The Africa Weekly. Equity research Pan-Africa News & Analysis. In this week's issue 04 February 2011

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1 In this week's issue 04 February 2011 Regional Crises hits African Eurobonds; Critical issues for AU as main summit begins; Nestle to invest USD 1bn in Africa over next two years Southern Africa Angola: Gov to issue public debt bonds; Fisheries prioritizes aquaculture in 2011; Nampak Angolan plant to contribute ZAR 500m Botswana: Exports surge 23% in the first nine months of 2010; Sefalana s 1H11 EPS decline by 7.5% on lower margins Lesotho: IFC, WB to support development through PPPs Malawi: MWK 80bn to modernise railway system; Bank sees pressure on foreign reserves; MASM takes over Liberty Health Mauritius: Textile sector seen recovering in 2011; Air Mauritius ups seat capacity; GDP growth to exceed 4%; Engen buys Chevron's Mauritius ops Namibia: BCI falls; ZAR 1.2bn for airport upgrades; Options for Sacu revenue sharing; BoN blocks dividends to Iran Husab project approved Swaziland: Tender process to launch for second mobile phone operator; SPTC publishes FY10 financial results Zambia: ZMK 840bn trade surplus; China-Zambia trade soars to USD 2.2bn; ZICTA approves MTN share sale; Luanshya mine set to reduce costs by 25% Zimbabwe: Indigenisation Act to be gazette; External debt reaches USD 6.93bn; Inflation pressures rise; Local investor proposes 125MW thermal power plant East Africa Kenya: Inflation reaches 5.42% in January; Housing prices up 5.8%; IMF projects 5.7% GDP growth in 2011; Mumias Sugar 1H11 PAT drops 21.2% Rwanda: BNR to implement RTGS payment system; Grenade attack hits Kigali; Bralirwa shares rise 62% on their market debut Tanzania: GDP growth at 6.2% for 3Q10; Engen acquires Chevron assets; Bank M issues fixed rate bond Uganda: Uganda defers oil production to 2012; Inflation hits highest in four months; Single currency to spur regional growth West Africa BRVM: Sonatel increases subscriber base; Niger goes to the polls; Cocoa reaches port, but not cleared for export Ghana: GRA exceeds its 2010 target of GHS 5.92bn by 0.5%; Work begins on Jubilee gas project; PBC s record s a 16.7% increase in EPS to GHS Nigeria: Stanbic IBTC forecasts NGN 2.6bn PAT for 1Q11; Six banks ready for recapitalization; Questions over MOU terms for rescued banks North Africa Egypt: Egypt conflict continues: Timeline of events; Vodafone services interrupted in the wake of unrest; Moody s downgrades ratings on five banks Morocco: Fuel subsidies to swell to USD 5bn in 2011; Morocco watches nervously as revolts erupt in its neighbours; Mobile penetration passes 100% Tunisia: Tunisia 2011 growth revised down; Tunisia slams ratings downgrade; TUNISIA TELECOM suspends IPO; BIAT net income grows 17% MARKET MOVES WEEK % YTD % Botswana Malawi Mauritius Namibia Zambia Zimbabwe Kenya Tanzania Uganda BRVM Ghana Nigeria Egypt Morocco Tunisia MSCI EM ex SA FTSE Johannesburg Nikkei S&P CURRENCY MOVES LEVEL* WEEK % BWP MWK MUR ZMK KES TZS UGX XOF GHS NGN EGP MAD TND EUR GBP JPY ZAR (NAD, SZL, * relative to USD Randolph Oosthuizen CFA Head of Research oosthuizenr@africanalliance.com Chris Blaine Editor blainec@africanalliance.com Rob Brownlee Head of International Sales and Trading brownleer@africanalliance.com Refer to important terms of use, disclaimers and disclosures on back page.

2 TABLE OF CONTENT Market Snapshot... 3 Market Commentary... 5 Economic Indicators... 7 Bond Rates... 8 Regional... 9 Egypt Nigeria Tunisia Kenya Morocco Mauritius Zimbabwe Botswana BRVM Ghana Zambia Tanzania Namibia Malawi Uganda Rwanda Swaziland Angola Lesotho Recently Published Research Regular Publications African Alliance Pan-African Securities Research 04 February 2011

3 MARKET SNAPSHOT MARKET Botswana Mauritius Malawi Namibia Swaziland Zambia Zimbabwe INDEX NAME Domestic Companies Semdex (All Share) All Share Local All Share All Share Industrial Kenya Top 20 Tanzania Uganda BRVM All Share All Share Composite Egypt EGX 30 Ghana Morocco Nigeria Tunisia South Africa All Share All Share All Share All Share All Share Weekly market moves (%chg local) Morocco -5.55% BRVM -6.38% 1.38% Ghana Tunisia -2.48% Nigeria -2.44% Egypt Uganda: -4.74% Tanzania 0.01% Kenya -3.09% Zambia 1.25% Malawi Namibia Namibia 0.05% Zimbabwe Botswana -0.12% -0.13% Mauritius -0.54% South Africa 2.04% Swaziland Source: African Alliance database 3 African Alliance Pan-African Securities Research 04 February 2011

4 AFRICAN AND GLOBAL MARKETS HEAT MAP (%CHG LOCAL) Daily price changes (%) (23-Jan - 03-Feb 2011) Weekly chg (%) Year-to-date change Date 23J 24J 25J 26J 27J 30J 31J 01F 02F 03F 27-Jan Feb Jan Feb-11 %ch Botswana , , BRVM Egypt ### , , Ghana , , Kenya , , Malawi , , Mauritius , , Morocco , , Namibia Nigeria , , Swaziland Tanzania , , Tunisia , , Uganda , , Zambia , , Zimbabwe South Africa , , FTSE , , Nikkei , , S&P , , Shanghai Composite , , MSCI World , , MSCI EFM Africa ex ZA MSCI EM Index , , African Alliance Pan-African Securities Research 04 February 2011

5 MARKET COMMENTARY The Moroccan market shed 5.6% this week, likely due the political unrest in North African counterparts, Egypt and Tunisia. Sentiment in the region has been negative, as nervous investors await the outcome. Larger, more liquid stocks came under pressure, with the likes of BCP (-13.4%), BMCE Bank (-11.3%), Lafarge Morocco (-8.6%), Attijariwafa Bank ( 7.8%), Douja Addoha (-4.8%), and Maroc Telecom (-4.4%) all falling, to drag the index downwards. Notable gainers were few and far between. M2M (+3.1%) led the way, while and CDM (+1.7%), Wafa Assurance (+0.8%) and Consumar (+0.5%) also posted gains. Attijariwafa, Maroc Telecom and BMCE were the week s most active stocks, as turnover dipped over 20% for the week. The Egyptian ian, market was closed for the entire trading week in the wake of antigovernment protests continued. The exchange is set to open next week. The Nigerian market shed 2.4% this week, on the back of a decline in brewing stocks. Nigerian breweries shed 9.1%, while Guinness Nigeria fell 7.8%. The two counters also accounted for around 10% of the week s total turnover. Some of the banking stocks also contributed to the dip in the index, UBA (-7.8%), First Bank (-3.1%) and Zenith (-2.1%) the most significant. First bank and Zenith were also the top traded stocks on the bourse this week, with Total Nigeria (-2.4%) also trading strongly. Elsewhere, cement giant Dangote Cement shed 2.7%, but on the back of light trading. Some of the smaller caps posted decent gains for the week, with notable performers including Spring Bank (+9.4%), Intercontinental Bank (+5.4%), Access Bank (+4.0%) as well as Cadbury Nigeria (+4.3%) In Kenya, the equity market recorded its third week of poor performance with the NSE 20 Index declining 3.1%. Activity from both local institutional and foreign investors remained low. After guarded purchases earlier in the week, foreign investors closed the week as net sellers. Equity Bank (-5.2%), KCB (-6.3%), Safaricom (-4.4%), and EABL (-7.4%) were the week s poorer performers, while also accounting for significant portions of the week s turnover. After reporting a 21% decline in 1H11 earnings, Mumias Sugar was the week s top loser down 9.7%. After strong trading of its newly listed rights-shares the previous week, KPLC witnessed reduced activity and ended the week 2.2% lower, but remained the top trader for the week. Car and General gained 16% topping a short list of advancing stocks. EAPC (+3.6%), and KenGen (+0.6%) also moved up notably. The momentum in the Botswana DCI was halted this week as the index slid by a marginal 0.1% on profit taking by retail investors, settling on a YTD gain of 6%. This week saw a number of indiscriminate declines across the board, with Engen leading the bloodbath with a 3.1% decline. Barclays (-0.5%) and FNBB (-1.5%), whose shares are trading 3.6% and 18.1% firmer YTD respectively, were casualties of profit taking as punters take advantage of the strong rally ahead of the earnings season. Primetime accounted for 50% of the week s BWP 50.6m turnover, closing the week trading 1.6% lighter. Letshego, which was responsible for 34% of turnover, traded 0.5% weaker on Monday but recovered it on Thursday to end the week level. The BRVM composite index lost only 6.4% on the back of a large dip in the price of Sonatel, which shed 11.8%, and emerged as the top trader for the week. SG Bank fell by a further 14.4% on light trading, Palm CI (-8.8%), Unliver (-7.5%) and Crown SIEM (-14.4%) also fell this week. The most notable of the gainers was ETI, which gained 2.1%, on thin trading. 5 African Alliance Pan-African Securities Research 04 February 2011

6 Market turnover on the Ghana Stock Exchange (GSE) during the week under review declined by 2.7% over the previous week to GHS 2.3m, on the account of a block trades recorded in Standard Chartered Bank Ltd (GHS 0.59), Enterprise Group Ltd (0.26m), Fan Milk Ltd (0.25m) and HFC Bank (Ghana) Ltd (GHS 0.24m). Standard Chartered Bank Ltd was the most traded equity by value, accounting for 25.4% of the market turnover. Eighteen price changes were recorded, twelve equities led by Aluworks Ltd (+31.3%) recorded price gains, while six price losers were recorded with Cocoa Processing Company Ltd (-33.3%) being the biggest loser. The GSE-CI gained 1.38% to close at 1, points, representing ytd gain of 5.9%. The Malawi index was flat as no counters registered price moves for the week. NBS was the week s top trader, accounting for 27% of market turnover. Illovo, NMB, and NITL also made up fair portions of the week s activity. The Mauritian an market index fell a further 0.5%, after a sharp fall in the share price of Mauritius leasing, which lost 14.0% for the week. Hotel stocks were also behind the downturn, as Naiade Resorts (-9.6%), New Mauritius Hotels (-3.5%) and Sun Resorts (-2.5%) all lost ground. NMH was also the week s second to top trader, making up 20% of turnover. In comparison, MCB (+0.6%), which was the top trader (46% of total) and SBM (+1.0%) were both up, as were UBP (+2.2%), Ireland Blythe (+1.3%) and Shell Mauritius (1.3%). The Namibian local index was marginally up by 5bp, as Bidvest (+0.1%) and Namibian Breweries (+0.1%) properties both gained. Bidvest was the top trader, accounting for 77% of the week s turnover. FNB (flat) was the only other stock to trade on the local board this week. The Rwanda Stock Exchange saw the listing of Bralirwa this week Monday, the first domestic listing on the bourse. The counter closed at RWF 235 on the day, up 73% on the IPO price, in thin trading that saw 3,300 shares changing hands (USD 1,235). After a break on Tuesday (public holiday), there was no trading on Wednesday, with no bids and offers at high levels. On Thursday there were two transactions totalling 10,500 shares at RWF 212 per share (USD 3,710). Bralirwa share price closed the week up by 56% as a result; however the outstanding bids are demanding (approximately USD 2.3m at RWF , which is a 30% premium to our fair value of RWF 165. There was no trading in Swaziland this week. The Tanzanian DSE index was up by 1bp on the back of a 3.6% gain in DCB, which traded lightly. CRDB was the week s top trader, turning over around USD 0.6m, and making up 78% of the week s activity. There was also some activity in NMB, Simba and TWIGA which all closed the week flat. The Tunisian stock exchange reopened this week, ending down by 2.5% after four sessions, as investors remained nervous in the market. Banking stocks, particularly BIAT (-12.9%), BH (-9.8%) BT (-3.5%) and STB (-15.3%), were a key driver of the index dip. Carthage Cement (-10.9%) and Monoprix (-16.2%) were also down sharply, but on smaller volumes. Actively traded stocks included BIAT (28% of total), as well as the week s top gainer, Tunisair, which gained a remarkable 21.4%, and made up 15% of the week s activity. Multi-listed auto stock Ennakl shed 14.1% and saw a fair share of trading activity. Poulina gained 4.4%, while SFBT was up 5.2%, but both gains came on the back of small volumes. 6 African Alliance Pan-African Securities Research 04 February 2011

7 In Uganda, activity increased tremendously this week, with market turnover rising tenfold from last week. Turnover came in at UGX 5.5bn as Stanbic supply came into the market from institutional investors; hence SBU generated 97% of the turnover, trading between UGX 275 and 280. Contrary to expectations, the price moved up to UGX 280 from UGX 275 following a profit warning (20-25% decline in profits expected). The bullish sentiment on locally listed banks led to price appreciations this week. The ALSI declined by 4.7% on the back of declines in cross-listed Kenyan stocks. Primary listed stocks performed well, including BOBU (+16.5%), NVL (+4.8%) and SBU (+1.8%), which all posted gains. In Zambia, the market gained 1.2% as a result of gains in Zanaco (+9.8%), ZAMEFA (+8.7%) and Zambia Sugar (+3.0%). Zambeef (-14.3%) and Farmers House (-10.8%0 were the only stocks registering declines this week. CEC (+0.8%) emerged as the week s top trader, making up 27% of total turnover. ZANACO, Lafarge, and Zambian Breweries also made up around 15% of turnover each. Zimbabwe s industrial index fell 0.1% as stocks such as Dawn (-15.4%), Colcom ( 6.7%) and Lafarge Zimbabwe (-5.3%) all fell. Econet (-0.4%) and Delta (-0.3%) were the week s top two traders, but also fell marginally. Stocks with notable gains include Pearl (+17.1%), Hwange (+8.3%) and Dairibord (+5.6%). Seed Co (-0.8%) and Innscor (Flat) also saw decent trade volumes this week. ECONOMIC INDICATORS COUNTRY PRIME (%) CPI (%) MONTH Southern Africa Angola Dec Botswana Dec Lesotho Dec Malawi Dec Mauritius Dec Namibia Dec Swaziland Oct Zambia Dec Zimbabwe 3.20 Dec East Africa Kenya Jan Rwanda Dec Tanzania Dec Uganda Dec West Africa BRVM average 1.30 Sep Ghana Dec Nigeria Dec North Africa Egypt Dec Morocco Dec Tunisia Nov Source: Central banks, statistical agencies 7 African Alliance Pan-African Securities Research 04 February 2011

8 BOND RATES COUNTRY LATEST RATE (%) MATURITY DATE COMMENT Southern Africa Botswana 7.95 Oct-18 BW005; 7.7yrs Lesotho 9.00 Oct-15 LS000A1A1T16; 4.7yrs Mauritius 8.46 Jul year; 9.4yrs Namibia 8.33 Apr-15 GC15; 4.2yrs South Africa 8.58 Jan-20 R207; 8.8yrs Swaziland 8.00 Aug-13 SG008; 2.5yrs Zambia year; 10yrs East Africa Kenya 9.68 Oct-20 FXD2/2010/10Yr; 9.7yrs Rwanda Nov-15 FXD4/2010/5yr; 4.8yrs Uganda Aug-20 FXD 6/2010/10;7.5yrs West Africa Ghana Oct ; 2.7yrs Nigeria 8.32 Oct-19 6th FGN Series 4; 8.7yrs Source: Central banks 8 African Alliance Pan-African Securities Research 04 February 2011

9 REGIONAL Pan-Africa Crises hits African Eurobonds Critical issues for AU as main summit begins Nestle to invest USD 1bn in Africa over next two years Africa better prepared for jump in food costs Turmoil in Egypt and a crisis in Ivory Coast that led to a formal Eurobond default on Tuesday have hit other sovereign debt issues in Africa, sending yields higher as investors fret about political risk. In the last four days, the yield on Ghana's USD 750m 2017 issue, a benchmark for frontier sub-saharan foreign currency debt, has jumped from below 6.3% to 6.8%, its highest since August. Similarly, Gabon's 2017 issue has seen its yield rise from 5.3% to 6% as popular protests have gathered steam in Egypt and come closer to toppling Hosni Mubarak, president for the last 30 years. A less-liquid USD 200m 2014 issue by Senegal has also fallen in price, sending its yield to its highest since last July. Nigeria's new USD 500m issue has also dropped marginally in price since it started trading last week. While it is hard to draw general conclusions across Africa, the social conditions that sparked uprisings in Tunisia and Egypt, and the political conditions that caused Ivory Coast's turmoil, may have parallels elsewhere on the continent. (Source: Reuters) Africa's heads of state and government begin their annual summit in the Ethiopian capital of Addis Ababa Sunday with a plateful of critical issues the continent has been grappling with in the recent past. Among the matters begging for resolutions at the Assembly of the African Union 16th Ordinary Session, is the Cote d'ivoire crisis where incumbent leader Laurent Gbagbo and rival Alassane Ouattara have been locked in a power struggle since the presidential re-run poll on 28 November, Kenya' Prime Minister Raila Odinga, who was the AU special envoy to Cote d'ivoire, and whose efforts have borne no fruit, has already presented his report to the Peace and Security Council. The Kenyan Premier has essentially bounced the ball back to the heads of state and government, who must now chart the way forward. (Source: AllAfrica) Nestle, the world's biggest food group, said on Thursday it would invest CHF 1bn expanding capacity in Africa over the next two years. Chief Executive Paul Bulcke made the comments at the opening of a NGN 12bn factory to produce Maggi seasoning cubes in the south-western state of Ogun in Nigeria, sub-saharan Africa's second-biggest economy. (Source: Reuters) Africa s increased investment in agriculture over the past few years has left it in a better position to weather the jump in global good prices in 2010, the World Bank s African vice president said. Global food costs rose to a record in December on higher sugar, grain and oilseed prices, the United Nations said on 5 Jan., exceeding levels reached in 2008 that sparked riots in African nations including Somalia, Burkina Faso and Cameroon. The situation is different to when many of the African countries were really caught in a bind, Obiageli Ezekwesili said in an interview yesterday in Addis Ababa, the Ethiopian capital. Today what we have is a more ebullient harvest environment. Investment since 2008 in infrastructure, irrigation, fertilizer and seed technology has reduced reliance on grain and rice imports, particularly in West African countries, Ezekwesili said. (Source: Bloomberg) 9 African Alliance Pan-African Securities Research 04 February 2011

10 EGYPT Political and economic news Egypt conflict continues: Timeline of events TUESDAY (25 Jan) WEDNESDAY (26 Jan) THURSDAY: (27 Jan) FRIDAY (28 Jan) SATURDAY (29 Jan) SUNDAY (30 Jan) MONDAY (31 Jan) Egypt's armed forces on Wednesday told protesters clamouring for an end to Hosni Mubarak's 30-year presidency, their demands had been heard and they must clear the streets. Timeline of events since protests began: Thousands of Egyptians demand an end to Mubarak's rule and clash with police in a "Day of Wrath" of anti-government demonstrations inspired by the downfall of Tunisia's President Zine al-abidine Ben Ali on 14 January Protests also take place in Ismailia and Suez, east of Cairo, and in other Nile Delta cities. In unprecedented scenes, police fight with thousands of Egyptians who defy a government ban to protest against Mubarak's rule. Security forces arrest about 500 demonstrators over the two days, the Interior Ministry says. Reform campaigner and former head of the IAEA, Mohamed ElBaradei arrives in Cairo, and calls for Mubarak s retirement. The Egyptian Stock exchange suspended trading on the bourse after the index slipped over 6% for the second day in a row. The market reopened, only to see the index continue to fall. The Egyptian pound meanwhile fell to a sixyear low against the US dollar. Authorities denied that Gamal Mubarak, son of President Hosni Mubarak, had fled the country. Obama called on President Mubarak to make "absolutely critical" political reforms, increasing pressure on a key U.S. ally in the face of the protests. At least 24 people are killed and more than 1,000 wounded in clashes throughout Egypt, 13 are killed in Suez. Mubarak extends a curfew to all cities in Egypt. Mubarak orders troops and tanks into cities overnight to quell demonstrations. Thousands cheer at the news of the intervention of the army, which is seen as neutral, unlike the police who are regularly deployed to stifle dissent. Mubarak sacks his cabinet but refuses to step down after a day of violent protests. Protesters stream back into Cairo's central Tahrir Square in the early hours after Mubarak announces, in an address broadcast shortly after midnight, he is sacking Egypt's government and is committed to reform. Later Mubarak picks intelligence chief and confidante, Omar Suleiman, as vice president. Thousands of protesters continue to roam the streets beyond the curfew, defying an army warning that anyone violating the order would be in danger. Egyptians form vigilante groups and assign private doormen armed with sticks to guard property after police withdraw from the streets. U.S. President Barack Obama urges an "orderly transition" to democracy in Egypt, stopping short of calling on Mubarak to step down. ElBaradei tells protesters in Cairo that an uprising against Mubarak's rule "cannot go back". Mubarak meanwhile met with the military. Egypt's army says it will not use force against Egyptians staging protests. It says "freedom of expression" is guaranteed to all citizens using peaceful means. Egypt then swore in a new government, but the protest movement calling for the overthrow of the president said the changes were irrelevant. They said their main demand was to overthrow Mubarak and get rid of all his associates. Suleiman announced that Mubarak asked him to start dialogue with all political forces, including on constitutional and legislative reforms. EGYPT 10 African Alliance Pan-African Securities Research 04 February 2011

11 Thousands remain in Tahrir Square hours after curfew, in a good-natured gathering, calling for the president to quit. TUESDAY (1 Feb) WEDNESDAY (2 Feb) THURSDAY (3 Feb) Ports struggle to cope with staff shortages Mubarak declares he will surrender power in September, offering a mixture of concessions and defiance in a televised statement. Around one million Egyptians protest throughout the country for Mubarak to step down. More than 200,000 Egyptians rally in Cairo for Mubarak and his government to quit. In Alexandria, Egypt's second city, troops in tanks fire shots in the air to keep order. Egypt's central bank says the country's banks will remain closed for a third day amid protests. Egypt's stock exchange also announces it will be closed for the fourth day. Many protesters speak of a new push on Friday, the Egyptian weekend, to rally at Cairo's presidential palace. The army calls for protesters to leave the streets and curfew hours are eased. Crowds gather in Tahrir Square for a ninth day of protest, rejecting Mubarak's timetable. Banners read "The people demand the fall of the regime". Spokesman Mustafa Naggar, says the opposition is ready to negotiate with Suleiman only after Mubarak steps down. Prominent opposition activist Mohamed ElBaradei and the Muslim Brotherhood rejected a call by the prime minister for talks saying President Hosni Mubarak must leave office first. Meanwhile, the army stepped in decisively for the first time to separate protesters. Soldiers separated supporters and opponents of the president, deploying infantry to create a buffer zone in an attempt to halt violence between them. The army deployed vehicles in Tahrir square after supporters Mubarak supporters opened fire at antigovernment protesters. Vice President Omar Suleiman held dialogue with the country's political parties and national forces in an attempt to end the protests. Egypt's cabinet however denied that it had a role in mobilising Mubarak supporters against antigovernment protesters in Tahrir Square and said it would investigate those behind the action. (Source: Reuters) Egypt's ports are struggling to cope with staff shortages and tight fuel supplies and a growing backlog of ships is waiting to discharge as unrest continues to disrupt the economy. Shipping sources said cargo operations at the Mediterranean ports of Alexandria, Damietta and Port Said, which especially handle bulk and container shipments including grains, continued to be severely disrupted. Shipping sources said operations for ship containers, which are used for consumer goods and foodstuffs, were being hit by a lack of workers. Danish shipping and oil group A.P.Moller-Maersk said it had suspended its container terminal operations at Port Said. (Source: Reuters) Company news Vodafone services interrupted in the wake of unrest Amidst the unrest, mobile phone operator Vodafone noted that text message services were still down in Egypt and that its network was struggling due to a lack of power and possible damage to its equipment. Vodafone was told to switch off its network in Egypt by the government Vodafone chief Vittorio Colao said that voice calls had been switched off for 24 hours, and that data services to access the Internet had been switched back on, but that text messages were still down. Colao said that they were lobbying the government to resume services. "It will be restored when we are authorised. We are in a continuous dialogue with government on keeping our services up. But this is a country that still has a curfew in place." Colao said. He added that the group was also having problems with parts of its network, because it was difficult for its engineers to travel around parts of the country, and because several antennas were not working. Rights groups have heavily criticised mobile operators for switching off their network, but Vodafone said it had had no EGYPT 11 African Alliance Pan-African Securities Research 04 February 2011

12 choice and had to put the safety of its staff above all other requirements. (Source: Reuters) Oriental Weavers US division reassures customers Electrolux suspends Olympic Group deal Moody s downgrades ratings on five Egyptian banks Lafarge halts cement production in Egypt Telenor Seeks Arbitration on VimpelCom-Orascom Deal The U.S. division of Egypt's Oriental Weavers reassured U.S. customers saying it saw no disruption in its business now or in the near future. "Our customers here in the US should rest assured that they will feel no disruption in business today or at any time in the near future," said Michael Riley, president of Oriental Weavers USA, in a statement. He said that if the political situation resolves itself in the coming weeks as expected, there would be no impact in deliveries to customers in the U.S. He added that the factories in Egypt are all protected, as are the employees of Oriental Weavers who mostly live in company developments and housing. Riley said that they had the backing of the Egyptian Military and local police forces, as well as private security. Meanwhile, U.S oil and gas company Apache Corp said it is moving an undisclosed number of workers out of Egypt due to the civil unrest. (Source: Reuters) Home appliances maker Electrolux said that it had suspended plans to buy Egyptian company Olympic Group due to the unrest in the country. Buying Olympic was part of the Swedish company's plans to boost presence in emerging markets, which are growing faster than the developed markets of western Europe and North America. "Given the background of latest developments, we are evaluating the situation in Egypt and we have agreed with the seller to put the due diligence process on hold," said Electrolux spokesman Erik Zsiga. (Source: Reuters) U.S. ratings agency Moody's has downgraded the ratings of five Egyptian banks due to the on-going unrest, in a move that could hurt the ability of those banks to borrow money. Moody's said the downgrades resulted from a reassessment of Egypt's capacity to support its banking system, following the agency's prior lowering of the government's debt rating. Moody's said Wednesday it cut the local deposit ratings of four Egyptian banks by two notches. The lenders include Bank of Alexandria, Banque Misr, Commercial International Bank, and National Bank of Egypt. The agency also cut the local deposit rating of Banque du Caire by one notch. It says the new ratings of all five banks remain under review for possible further downgrade. Moody's predicted that a worsening economic environment will hurt Egyptian banks' loan portfolios, forcing them to raise their bad loan provisioning and damaging their profitability. (Source: VOA News) Lafarge has temporarily halted its production in Egypt because of the worsening political crisis in the country, a spokesman said. "There is not really any economic activity in Egypt at the present time, so we have adapted our capacity to the situation," the spokesman said. "Lafarge's production activities are temporarily suspended," he adding, noting that the operations could restart if there was any change in the situation. Lafarge s interest in Egypt is through the cement operations of Orascom Construction Industries (Source: Bloomberg) Telenor ASA has asked for the dispute over VimpelCom Ltd. s purchase of Egyptian billionaire Naguib Sawiris s phone assets to be referred to a court of arbitration. Telenor opposes a plan by VimpelCom to issue new stock representing 20% of shares outstanding and 31% of voting rights to investors in Wind Telecom SpA, the holding company for Sawiris s phone assets. Altimo, the telecommunications arm of Russia s Alfa Group and VimpelCom s biggest shareholder by voting rights, supports the deal. After Telenor appoints its representative on the tribunal, selecting the other two arbitrators may take up to 60 days. VimpelCom shareholders are scheduled to vote on 17 March 2011 on the new shares. (Source: Reuters) EGYPT 12 African Alliance Pan-African Securities Research 04 February 2011

13 Egyptian Exchange to re-open, hours shortened The chairman of Egypt's stock exchange said trading hours will be shortened to three from the normal four when it reopens next week, the official state news agency reported. The bourse has been closed since 27 January because of countrywide protests against the government of Hosni Mubarak. Chairman Khaled Serry Seyam said the exchange would reopen on Monday of next week. Seyam added that the exchange may take special measures to protect the market, including steps involving margin trading and limits to the movement of shares. Egyptian stocks had lost more than 21% since the start of the year, before the market was closed. (Source: Reuters) Market activity The Egyptian, market was closed for the entire trading week in the wake of antigovernment protests continued. The exchange is set to open next week. Egyptian Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE No gainers No losers TOP TRADER EGP (M) USD (M) TOTAL TRADED EGP (M) USD (M) No Trade EGX MARKET PERFORMANCE LEVEL EGP (%) USD (%) EGP/USD % CHG EGX 30 (EGP) 5, Source: African Alliance database EGYPT 13 African Alliance Pan-African Securities Research 04 February 2011

14 NIGERIA Political and economic news DMO allays fears about National Debt As at December last year, Minister of State for Finance, Yawaba Lawan-Wabi, said the balance in the ECA is about USD 3m, after the Federation Accounts Allocation Committee (FAAC) held a secret emergency meeting in the twilight of last month to disburse USD 1bn (about NGN 150bn) to the three tiers of government. But, it appears the more government earned money over the years, the more it is sinking deeper into the cesspit of debt, though without much to show for it, in terms of a corresponding impact in the quality of life of the people. "The increases are accounted for by different sets of factors, reflecting a shift towards market-based funding of government deficits, borrowing for developmental purposes and on-lending to institutions such as Nigerian Agricultural and Rural Development Bank (NARDB), Bank of Industry (BOI) and the Federal Mortgage Bank of Nigeria (FMBN)," the DMO explained in its National Debt Management Framework ( ) publication. Director General, DMO, Abraham Nwankwo, said last Tuesday in Abuja that the country's domestic debt profile is growing as a result of a deliberate policy by government to focus more attention on raising funding for its activities and services from domestic sources, rather than relying on external sources. (Source: 234next) Foreign reserves fell to USD 33.12bn in January 2011 Amnesty programme gets new chief Nigerian president sees oil reforms before May 2011 Nigeria s foreign exchange reserves slipped slightly to USD 33.12bn by the end of January from USD 33.53bn two weeks earlier, and remain down more than a quarter from a year ago, the Central Bank said on Wednesday. The foreign reserves of Africa s top oil and gas producer have fallen over the past 12 months despite rising oil prices and production, raising concerns about government spending in the run-up to April elections. They are now 27% below year-ago levels. The government has said the decline is partly due to spending to maintain a stable naira currency in the face of higher dollar demand, as well as spending on the power sector and seed capital for a planned sovereign wealth fund. Central Bank governor, Lamido Sanusi, told Reuters last month monetary tightening, higher money market yields, a recovering banking sector, and higher oil prices and production should help stop the reserve depletion. (Source: 234next) Timi Alaibe, the outgoing special adviser to the president on Niger Delta affairs said yesterday in Abuja at the formal handover ceremony to his successor, Kingsley Kuku, that he must build on the foundation already laid for the growth and development of the country s oil bearing areas. The amnesty programme is a resounding success. This is the first time that those who were carrying arms are transformed into those writing examinations on non-violence, having shown their readiness to embrace integration in the society, he said. He said the programmes and operational structure already put in place under his leadership have charted the pathway for his successor s success, to achieve the Federal Government s objective of providing employment for youth in the area. Mr. Alaibe said a total of 12,917 former members of Niger Delta armed militant groups participated in the demobilisation and integration process through non-violent and conflict resolution programmes. An additional 6,166 others enlisted last December. (Source: 234next) Nigerian President Goodluck Jonathan said on Wednesday he expects wide-ranging reforms to the mainstay oil and gas industry to be passed into law before the end of the current parliament in May. The proposed legislation will alter everything from the fiscal framework for offshore oil projects to the involvement of indigenous firms in the sector. NIGERIA 14 African Alliance Pan-African Securities Research 04 February 2011

15 Uncertainty over the plans - which could significantly increase the cost of operating in Africa's biggest oil exporter - have putbns of dollars of potential investment on hold, according to industry executives. The bill has been before parliament for months and with April presidential, parliamentary and state governorship elections fast approaching and political minds elsewhere, many observers had expected it not to pass under the current administration. (Source: Reuters) Goodluck Jonathan claims he will seek only a single term Lagos plans NGN 60bn bond issuance Guidelines set on FX derivatives markets AMCON delays NGN 1.5trn bond issue Questions over MOU terms for rescued banks Nigerian President Goodluck Jonathan, the strong favourite to win an April presidential election, has said he will stand for only one term, a move which may help to appease some of his northern opponents. Jonathan's candidacy in this year's polls interrupts a pact within the PDP that power should rotate between the largely Muslim north and mostly Christian south every two terms. His main challenger in the election is likely to be former military ruler Muhammadu Buhari, a northerner whose reputation as a disciplinarian with a low tolerance for corruption make him popular among grass roots supporters in the north. (Source: Reuters) Nigeria's Lagos state plans to raise NGN 60bn (USD 395 m) under its bond issuance programme in 2011, up marginally from NGN 57bn in Lagos is rare among Nigeria's 36 states in generating 70% of its revenue internally from taxation and public services such as buses. Most of the country's states depend on their share of federal oil revenues. Lagos state commissioner for budget and planning Ben Akabueze told reporters that funds from last year's bond issue are being used to upgrade one of the main roads into the city into a 10-lane expressway as well as funding the development of a light rail transit system. (Source: Reuters) On efforts to deepen the foreign exchange market, Mr. Oni said the meeting approved guidelines to help in dealing with forward contracts, to avoid speculation activities, adding that with the growth being experienced with demand on corporate bonds, most organisations would begin to see corporate bond as a means of financing their long term financing needs. On non-interest banking (Islamic banking), the CBN director said, with the guidelines issued recently, most banks are ready to establish it either as a full-fledged bank or subsidiary of a bank or a service provided through a special window, given the number of unbanked population in the country. "It is not a religious issue, but a viable product that people can patronise, irrespective of their religious affiliation. This is a product that has been there for a long time, which Nigerians can benefit from. Over a trillion dollars of assets are in Islamic banks in 300 banks in 45 countries worldwide," Mr. Oni noted. (Source: 234next) Nigeria's state asset management company said on Monday it was delaying by a month the issue of NGN 1.5trn (USD 10bn) in tradeable bonds but said it was still on track to absorb all bad bank loans on time. AMCON had planned to replace NGN 1.03trn worth of consideration bonds issued to 21 lenders in December with fully tradeable bonds by 31 Jan., but Chief Executive Mustapha Chike-Obi said the process was taking longer than expected. "We have had to delay the bond issue because there are a lot of procedural issues. We are seeking some waivers from the ministry of finance... so we have pushed it back to 28 Feb.," he told Reuters in a telephone interview. But he said AMCON's timetable - absorbing bad loans by the end of March and resolving the banking crisis by the end of June - was still on track. (Source: Reuters) Some top executives of the rescued banks are currently engaged in intense struggle to agree on a share ownership structure with their potential buyers as they prepare to sign their Memorandum of Understanding (MoU). The struggle comes amidst concerns by the banking industry operators and some analysts on the acquirers integrity. Chief executives of some of the rescued banks confirmed to BusinessDay that the contents of the MoU are NIGERIA 15 African Alliance Pan-African Securities Research 04 February 2011

16 not in the interest of both the banks and the shareholders. Some analysts share deferring opinion on the development. Specifically, one of the MoUs by a local bank seen by BusinessDay yesterday showed that an acquiring bank is proposing 80% ownership with the remaining 20% being shared by the existing shareholders and the Asset Management Corporation of Nigeria (AMCON). Afribank, Bank PHB, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank have all held talks with potential foreign and local investors in recent months. But most of them are still discussing the grey areas. The other rescued lenders include privately-held Equitorial Trust Bank, Spring Bank and Wema Bank, which has already said it will restructure into a regional bank. (Source: Businessday) Six banks ready for recapitalisation Duet Group to launch African Equity Fund Central Bank of Nigeria (CBN) director of banking operations, Sam Oni, disclosed this at the end of the Bankers Committee meeting held on 1 February in Abuja. He noted that with the progress recorded so far with the regulators intervention with the ongoing reforms in the banking sector, four banks would conclude discussions on the issue before the end of the week, while two others will follow in the next two weeks. "The Central Bank of Nigeria (CBN) intervention in the banking sector, which led into a lot of reforms, has recorded a lot of progress since August last year. By the end of this week, four of those banks considered very important in terms of their systemic impact would have concluded the deal on their recapitalisation, in terms of signing the memorandum of understanding (MOU) with their partners. Before the end of the next two weeks, two others would also reach that stage," he said. (Source: 234next) London-based asset manager Duet Group and Africa's biggest bank by assets Standard Bank plan to launch a quoted USD 100m fund for African equities in March, the two firms said on Thursday. Duet is acting as fund manager and Standard Bank as market maker for the fund that will be listed in London. Private equity firms are setting up shop in Africa, attracted by a growing urban population and expanding middle class as well improving governance, political stability and sounder economic management. "The fund will seek to replicate a proprietary benchmark index composed of companies listed on the stock exchanges in sub-saharan African countries, excluding South Africa, with a market capitalisation above USD 250m that meet minimum trading liquidity requirements," they said. Duet Group runs two Africa-focused funds targeting the banking, telecommunications, consumer goods and construction sectors. Nigeria makes up the largest weighting in the funds and the group is interested in Ghana and Uganda, both of which will soon become oil producers. (Source: Reuters) Company news Stanbic IBTC forecasts NGN 2.6bn PAT for 1Q11 Stanbic s operating income and operating expenses increased 34% and 35% y/y. As such, operating margins were largely the same in 1Q11 as in 1Q10. Operating profit increased 32% y/y but this was offset by a surprisingly large increase in loan loss provisioning which increased by 434% y/y. PBT was largely unchanged compared to the same period last year. (Source: Company Filing) Stanbic IBTC Plc 3M TO MARCH (NGN M) 1Q08 1Q09 % CHG Total operating income 11,578 15,518 34% Operating Expenses -7,851-10,584 35% Operating profit before provisions 3,727 4,934 32% Loan loss provisions , % Profit/(loss) before tax 3,446 3,433 0% Profit/(loss) after tax 2,588 2,564-1% Source: Company Filing NIGERIA 16 African Alliance Pan-African Securities Research 04 February 2011

17 Guaranty Trust Bank board meeting The Bank has notified The Exchange that its Board will meet shortly to consider its Audited Financial Statements for the year ended 31 December Issues relating to Dividend and Scrip Issue may also be considered at the meeting. The market will be kept abreast on decisions reached in due course. (Source: NSE) Market activity The Nigerian market shed 2.4% this week, on the back of a decline in brewing stocks. Nigerian breweries shed 9.1%, while Guinness Nigeria fell 7.8%. The two counters also accounted for around 10% of the week s total turnover. Some of the banking stocks also contributed to the dip in the index, UBA (-7.8%), First Bank (-3.1%) and Zenith (-2.1%) the most significant. First bank and Zenith were also the top traded stocks on the bourse this week, with Total Nigeria (-2.4%) also trading strongly. Elsewhere, cement giant Dangote Cement shed 2.7%, but on the back of light trading. Some of the smaller caps posted decent gains for the week, with notable performers including Spring Bank (+9.4%), Intercontinental Bank (+5.4%), Access Bank (+4.0%) as well as Cadbury Nigeria (+4.3%) Nigerian Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Intercontinental Bank Unity Bank Cadbury Nigeria Nigerian Breweries Access Bank African Petroleum TOP TRADER NGN (M) USD (M) TOTAL TRADED NGN (M) USD (M) Zenith Bank 2, NIGSE 20, MARKET PERFORMANCE LEVEL NGN (%) USD (%) NGN/USD % CHG NIGSE (NGN) 26, Source: African Alliance database NIGERIA 17 African Alliance Pan-African Securities Research 04 February 2011

18 TUNISIA Political and economic news Tunisia 2011 growth revised down Ports closed to vehicles imports A new Chief of Staff for Ministry of Finance Tunisia slams ratings downgrade PM urges return to work after revolution Mr Abdelhamid Triki, Secretary of State in the development and international cooperation Ministry, said yesterday that it will be quite difficult for Tunisia to achieve a growth rate greater than 2% in He also clarified that the current account deficit is projected to increase by 6.5% in (Source: Africanmanager) The transitional government has officially decided to close all Tunisian commercial ports to vehicle importers. The Ministry of Commerce has ordered Port Authorities to prevent foreign cargo vessels carrying cars from loading or unloading vehicles. (Source: Investiren-tunisie) Mr Jaloul Ayed, new Finance Minister, has appointed Mr Jamel Belhadj as chief of staff at the Ministry of Finance. (Source: Africanmanager) Tunisia's new central-bank governor criticized ratings agencies for downgrading the country as newly appointed government leaders race to stabilize the nation after its uprising. "They downgraded in a rush. This is not acceptable," Mustapha Kamel Nabli told an audience at the World Economic Forum on Saturday. "Were they sleeping when corruption was endemic?" On Wednesday, Moody's Investor Service Inc. downgraded Tunisia's sovereign rating by one notch and changed the country's outlook to negative from stable, citing political instability caused by the toppling of the government. The rating was cut to Baa2 from Baa3, Moody's said. (Source: The Wall Street Journal) Prime Minister Mohamed Ghannouchi urged Tunisians on Wednesday to return to work to prevent the economy collapsing after fears of growing lawlessness kept many people at home in recent days. (Source: Reuters) Company news TUNISIA TELECOM suspends IPO Modern Leasing's CEO resigns BIAT net income grows 17% BT activity indicators increase ATL: activity indicators increase Mr Sami Zaoui, Secretary of State at the Ministry of Technology and Communication said yesterday that the IPO process of TUNISIE TELECOM has been suspended pending a final decision with the strategic partner. (Source: Tustex) Mr Abdelwahab Nachi, CEO of Modern Leasing, has resigned from his position as CEO of Modern Leasing. (Source: Africanmanager) The net banking income of Banque Internationale Arabe de Tunisie (BIAT) grew by 17% to reach TND 302.4m at 12/31/2010 against TND 257.6m at 12/31/2009. These indicators were realized thanks to an improvement of 12% in revenues and the operating expenses control. (Source: Cmf) Activity indicators of Banque de Tunisie (BT) have improved at 12/31/2010. Banking revenues increased by 11.5% while operating expenses were up 12.1%. The Net Banking Income has increased by 11.1% from TND 132.9m at 12/31/2009 to TND 147.7m at 31/12/2010. (Source: Cmf) ATL has published its annual activity indicators showing approvals up 42.5% and turnover improvement of 35.5%. The Net Leasing Income increased by 16% at TND 17.6m at 12/31/2010 against TND 15.1m at 31/12/2009. (Source:Cmf) TUNISIA 18 African Alliance Pan-African Securities Research 04 February 2011

19 CEO Ouaïli resignes from Tunisie Telecom ENNAKL activity indicators up Carthage Cement activity indicators rise two-thirds Montassar Ouaïli has presented his resignation from his position as CEO of Tunisie Telecom. Mr Rauf Chekir has been designated as TUNISIE TELECOM transitional CEO. (Source: Webmanagercenter, Businessnews) ENNAKL published its 2010 activity indicators which showed an increase in the turnover from 30% at TND 411.5m in 12/31/2010 against TND 316.4m in 12/31/2009 and a rising cost of sold goods by 30% at TND 361m against TND 278m in 12/31/2009. At the same time, the company has made an initial estimate of its losses during the recent riots. These losses affected 20 vehicles disappearance in the port with a value of TND 1.5bn and damage to other vehicles worth TND 200,000. (Source: Cmf) Cartahage Cement Activity indicators showed an increase of 66.9% of its revenue at TND 13.8m in 12/31/2009 against TND 23m in 31/12/2010. Similarly, the company investment stood at TND 133m in 12/31/2010 against TND 18m Dinars in 12/31/2009. (Source: Cmf) Market activity The Tunisian stock exchange reopened this week, ending down by 2.5% after four sessions, as investors remained nervous in the market. Banking stocks, particularly BIAT (-12.9%), BH (-9.8%) BT (-3.5%) and STB (-15.3%), were a key driver of the index dip. Carthage Cement (-10.9%) and Monoprix (-16.2%) were also down sharply, but on smaller volumes. Actively traded stocks included BIAT (28% of total), as well as the week s top gainer, Tunisair, which gained a remarkable 21.4%, and made up 15% of the week s activity. Multi-listed auto stock Ennakl shed 14.1% and saw a fair share of trading activity. Poulina gained 4.4%, while SFBT was up 5.2%, but both gains came on the back of small volumes. Tunis Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Tunisair Monoprix SOMOCER STB SOTUVER Ennakl Auto (Tunis) TOP TRADER TND (M) USD (M) TOTAL TRADED TND (M) USD (M) BIAT TUNIS Index MARKET PERFORMANCE LEVEL TND (%) USD (%) TND/USD % CHG TUNIS Index (TND) 4, Source: African Alliance database TUNISIA 19 African Alliance Pan-African Securities Research 04 February 2011

20 KENYA Political and economic news AU supports appeal for deferral of ICC cases Inflation reaches 5.42% in January IMF projects 5.7% GDP growth in 2011 Housing prices up 5.8% Kenya s appeal for a one year suspension of ICC prosecution against six alleged sponsors of the post-election violence was unanimously endorsed by African leaders. The African Union summit, which ended on Monday, said it would fully back the country s appeal and requested the United Nations Security Council to accede to the Kenyan request. During the leaders summit, the Kenyan President said the government is preparing to put the necessary legal framework to implement the trials locally. The President expressed his confidence on the new constitution adopted in August 2010, which he said paves way for justice and reconciliation. (Source: Daily Nation) Inflation in the month of January rose to 5.42%, from 4.51% in December, surpassing the 5% target set by monetary authorities. Rise in inflation was mainly driven by increased food, fuel and energy prices that account for 36% and 18.3% of the CPI respectively. The announcement came after a recent cut in the Central Bank Rate (CBR) by 25bp to 5.75%. Monetary authorities noted that continued rise in inflation (from October) was as a result of supply side constraints. With the country expected to face reduced rainfall over the next six months, inflation is likely to continue rising due to increased food prices and rise in energy costs due to continued dependence on hydro power. (Source: Business Daily) According to the International Monetary Fund (IMF) Kenya s economy is likely to expand by 5.7% in 2011 from an estimated 5% growth in According to the statement, GDP growth will mainly be driven by continued public spending on infrastructure and private sector growth. During the week, the multilateral lender approved a three year USD 509m credit facility to help Kenya boost its international reserves. Over the next 2 years, IMF expects the terms of trade for the country to deteriorate by about 14%, mainly due to high oil prices and reduction in the prices for tea and coffee by about 12%. (Source: Reuters) According to HassConsult s property index, Kenya s housing prices rose 5.8% y/y in 2010 compared to a 0.8% y/y growth a year earlier. The increase in prices was mainly attributed to expansion of the middle-income class, increased access to credit and sustained economic growth. Over the same period, prices of stand-alone houses grew by 9.7%. HassConsult, said purchases are still split between investors and home buyers. Most agents expect property prices to stabilise this year as investors move to peri-urban areas, relieving land price pressure in cities. As from 2000, the Property Index shows that the average price for a stand-alone house like a bungalow, cottage or villa, has increased by more than 263%, while prices of town houses have jumped 164%. Over the same period, apartment prices more than doubled. (Source: Reuters) Company news Mumias Sugar 1H11 PAT drops 21.2% Mumias Sugar Company (MSC) delivered disappointing 1H11 earnings (period ending 31 December 2010) recording a 21.2% y/y decline in PAT. The underlying business witnessed a significant slow down in activity with gross revenue declining 1.7% y/y and net revenue declining 4.7%. Management attributes the decline in profitability to heavy rainfall in August to October 2010 which hampered cane deliveries and depressed sugar production. Over the period, sugar crashed declined 4.3% to 1.1mt while sugar produced declined 7.8% to 113,521t. On the back of high international sugar prices, management said they expect strong FY11 earnings. (Source: Company filing) KENYA 20 African Alliance Pan-African Securities Research 04 February 2011

21 Mumias Sugar Company Ltd 6M TO DECEMBER (KES M) 1H10 1H11 % CHG Gross Turnover 8,961 8, % Net Turnover 7,683 7, % Profit/(loss) before tax 1,526 1, % Profit/(loss) after tax 1, % EPS % Source: Company report NBK to invest KES 600m in new branches In FY11, National Bank of Kenya (NBK) plans to invest KES 600m in opening 20 new branches. The move comes at a time when other banks are initiating austerity measures mainly through staff reductions and adoption of agency banking to cut on expenses. The move targets to improve the banks local presence ahead of its planned regional expansion across East Africa. Making the announcement, the Bank s CEO also noted that the bank s board was likely to propose the payment of a dividend against FY10 earnings. Both announcements come at a time when NBK has been in the process of re-organizing its operations into a fully private oriented bank. (Source: Business Daily) Market activity In Kenya, the equity market recorded its third week of poor performance with the NSE 20 Index declining 3.1%. Activity from both local institutional and foreign investors remained low. After guarded purchases earlier in the week, foreign investors closed the week as net sellers. Equity Bank (-5.2%), KCB (-6.3%), Safaricom (-4.4%), and EABL (-7.4%) were the week s poorer performers, while also accounting for significant portions of the week s turnover. After reporting a 21% decline in 1H11 earnings, Mumias Sugar was the week s top loser down 9.7%. After strong trading of its newly listed rights-shares the previous week, KPLC witnessed reduced activity and ended the week 2.2% lower, but remained the top trader for the week. Car and General gained 16% topping a short list of advancing stocks. EAPC (+3.6%), and KenGen (+0.6%) also moved up notably. Nairobi Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE EA Portland Cement Mumias Sugar Pan Africa Insurance George Williamson Sameer EABL TOP TRADER KES (M) USD (M) TOTAL TRADED KES (M) USD (M) KPLC NSE 20 1, MARKET PERFORMANCE LEVEL KES (%) USD (%) KES/USD % CHG NSE 20 (KES) 4, Source: African Alliance database KENYA 21 African Alliance Pan-African Securities Research 04 February 2011

22 MOROCCO Political and economic news Fuel subsidies to swell to USD 5bn in 2011 Morocco watches nervously as revolts erupt in its neighbours A senior government official said in London this week that Morocco will have to raise fuel subsidies to a record USD 5bn this year, from USD 3bn in 2010 if oil prices remain in the USD 100 per barrel range. The official said the country is in discussions with investors about building a 200,000bpd refinery in Jorf Lasfar and that a final decision would be taken by the end of the year. (Source: Reuters) A cousin of King Mohammed VI has warned in an interview on Monday that Morocco will probably not be spared from the revolt that has erupted in neighbouring North African countries. Prince Moulay Hicham told Spanish daily El Pais that Morocco is watching nervously as its neighbours erupt in revolt. He noted that the country must not be deceived as almost every authoritarian system will be affected by this wave of protests. He said it remains to be seen whether the revolt is just social or also political, and if political parties act under the influence of the recent events. The 46-year old Prince Hicham, who is third in line to the throne, has been nicknamed the red prince because of his criticism of the monarchical system in Morocco. The Prince, said the political liberalisation launched in the 1990s after Mohammed succeeded his authoritarian father, Hassan II, had virtually come to an end and reviving it while still avoiding radical pressures would be a major challenge. The events in Egypt are said to be dominating the Moroccan press, but government has so far made no comment. However it gave proof that the regional situation is worrying it by issuing a swift reply that it had redeployed troops. Government summoned the Spanish ambassador to protest reports in the Spanish media that the troops had been brought from Western Sahara in case of protests. The government issued a categorical denial to the statements saying they are false and unfounded. (Source: AFP) Fitch confirms sovereign rating with stable outlook Mobile penetration passes 100% Fitch rating confirmed the sovereign rating of Morocco with a stable outlook this week, saying that the kingdom continues to benefit from solid fundamentals in comparison with other countries in the region. In this regard, Fitch highlighted the social and political stability enjoyed by the kingdom, stressing that Morocco has under the leadership of HM King Mohamed VI managed over the past decade to reduce poverty and fight unemployment. The agency maintained the BBB- rating for the Kingdom s debt and expects that Moroccan authorities will increase welfare spending and expenses for compensation in order to tackle social inequalities. (Source: MAP) According to the telecommunications regulator, ANRT, mobile penetration increased by over 20 points to 101.4% in Mobile customer growth came in at 26.4%, reaching 31.98m at the end of December against 25.31m. 3Q09 reported the fastest y/y growth of 9.4%, followed by 1Q at 6.5%. Maroc Telecom held 51.8% of the market at December 2010, versus 33.7% for Medi Telecom and 13.5% for Wana Corporate, whereas December standings were 60.3%, 37.3% and 2.4% respectively. Prepaid customers accounted for 96.2% of the market. The fixed market reported a 6.6% increase in customers to 3.8m, with penetration reaching 11.9%. Residential lines represented 85.4%, business 10.8% and payphones 3.9%. Wana Corporate had a 66.7% of the fixed line market, followed by Maroc Telecom at 32.8% and Medi Telecom at 0.5%. The internet market grew by 57.3% to 1.9m customers, including both fixed and mobile. Internet penetration, which was at 0.4% in 2004, was 5.9% in Maroc Telecom held 56% of the internet market, Wana Corporate 29.9% and Medi Telecom 14%. Dial up users MOROCCO 22 African Alliance Pan-African Securities Research 04 February 2011

23 declined by half to 1,809 in ADSL users grew by 4.9% to 497,640 in 2010, following a 1.7% contraction in G internet customers were 1.4m, 93.2% higher. (Source: Telecom Paper) Portuguese company to invest EUR 40m in Brazil and Morocco Portuguese logistics service provider, Grupo Rangel has unveiled plans to invest up to EUR 40m (USD 55.4m) in Brazil and Morocco. The company s chairman, Eduardo Rangel, said in an interview for economic daily Diario Economico that the sum will be spent on new projects in the two countries. The chairman further added that 2011 will be a year of reinforcement of the international activities. (Source: ADPnews Portugal) Market activity The Moroccan market shed 5.6% this week, likely due the political unrest in North African counterparts, Egypt and Tunisia. Sentiment in the region has been negative, as nervous investors await the outcome. Larger, more liquid stocks came under pressure, with the likes of BCP (-13.4%), BMCE Bank (-11.3%), Lafarge Morocco (-8.6%), Attijariwafa Bank ( 7.8%), Douja Addoha (-4.8%), and Maroc Telecom (-4.4%) all falling, to drag the index downwards. Notable gainers were few and far between. M2M (+3.1%) led the way, while and CDM (+1.7%), Wafa Assurance (+0.8%) and Consumar (+0.5%) also posted gains. Attijariwafa, Maroc Telecom and BMCE were the week s most active stocks, as turnover dipped over 20% for the week. Casablanca Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE CDM BCP Wafa Assurance 0.8 2,855 BMCE Bank Cosumar 0.5 2,211 Lafarge Morocco ,970 TOP TRADER MAD (M) USD (M) TOTAL TRADED MAD (M) USD (M) Attijariwafa Bank MASI 1, MARKET PERFORMANCE LEVEL MAD (%) USD (%) MAD/USD % CHG MASI (MAD) 12, Source: African Alliance database MOROCCO 23 African Alliance Pan-African Securities Research 04 February 2011

24 MAURITIUS Political and economic news Textile sector seen recovering in 2011 GDP growth to exceed 4% Mauritius' textile sector, which supplies top European chains, expects growth of more than 2% this year helped by a stabilisation in its traditional markets and a diversification into new ones. The sector, which contributes 6.5% of gross domestic product and provides 11% of jobs, grew a marginal 0.7% in 2010 due to the global downturn. (Source: Reuters) Mauritius' economic growth is expected to exceed 4% in 2011, the rate at which it expanded last year, as the world economy recovers and helped by a fiscal stimulus, the International Monetary Fund said. (Source: Reuters) Company news Engen buys Chevron's Mauritius ops Air Mauritius ups seat capacity Air Mauritius to start direct China flights South African petroleum company Engen is looking to expand in Mauritius after it concluded an agreement on Tuesday to buy Chevron's business in the Indian Ocean island, it said on Wednesday. Chevron's Mauritius operations include a network of 28 retail service stations, aviation fuelling facilities and lubricant sales. Jan Theys, Engen's board chairman, said there was scope for more petrol stations along new roads being built on the island. (Source: Reuters) Air Mauritius said on Friday it will increase seat capacity by 6.3%, in line with a government goal to attract more tourists from emerging economies. (Source: Reuters) Air Mauritius has announced direct flights to Shanghai, China, commencing in July, The carrier hopes to boost tourism to the Indian Ocean island nation. (Source: etn) Market activity The Mauritian an market index fell a further 0.5%, after a sharp fall in the share price of Mauritius leasing, which lost 14.0% for the week. Hotel stocks were also behind the downturn, as Naiade Resorts (-9.6%), New Mauritius Hotels (-3.5%) and Sun Resorts ( 2.5%) all lost ground. NMH was also the week s second to top trader, making up 20% of turnover. In comparison, MCB (+0.6%), which was the top trader (46% of total) and SBM (+1.0%) were both up, as were UBP (+2.2%), Ireland Blythe (+1.3%) and Shell Mauritius (1.3%). Stock Exchange of Mauritius TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Mauritian Eagle Mauritius Leasing United Basalt Products Naiade Resorts Phoenix Beverages New Mauritius Hotels TOP TRADER MUR (M) USD (M) TOTAL TRADED MUR (M) USD (M) MCB MAUR MARKET PERFORMANCE LEVEL MUR (%) USD (%) MUR/USD % CHG MAUR (MUR) 2, Source: African Alliance database MAURITIUS 24 African Alliance Pan-African Securities Research 04 February 2011

25 ZIMBABWE Political and economic news Indigenisation Act to be gazetted External debt reaches USD 6.93bn China to avail USD 10bn for local investing Inflation pressures rise Foreign banks threatened The government has announced that laws requiring foreign mining companies to sell a majority of their shares to locals will be gazetted by the end of February In a statement published in a local daily, the Ministry of Indigenisation and Empowerment indicated that consultations were at an advanced stage and new regulations would be gazetted no later than the end of February. The Indigenisation and Economic Empowerment Act, requiring all businesses to give-up 51% of their equity to local black citizens was signed into law in However, government is yet to implement any provisions of this act. Economists and civic groups in the country have been very critical and described the move as just another ZANU PF ploy for self-enrichment. The ministry stated that the regulations require 100% local ownership of alluvial diamond mines and other minerals a minimum of 51% local ownership. Any new mining ventures would also require at least 51% local participation. (Source: SW Radio) Zimbabwe owes USD 6.93bn to external lenders and has built up repayment arrears amounting to USD 4.8bn on its foreign debt, according to the Reserve Bank of Zimbabwe (RBZ). The total external debt represents 103% of GDP, which is substantially above the international debt sustainability benchmark of 60%. RBZ is the country s largest borrower, owing 57% of total external debt, state-owned companies 35% and the private sector 8%. The substantial arrears on external debt have prevented multilateral creditors such as the International Monetary Fund (IMF) and World Bank from further extending new loans to the country. (Source: APA News) China Development Bank could fund up to USD 10bn in Chinese investment in the local mining and agriculture sectors. According to the Ministry of Economic Planning and Investment Promotion, this would be a big boost for the country as it is struggling to attract foreign investors. Such an investment would be in excess of the country s estimated USD 6bn GDP. China has expressed interest in mining development, agriculture, infrastructure development and ICT. Its investment has been growing steadily in the country over the last decade, although it still lags investments into Angola, Mozambique and Zambia. On the other hand, Zimbabwe is expected to produce about 1.5mt of maize in 2011, up 15.4% from The gold production target is 13t in 2011 compared to an output of 8.3t in (Source: Reuters) According to the RBZ, rising fuel prices and a strong South African rand will continue to exert inflationary pressures on the economy. The country experienced low and stable inflation in 2010, on the back of improved macroeconomic policies and better performance on the supply side of the economy. Annual inflation remained within the single digit range, peaking at 6.1% in May 2010 before declining to 4.2% in November. The central bank also expects rising food prices to add to the inflationary pressures going forward. (Source: New Zimbabwe) RBZ Governor Gideon Gono has warned foreign banks operating in the country that they would suffer consequences for declining loan applications from ZANU-PF officials or those listed under targeted sanctions. The warning was made in his latest monetary policy statement, in which he argued that foreign banks were unfairly extending illegal Western sanctions. Gono further accused the foreign banks of paralyzing the local money market by withholding domestic deposits and not participating in the interbank market, or creating risk assets. (Source: VOA News) ZIMBABWE 25 African Alliance Pan-African Securities Research 04 February 2011

26 Company news Local investor proposes 125MW thermal power plant A local company called Ridge Tech Trading is planning to construct a 125MW thermal power station near the capital Harare. This would help to ease current electricity shortages in the country. Management said the power plant would be constructed in Marondera, a farming town 75km east of Harare. Equipment for the plant is to be imported from China, although the cost of this equipment was not disclosed. A schedule for the commencement of the construction has also not been provided. Zimbabwe has a huge power deficit and imports 35% its requirement from neighbouring countries. However, owing to a lack of funds and a general power deficit in the SADC region, severe power supply constraints have been experienced in the country. Zimbabwe generates 1,200MW. (Source: African Manager) Market activity Zimbabwe s industrial index fell 0.1% as stocks such as Dawn (-15.4%), Colcom (-6.7%) and Lafarge Zimbabwe (-5.3%) all fell. Econet (-0.4%) and Delta (-0.3%) were the week s top two traders, but also fell marginally. Stocks with notable gains include Pearl (+17.1%), Hwange (+8.3%) and Dairibord (+5.6%). Seed Co (-0.8%) and Innscor (Flat) also saw decent trade volumes this week. Zimbabwe Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Pearl Properties Dawn Properties NMBZ Holdings Turnall Hwange Colliery Star Africa TOP TRADER USD (M) USD (M) TOTAL TRADED USD (M) USD (M) Econet Wireless ZSE Ind MARKET PERFORMANCE LEVEL USD (%) USD (%) USD/USD % CHG ZSE Ind (USD) Source: African Alliance database ZIMBABWE 26 African Alliance Pan-African Securities Research 04 February 2011

27 BOTSWANA Political and economic news Exports surge 23% in the first nine months of 2010 Data released by the Central Statistics Office (CSO) indicates that total imports were BWP 4.0bn during November 2010, representing an increase of 16.3% m/m and 34.6% y/y. Total exports during the same month were BWP 3.4bn, representing an increase of 7.5% m/m and 24.6% y/y. The CSO report stated that Botswana has consistently reported trade deficit as from October 2008 to May 2010, noting that the spell was broken in June 2010 when a trade surplus of BWP 206m was reported, but reverted to deficits from July onwards. Total imports during the first 3Q of 2010 were BWP 35.2bn, 4.9% higher than in 2009, while total exports were 23.1% higher than for 2009 at BWP 29.9bn. The CSO noted that diamonds contributed the most to imports during November, contributing 20.9% of total imports (BWP 828.3m), while machinery and electrical equipment was the second biggest contributor at 15.9% (BWP 628.8m) followed by food, beverages and tobacco at 13.1% (BWP 518m). Imports of fuel accounted for 10.2% (BWP 403m) of total imports. For exports, diamonds contributed 71.3% (BWP 2.4bn) of total exports, while copper/nickel exports contributed 11.2% (BWP 377m). Textile exports were only 4.4% (BWP 139.4m) while meat and meat products contributed 2.8% (BWP 86.6m) to exports for the month. 66.7% (BWP 2.6bn) of imports came from South Africa, with SACU supplying 67.8% (BWP 2.6bn) of imports. Exports amounting to BWP 2.2bn (64.6%) were destined for Europe, with 61% (BWP 2.1bn) headed for the United Kingdom. Exports to South Africa and Zimbabwe represented 13.3% and 2.5% respectively. (Source: Central Statistics Office) Company news Sefalana s 1H11 EPS decline by 7.5% on lower margins Sefalana Holdings (Sefalana) released unaudited 1H11 results (October 2010) reporting a 7.5% decline in EPS to BWP 0.09, largely owing to an 11.4% increase in the number of shares in issue. Revenue increased by 8.8% to BWP 904.6m driven by the manufacturing and property divisions, which grew their top-lines by 23% respectively, and the trading division (+11.4%). Cost of sales was also up 8.9% to BWP 839.8m driven by higher input costs, particularly for food items and commodities. The GP margin was relatively stable, declining only by a marginal 10bp to 7.2% from 1H10. However from FY10, the margin declined by 140bp. Operating profit and profit before tax decreased by 8% and 2.3% to BWP28.4m and BWP 23.8m respectively, as tight cost containment (+3.8%) and a reduction in finance costs (-33%) was offset by a 75.5% decline in other income. Profit after tax decreased by 13.2% to BWP 17.9m owing to a 58.2% increase in the tax charge, as the effective tax rate increased from 15.3% to 24.8% (FY10: 22.6%). An interim dividend of BWP 0.10 was declared (LDR: 18 February 2011). Sefalana acquired the remaining 20.65% minority stake in Sefcash in September 2010, and is actively pursuing a strategy to penetrate the retail market through this subsidiary, under the Shoppers banner. Ten Shoppers supermarkets were operational at the end of the period, and a further five new supermarkets are planned for opening within the 1H11. (Source: Company results) Blue turnaround on course as losses contract in FY11 Blue has issued a trading update indicating that the company expects a decrease in the loss per share (LPS) and headline loss per share (HLPS) for FY11 (28 February 2011), of more than 20% compared to those reported in FY10. The company attributes the improvement in performance to cost savings achieved as a result of right-sizing the organisation, lower credit impairments reduced through improvements in collection BOTSWANA 27 African Alliance Pan-African Securities Research 04 February 2011

28 processes, a reduced need for further write-offs of financial and intangible assets post the recapitalisation of the group by Mayibuye and improvements in operational efficiencies and business sophistication. Blue further noted that the restructuring embarked upon by the company during the current financial year and the impact of the Mayibuye turnaround strategy, have contributed to the expected improvement in financial results. It however indicated that the actions to stabilise the business have led to a decline in new loan advances to customers during the year, but said this should change with the market repositioning of the business and enhanced credit granting procedures. (Source: Company announcement) Market activity The momentum in the Botswana DCI was halted this week as the index slid by a marginal 0.1% on profit taking by retail investors, settling on a YTD gain of 6%. This week saw a number of indiscriminate declines across the board, with Engen leading the bloodbath with a 3.1% decline. Barclays (-0.5%) and FNBB (-1.5%), whose shares are trading 3.6% and 18.1% firmer YTD respectively, were casualties of profit taking as punters take advantage of the strong rally ahead of the earnings season. Primetime accounted for 50% of the week s BWP 50.6m turnover, closing the week trading 1.6% lighter. Letshego, which was responsible for 34% of turnover, traded 0.5% weaker on Monday but recovered it on Thursday to end the week level. Botswana Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE RPC Data Engen Botswana Turnstar Cresta Sechaba G4S TOP TRADER BWP (M) USD (M) TOTAL TRADED BWP (M) USD (M) Primetime BSE DCI MARKET PERFORMANCE LEVEL BWP (%) USD (%) BWP/USD % CHG BSE DCI (BWP) 6, Source: African Alliance database BOTSWANA 28 African Alliance Pan-African Securities Research 04 February 2011

29 BRVM (Mali, Burkina Faso, Benin, Guinea Bissau, Togo, Côte d Ivoire, Senegal, Niger) Political and economic news AU sets up panel to find solution in Ivory Coast Gbabgo seizes Ivorian BCEAO offices A High Level Panel has been set up by the African Union (AU) to send a team of experts to Côte d'ivoire and come up with a solution to the political impasse that would be binding on both incumbent Laurent Gbagbo and his rival for the presidency, Alassane Ouattara. The Panel named on the final day of the AU summit consists of the new African Union chairperson, Equatorial Guinea's President Teodoro Obiang Nguema, Nigerian President Goodluck Jonathan in his capacity as chair of the Economic Community of West African States (ECOWAS), along with the leaders of leaders of Chad, Mauritania, Burkina Faso, Tanzania and South Africa. "The Panel is a welcome proposition as long as it operates within the constitution of Côte d'ivoire," said Ivorian Foreign Affairs Minister Alcide Djédjé in Addis Ababa. "The AU's decision [to set up the Panel] is what Gbagbo has been asking for to resolve the crisis peacefully. We think the Panel comes with respect for the constitution. Anything that is against the constitution would not be accepted." Djédjé's emphasis on the constitution is no accident. Gbagbo's refusal to accept U.N.-certified results and concede defeat to Ouattara is founded on what the Gbagbo camp views as a grave violation of electoral procedures. (Source: All Africa, IPS) Laurent Gbagbo's government in Ivory Coast has seized the Ivorian offices and staff of the Central Bank of West African states, also known as BCEAO. Mr. Gbagbo's move comes after the internationally recognized president-elect, Alassane Ouattara, took control of the BCEAO, when West African heads of state forced the pro-gbagbo bank governor to resign. The parallel administration of Mr. Ouattara said Mr. Gbagbo's seizure of central-bank assets was illegal and illegitimate and called on the bank to close its operations until further notice. Mr. Ouattara's administration is trying to cut off Mr. Gbagbo's sources of funding and at the weekend called for a month-long ban on cocoa and coffee exports. However, Mr. Ouattara is under blockade at a hotel in Abidjan, while the police and army in the south of the country have remained loyal to the incumbent Mr. Gbagbo. The international community recognizes Mr. Outtara as the winner of Ivory Coast's November presidential election, but Mr. Gbagbo has refused to cede power. A heavy presence of gendarmes around the BCEAO offices in Abidjan, including armored vehicles, was seen mid-week. (Source: Wall Street Journal) Outtara urges citizens to withhold paying taxes Cocoa export ban leaves farmers in disarray Cocoa reaches port, but not cleared for export Ivory Coast s President-elect Alassane Ouattara told citizens to withhold paying their taxes as his rival s finance minister warned of irreversible consequences to the closure of the region s central bank offices in the nation. The government asks taxpayers to withhold payment of taxes until the offices of the Central Bank of West African States are reopened, said Guillaume Soro, Ouattara s prime minister, in a statement published in several local newspapers. (Source: Bloomberg) A cocoa export ban in Ivory Coast and a liquidity shortage since incumbent Laurent Gbagbo seized the central bank's local branch has left the top grower's cocoa industry in chaos, with beans piling up on farms or being smuggled out, farmers said. "The farmers are in disarray. Everything's stopped, the beans are just pilling up in the bush," said one farmer. (Source: Reuters) Cocoa continued to reach Ivory Coast's ports last week, but virtually none of it was registered for export as shippers observed a ban called by presidential claimant Alassane Ouattara, exporters said. Some 895,000t of cocoa reached Ivory Coast's two ports by 30 BRVM 29 African Alliance Pan-African Securities Research 04 February 2011

30 January 2011 since the start of the season in October, marking a 14% increase from the same period a year-ago. But the figure included 40,000t from the week ended 30 January, none of which was registered for shipment. Purchase managers are in the meantime accepting bean deliveries from farmers in order to recuperate what has been paid for in advance, but none of these beans have been registered for export. Other exporters based in both Abidjan and San Pedro confirmed that beans were not being registered. This came on the back of Ouattara s call for a one-month ban on cocoa registrations to starve incumbent leader Laurent Gbagbo of tax revenues. Gbagbo has shown no sign of caving to international pressure to step down after the country's top legal body reversed U.N.- certified results showing Ouattara as the winner. (Source: Reuters) EU extends list of visa bans and asset freezes Niger goes to the polls Senegal rice crop to exceed record harvest The European Union (EU) on added six people and two banks to a list of people and entities subject to visa bans and asset freezes for supporting Ivory Coast's Laurent Gbagbo. The two banks were the Savings Bank of Cote d'ivoire and the Housing Bank of Cote d'ivoire, and the individuals included the former head of the Central Bank of West African States, Philippe Henry Dacoury-Tabley. They were added to the list for helping to fund the illegitimate administration of Mr Laurent Gbagbo. Last month the European Union froze the assets of and imposed visa bans on 85 people, including Gbagbo, and 11 economic bodies, which included Ivory Coast's cocoa-exporting ports, its state oil firm and three banks. The sanctions are aimed at forcing Gbagbo to relinquish power. (Source: Reuters) Nigeriens voted peacefully early this week in an election meant to end a year of military rule in the West African country but the outcome could prove contentious because of fears of fraud and disorganisation. Polls closed at and counting started, with the only serious disturbance reported in Tassara in the northeast, where security sources said some polling stations were attacked. The election commission said it had been informed fake voter identification cards were sold before the poll, without saying how many, while eight of the election's 10 candidates had called in vain for the postponement of the vote to allow time for better preparation. "I voted, but in a spirit of doubt and disappointment," said one of the candidates, former premier Hama Amadou, after casting his ballot in the capital Niamey. A smooth election is seen as important for countering the rising regional security threat and ensuring minerals investments benefit the country's 15m people. (Source: Reuters) Senegal s rice crop is likely to exceed last year s record harvest and meet at least 60% of domestic consumption needs, helping the country reach self-sufficiency by 2015, a government official said. Production was 350,000t in 2010, the most the former French colony has reaped in a single calendar year, said Salif Diack, rice program officer in the state-run Society for the Development and Exploitation of Land in the Senegal River Valley. The West African nation is expected to produce more this year, Diack said. Senegal s government is using funding from the U.S. Millennium Challenge Account to rehabilitate land in the Senegal River Valley along its northern border with Mauritania. The program aims to level and irrigate uncultivated rice paddies. Diack noted that if rehabilitating the land was maintained, and farmers were advised, then self-sufficiency would be obtained within three to four years (Source: Bloomberg) BRVM 30 African Alliance Pan-African Securities Research 04 February 2011

31 Company news Sonatel increases subscriber base Senegal had 7.8m mobile phone users at the end of September 2010, up 4.4% from 7.5m in the middle of the year and compared to 6.4m at the end of September 2009, according to telecommunications regulator ARTP. There were fewer than 52,000 post-paid customers, down by nearly 5,000 since the end of June. Orange Senegal (Sonatel Mobile) increased its customer base to 4.7m from 4.3m a year earlier, Sentel to 2.4m from 1.9m, and Expresso to 0.7m from 0.2m. ARTP states that there were 331,479 fixed lines in Senegal at the end of the third quarter, compared to 264,403 a year earlier, of which 78.0% are residential, 20.8% business and 1.1% payphones. Fixed and mobile internet customers reached 85,279 at the end of September, up nearly 15% on 74,182 three months earlier and compared to 58,708 a year earlier. Some 90.3% of users had ADSL, 8.2% 3G mobile and 1.5% PSTN dial-up. ARTP only provides subscriber base figures for individual operator in the mobile segment. (Source: Telecom Paper) Market activity The BRVM composite index lost only 6.4% on the back of a large dip in the price of Sonatel, which shed 11.8%, and emerged as the top trader for the week. SG Bank fell by a further 14.4% on light trading, Palm CI (-8.8%), Unliver (-7.5%) and Crown SIEM (-14.4%) also fell this week. The most notable of the gainers was ETI, which gained 2.1%, on thin trading. Bourse Regionale des Valeurs Mobilieres TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE SODE ,000 SGB ,500 Bank of Africa NG ,000 Crown SIEM CI ,300 ETI (BRVM) Sonatel SN ,000 TOP TRADER XOF (M) USD (M) TOTAL TRADED XOF (M) USD (M) Sonatel SN IC Comp MARKET PERFORMANCE LEVEL XOF (%) USD (%) XOF/USD % CHG IC Comp (XOF) Source: African Alliance database BRVM 31 African Alliance Pan-African Securities Research 04 February 2011

32 GHANA Political and economic news GRA exceeds its 2010 target of GHS 5.92bn by 0.5% Large deposits of iron ore found in the Northern Region PURC to review utilities tariffs GNPC to lift first crude cargo in March Work begins on Jubilee gas project The Ghana Revenue Authority (GRA) collected GHS 5.94bn for the 2010 fiscal year, exceeding its target of GHS 5.92bn by 0.5% made up of revenue from, the Customs Excise and Preventive Service (GHS 2.44bn), the Internal Revenue Service (GHS 2.44bn) and the Value Added Tax Service (GHS 1.06bn). The revenue collected for the 2010 fiscal year also represents 23.6% increase over the 2009 fiscal year. Announcing the figures, the Commissioner General of GRA, Mr George Blankson said the revenue from Customs was about 9% below target as a result of among others, a reduction in some petroleum taxes during the year. The GRA has set its revenue target for the 2011 fiscal year at GHS 7.5bn. (Source: Daily Graphic) Geochemical exploration undertaken along the eastern corridor of the Northern Region has revealed large deposits of iron ore at several locations in the area. Also, there were traces of silica, copper, manganese, aluminium and chrome found in the area but these are subject to further exploration and laboratory test to determine whether these minerals are available in commercial quantities. (Source: Daily Graphic) The Public Utilities Regulatory Commission (PURC) is consulting with stakeholders in the utilities sector to consider a possible review of utility tariffs as it seeks to implement the Automatic Adjustment Formula (AAF) within the 1Q11. The PURC announced the reintroduction of the AAF following the review of utilities tariffs in June 2010 which led to an average increase of 89% and 36% in power and water tariffs respectively. The AAF seeks to track and incorporate movements in key determinant variables to reflect the actual cost of utility generation and distribution. The PURC is currently in consultation with Government, the Trade Union Congress, the Association of Ghana Industries and Parliament before the reintroduction. The PURC said it will consider social and economic factors in coming up with a decision although indicators are pointing to a potential increases in tariffs (Source: Business and Financial Times) The Ghana National Petroleum Corporation (GNPC) is set to lift its first Jubilee crude cargo by the second week of March and the second possibly by the end of May. GNPC will be the fourth partner to lift after Tullow and two other partners, according to the schedule agreed amongst the partners to lift in order of their interest in the field. GNPC said it is working closely with the partners to obtain the best price for the crude and expects to sell it at a price slightly higher than Brent crude. The GNPC is currently evaluating proposals from oil traders and consumers as well as Ghanaian bulk distributors of refined petroleum products in order to select a suitable partner. (Source: Myjoyonline) Work has begun on the Jubilee gas project to harness the country s natural gas deposits with the laying of flow lines to pipe the gas from the Jubilee Field to the Jomoro District of the Western Region. Technip, which was contracted by the Ghana National Petroleum Corporation to engineer, weld and install a 14km rigid steel flow line under the first phase of the project, has completed the flow lines which are expected to arrive in Ghana within the next week. (Source: Daily Graphic) Company news PBC s record s a 16.7% increase in EPS to GHS Produce Buying Company Ltd (PBC) recorded an increase of 42.5% y/y in turnover to GHS m, while corresponding cost of sales increased by 44.1% y/y to GHS m for the 1Q11 ended 31 December Also, other income for the period increased from GHANA 32 African Alliance Pan-African Securities Research 04 February 2011

33 GHS 0.03m to GHS 0.50m, while direct operating expenses and general and administrative expenses increased by 60.5% y/y and 29.3% y/y to GHS 9.15m and GHS 4.48m, resulting in a 22.6% y/y increase in operating profit to GHS 20m. Although PBC s finance charges for the period increased by 31.1% y/y to GHS 8.83m, PBC recorded a 16.7% y/y increase in PAT to GHS 8.38m. (Source: Company release) Produce Buying Company Ltd (PBC: GN) 3M TO DECEMBER (GHS 000) 1Q10 1Q11 % CHG Turnover 231, , Gross profit 25,444 33, Operating profit before finance 16,306 19, Profit/(loss) before tax 9,573 11, Profit/(loss) after tax 7,180 8, EPS Source: Company report TOTAL s PAT up by 60% to GHS 21.07m For the unaudited FY10 ended 31 December 2010, Total Petroleum Ghana Ltd s (TOTAL) turnover increased by 36.1% y/y in to GHS m, while its cost of sales increased by 34.1% y/y to GHS m. TOTAL s other income for the period decreased by 30% y/y to GHS 7.67m, while it recorded finance income of GHS 0.61m compared to finance charges of GHS 2.08m recorded a year ago, resulting in a 60% y/y increase in PAT to GHS 21.07m. (Source: Company release) Total Petroleum Ghana Ltd (TOTAL: GN) 12M TO DECEMBER (GHS 000) FY09 FY10 % CHG Turnover 542, , Gross profit 40,046 64, Operating profit 7,290 19, Profit/(loss) before tax 16,157 27, Profit/(loss) after tax 13,166 21, EPS Source: Company report UNIL sfy10 EPS increases from GHS to GHS Unilever Ghana Ltd (UNIL) released its unaudited FY10 results (December 2010), recording a 10.6% y/y increase in turnover to GHS m, while corresponding cost of sales decreased by 1.6% to GHS m. UNIL s general, administrative and selling expenses for the period decreased by 28.7% to GHS 12.03m, contributing to operating profit increasing from GHS 5.29m to GHS 27.06m. The company recorded a 53.6% increase in exceptional items to GHS 3.53m, while finance income increased by 63.1% to GHS 1.45m, and finance cost declined by 79.7% to GHS 0.26m. These resulted in UNIL s PAT increasing from GHS 1.30m a year ago to GHS 19.11m. (Source: Company release) Unilever Ghana Ltd (UNIL: GN) 12M TO DECEMBER (GHS 000) FY09 FY10 % CHG Turnover 163, , Gross profit 22,168 39, Operating profit expenses 5,286 27, Profit/(loss) before tax 2,777 25, Profit/(loss) after tax attributable to owners of the parent owner 1,304 19,109 1,365.4 EPS ,365.4 Source: Company report GHANA 33 African Alliance Pan-African Securities Research 04 February 2011

34 FML s PAT up by 27.4% to GHS 19.31m Fan Milk Ltd (FML) released financials for the FY10 ended 31 December 2010 (unaudited), recording a 25.8% y/y increase in turnover to GHS m and a 25.3% y/y increase in cost of sales to GHS 46.27m. FML s distribution costs and administrative expenses increased by 19.5% y/y and 36.3% y/y to GHS 19.99m and GHS 7.94m respectively. For the FY10, the company recorded a 27.4% y/y increase in PAT to GHS 19.31m. EPS was however down, as the company issued bonus shares (five new shares for every one held) in (Source: Company release) Fan Milk Ltd (FML: GN) 12M TO DECEMBER (GHS 000) FY09 FY10 % CHG Turnover 82, , Gross profit 45,545 57, Operating profit 18,998 24, Profit/(loss) before tax 20,175 25, Profit/(loss) after tax 15,156 19, EPS Source: Company report Market activity Market turnover on the Ghana Stock Exchange (GSE) during the week under review declined by 2.7% over the previous week to GHS 2.3m, on the account of a block trades recorded in Standard Chartered Bank Ltd (GHS 0.59), Enterprise Group Ltd (0.26m), Fan Milk Ltd (0.25m) and HFC Bank (Ghana) Ltd (GHS 0.24m). Standard Chartered Bank Ltd was the most traded equity by value, accounting for 25.4% of the market turnover. Eighteen price changes were recorded, twelve equities led by Aluworks Ltd (+31.3%) recorded price gains, while six price losers were recorded with Cocoa Processing Company Ltd (-33.3%) being the biggest loser. The GSE-CI gained 1.38% to close at 1, points, representing ytd gain of 5.9%. Ghana Securities Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Aluworks Ghana Cocoa Processing Produce Buying Starwin Products Ghana Oil SIC Insurance TOP TRADER GHS (M) USD (M) TOTAL TRADED GHS (M) USD (M) Stanchart Ghana GSE CI MARKET PERFORMANCE LEVEL GHS (%) USD (%) GHS/USD % CHG GSE CI (GHS) 1, Source: African Alliance database GHANA 34 African Alliance Pan-African Securities Research 04 February 2011

35 ZAMBIA Political and economic news China-Zambia trade soars to USD 2.2bn ZMK 840bn trade surplus Trade between China and Zambia has remained robust at over USD 2.2bn because of the closer bilateral relationship the two countries enjoy, Chinese Ambassador to Zambia Li Qiangmin has said. Standard Chartered Bank Managing Director Mizinga Melu said in 2010, African-Chinese trade exceeded USD 110bn from USD 90bn recorded in Ms. Melu said the USD 2.2bn trade between China and Zambia is set to enhance closer socio-economic partnerships and ties. She said Standard Chartered Bank signed a Memorandum of Understanding with the Agricultural Bank of China and the partnership focuses on providing further support for the Africa-China trade corridor by opening a new representative office in Angola. (Source: Zambia Daily Mail) Zambia in December last year recorded a trade surplus of more than ZMK 840bn, a feat that meant the country finished the year without a deficit month. This brought the annual trade balance to almost ZMK 9trn. Zambia s total exports for December hit ZMK 3.22trn and imported goods worth ZMK 2.97trn, recording a surplus of ZMK 840.6bn in trade. This was lower than was recorded in November which registered ZMK 860bn. Central Statistics Office (CSO) Acting Director John Kalumbi said that copper dominated the exported goods as it accounted for 86.8% while the non-traditional exports (NTEs) weighed in at 13.2%. Zambia also recorded a trade surplus in December of ZMK 840bn. Since January last year, the country has had monthly trade surpluses with the highest valued at ZMK 1.14trn in March Mr. Kalumbi said there was an increase in the total value of exports in December as compared to November last year with the year closing with ZMK 3.22trn worth of exports, this was ZMK 25bn more than exports in November. While the exports were increasing, the trend was the same with imports which increased from ZMK 2.11trn in November to ZMK 2.38trn in December last year. (Source: Zambia Daily Mail) Mining tax revenues up Total mining tax revenues from copper earnings have risen from ZMK 4bn in 2004 to ZMK 1.7trn in 2010, Bank of Zambia Governor Caleb Fundanga has said. Dr. Fundanga said it is important to note that the variable profit tax does not allow the government to benefit from higher copper prices and earnings like the windfall tax. He said the extent to which benefits from the mines accrue to the government depends on the ability to effectively monitor the taxable income of mining firms and to police various ways multinationals use to reduce tax obligations by transfer pricing. As a percentage of Gross Domestic Product (GDP), mining taxes have risen from virtually zero to about 2.2%. On foreign exchange earnings in 2010, the sector s net supply of foreign exchange to the banking sector was only USD 905.5m. With export earnings estimated at USD 6,003.4m, this net supply of foreign exchange to the market was 15% of metal earnings, a drop from 30% in Dr Fundanga said Foreign Direct Investment (FDI) flows in the sector in the recent past are estimated at USD 624m in 2009 and USD 724.9m in 2010, rising from USD 277m in Between 2004 and 2009, total FDI flows and mining sector external borrowing were positively correlated, but this relationship appeared to break down in For the period 2000 to 2010, the total debt contracted amounted to USD 1,367m whilst total debt repayment reached USD 1,319.5m, driven by large outflows for 2009 and (Source: Zambia Daily Mail) ZAMBIA 35 African Alliance Pan-African Securities Research 04 February 2011

36 Company news ZICTA approves MTN share sale Luanshya mine set to reduce costs by 25% Saudi firm to invest USD 125m in Zambia in 2011 FQM to invest USD 400m in Kansanshi mine The Zambia Information and Communication Technology Authority (ZICTA) has given MTN Zambia permission to issue 7.8% shares to the public by MTN Managing Director Farhad Khan said so far, 2.2% shares have already been taken up by private companies out of the 10% shares that the firm is mandated to float on the local bourse. In November 2009, MTN Zambia said it was set to finalise the issuance of the remaining shares through a private placement arrangement in the first quarter of It delayed the issuance of shares due to the global credit crunch. MTN issued some shares to Barclays Staff Pension Fund and Saturnia Regna Pension Fund of Zambia under a private placement in March (Source: Zambia Daily Mail) China Non Ferrous Mining Corporation Luanshya Copper Mine (CLM) has targeted to reduce the cost of producing copper to USD 5,000 per tonne from the current USD 6,640 in the next one and half years. CLM Public Relations Officer Sydney Chileya said the targeted reduction would be achieved soon after the overhaul of Baluba Mine was over. CLM had continued to buy new equipment to cut down on operational costs, the latest one being the ceramic filter used for drying copper concentrates at the cost of USD 3.5m. Apart from the latest ceramic filter, CLM had acquired five copper crushers at the cost of USD 280,000 each. (Source: Times of Zambia) Saudi firm Menafea Holding plans to invest USD 125m in a 5,000ha farm in North-Western Zambia during 2011, where it will grow pineapples and build a factory to produce juice. Khaled Alrajhi said Menafea would also build 2,000 housing units in Lusaka under the same agreement, signed with Zambia's Investment Promotion Agency. Zambia Development Agency Director for Investment Promotion, Muhabi Lungu, said more Saudi firms were expected to invest in Zambia. Finance Minister Situmbeko Musokotwane said Zambia did not regard leasing farmland to foreign investors as a form of "colonialism" and was encouraging Gulf countries to invest in its agricultural sector. (Source: Reuters) First Quantum Minerals (FQM) will invest USD 390m into Kansanshi Mine in Solwezi to raise copper production by 60% per year. Production will rise to t of copper cathodes per year from 250,000t. The money would go into the Phases One and Two of the expansion of Kansanshi Mine, which is one of the largest single copper mines in the world. FQM President Clive Newall said Phase-One of the expansion project is presently underway and expected to increase annual production capacity to approximately 285,000t. Phase-One is focused on expanding the treatment capacity of the oxide copper (from open pit) by about 20% to 8.5mt of copper ore (rock) and building flexibility to allow for the mixed and sulphide circuits to be switched as needed to suit mining activity. This phase of the expansion project has a capital budget of USD 40m and construction is scheduled to be complete in the fourth quarter of Construction of Phase-Two is expected to start in the second half of 2012 with commissioning targeted for 1H14 which would see the construction of a new concentrator with a planned annual output of 25mt of ore. (Source: Times of Zambia) ZAMBIA 36 African Alliance Pan-African Securities Research 04 February 2011

37 Market activity In Zambia, the market gained 1.2% as a result of gains in Zanaco (+9.8%), ZAMEFA (+8.7%) and Zambia Sugar (+3.0%). Zambeef (-14.3%) and Farmers House (-10.8%0 were the only stocks registering declines this week. CEC (+0.8%) emerged as the week s top trader, making up 27% of total turnover. ZANACO, Lafarge, and Zambian Breweries also made up around 15% of turnover each. Lusaka Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE ZANACO 9.8 1,108 Zambeef ,000 ZAMEFA Farmers House ,122 Bata Zambia TOP TRADER ZMK (M) USD (M) TOTAL TRADED ZMK (M) USD (M) Copperbelt Energy LuSE ALSI 3, MARKET PERFORMANCE LEVEL ZMK (%) USD (%) ZMK/USD % CHG LuSE ALSI (ZMK) 3, , Source: African Alliance database ZAMBIA 37 African Alliance Pan-African Securities Research 04 February 2011

38 TANZANIA Political and economic news GDP growth at 6.2% for 3Q10 Tanzania's economy grew 6.2% in 3Q10 from 5.7% in the same period a year ago due to an improvement in construction, transport and communication sectors. The National Bureau of Statistics (NBS) said in a report that construction rose by 11.2% from -5.4%, while transport and communication sectors recorded a growth rate of 10.7% compared with 5.7% previously. The government expects Tanzania's economy to grow by 7.2% this year from an estimated 7% in 2010 due to a strong recovery after the global financial crisis. The IMF's outlook for economic growth in Tanzania puts it at 6.7% for this year. (Source: Reuters) Company news Engen acquires Chevron assets Bank M issues fixed rate bond African downstream petroleum marketer, Engen has acquired Chevron's interests in Tanzania. The move is part of the company's expansion programme in a batch of seven agreements to acquire some of Chevron's interests in Sub-Saharan Africa and the Indian Ocean Islands. These deals see Engen enter new territory in Reunion and Malawi, while strengthening its presence in Tanzania. However, the deals for Chevron's interests in Zimbabwe, Mozambique and Mauritius are still subject to all the relevant in-country regulatory and legislative conditions. Chevron imports about 70% of Tanzania's petroleum products. (Source: The Citizen) Bank M Tanzania Limited became the first local bank to raise funds through the bond market in the country, saying it would use the money to loan out investors in agriculture and transport sectors. The bank embarked on a five-day drive to raise TZS 3bn (USD 2m), at a 15% annual return rate, payable annually. The bond will also be listed on Dar es Salaam Stock Exchange (DSE) on 9 February The bank s chairman termed the bond issue as an opportunity for Bank M to support and add depth to the fledgling bond market in the country. The fixed rate bond requires a minimum subscription of TZS 5m and is issued in specified denomination of TZS 1m and in integrated multiples of TZS 1m in excess thereof. (Source: Daily News) Market activity The Tanzanian DSE index was up by 1bp on the back of a 3.6% gain in DCB, which traded lightly. CRDB was the week s top trader, turning over around USD 0.6m, and making up 78% of the week s activity. There was also some activity in NMB, Simba and TWIGA which all closed the week flat. Dar es Salaam Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE DCB No losers TOP TRADER TZS (M) USD (M) TOTAL TRADED TZS (M) USD (M) CRDB Bank DSE 1, MARKET PERFORMANCE LEVEL TZS (%) USD (%) TZS/USD % CHG DSE (TZS) 1, , Source: African Alliance database TANZANIA 38 African Alliance Pan-African Securities Research 04 February 2011

39 NAMIBIA Political and economic news BCI falls ZAR 1.2bn for airport upgrades Meatco raises PTI Nampower targets Mile 8 Options for Sacu revenue sharing BoN blocks dividends to Iran The IJG December Business Climate Index fell by 16.4 points m/m to index points mainly due to rising fuel costs, a drop in business registrations, and lower commercial vehicle sales, according to IPPR. (Source: IPPR) The Namibia Airports Company will invest ZAR 1.2bn on airport upgrades over the next five years, which will allow any-sized aircraft, including super jumbo, to land at the country s two main airports. The State-owned enterprise said that the envisaged improvements would also enable it to offer around-the-clock service at the Hosea Kutako International Airport and Walvis Bay airport. (Source: The Namibian) Meatco has increased the rate of its producers transit insurance from 0.5% to 0.6% for all livestock en route to company plants. (Source: New Era) The Walvis Bay Municipality s refusal to allow NamPower to build a 400MW coal-fired power station at Bird Island north of Walvis Bay, and the power company s rejection of the land behind Dune 7, has led to Mile 8, north of Swakopmund, becoming one of the possible sites for the new power station. (Source: The Namibian) Namibia is keeping its options open and will first scrutinise an independent draft report suggesting huge cuts in the revenue it gets yearly from the Southern African Customs Union (Sacu) before taking action, according to Deputy Finance Minister Calle Schlettwein. The report, compiled by Australian consultants, the Centre for International Economics, proposes various options for a new revenue-sharing formula which would slash the customs and excise revenue of Sacu members Botswana, Swaziland and Namibia while boosting that of South Africa by at least ZAR 12bn a year. (Source: The Namibain) Millions of US dollars of dividends, due to Iran as shareholder in Rio Tinto Rössing Uranium, are lying in a local bank account, blocked by the Bank of Namibia, according to the American ambassador to Namibia. The Ambassador, Dennise Mathieu, also conveyed Rössing s request for advice on how they could get rid of their Iranian partner. (Source: The Namibian) Company news Significant resources at Ongolo Husab project approved Seaflower workers on strike Deep Yellow confirmed significant uranium intercepts from its JORC Resource drilling programme at its Ongolo Alaskite Project area in Namibia. (Source: Deepyellow) Extract Resources has received environmental approval for its Husab uranium project. The company also lodged a mining licence application for the project, for which a definitive feasibility study is expected at the beginning of Plant commissioning is scheduled for the first quarter in 2014 for an open pit mine producing 15m pounds per annum of U3O8. (Source: The Namibian) Close to 400 workers of the Seaflower Whitefish Corporation at Lüderitz are on strike to press for a 5.5% wage increase backdated to May last year. The workers also want the company to scrap a practice introduced at the beginning of 2010, forcing them to take paid leave during the off-season in October. In addition, they want the company to do away with a practice compelling them to present a Police affidavit confirming the death of a relative before qualifying for compassionate leave. (Source: The Namibian) NAMIBIA 39 African Alliance Pan-African Securities Research 04 February 2011

40 Kudu gas project progressing Paladin acquires Aurora s uranium assets Auryx lists on NSX Partners in the Kudu gas field have taken another step in developing the project which will pump 500MW of power into the Namibian grid and allow the country to export another 300MW. Tullow Oil, on behalf of its partners Namcor, Gazprom International and Itochu, has concluded the terms of reference for a new petroleum agreement with the Ministry of Mines and Energy. (Source: Offshore Magazine) Paladin advised that it has completed its previously announced acquisition of the uranium assets of Aurora Energy Resources from Fronteer Gold. Paladin now holds title to significant uranium assets within the highly prospective Central Labrador Mineral Belt of Eastern Canada, totalling 83.8m pounds of Measured and Indicated resources and 53.0m pounds of inferred resources across six deposits, including the Michelin, Jacques Lake, Rainbow, Nash, Inda and Gear deposits and has secured control of the most prospective ground within this belt. (Source: Paladinenergy) Auryx Gold which has a primary listing on the Toronto Stock Exchange has been granted permission by the Namibian Stock Exchange to dual list 161.6m ordinary shares of no par value on the Development Board on 1 February In a related story, Auryx announced that it recently received the second of two waivers from the Namibian Government that are required in order for a foreign company to purchase farm/ranch land in Namibia. This waiver completes the conditions precedent to the surface rights acquisition. Auryx has agreed to purchase the surface rights to a land package of more than 14,700ha surrounding the Otjikoto gold deposit and the entire 10km long geophysical anomaly with which it is associated. The Company is currently undertaking work via a surface rights access agreement that expires in June The acquisition of the surface rights provides the Company with unhindered access to the ground for exploration and it is an essential step for the eventual development of the project. (Source: NSX, Bloomberg) Market activity The Namibian local index was marginally up by 5bp, as Bidvest (+0.1%) and Namibian Breweries (+0.1%) properties both gained. Bidvest was the top trader, accounting for 77% of the week s turnover. FNB (flat) was the only other stock to trade on the local board this week. Namibian Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Bidvest Namibia No losers Namibia Breweries TOP TRADER NAD (M) USD (M) TOTAL TRADED NAD (M) USD (M) Bidvest Namibia NMB LOCAL MARKET PERFORMANCE LEVEL NAD (%) USD (%) NAD/USD % CHG NMB LOCAL (NAD) Source: African Alliance database NAMIBIA 40 African Alliance Pan-African Securities Research 04 February 2011

41 MALAWI Political and economic news MWK 80bn to modernise railway system Bank sees pressure on foreign reserves Japan Tobacco Company in talks on cigarette plant Economists hit government on fuel price jump MASM takes over Liberty Health MTL says broadband to improve business Malawi needs USD 528m (about MWK 80bn) to rehabilitate and upgrade the current rail network to ensure efficiency in the industry, a study has shown. Victor Lungu, director of transport planning in the Ministry of Transport and Public Works, confirmed in an interview that a recent study, funded by the European Union has revealed that for the country's 810km railway stretch to be efficient, existing structures need improvements. (Source: The Nation) The global market has started the year with soaring prices of petroleum products, a development that is likely to see continued escalation of commodity prices. In its monthly financial and economic report, Malawi Savings Bank expresses fear that the continued upswing in prices of petroleum products will mount pressure on the country's foreign reserves. The recent rise in prices of petroleum products on the global market if it persists may provide pressure on the reserves during the next two months of February and March. (Source: The Daily Times) Malawi and India signed a MWK 7.9bn (USD 50m) loan agreement expected to assist Malawi in buying machinery and equipment for the Greenbelt Irrigation Initiative and One Village One Product concept. In a statement, the Malawi High Commission in India said some of the funds will also be used for the purchase and installation of a cotton processing plant. Malawi's High Commissioner to India Dr. Chrissie Chawanje, who signed the agreement on behalf of the country, thanked India for the continued assistance it renders to Malawi in programs relating to socio-economic development and poverty reduction. (Source: The Nation) The Economics Association of Malawi and the Economic Empowerment Action Group (EEAG) warned that the country should brace for serious economic implications due to the recent fuel price increase. The Malawi Energy Regulatory Authority announced that its 11th board meeting resolved to adjust pump prices for petrol, diesel and paraffin, effective 28 January 2011 following higher crude oil prices on the international market. But in an interview, EEAG president Lewis Chiwalo described the hike as untimely, warning that it will unleash a chain of negative effects on the economy. (Source: The Nation) The Medical Aid Society of Malawi (MASM) has taken over the operations of Liberty Health South Africa in Malawi which had entered the Malawi medical insurance market two years ago. MASM chief executive officer Sydney Chikoti confirmed in an interview that Liberty Health is no longer operating directly in Malawi, saying its customers will now be served through MASM. (Source: The Daily Times) Fixed and wireless phone operator, Malawi Telecommunications Limited (MTL), has described its investment in the fibre optic backbone as a priceless venture that will improve business operations in the country. MTL chairman Professor Mathews Chikaonda said this in an interview on the sidelines of a dinner he hosted for scores of business executives at the College of Medicine Sports Complex in Blantyre on Friday. (Source: The Daily Times) MALAWI 41 African Alliance Pan-African Securities Research 04 February 2011

42 Company news MPICO releases trading statement for the year for FY10 In compliance with the Listing Rule no 7.3(a) of the Malawi Stock Exchange, Malawi Property Investment Company Ltd (MPICO) has announced that its Group profit after tax for FY10 will be 100% more than the prior year's results. This is largely due to an increase in fair value of the existing properties, improvement of core operations and the sale of three commercial properties. (Source: Company Data) Market activity The Malawi index was flat as no counters registered price moves for the week. NBS was the week s top trader, accounting for 27% of market turnover. Illovo, NMB, and NITL also made up fair portions of the week s activity. Malawi Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE No gainers No losers TOP TRADER MWK (M) USD (M) TOTAL TRADED MWK (M) USD (M) NBS MSE ALSI MARKET PERFORMANCE LEVEL MWK (%) USD (%) MWK/USD % CHG MSE ALSI (MWK) 4, Source: African Alliance database MALAWI 42 African Alliance Pan-African Securities Research 04 February 2011

43 UGANDA Political and economic news UN warns staff on possible violence Single currency to spur regional growth Inflation hits highest in four months The UN has called on local and international staff in Uganda to take caution and make special preparations, citing possible violence ahead of, during and after the 18 February general elections. Although noting that all stakeholders in the electoral exercise have paid adequate attention to ensure a peaceful and safe conduct of the process, the UN said that disputes leading to clashes and violence are not unlikely. Uganda Police however reported that there is no hard evidence that there will be violence but it is only wise for UN to advise their staff in case of the worst scenario. The electoral process which kicked off in October 2010 has been so far hailed by all observers as being generally peaceful but tension is building up as incumbent President Museveni and his arch- rival, Dr Kizza Besigye issue warnings and counter warnings against each other. Dr Besigye and six other opposition candidates have already dismissed the coming poll as falling short of being free and fair and the Electoral Commission (EC) as being partisan. Dr Besigye has declared intentions to announce his own version of results, citing fears that the EC cannot be trusted in the matter. Mr Museveni recently warned that if Dr Besigye announces results he will be arrested. (Source: The Daily Monitor) East African member states have been challenged to deeply integrate their economies if the region is to achieve a Monetary Union. The EAC secretary general, said in a keynote address during the opening of a four day Single Currency Conference on Monday in Arusha, Tanzania that the introduction of a common currency would provide a stronger and more solid basis for investment and economic growth. For an efficient and effective Common Market to operate, a Monetary Union, and not simply the free movement of capital, is essential. The EAC Common Market Protocol demands that after the formulation of the Customs Union and the Common Market, a Monetary Union, the third pillar of the protocol, must be instituted before the Political Union, which is the last step in the Union s agenda. The preparatory meeting of the High Level Task Force (HLTF) is negotiating the Protocol to establish a Monetary Union. (Source: The Daily Monitor) According to the Bureau of Statistics Uganda has recorded an increase in its inflation rate over the last four months rising by almost double from 1.7% in August to 3.1% in December However, in comparison to other East African countries, Uganda has registered the lowest inflation rate for the month of January. Inflation figures show that in December 2010, Tanzania recorded a 5.6% inflation rate, Rwanda 17.6%, Burundi 6.3% and Kenya 4.5%. Tanzania's inflation that rose from 5.5% in November to 5.6% in December was attributed to the end of year festivals that led to an increase in the cost of food. The Uganda Bureau of Statistics stated that the annual core inflation rate, which excludes food crops, fuel, electricity and metered water increased to 4.8% in December 2010 y/y compared to 2.9% in November 2010 y/y. (Source: The East African Business week) Company news Uganda defers oil production to 2012 Tullow Oil has deferred Uganda's first oil production to 2012 citing infrastructure challenges, the long tax dispute that held back progress through last year, as well as the waxy nature of Uganda s crude oil. Tullow is the largest exploration company operating in Uganda's Lake Albert basin, which is estimated to contain roughly 2.5bn barrels of oil. Tullow has so far discovered 1bn barrels of recoverable oil. The largest Irish company on the Dublin stock exchange had planned to begin production in the 4Q11, but a longrunning dispute with both the government and Tullow's former partner, Heritage Oil, UGANDA 43 African Alliance Pan-African Securities Research 04 February 2011

44 appears to have delayed that target. Tullow paid about USD 1.5bn in July 2010 to Heritage Oil for interests in the Lake Albert basin. In the deal, Heritage paid USD 121m in an escrow account pending the resolution of the dispute and the balance would only be paid if the arbitrators ruled in Uganda's favour. As a result, Uganda has delayed final approval of the purchase of the stakes until the matter is finalised. The tax dispute also dampened efforts Tullow was making to acquire two large oil development partners. (Source: East African Business week) Tullow Oil advertises nonexistent vacancies Tullow Oil Uganda is on the spot once again for duping the public by advertising senior positions in the company which have already been offered to expatriates. It is believed that the reason for advertising the 18 non-existent jobs was to enable the company get work permits for the foreigners who have been working in the country illegally since 2010 after the immigration officials had declined to issue them work permits. Reports show that the Senior Position vacancies which were advertised in a local daily in January 2011 had earlier been advertised in the UK in May 2010, interviews conducted and the jobs given out. Tullow which currently has 85% of its staff from Uganda confirmed that some senior and highly technical position vacancies had been advertised and filled before they were advertised in Uganda but the company denied suggestions that foreign staff had been denied work permits. The oil company which is free to source for experts abroad on areas where local capacity is unavailable, is now accused of deliberately trying to lock out Ugandans from senior positions. (Source: The Daily Monitor) Market activity In Uganda, activity increased tremendously this week, with market turnover rising tenfold from last week. Turnover came in at UGX 5.5bn as Stanbic supply came into the market from institutional investors; hence SBU generated 97% of the turnover, trading between UGX 275 and 280. Contrary to expectations, the price moved up to UGX 280 from UGX 275 following a profit warning (20-25% decline in profits expected). The bullish sentiment on locally listed banks led to price appreciations this week. The ALSI declined by 4.7% on the back of declines in cross-listed Kenyan stocks. Primary listed stocks performed well, including BOBU (+16.5%), NVL (+4.8%) and SBU (+1.8%), which all posted gains. Uganda Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE Bank of Baroda No losers New Vision Stanbic Uganda TOP TRADER UGX (M) USD (M) TOTAL TRADED UGX (M) USD (M) Stanbic Uganda 5, USE ALSI 5, MARKET PERFORMANCE LEVEL UGX (%) USD (%) UGX/USD % CHG USE ALSI (UGX) 1, , Source: African Alliance database UGANDA 44 African Alliance Pan-African Securities Research 04 February 2011

45 RWANDA Political and economic news BNR to implement RTGS payment system Grenade attack hits Kigali The central bank is set to start implementing the Real Time Gross Settlement System (RTGS) which allows transfer of money from one bank to another on real time and on individual basis. The system is part of the government s payment modernisation programme under the Rwanda Integrated Payments Processing System (RIPPS) geared towards making payment systems efficient and reliable. The Governor of the National Bank of Rwanda (BNR) said it was also part of the integration of payment systems within the East African Community being conducted through a project implemented by the five central banks. The RTGS system is already operational in three countries - Kenya, Uganda and Tanzania. Last year, the central bank signed a contract with CMA Small Systems AB of Sweden to implement the programme. The Governor said the cost of investment in the project in Rwanda stands at USD 2m. The project, funded by the World Bank through the Competitiveness and Enterprise Development Project (CEDP), will see the usage of cheques also reduced to minimal levels. (Source: The New Times) A grenade attack killed two people and wounded at least 28 in Kigali on Friday, 28 January Kigali was hit by a string of grenade attacks last year which the government has blamed on two high-ranking officers now in exile. One of them denied the allegations last year, saying that the Rwandan authorities had staged the grenade attack. He currently lives in South Africa where he was shot and wounded in June 2010 in an attack his wife blamed on Rwanda. Rwanda has been in the limelight internationally due to concerns about the level of democracy in the country. (Sources: Reuters; African Alliance Research) Company news Bralirwa shares rise 62% on their market debut Shares of Rwandan brewer Bralirwa jumped 62% on their market debut as the country's stock exchange opened for business on Monday, 31 January The government raised USD 29.5m by selling a 25% stake at RWF 136 per share in the IPO and sold its remaining 5% to Heineken, which already holds 70%. The shares closed at RWF 220 on the Rwanda Stock Exchange (RSE). Robert Mathu, executive director of the Capital Markets Advisory Council (CMAC), said the exchange's first transaction had triggered secondary trading. Bralirwa Managing Director told Reuters 5% of government shares were sold to Heineken at RWF 179 each, for a total USD 7.8m, before the IPO. Rwanda is preparing for the listing of Banque de Kigali (BK) and telecoms operator MTN Rwanda, the local unit of South Africa-based MTN Group. Rwanda's largest bank by assets, BK will offer a 25% stake in an IPO in the first half of this year. The government also plans to sell a 20% stake in the country's biggest insurer, Sonarwa (Societe Nouvelle d'assurance du Rwanda), in which Nigerian firm IGI owns a 35% stake. (Source: Reuters) Market activity The Rwanda Stock Exchange saw the listing of Bralirwa this week Monday, the first domestic listing on the bourse. The counter closed at RWF 235 on the day, up 73% on the IPO price, in thin trading that saw 3,300 shares changing hands (USD 1,235). After a break on Tuesday (public holiday), there was no trading on Wednesday, with no bids and offers at high levels. On Thursday there were two transactions totalling 10,500 shares at RWF 212 per share (USD 3,710). Bralirwa share price closed the week up by 56% as a result; however the outstanding bids are demanding (approximately USD 2.3m at RWF , which is a 30% premium to our fair value of RWF 165. RWANDA 45 African Alliance Pan-African Securities Research 04 February 2011

46 SWAZILAND Political and economic news Tender process to launch for second mobile phone operator A recent country report issued by the International Monetary Fund (IMF) reports government is to launch a tender process for a second mobile phone operator by the end of March This is one of the initiatives by government to promote private sector competitiveness in a bid to make Swaziland an attractive destination for Foreign Direct Investments (FDI). The IMF has advised other actions that need to be taken by government as reduction of the cost of enforcing contracts, reduction of corruption and red tape, and steps towards economic integration. The IMF report notes that bold steps need to be taken to liberalise local markets and restart government s privatisation program that was initiated in Furthermore, the IMF advises that publicly-owned enterprises operating in competitive markets should be considered for privatisation and the Swaziland Development and Savings Bank (SwaziBank) is given as an example of one such enterprise. (Source: Times of Swaziland) Company news SPTC publishes FY10 financial results The Swaziland Posts and Telecommunications Corporation has published FY10 financial results that show a 61.9% decline in profit after tax to SZL 39.9m. The main reason for the decline is the dividend income from Swazi MTN Limited that was not distributed prior to SPTC s year end of 31 March SPTC holds a 41.0% stake in Swazi MTN Limited. (Source Times of Swaziland) Market activity There was no trading in Swaziland this week. Swaziland Stock Exchange TOP GAINER(S) % CHG PRICE TOP LOSER(S) % CHG PRICE No gainers No losers TOP TRADER SZL (M) USD (M) TOTAL TRADED SZL (M) USD (M) No Trade SSX ALSI MARKET PERFORMANCE LEVEL SZL (%) USD (%) SZL/USD % CHG SSX ALSI (SZL) Source: African Alliance database SWAZILAND 46 African Alliance Pan-African Securities Research 04 February 2011

47 ANGOLA Political and economic news Gov to issue public debt bonds Fisheries prioritizes aquaculture in 2011 Japan to fund USD 50m hydroelectric plant Banco de Desenvolvimento has USD 270m for projects The Finance Minister, Carlos Alberto Lopes, has been authorised as from Wednesday by the Cabinet Council to issue short-term Public Debt Bonds, as additional financing tools for the implementation of the 2011 State Budget. The Cabinet Council decided so while reviewing the state of implementation of the works underway in the fiscal reform field, having taken good note of actions already implemented and recommended towards drafting the necessary legal diplomas for their implementation in real time. According to a press release from the Cabinet Council, a memorandum aimed at substantially reducing the current tax burdens with the real estate incurred by the citizens in the process of transmission of their property was also approved. (Source: AngoP) Encouraging the implementation of aquaculture is a priority for the Secretariat of State for Fisheries for 2011, revealed on Friday in Luanda the National director of Fisheries, Maria Esperança Pires dos Santos. Speaking to Angop about the expectations of the sector for 2011, the head said that the stimulus to the recovery of aquaculture in the country consists of a report on the status of the current state of fish stocks that contains the guidelines and present the results expected in the short and medium term in the filed. (Source: AngoP) Japan will fund the construction of a hydroelectric dam on the Cutato River in Angola s Bie province, Macauhub reported today, citing Yoko Matsuzaki from the Japan International Cooperation Association. A total of USD 50m will be spent to build the dam, install two turbines and a 50km transmission line, the online news service said. The plant will generate 30MW of electricity to power 30,000 homes, it said. (Source: Bloomberg) Angolan bank, Banco de Desenvolvimento de Angola (BDA) this year has received USD 70m to fund agriculture and other sectors outside the fields of oil and mining, the bank s chief executive Walter Barros said Monday in Luanda. According to the CEO, the figure is the result of contributions of 5% and 2% of fiscal revenues from the oil and diamond sectors, respectively, to the National Development Fund managed by BDA. (Source: macauhub) Company news Maersk Oil to raise stake in Angolan field Nampak Angolan plant to contribute ZAR 500m Maersk Oil is set to raise its stake in an Angolan field to 65% and said it would consider more investments in the country that it has identified as key to growing its business. The oil unit of A.P. Moller-Maersk's said on Monday it had agreed to buy a 15% stake in Block 16 in Angola from Devon Energy for an initial payment of USD 70m. The subsidiary of the Danish shipping and oil group said it would also pay future contingent considerations and that the deal was subject to closing conditions including government approval. (Source: Reuters) Packaging firm Nampak said its new beverage can plant in Angola will contribute ZAR 500m to the sales of the group on an annual basis. Nampak CEO Andrew Marshall said his company had invested ZAR 1.2bn on a plant in Angola and production is scheduled to commence next month (March 2011). Marshall said the facility will produce 500mpa cans for clients, such as South African Breweries and Coca-Cola operations in Angola. (Source: Moneyweb) ANGOLA 47 African Alliance Pan-African Securities Research 04 February 2011

48 LESOTHO Political and economic news IFC, WB to support development through PPPs IFC and the World Bank are assisting Lesotho to draft a public-private partnership (PPP) policy that will fund and develop large infrastructure projects to support broad economic growth and greater access to services in the country. The Government of Lesotho, IFC, and the World Bank hosted a PPP awareness workshop in Maseru that attracted participants from both the public and private sectors. The workshop covered many key areas, including the various models that other countries have used to develop PPPs, and lessons learned from successful PPP programs around the globe. Saleem Karimjee, IFC Country Manager for Lesotho, said, IFC supports Lesotho s commitment to adopt innovative approaches to leverage the private sector to develop infrastructure and deliver efficient and high quality public services at the lowest cost. Ruth Kagia, World Bank Country Director for Lesotho, said, Public-private partnerships are needed to bolster economic growth and boost service delivery. As an early pioneer, Lesotho has shown how such partnerships in the health sector can improve coverage, quality, and human welfare. IFC and the World Bank are helping Lesotho develop an appropriate policy to provide the institutional and legal framework for encouraging the private sector to play a larger role in financing infrastructure projects and services. Lesotho has already committed to several PPPs, most recently the Lesotho National Referral Hospital PPP for a new national referral hospital and three primary health care clinics in Maseru. IFC acted as lead transaction advisor to Lesotho s government on this pioneering PPP transaction, which will serve as a model for increased private sector participation in sub Saharan Africa s often overburdened health sector. The World Bank is the administrator for the Global Partnership on Output-Based Aid (GPOBA) which provides support for the new National Referral Hospital and clinics. The World Bank Group s Public-Private Infrastructure Advisory Facility (PPIAF) provided funding for the public awareness workshop in Lesotho. (Source: Africa News Break) LESOTHO 48 African Alliance Pan-African Securities Research 04 February 2011

49 RECENTLY PUBLISHED RESEARCH Kenya Telecommunications Industry Data Release Mumias Sugar 1H11 Results Flash Note Sefalana Holdings 1H11 Results Flash Note Zambeef Products Plc Cautionary Announcement SCB Zambia FY10 Flash Note Zanaco FY10 Results Flash Safaricom Limited Company Update Africa Strategy and Quants research - Africa Market Review (2010) Egypt Equity Strategy 2011 Update Guinness Nigeria Company Update Bralirwa IPO well oversubscribed Sub-Sahara Banks Review KPLC Rights Issue Results Heineken acquires additional brewery capacity in Nigeria Zambeef Products FY10 Results Flash West African Banks Update Ghabbour Auto Update (HOLD) Zambeef Products Plc Cautionary Announcement AccessKenya Group Limited (Downgrade from BUY to HOLD) Ayrton Drug Manufacturing Ltd FY10 Results Flash Kenya Power & Lighting Company Limited Rights issue note Egypt Equity Strategy 2011: Seeking Alpha Orascom Telecom Holding Valuation Update 2 February 1 February 31 January 31 January 28 January 28 January 28 January 25 January 24 January 21 January 19 January 19 January 12 January 12 January 22 December 22 December 20 December 17 December 17 December 10 December 08 December 07 December 02 December REGULAR PUBLICATIONS Africa Markets Daily (English/French) Botswana Daily Ghana Daily Uganda Daily Africa Liquidity Snapshot (monthly) Lesotho Fixed Income Malawi Daily Kenya Daily Kenya Fixed Income Weekly Africa Monthly Market Review 49 African Alliance Pan-African Securities Research 04 February 2011

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