brief 15-19 November 2010

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Research Papers in Economics