Three Things in African Markets You Needed to Know Last Week – October 9

Here’s the rundown on last week’s episode of New Rules Africa. Check out the video for our deep dive into Africa’s stock exchanges: Link

Marriott Plans to Build 50 Hotels in Nigeria, South Africa, and Egypt by 2020 – Link

Marriott is putting both feet in Africa, where it projects to have its highest revenue growth through 2020. The company plans to build 50 hotels in Nigeria, South Africa, and Egypt – 10,000 hotel rooms apiece.

That isn’t the end. Within the next 14 months, the company is opening nine hotels in Uganda, Ghana, Ethiopia, Uganda, and South Africa – 1,300 hotel rooms.

The company bought Protea Hospitality Holdings for $200M in April as part of its expansion across Africa. It is interesting that the company is taking both an organic and acquisition approach to growth on the continent.

IMF Forecasts Ghana’s Outlook in Wake of Recent Meetings – Link

Ghana concluded those meetings last week, and walked away with a pretty grim outlook on the country. It may see its lowest growth levels in the past decade, with GDP growth dropping to 4.5 percent from its 7.1 percent growth for 2014. Compare this to the country’s double digit growth levels in the few years following the discovery of the Jubilee Oil Fields. The struggle the country is facing includes:

  • Low revenue
  • High government employee wages on aggregate
  • Rising cost of paying off debt
  • Struggling currency – dropped 30 percent to the dollar this year
  • High inflation – average of 15 percent for the year

It’s a tough situation and hopefully, the country will see it’s way out of this sooner rather than later. President Mahama spoke at a conference I attended a few weeks ago, and while he spoke relatively frankly about the country’s challenges, and the runway for improvement being a potentially long one, he remained hopeful in his comments. The two sides continue talks this week during the IMF/World Bank Annual Meetings.

Mo Ibrahim Foundation Releases 2014 Governance Index – Link

Mo Ibrahim, since 2006, has taken on the task of ensuring that Africa’s governments operate for the people, by the people. The mobile phone pioneer’s Mo Ibrahim Foundation released its latest annual index that ranks the continent’s governments based on a comprehensive set of criteria covering participation and human rights, human development, sustainable economic opportunity, and safety and rule of law.

Here are the highlights:

  • Governance improved on the aggregate slightly over the last five years;
  • The primary drivers of improvements were in participation and human rights, and human development categories. Economic opportunity and human development used to drive the improvement;
  • These countries improved in all four categories: Côte d’Ivoire, Guinea, Zimbabwe, Rwanda, São Tomé & Príncipe, Kenya, Sierra Leone, Lesotho, Liberia, Zambia, Congo, Chad and Gabon; and
  • Côte d’Ivoire, Guinea, Niger and Zimbabwe saw the biggest improvements.

The Fight Continues for Governance and the Central Bank of Nigeria’s Independence

Key Points

1. The saga around the suspended Central Bank of Nigeria governor continues;
2. The Central Bank governor is handily backing up his reputation;
3. President Jonathan could get a black eye from this fight; and
4. The independence of the Central Bank of Nigeria is in the balance.

The Saga

The February 20 suspension of Central Bank Governor Sanusi Lamido Sanusi for “financial recklessness and misconduct” drew many a side-eye. Two months prior to the suspension announcement, Governor Sanusi made claims that Nigeria’s National Petroleum Company had failed to repatriate 49.8 billion USD to the government, before reducing the claim to 20 billion USD.

Governor Sanusi challenged his suspension on the grounds that it is illegal for the President to suspend the Central Bank Governor under the Central Bank of Nigeria Act. This past Thursday, Nigeria’s High Court declined to rule on Governor Sanusi’s challenge. Check out Governor Sanusi’s response.

The suspension is not the only issue Governor Sanusi is dealing with. The Financial Reporting Council of Nigeria is pushing to investigate his use of 1 billion USD while CBN Governor. Nigeria’s High Court has struck down to-date and Governor Sanusi has provided a detailed response.

Dueling Reputations

Governor Sanusi points to the stability of the Central Bank of Nigeria and its effectiveness in fixing the country’s banking system, controlling inflation, and stabilizing currency as wins. The global investing community has taken note and I wouldn’t be surprised if we see Governor Sanusi advising other central banks on their activities when the dust settles – unless the forensic audit of the NNPC proves the company’s financials to be in good shape.

President Jonathan, on the other hand, could be licking his wounds from this fight and the continued threat of Boko Haram in parts of the country. The results forensic audit of the NNPCs financials will serve as vindication for one or the other.

Central Bank Independence

The bottom line is that this situation has big implications for the independence of the Central Bank of Nigeria. Will future governors have Governor Sanusi’s fate on their minds when making decisions? If so, we could very well see the slow unwinding of the governance structure Governor Sanusi helped develop.

Not a Protectionist, But David Cameron’s Interest in Africa Makes Me Nervous

While reading an article on David Cameron’s visit to Africa, I just couldn’t help but see an image of British ships exploring the new world, landing on the African continent and thinking – “we’ve got free labor”.

Source: Slavery in America

The author follows Prime Minister Cameron on his trip to South Africa and Nigeria, highlighted by the fact that the Prime Minister brought with him the heads of several heavy hitters already doing business on the African continent – Vodacom, Barclays, and Diageo to name a few. Mr. Cameron’s theme throughout the trip was that Britain sees Africa in a new light – a trading partner, not just an aid recipient. Business leaders touted the economic opportunities on the continent, and expressed their wishlists of improved regulations to enable business to thrive.

The African continent’s countries are really making moves in growing their economies and improving governance. Those improvements are drawing increasing attention from Asia and the West, and it is increasingly important that African countries protect their interests. My recent trip to Uganda revealed the downside of China’s investment on the continent – socks that had holes after a week of wear. Again, it is increasingly important that African countries protect their interests.

Source: The Economist

Those of us in the Diaspora have an incredible opportunity to seize in serving our countries. Tons of us have studied the way the Asian, European, and American players work the markets, run governments, etc. We can work with Africans on the continent in serving as gatekeepers to ensure that non-African penetration of African countries is healthy.

Source: Marvel Comics

I look forward to working with you in some fashion. I’m sitting here with goosebumps as I watch childhood daydreams morph into reality.