Weekly Africa Newsbriefs 4 September

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    Leriba Africa Newsbrief

     

     Week commencing 4 September 2017

     


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    Nigeria

    Chinese group to build hydropower plant

    China Civil Engineering Corporation will build a $5,8bn hydropower station in the country’s eastern Mambila region with a capacity to generate 3,050MW. China’s Export-Import Bank will provide 85% of the funding and Nigeria will contribute the balance. The project requires the construction of four dams and includes 700km of transmission lines. The government is seeking a further $5,2bn from the World Bank to boost generation capacity, expand distribution and transmission capacity and increase access to electricity in rural areas.

    Bloomberg 31 August

     

    Allianz buys Nigerian insurer in African push

    German insurer Allianz plans to pay $35m for a 98% stake in Nigerian insurer Ensure Insurance in a push for growth in an underserviced African market. Allianz will acquire the stake from UK-based holding company Greenoaks Global Holdings. It expects the acquisition to close this year and intends retaining Ensure’s management team. The company plans to focus on property and casualty insurance, particularly underwriting industrial and speciality risk in the energy and infrastructure sectors.

    Reuters 30 August

     

    Ethiopia

    New ethanol production plant to be built

    Ethiopia has joined hands with German construction firm Eugen Schmitt Company to build an ethanol plant in the Wonjo Shoa sugar factory at an estimated cost of $51m. The German firm will own 83% of the plant with the balance shared between the state and three other shareholders. Once complete, the plant will have capacity to produce 60,000 litres of ethanol a day.

    2Merkato.com 29 August

     

    Zimbabwe

    Chinese firm in bid to revive steel manufacturer

    Chinese firm R&F will invest $1bn in Zimbabwe Iron and Steel (Ziscosteel) in an attempt to revive the waning steelmaker, once the largest integrated steel works in the region before it shut down in 2008. Steel output is expected to start within 18 months. Details of the deal were not made public but the scale of investment suggests R&F would have control of Ziscosteel’s stock, making it the first state-owned company to be privatised.

    The Financial Gazette 29 August

     

    East Africa

    EABL to up its Serengeti stake

    Beer maker East Africa Breweries is set to significantly raise its stake in Tanzanian subsidiary Serengeti Breweries by converting a $148m loan into shares. Serengeti’s market valuation is not disclosed, but the equity injection could either suggest a complete takeover or a requirement by the minority shareholders to also inject fresh capital into the business.

    Business Daily Africa 31 August

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Opportunity

   
A rapidly growing and urbanising middle class set to experience a consumption boom; the world’s greatest resources of as-yet-untapped agricultural land, oil, gas and countless other commodities; and a growing number of entrenched, stable democracies with increasingly sophisticated democratic institutions. Africa is the last major region in the world to offer the prospect of take-off phase economic growth, delivering world-beating returns to investors.
5.6%
GDP growth rate in the decade to 2013 average in Africa; 7% expected in the next decade
7
of the 10 fastest growing economies in the world over the next decade will be African
4
of the 10 most improved economies for doing business are in Africa
   
Urbanisation Natural Resources
The population of Africa’s cities will triple by 2050 with over one billion people living in cities by 2040. Lagos is the largest with over 12,4 million people. Urbanisation presents opportunities for tertiary sectors like retail, telecommunications, banking and logistics. Major recent discoveries in oil, iron ore, natural gas, and other key commodities are set to provide major economic stimulus. Urbanisation in Africa and the rest of the world will drive demand for natural resources which Africa is uniquely positioned to satisfy with both new and old discoveries.
   
   

Risk

     
90%
of African countries score below 50 in Transparency International's corruption perception index
16
African countries use International Financial Reporting Standards, others inconsistent
45
African countries have media sectors that are considered not free
   
The continent remains a difficult place to do business. The regulatory and legal structures common in much of the world are only nascent in many African countries. In rapidly changing economies, reputations are only starting to develop and information on performance histories difficult to obtain. Weak media sectors often mean that critical information relevant to potential exposures is never publicly  disseminated. Data are scarce making traditional investment analysis difficult if not impossible. The incentives facing local partners are opaque and may well be antithetical to outside investors’ interests. As in any rapidly changing environment, opportunists are aiming to exploit potential investors. Just as the opportunities in Africa are clear, the stories of investments gone wrong are sobering.
   

Solved

   
Leriba is a specialist consultancy with a unique combination of financial and political research skills. We help analyse opportunities and examine current investments for unforeseen political and financial risks. We recognise the investment
 
opportunities in Africa but we are pragmatic about the challenges. Our insights provide actionable information which directly pay off through better investment decisions.
PEOPLE OUR VALUES COUNTRIES INDUSTRIES 
Our directors have decades of experience in Africa. We work with a network of associates across the continent with support staff in London and Johannesburg
 
First and foremost we aim to make a positive contribution to our clients and to the societies in which we operate. Clients can have full confidence in our ethics, professionalism and discretion. Our staff are governed by a strict code of conduct and many are members of professional societies
 
Unlike some other consultancies, our analysts live and work in Africa and have built up substantial networks and insight. We are able to work in any of Africa’s 54 countries.
 
We have worked in a wide range of industries, including:
 
Banking, oil & gas, mining, telecoms, IT, retail, logistics, agriculture, insurance, fund management, FMCG, hotels & tourism, energy and infrastructure 
       
       

Weekly Africa Newsbriefs 4 September

Leriba in the Media
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Snapshots
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Weekly newsbriefs

Weekly Africa Newsbriefs 4 September

To receive this brief in your email every Monday, please subscribe here.

Leriba Africa Newsbrief

 

 Week commencing 4 September 2017

 


hoover-1758805_1280

 

 

 

 

 

 

 

 

 

 

 

Nigeria

Chinese group to build hydropower plant

China Civil Engineering Corporation will build a $5,8bn hydropower station in the country’s eastern Mambila region with a capacity to generate 3,050MW. China’s Export-Import Bank will provide 85% of the funding and Nigeria will contribute the balance. The project requires the construction of four dams and includes 700km of transmission lines. The government is seeking a further $5,2bn from the World Bank to boost generation capacity, expand distribution and transmission capacity and increase access to electricity in rural areas.

Bloomberg 31 August

 

Allianz buys Nigerian insurer in African push

German insurer Allianz plans to pay $35m for a 98% stake in Nigerian insurer Ensure Insurance in a push for growth in an underserviced African market. Allianz will acquire the stake from UK-based holding company Greenoaks Global Holdings. It expects the acquisition to close this year and intends retaining Ensure’s management team. The company plans to focus on property and casualty insurance, particularly underwriting industrial and speciality risk in the energy and infrastructure sectors.

Reuters 30 August

 

Ethiopia

New ethanol production plant to be built

Ethiopia has joined hands with German construction firm Eugen Schmitt Company to build an ethanol plant in the Wonjo Shoa sugar factory at an estimated cost of $51m. The German firm will own 83% of the plant with the balance shared between the state and three other shareholders. Once complete, the plant will have capacity to produce 60,000 litres of ethanol a day.

2Merkato.com 29 August

 

Zimbabwe

Chinese firm in bid to revive steel manufacturer

Chinese firm R&F will invest $1bn in Zimbabwe Iron and Steel (Ziscosteel) in an attempt to revive the waning steelmaker, once the largest integrated steel works in the region before it shut down in 2008. Steel output is expected to start within 18 months. Details of the deal were not made public but the scale of investment suggests R&F would have control of Ziscosteel’s stock, making it the first state-owned company to be privatised.

The Financial Gazette 29 August

 

East Africa

EABL to up its Serengeti stake

Beer maker East Africa Breweries is set to significantly raise its stake in Tanzanian subsidiary Serengeti Breweries by converting a $148m loan into shares. Serengeti’s market valuation is not disclosed, but the equity injection could either suggest a complete takeover or a requirement by the minority shareholders to also inject fresh capital into the business.

Business Daily Africa 31 August