Africa’s Rutted Roadshow Resistance
As once ostracized credits like Ecuador and Pakistan plot post Q1 returns on positive index performance and fund flows delayed African sovereigns likewise seek a window with Zambia’s repeat and Kenya’s debut in the forefront. Zambian yields exceeded 8 percent at end-March as dollar debt was off almost 5 percent in the bottom rung with Ghana, which has indefinitely shelved its placement. Benchmark local rates are over 10 percent as the copper-tied kwacha is down 15 percent against the greenback at the region’s nadir. Treasury auctions have failed following a rating cut to “B” as President Sata has scrambled to bridge an 8.5 percent of GDP budget deficit with a wage and subsidy freeze, as $200 million in scarce reserves were spent on currency defense to keep the dollar level at six. GDP growth may stay at 6 percent on infrastructure investment and farm exports, but world copper prices are at a 4-year low as Chinese buyers and mine owners under fire for labor treatment reassess plans. The Finance Ministry has pressed on with presentations in the US and Europe and distinguished its case from Ghana’s, which was grouped among the three most vulnerable economies in a recent S&P ranking. External yields touched double-digits there on runaway current account and fiscal deficits as officials imposed foreign exchange access and trading curbs. FDI has come to $20 billion the past five years mainly in retail and services as oil finds were slow to materialize and gold and cocoa values foundered. VAT and prime lending rates approach 20 percent to squeeze 15 percent inflation as President Malema vows to forge a value-added agriculture-based economic model featuring at-home bean processing and chocolate production. Stock exchange gains have been erased with commodity pain inflicted on big listings like PBC, which has turned to private sources for an emergency $75 million infusion. Kenya is simultaneously pursuing inaugural bond and renewed IMF loan tracks as the ICC proceeding in The Hague ensnares top administration officials who have fought jurisdiction by emphasizing ant-terror responsibilities in the wake of brutal Sudan and Somalia-brewed assaults. The former central bank governor is also under investigation as banks reported a first quarter consumer NPL spurt.
In the Francophone zone Cote d’Ivoire has signaled a Eurobond and credit rating in the coming months after the IMF modified the commercial borrowing cap. After official cancellation, debt/GDP is 40 percent although state enterprise arrears have accumulated that may be vanquished through near-term strategic and Abidjan exchange privatizations. The central and west African unions were recently enveloped by the CEO saga of continental pioneer Ecobank, where resignation was forced after allegations of insider dealing and officer retaliation. Corporate governance practice was criticized by securities regulators in Nigeria, where foreign investors have otherwise slashed positions ahead of vicious military and political struggles once more scarring the path.
