Tales of adventure and woe
Africa’s “lion” economies are due for a reality check. The continent’s growth has slowed in past months because oil and other mineral commodity prices have fallen and countries are too dependent on these sectors. The World Bank, in its most recent estimate, says African growth has slowed to 3% in 2015, down from 4.5% in 2014, the weakest pace since 2009.
One way to see what has happened to African economies since the slowdown in global markets for commodities is to measure the relative success of listed SA bluechip companies such as Nampak, Tiger Brands, PPC and Tongaat Hulett. All of them have (or are developing) substantial production facilities on the continent.
At its peak, growth in Africa has been good for some, erratic for others, and for some SA companies it has “rained disaster”, in the words of Ian Cruickshanks, chief economist at the SA Institute of Race Relations.
Tiger Brands is still licking its wounds after it wrote down R2.7bn in its nowdefunct Tiger Branded Consumer Goods business in Nigeria, after it bought rice, flour and pasta seller Dangote Flour Mills for 1,750 1,500 1,250 1,000 0 R1.6bn in 2012. It sold back its 65.7% stake to Nigerian tycoon Aliko Dangote’s Dangote Industries group for a nominal $1 last December.
Cruickshanks says the sellers saw South Africans with deep pockets. “It seems some people see them coming. South Africans are looked on as being gullible.” He says that while it was a good idea for Tiger Brands to venture into Nigeria, former CEO Peter Matlare was never concerned that its economy was based on one commodity — oil.
Nampak, Africa’s largest packaging manufacturer, is riding out a shortage of foreign exchange, declining consumer markets and the effects of the oil price crash in Nigeria and Angola, where it is heavily invested.
For the interim period ended March, headline earnings per share rose a sluggish 4% from the same period last year, hurt by net abnormal losses of R119m, much of it from the devaluation of Nampak’s Angolan kwanza accounts.
The group has R1.5bn trapped in Angola and Nigeria after delays in converting its bank balances to US dollars, caused by hard currency