Loan Officers’ Altered Mood Mooring
The IIF’s latest quarterly poll of 150 worldwide emerging market bankers, modeled after the US Federal Reserve’s regular sentiment survey, charted a return to a barely favorable 50 lending condition reading after a year below the cutoff. Both domestic and international aspects brightened, particularly in Europe and Latin America, while Asia benefited from a trade finance thaw. However the outcome was mixed as all regions except Africa-Mideast reported an increase in bad credit laying the potential for future pullback. Europe’s indices began to converge after badly lagging for consecutive periods on open-ended central bank support, although standards remain tight with real estate supply and demand among the most difficult. Latin America’s break from monetary tightening was noticeable, but was offset by decreased local funding in the MENA sub-region. Sub-Sahara Africa’s trend was “impressive” for a first-time over 50 result although external provision was still constrained and could worsen over the coming months under the fallout from Western anti-terror operations in Mali and the surrounding Sahel. Oil-producing locations are also under scrutiny from the major security breach in Algeria which involved hostage kidnapping and killing. The attacked facility was a joint venture with state hydrocarbon monopoly Sonatrach, which has raised money abroad and is the best-known listing on the dormant stock exchange. The ruling party there has battled its own insurgency for decades after annulling an election won by the Islamic Front in a precedent now closely watched for parallels with current Egypt strife. The vulnerability was exposed as new energy exporters like Ghana have created fund structures to overcome the past legacy of industry corruption and opacity which lost Nigeria an estimated $30 billion over the past decade. President Mahama won a full term in December under a framework that safeguards 30 percent of revenue for infrastructure, education and power development. A separation petroleum commission is responsible for licensing and regulation as earnings came to 7 percent of GDP the first year of production. Economic growth was 7 percent in 2012, but the fiscal deficit overshot at over 9 percent of GDP on election spending and a 35 percent higher wage bill. Utility subsidies and currency depreciation were a drain, and the West Africa Gas Pipeline was out of operation. The administration has a medium term budget gap goal of 3 percent but has not indicated specific steps.
Kenya, which was a top frontier stock market last year, is now in its own poll run-up as indicted ethnic violence instigators Kenyatta and Rutu team on a Kikuyu-Kalenjin ticket against Prime Minister Odinga from the Luo tribe. Sporadic land skirmishes have again erupted amid fears of greater bloodshed before the March event. The gloom overshadowed launch of a long-planned small business tier of the Nairobi Exchange for companies with at least $1 million in assets and 100 shareholders intent on mutual reward.
