My Beauty Best Teacher

Miles Moreland co-founder of Development Partners International, states in the FT:

“Many people think that the only opportunities in Africa are in commodities and infrastructure. That’s wrong,” says Mr Morland. “The best opportunities are the same as in Asia or Latin America. They are to be found in companies providing goods and services to rapidly growing middle classes. Things like banks, financial services, beverages, telecoms, power, middle income housing and health services.That is where we will be focusing.”

Emerging Markets reports on SSA debt markets:

If domestic debt markets are to develop, it is also vital to improve local debt management, which has generally lagged behind efforts at debt relief. Countries need a clear debt management plan(pdf) and issuance strategy(pdf), which might include publishing a debt management report, lengthening the yield curve, building benchmark issues as conditions permit and widening the investor base

The limited size of local debt markets means that not all financing needs can be met domestically, and external commercial borrowing may also be cheaper than domestic debt, by removing the inflation and currency risk faced by international investors. Finally, it also fits in with the need to maintain a diversified funding mix. African governments now seem ready to test international investor appetite with sovereign issues, and Ghana’s milestone Eurobond issue in September points the way – the Ghanaian government could not have raised $750 million at a yield of 8.5% in the local market. African companies have also been active in the international market, especially telecoms and banks, and we believe international bond issues will be a significant feature of corporate Africa going forward.

The Economist writes:

Ethiopia likes to do things differently. In September it started celebrating the new millennium, more than seven years after everybody else. The country has been out of step in this respect since 1582: while the rest of the Christian world changed to the revised Gregorian calendar, Ethiopia stuck to the Julian. It also still keeps its own time, measured in 12-hour cycles rather than 24-hour ones.

The reasons for this economic crawl are not hard to find. Beyond the government-directed state, funded substantially by foreign aid, there is—almost uniquely in Africa—virtually no private-sector business at all. The IMF estimates that in 2005-06 the share of private investment in the country was just 11%, nearly unchanged since Mr Zenawi took over in the early 1990s. That is partly a reflection of the fact that, despite some privatisation since the centralised Marxist days of the Derg, large areas of the economy remain government monopolies, closed off to private business.

This is where Ethiopia misses out badly. Take telecoms. While the rest of Africa has been virtually transformed in just a few years by a revolution in mobile telephony, Ethiopia stumbles along with its inept and useless government-run services. Everywhere else, a plethora of South African, home-grown and European providers has leapt into the market to provide Africans with an extraordinary array of cheaper and more efficient services, now used even by the poorest of farmers, for instance, to check spot prices for agricultural goods in markets miles away. And the mobile-phone revolution has created thousands of new livelihoods; at times it seems as if every boy on a street corner is hawking a top-up card. Not in Ethiopia.
It is the same story in financial services, where, despite the growth of some smaller private banks, no foreign banks are allowed. Micro-finance schemes have expanded exponentially, but it remains almost impossible to find start-up loans for small or medium businesses.

Tutu Agyare states in The Banker:

“We advise a number of different corporations from different sectors from telecoms to mining companies. Africa is being rediscovered, if you like. Capital is flowing back into Africa; infrastructure is being built in Africa.” He puts this welcome trend down to a number of factors, singling out two for special mention. “Corporate governance in Africa, regardless of what you read in the newspapers, is growing significantly. Security of property rights is also improving rapidly, I believe, becoming more transparent and being better enforced on the continent. And there’s a lesson from history here, Agyare believes. “If you look back to Britain’s Industrial Revolution, what you observe is the abundance of cheap minerals from Africa, an excellent security of property rights and a legal system that worked. Those factors enabled private investors and institutions to grow and to prosper. And I see that happening now in Africa. Like many Africa observers, Agyare is fascinated by the new China-Africa alliance that has developed over the last year or two. “The Chinese are building new infrastructure at cost, something that has not been done in Africa for years, and although there are risks attached to the relationship in termsof neo-colonialism, the absence of skills transfers and cheap Chinese goods flooding the continent, that new infrastructure will undoubtedly allow African companies to flourish.”

The FT reports(subscr. reqd):

The development of capital markets in Africa’s strongest economies has accelerated this year. In Nigeria, there is now a bond yield curve out to 10 years, and equity capital markets transactions so far this year have totalled $3.3bn, according to Dealogic. This is tiny by international standards, but a huge jump that brings it close to volumes in the more developed South African market. Most of the Nigerian equity offerings, though, are the result of capital-raising by its consolidating banking sector, and more activity in areas such as oil and telecoms is needed to maintain the impetus.

Christine Bowers reports

Telecom companies aren't offering m-banking out of the kindness of their hearts. They like m-banking because it's a way for them to attract new customers by doing what they already do well—processing millions of tiny transactions. Banks aren't as interested, because they don't expect to profit from poor clients who won't be taking out a mortgage anytime soon. But the telecoms could start siphoning away bank customers who don't need all the bells and whistles.