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  30  August–3 
September  2010,  global  equity  markets 
advanced  as  fears  over  a  double-dip 
recession  eased.  African  stock  markets, 
however,  showed  mixed  performance, 
with  the  highest  gains  of  4.5%  and  2% 
recorded  in  the  stock  markets  of  South 
Africa  and  Tunisia,  respectively. 
Moderate  gains  of  0.8%  and  0.5%  were 
recorded in the markets of Egypt and Côte 
d'Ivoire,  respectively.  The  markets  in 
Mauritius,  Kenya  and  Ghana  posted 
substantial  losses  of  1.9%,  1.6%  and 
1.5%,  respectively.  The  overall  stock 
prices  of  Nigeria  were  virtually 
unchanged. 
 
Equity Focus 
 
Mauritius: The SEMDEX Index declined 
by 1.9% over the week. In particular, the 
prices  of  tourism  stocks  fell  sharply  as 
investors speculated over weak upcoming 
earnings results due to the adverse impacts 
of the Euro-zone crisis. 
 
Kenya: The NSE 20 Index fell by 1.6% 
during the week due to profit-taking, after 
rising  to  a  near  2-year  high  in  the  first 
week  of  August.  The  market  was  also 
weighed down by a fall in the share price 
of Safaricom, Kenya's largest telecoms  
 
 
 
firm, caused by the stiff competition in the 
telecom sector. 
 
South Africa: The JALSH Index rose by 
4.5%  over  the  week,  recording  its  first 
weekly gain after 5 consecutive weeks of 
losses. The market tracked the movements 
of  global  equities,  on  the  back  of  a 
stronger  than  expected  labour  market 
report that bolstered optimism in the U.S. 
and global economies. 
 
 
1.2  Commodity Markets 
 
Crude Oil (Brent):  The price of crude oil 
fell by 0.8% over the week to USD 74.6 a 
barrel  on  concern  over  Europe’s 
sovereign-debt problems. The decline also 
reflected  the  increase  in  the  U.S. 
petroleum  stockpiles  from  0.4  to  1.14 
billion  barrels,  the  highest  level  since 
1990. 
 
Cotton: The cotton price has increased by 
2.2%  over  the  week,  reaching  a  15-year 
high  due  to  supply  constraints  and 
sustained demand for clothing products.  
 
Copper:  The  price  of  copper  rose  3.9% 
during  the  week,  reflecting  buoyant 
growth  in  China  and  general  supply 
constraints.  Copper  output  from  the  top 
four  producing  companies  dropped  by 
about 12% in the first quarter of 2010.  
 
 
 
 
Market Brief 
Volume1, Issue 35 
3 September, 2010 
 
Africa Economic & Financial Brief 
For the period 30 August – 3 September, 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),        
 under the supervision by Abdul B. Kamara (a.b.kamara@afdb.org).  
 
 
  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 
  
 
 
 
 
 
 “Angolan authorities cut 
gasoline  and  diesel 
subsidies as a prelude to 
liberalizing the country's 
downstream  oil  sector 
…” 
 
1.3  Exchange Rates 
 
The majority of African currencies  rallied 
against the  US  dollar,  following  the  Euro 
which  appreciated  against  the  US  dollar 
reflecting  simmering  worries  about  an 
economic  slowdown  in  the  world.  During 
the week under review, twenty four African 
currencies depreciated against the US dollar 
in the inter-bank foreign exchange markets. 
The Madagascar Ariary recorded the largest 
appreciation of 6.9%, followed by the Cape 
Verde Escudo (1.8%). The CFA Franc also 
posted a moderate appreciation of 1% vis-à-
vis the US dollar. In contrast, seven African 
currencies weakened against the US dollar. 
The  largest  depreciation  of  4.5%  was 
recorded by the Guinea Franc, followed by 
DRC’s  Congolese  Franc  (1.6%).  The 
currency  value  of  the  Liberian  dollar 
remained unchanged. 
 
2.   Regional Developments 
Africa:  According  to  the  World  Trade 
Organization  (WTO),    the  value  of 
merchandise  exports  of  nine  African 
countries  –  Algeria,  Egypt,  Kenya, 
Mauritius, Morocco, Nigeria, South Africa, 
Tanzania,  Tunisia  –  increased  by  29 
percent,  while  merchandise  imports 
increased by 18 percent on average year-on-
year in the second quarter of 2010. With the 
growth  of  world  merchandise exports  and 
imports  at  26%  and  25%,  respectively, 
demand for African exports is expected to 
be sustained. 
3.  Countries in Focus 
Angola:  Angolan  authorities  cut 
gasoline  and  diesel  subsidies  as  a 
prelude to liberalization of the country's 
downstream oil sector, triggering a rise 
of gasoline price by 50% and diesel by 
38%. 
 
Botswana:  Based  on  a  stronger 
performance  by  the  minerals  sector  - 
particularly  diamonds  -  the  International 
Monetary  Fund  (IMF)  has  reduced  its 
forecast for Botswana's budget deficit this 
year from 12.2% to 6.4%.  
The  Gambia:  The  Central  Bank  of  the 
Gambia  forecast  the  country's  economic 
growth to slow to 5% in 2010 from 5.6% 
in 2009. The bank predicted that despite 
the  negative  effects  of  the  global 
economic  crisis  on  the  services  sector, 
manufacturing, wholesale and retail trade 
and  agricultural  value-added  remained 
strong.  
Ghana: An audit report by the Bank of 
Ghana has indicated that fifteen Rural and 
Community  Banks  (RCBs)  out  of  the 
current  136  RCBs  in  Ghana  are  to  be 
liquidated.  The  central  bank  explained 
that the objective of the liquidation is to 
reduce risk in the financial sector.  
Mauritius: The Government reported that 
the  country  needed  to  raise  some  225 
billion rupees over the next 10 years to 
finance  its  public  infrastructure 
development.  However,  there  are  fears 
that banks could be reluctant to lend the 
money  in  the  wake  of  the  Euro  zone 
crisis.  In  this  context,  the  Government 
intends  to  foster  the  development  of  a 
secondary debt market in order to spread 
business risk more widely and reduce the 
dependence on banks. 
Morocco: The number of tourists arriving 
in  Morocco  in  July  rose  by  10%  on  a 
year-to-year  basis  and  4%  compared  to 
June.  In  the  seven  months  to  July,  5.6 
million  visitors  came  to  Morocco,  with 
British  tourist  arrivals  contributing  for 
most  of  the  growth  followed  by  Italian 
and  Spanish  tourists.  Tourism  is  the 
second largest foreign currency earner for 
Morocco after remittances, accounting for 
9% of its Gross Domestic Product. 
 
 
“In  Ghana,  :  Fifteen 
Rural  and  Community 
Banks (RCBs) out of the 
current  136  RCBs  in 
Ghana  are  to  be 
liquidated … ” 
 
   Africa Economic & Financial Brief: 30 August – 3 September 2010                                                                       Page 2 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nigeria:  Nigeria  hopes  to  launch  a  $500 
million global bond with a 10-year maturity 
by the end of November and has selected a 
consortium  of  international  and local legal 
and financial advisers.  
The  Nigerian  financial  sector  is  showing 
signs  of  recovery  following  last  year’s 
intervention by the Central Bank of Nigeria. 
While  lending  to  the  private  sector  is 
picking  up,  the  World  Bank  has  criticized 
the  funding  of  the  Small  and  Medium 
Enterprises (SMEs) as too generous, arguing 
that  the  80%  risk  guarantee  by  the  CBN 
should be split 50-50 with the commercial 
banks.  
Rwanda:  The government plans to have a 
new airport by 2014 and has set aside $98 
million as capital for its national airline over 
the next three years with a view to selling it 
off once it breaks even. 
Sudan: The country plans to delay the sale 
of $300 million of Islamic bonds until next 
year as it waits for global markets to recover 
from the economic crisis. Sudan is seeking 
buyers  for  the  bonds  in  the  Persian  Gulf 
region,  because  U.S.  economic  sanctions 
have  denied  the  country  access  to  other 
international markets.  
Uganda:  Uganda  has  invited  international 
bids  for  the  Karuma  falls  hydropower 
project  expected  to  produce  up  to  700 
megawatts  (MW)  and  estimated  to  cost 
about $900 million. The project was delayed 
after a European contractor pulled out.  
 
 
4.   Development Partnerships 
 
EC-Africa:  The  European  Commission 
approved  the  first  financing  in  favor  of 
Burkina  Faso  (EUR  14  million)  under  the 
EUR  264  million  2010  allocation  for  the 
Vulnerability  FLEX  mechanism.  It  is  a 
short-term instrument which provides EUR 
500 million over two years (2009-2010) to 
help  the  most  vulnerable  African, 
Caribbean, and Pacific (ACP) countries cope 
with the impact of the global financial crisis 
 
 “In  Morocco,  the 
number  of  tourists 
arriving in July rose 
10  percent  from  a 
year  earlier  and  4% 
compared to June.” 
and economic downturn.  
 
Zambia-China:  Construction  of  Zambia's 
Kafue  George  Lower  hydroelectric  power 
plant  is  expected  to  begin  in  April  2011, 
based on an agreement between China and 
Zambia  for  the  1.5  billion  dollar,  750 
megawatt  power  scheme.  It  will  ease  but 
does  not  eliminate  Zambia's  medium-term 
power  needs  --  driven  in  large  part  by  a 
revived mining sector.  
 
Zimbabwe-AFREXIM  Bank: The African 
Export  Import  Bank  (AFREXIM  Bank) 
announced a US$100 million credit facility 
for  Zimbabwe,  to  be  used  mainly  by 
companies  involved  in  export  trade  and 
manufacturing.  The  facility  will  facilitate 
access  by  industry  to  reasonably  priced 
financing and thus help alleviate long-term 
financing constraints within the economy.  
 
5.  Summary 
 
During  the  week  under  review,  African 
stock  markets  showed  mixed  performance 
despite  rallies  in  the  major  global  stock 
markets  and  some  commodity  markets. 
Noteworthy  developments  in  the  financial 
sector include Nigeria’s planned launch of a 
$500  million  global  bond  and  Ghana’s 
restructuring  of  the  Rural  and  Community 
Banks. Meanwhile, the negative impacts of 
the  global  financial  crisis  persist,  as 
illustrated  by  slowing  growth  (e.g.,  the 
Gambia) and delays in the implementation 
of  long-term  development  projects  (e.g., 
Uganda).  
   
 
 
 
“Sudan  plans  to 
delay the sale of $300 
million  of  Islamic 
bonds until next year 
as it waits for global 
markets  to  recover 
from  the  economic 
crisis….” 
  
 
   Africa Economic & Financial Brief: 30 August – 3 September 2010                                                                      Page 3 
 
 
 
 
   
 
Appendix Table 1: Stock market movements – Week ending on 3 September, 2010 
Côte d'Ivoire BRVM Composite Index ▲ 0.54 ▲ 2.61 ▲ 17.4
Egypt* CASE 30 Index ▲ 0.80 ▲ 1.34 ▲ 5.1
Ghana Ghana All Share ▼ -1.47 ▲ 1.72 ▲ 19.6
Kenya Nairobi SE Index- NSE 20 ▼ -1.59 ▼ -1.90 ▲ 36.6
Mauritius Mauritius AllShares ▼ -1.91 ▲ 0.07 ▲ 2.2
Morocco Casa All Share Index ▼ -0.54 ▲ 2.31 ▲ 12.0
Nigeria NGSE All Share Index ▼ -0.03 ▼ -3.26 ▲ 16.6
South Africa All Share Index ▲ 4.50 ▼ -0.93 ▲ 1.0
Tunisia Tunis se Tnse Index STK ▲ 1.95 ▲ 1.06 ▲ 26.0
Uganda* Uganda SE All Share index ▼ -0.24 ▲ 1.61 ▲ 45.0
Others
USA Dow Jones Industrial ▲ 2.93 ▼ -0.62 ▲ 0.2
France CAC 40 Index ▲ 4.70 ▼ -0.53 ▼ -6.7
Japan Nikkei 225 Index ▲ 1.37 ▼ -2.05 ▼ -13.6
Region/Country Index Name Previous 
week
Week under 
review
Dec 31 - Sep 03
Weekly % change                    
( 03-09-2010)
Year-to-date % 
Change
Stock Markets
 
      * Value at end of 2 September, 2010 
 
 
   Africa Economic & Financial Brief: 30 August – 3 September 2010                                                                         Page 4 
 
 
 
 
  Appendix Table 2: Exchange rate movements – Week ending on 3 September, 2010 
Africa 
Algeria Algerian Dinar DZD ▲ 0.99 ▼ -1.00 ▼ -3.0
Angola New Kwanza AON ▲ 1.13 ▲ 1.39 ▼ -1.0
Botswana Pula BWP ▲ 0.67 ▼ -0.79 ▼ -1.9
Burundi Burundi Franc  BIF ▼ 0.00 ▼ -0.06 ▲ 1.0
Cape Verde Escudo  CVE ▲ 1.83 ▼ -2.09 ▼ -13.6
Comoros Comoros Franc  KMF ▲ 0.44 ▼ -0.01 ▼ -10.6
Congo. Dem. Rep. of Congolese Franc  CDF ▼ -1.64 ▲ 1.00 ▼ -11.8
Djibouti Djibouti Franc  DJF ▼ -0.45 ▼ -0.07 ▼ -2.4
Egypt Egyptian Pound  EGP ▼ -0.13 ▲ 0.04 ▼ -3.9
Ethiopia Birr  ETB ▲ 0.06 ▼ -0.12 ▼ -7.1
Gambia. The Gambian Dalasi  GMD ▼ -0.63 ▼ -0.32 ▼ -8.2
Ghana New Cedi  GHS ▲ 0.41 ▼ -0.14 ▲ 0.1
Guinea Guinea Franc  GNF ▼ -4.52 ▼ -3.27 ▼ -11.3
Kenya Kenyan Shilling  KES ▲ 0.49 ▲ 0.25 ▼ -6.1
Liberia Liberian Dollar  LRD  ▲ 0.00 ▲ 0.00 ▼ -4.1
Libya Libyan Dinar  LYD ▲ 1.26 ▼ -1.07 ▼ -3.2
Madagascar Ariary  MGA ▲ 6.85 ▼ -0.06 ▼ -4.1
Malawi Kwacha  MWK ▲ 0.46 ▲ 0.45 ▼ -2.9
Mauritania Ouguiya  MRO  ▼ -0.10 ▼ -0.06 ▼ -8.4
Mauritius Mauritius Rupee  MUR  ▲ 0.44 ▼ -1.29 ▼ -2.0
Morocco Dirham  MAD ▲ 0.70 ▼ -0.73 ▼ -8.6
Mozambique New Metical  MZN ▲ 0.54 ▲ 4.19 ▼ -25.3
Nigeria Naira  NGN ▲ 1.04 ▼ -0.45 ▲ 0.2
Rwanda Rwandan Franc  RWF ▲ 0.73 ▼ -0.06 ▼ -2.5
São Tomé & Príncipe Dobra  STD ▲ 1.16 ▼ -1.66 ▼ -17.3
Seychelles Seychelles Rupee  SCR ▲ 0.88 ▼ -0.33 ▼ -10.1
Sierra Leone Leone  SLL ▼ -1.54 ▼ -0.13 ▼ -1.9
Somalia Somali Shilling  SOS ▼ -0.54 ▼ -0.06 ▼ -7.6
South Africa Rand  ZAR ▲ 0.76 ▼ -0.56 ▲ 1.9
Sudan Sudanese Pound  SDG ▲ 0.13 ▼ -0.06 ▼ -2.1
Tanzania Tanzanian Shilling  TZS ▼ -0.09 ▲ 0.07 ▼ -12.0
Tunisia Tunisian Dinar  TND ▲ 0.23 ▼ -1.01 ▼ -10.5
Uganda Uganda Shilling  UGX ▼ -0.13 ▼ -0.62 ▼ -15.5
Zambia Zambian Kwacha  ZMK ▲ 1.33 ▼ -1.14 ▼ -4.9
CFA zone Countries CFA Franc XOF ▲ 1.04 ▼ -1.04 ▼ -10.5
Others
Europe Euro EUR ▲ 0.82 ▼ -0.93 ▼ -10.6
Japan Yen JPY ▲ 0.46 ▲ 1.03 ▲ 9.5
Currency 
Code
Weekly % change                    
( 03-09-2010)
Year-to-date % 
Change
Previous week
Exchange Rates (currency per US$)
Region/Country Currency Name
Week under 
review
Dec 31 -Sep 03
 
         Source: AfDB Statistics Department, September 2010 

Market Brief-Africa Economic Financial Brief 30-3 September 2010

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/9.10-Africa%20Economic%20%20Financial%20Brief%2030%20August%20-%203%20September%202010.pdf

Market Brief-Africa Economic Financial Brief 30-3 September 2010

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