KEY FI­NANCE UP­DATES

Financial Nigeria Magazine - - Finance -

Ghana cuts bench­mark in­ter­est rate to four-year low

The Bank of Ghana (BoG) on March 26th an­nounced a cut in its pol­icy in­ter­est rate to 18 per­cent. This rep­re­sents the low­est level in four years as in­fla­tion drops closer to tar­get.

BoG Gov­er­nor, Ernest Ad­di­son said the bench­mark in­ter­est rate was re­duced by 200 ba­sis points. In­fla­tion pres­sures are sub­dued and price growth is mov­ing closer to the six per­cent to 10 per­cent medium tar­get, he said.

Lower bor­row­ing cost may fur­ther boost Ghana's rate of eco­nomic ex­pan­sion, which is cur­rently one of the high­est in Africa. While in­fla­tion – which stood at 10.6 per cent in Fe­bru­ary still ex­ceeded the tar­get band – the rate has dropped by al­most half in the last two years and a sta­ble lo­cal cur­rency could help bol­ster growth even fur­ther.

The Bank of Ghana has low­ered bench­mark in­ter­est rate by 800 ba­sis points since 2016.

Three Nige­rian banks sign SME loan deals with Is­lamic Co­op­er­a­tion for Devel­op­ment

The Is­lamic Co­op­er­a­tion for Devel­op­ment (ICD) has signed fi­nanc­ing agree­ments with Jaiz Bank, Sun Trust Bank and Wema Bank to the tune of $20 mil­lion, $10 mil­lion and $20 mil­lion, re­spec­tively.

Af­ter sign­ing the deal, the man­age­ment of ICD said: “The small and medium sized en­ter­prises have a cru­cial role to play in a coun­try's growth and devel­op­ment, and the ICD has big plans for them. This is an im­por­tant niche in all the mem­ber coun­tries, es­pe­cially in Africa. ICD is now fo­cused on in­creas­ing ac­cess to fund­ing to the pri­vate sec­tor by chan­nelling the funds to es­tab­lished fi­nan­cial in­sti­tu­tions in its mem­ber coun­tries.”

The to­tal of $50 mil­lion lines of fi­nanc­ing fa­cil­ity will be made avail­able by the banks to SMEs, cov­er­ing var­i­ous sec­tors such as tech­nol­ogy, com­mu­ni­ca­tions, in­dus­trial, health, man­u­fac­tur­ing, agri­cul­tural sec­tors, etc.

A to­tal of $120 mil­lion in line of fi­nanc­ing fa­cil­ity has pre­vi­ously been ex­tended by ICD for SMEs in Nige­ria.

South Africa plans pri­va­ti­za­tion as key front of eco­nomic re­form

South Africa (SA) may par­tially pri­va­tize strug­gling state-owned com­pa­nies as part of a move to set Pres­i­dent Cyril Ramaphosa's wide-rang­ing re­forms in mo­tion, said Dondo Mo­ga­jane, Di­rec­tor Gen­eral of the Na­tional Trea­sury.

SA es­caped a rat­ing down­grade from Moody's last month, owing to the change in the coun­try's lead­er­ship and a na­tional bud­get that was well re­ceived by mar­kets.

Mo­ga­jane said the na­tion was at the end of a credit down­grade cir­cle af­ter Moody's raised its out­look for South Africa.

When asked if some state-owned busi­nesses could be sold, Mo­ga­jane an­swered: “Why not?” He gave the sale of 49 per­cent of South African Air­ways and the split­ting up of gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion sec­tions of Eskom as ex­am­ples in a bid to sug­gest how the coun­try could at­tract for­eign in­vestors.

Moody's main­tained its sov­er­eign rat­ing for SA at Baa3‚ one rung above junk sta­tus‚ with a sta­ble out­look.

Nige­ria not among top 10 in­vest­ment des­ti­na­tions in Africa

Africa In­vest­ment In­dex 2018, pro­duced by Quan­tum Global Re­search Lab, was re­leased last month, show­ing the list of top in­vest­ment des­ti­na­tions in Africa. The high­light of the re­port is that Nige­ria, the most pop­u­lous African na­tion and the con­ti­nent's big­gest econ­omy, doesn't rank among the top 10.

Morocco ranks first, fol­lowed by Egypt, Al­ge­ria, Botswana, Cote d'Ivoire, South Africa, Ethiopia, Zam­bia, Kenya and Sene­gal in that or­der.

The rank­ing was based on eco­nomic growth rate, in­creased FDI, strate­gic geo­graph­i­cal po­si­tion­ing, ex­ter­nal debt lev­els, so­cial cap­i­tal fac­tors, and a con­ducive busi­ness en­vi­ron­ment, ac­cord­ing to Quan­tum Global.

Ac­cord­ing to re­cent data by the Moroc­can Ex­change Con­trol, Morocco at­tracted nearly $2.57 bil­lion of for­eign di­rect in­vest­ment (FDI) in 2017, up by 12 per­cent com­pared to 2016. The coun­try is be­ing recog­nised as one of the best emerg­ing mar­kets for over­seas in­vest­ment.

Ac­cord­ing to AII's data, the top five African In­vest­ment des­ti­na­tion at­tracted an over­all FDI of $12.8 bil­lion in 2016. Cote D'Ivoire, tagged as the fastest grow­ing econ­omy in Africa, ranks fifth and scores well in liq­uid­ity, and risk fac­tors such as real in­ter­est rate, ex­change rate risk and cur­rent ac­count ra­tio.

Coun­tries such as Swazi­land, An­gola, Rwanda, Chad, Co­moros, Sey­chelles, South Su­dan and Sierra Leone all reg­is­tered strong up­ward move­ments on the AII's three-year rank­ings.

MTN Ghana to raise $787 mil­lion in record-level IPO

The Ini­tial Pub­lic Of­fer­ing (IPO) of MTN Ghana, which is ex­pected this April, will raise about $787 mil­lion from in­vestors. The sale of 35 per­cent of the com­pany, still pend­ing reg­u­la­tory ap­proval, is in line with the agree­ment in 2015 which en­abled South-African MTN to ac­quire a spec­trum li­cence for pro­vi­sion of high-speed mo­bile data for its cus­tomers in Ghana.

If the IPO is 100 per­cent suc­cess­ful, it will ex­ceed by more than 10 times the pre­vi­ous big­gest IPO sold on the Ghana Stock Ex­change, by Agri­cul­tural Devel­op­ment Bank in De­cem­ber 2016.

MTN Ghana was launched in 2006 and cur­rently boasts 17.8 mil­lion sub­scribers, which rep­re­sents 55 per­cent share of the mar­ket.

South African Pres­i­dent Cyril Ramaphosa

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