KEY FINANCE UPDATES
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