Global Air Freight Growth Slowed to 2.2% in 2015

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04/02/2016

The International Air Transport Association (IATA) released figures for global air freight markets showing cargo volumes measured in freight tonne kilometers (FTKs) expanded 2.2% in 2015 compared to 2014. This was a slower pace of growth than the 5.0% growth recorded in 2014. The weakness reflects sluggish trade growth in Europe and Asia-Pacific.

After a strong start, air freight volumes began a decline that continued through most of 2015, until some improvements to world trade drove a modest pick-up late in the year. Cargo in Asia-Pacific, accounting for around 39% of freight traffic, expanded by a moderate 2.3%.

The key markets of Europe and North America, which between them comprise around 43% of total cargo traffic, were basically flat in 2015. Latin America suffered a steep decline (-6.0%) while the Middle East grew strongly, up 11.3%. Africa also saw modest growth of 1.2%. The freight load factor (FLF) was at times the lowest for some years, falling to an average 44.1% compared to 45.7% in 2014, driven down by weak demand and capacity expansion.

“2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion. Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions.

We have to adjust to the ‘new normal’ of cargo growing in line with general rates of economic expansion. The industry is moving forward with an e-freight transformation that will modernize processes and improve the value proposition. The faster the industry can make that happen, the better,” said Tony Tyler, IATA’s Director General and CEO.

The industry’s key challenges will be discussed in detail at the World Cargo Symposium (WCS) in Berlin, 15-17 March. The world’s largest gathering of air cargo professionals, the 10th WCS will bring together 1,000 delegates under the theme of ‘The Value of Air Cargo’ to debate solutions for strengthening air cargo and the vital service it performs for the world economy.

Dec 2015 vs. Dec 2014	FTK Growth	AFTK Growth	FLF
International	0.7%	6.6%	47.4%
Domestic	1.4%	6.2%	30.8%
Total Market	0.8%	6.5%	43.9%

YTD 2015 vs. YTD 2014	FTK Growth	AFTK Growth	FLF
International	2.5%	6.4%	47.6%
Domestic	0.1%	4.6%	29.6%
Total Market	2.2%	6.1%	44.1%

Regional analysis in detail
The global freight growth rate in December was 0.8% compared to December 2014. Within that range there were considerable regional fluctuations.

· African airlines FTKs declined by 8.4% in December although for 2015 as a whole the region grew by 1.2%. The FLF in 2015 was 29.7%, the lowest of any region. The under-performance of the Nigerian and South African economies was a challenge throughout the year, but trade growth to and from the region was sufficient to drive a modest expansion in FTKs.

· Asia-Pacific carriers were basically flat in December, expanding just 0.1%. For the whole of 2015, the region grew 2.3%. The FLF for 2015 was 53.9%, the highest of any region. Cargo expansion in the region has been hampered by a shift in Chinese economic policy to favour domestic consumption. A mid-year fall of 8% in trade to/from emerging Asia also led to declines but this appears to have bottomed out, with a rebound in the second half of the year.

· European airlines grew by 1.2% in December but the performance for 2015 in total was a fall of 0.1% compared to 2014. The FLF in 2015 was 44.9%. Economic conditions in the Euro-zone have been subdued, leading to suppressed demand for air freight, but imports have improved in recent months.

· Latin American carriers continued the weak performance of recent months, declining by 6.2% in December and by 6.0% for 2015 as a whole. This was the weakest performance of any region. The average FLF for 2015 was 38.3%. Economic and political conditions in Brazil have worsened, and regional trade activity has been volatile.

· Middle Eastern carriers grew 4.0% in December and for 2015 in total the region expanded 11.3% compared to 2014. The FLF was 42.8% for 2015. The region enjoyed a strong year as network expansion into emerging markets was supported by economic growth in local economies. Political instability and the fall in the oil price may impact on some economies in the region but growth as a whole remains robust enough to support further expansion in 2016.

· North American airlines saw FTKs expand 1.4% in December compared to December 2014. For the year as a whole, North America grew just 0.1%. The 2015 FLF was 34.3%. Growth in 2015 faded after a strong start that was flattered by the West Coast ports strike. Recently there have been mixed signals from economic data, indicating an uncertain outlook for air freight in the coming months.

Ringier Africa, Asia Pacific Form New Structure/Leadership

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04/02/2016

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Ringier is restructuring its international market set-up for the beginning of the new year.

On the first of January, Ringier Africa and Asia have implemented various changes, further supporting the strong growth of its international markets, with additional personnel and international support.

After a successful 2015 with strong growth across all core businesses and countries on both continents, the accomplishment of important milestones, including the new market entry in Myanmar, Ringier introduced a new international setup which will ensure further growth in quality and efficiency for future expansions.

To facilitate this, Leonard Stiegeler, former General Manager, Ringier Nigeria & Head of Ringier, West Africa has been appointed to the new position of General Manager, Ringier Africa.

Former Head of New Business Implementation, Ringier AG, Florent de Rocca-Serra will take the new position of General Manager Ringier Asia Pacific.

Jessica List, formerly part of Ringiers M&A and Business Development team will take the new position of CFO Africa. Jessica Stiles, former Head of Marketing International Markets becomes CMO Africa & Asia.

All of these positions will be reporting into the current CEO Asia & Africa, Robin Lingg, who has been elected to the Group Executive Board of Ringier AG in December.

Julian Artopé, current Director, Ringier Africa will pursue an MBA by the end of March after four years of building Ringiers African business on the continent. Mark Slade, former Head of the Digital Marketing Agency, RDM in Nigeria, will take over the position as General Manager, Ringier Nigeria.

To further support the risen complexity in Ringier’s fast-scaling operations, four dedicated teams were established for each of the African business models Classifieds, Content, E-Commerce and Digital Marketing. Each will consist of a dedicated team supporting their field in Marketing, Business & Operations and Product Development.

Robin Lingg, CEO Ringier Africa and Asia:
“With the high speed and growth of our digital business in Africa and Asia, we were in need of stronger support structures to facilitate further aggressive scaling of our business.

Through this evolution of the organisation I’m convinced we’ll be able to further boost and expand our leading market positions in Classifieds, Content, E-Commerce and Digital Marketing across all our markets.

We have a proven and highly experienced team of which I’m very happy to see so much internally promoted leadership emerge. I also would like to thank Julian Artopé, who has been essential for building this organisation on the ground and has been a key part for the success of Ringier.”

FCMB Earnings Analysis: Weak Asset Quality Pressures Earnings

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02/02/2016

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First City Monument Bank Group Plc [FCMB] released its 9M: 2015 earnings result last Friday, 29th January, three months after its due date.

The result was largely disappointing as gross earnings grew 2.4% to N109.3bn (weaker than our projection of 9.6%) while PBT fell 84.7% Y-o-Y to N2.6bn and annualised EPS settled at N0.49 relative to our FY:2015 projection of N1.05.

The deviation in top line growth relative to our forecast was due to the mild 4.1% Y-o-Y growth recorded in interest earning assets from N857.5bn in FY:2014 to N892.6bn in Q3:2015.

Loans contracted 8.5% YTD to N568.3bn leading to constrained 3.0% growth in Interest income. Interest expense however grew faster by 9.3%, resulting in a higher cost of fund (5.6% from 5.2% in FY: 2014) and a 0.8% Y-o-Y decline in Net Interest Income to N48.7bn.

Investment and other operating income also weakened by 4.1% to N19.6bn, which the Group’s management attributed to regulatory and macro-economic headwinds which had led to a lull in capital market activities and pressured earnings performance of its investment banking unit (which contributed 5.6% to FY: 2014 PBT).

We however attribute much of this to weaker income from FX transactions and lower COT regime affecting trading and commission revenue already exhibited in its H2:2015 result.

The significant drop in PBT was driven by impairment charges on the loan book (up 290.7% Y-o-Y to N15.3bn) of its commercial banking unit and a higher operating cost.

The impact of both weighed on the Group’s Cost of Risk (annualised) and Cost to Income ratios which rose to 3.7% (Vs. 1.7% in FY: 2014) and 71.5% (Vs 68.5% Q3:2014), also higher than our FY: 2015 forecasts of 1.7% and 66.0% respectively.

The list of “bad debtors” released by the Group in August 2015 put cumulative toxic assets at N17.1bn with exposures ranging from downstream oil & gas, properties and construction & engineering. Whilst this may indicate a significant chunk of provisions have already been made, the increasing NPL ratio (which increased to 5.8% in 9M: 2015 from 3.6% in FY: 2014) and high exposure to upstream oil & gas and commerce sectors (27.8% of gross loan book as at H1:2015) signify a downside risk to future profitability.

12-Month TP Revised to N1.78 from N4.19, Retain a “BUY” Recommendation
We have lowered our FY: 2015 estimate of gross loan growth to -8.5% and the FY: 2016 loan growth projection to 3.0%. The Group in a loss warning issued last week suggested that Wholesale Banking related activities (which accounted for 64.0% of Gross loans in H1:2015) continued to witness pressure into Q4:2015, largely due to FX illiquidity and macro headwinds which we envisage would persist in 2016.

We have also raised our Cost of Risk assumption to 3.0% (from 1.7%) for FY: 2015 (from 1.7%) and expect it to moderate to 2.1% in 2016. Although the Group’s Cost of Fund remains below Tier-2 average (5.7%), deposits have been declining while funding and operating expense ratios are up, thus we expect Net Interest Margin to moderate to 7.3% and 7.4% in 2015 and 2016 (from 8.0% in 2014) and Cost to Income Ratio to rise to 74.0% in 2015 and moderate to 72.2% in 2016.

Against this backdrop, we forecast PBT to decline 73.5% Y-o-Y to N6.3bn in FY: 2015 and have revised our 2016 PBT estimate to N13.9.bn (from N28.6bn). We expect 2015 EPS to settle at N0.27 and increase to N0.62 in 2016. We have also lowered our dividend expectation for the Group in 2015 due to lower earnings yield and impact of weaker asset quality on its capital buffers.

The CBN recently increased provisioning cost for loans to 2.0% from 1.0%. Although the bank remains well-capitalised (with a CAR of 18.3% from 19.8% in H2:2015) above regulatory requirement of 15.0%, management would likely increase retention rate to stem the impact of the increase in regulatory risk reserve on its core Tier-1 capital.

Consequently, our bended valuation comprising Net Asset Value, Dividend Discount Model and Residual Income Model valued the stock at a fair price of N1.49 and a 12-Month Target Price of N1.78, implying a P/E and P/BV of 6.3x and 0.2x as against the current trailing P/E and P/BV of 2.0x and 0.1x respectively. This presents an 80.1% upside potential as the stock presently trades at N0.99.

Hence, we have maintained a BUY recommendation on the stock.

By: Afrinvest Research

Brand Finance Global 500: Allianz Ranks Most Valuable Global Insurance Brand

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02/02/2016

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· Allianz brand tops the Insurance Top 50 ranking for third year in a row
· Allianz is the only insurer to rank amongst the world’s 50 strongest brands in 2016
· Brand value of Allianz at €18.6bn, up 8.1% from 2015

Allianz has consolidated its position as the most valuable insurance brand in this year’s Brand Finance Global 500 ranking.

Holding the pole position for three consecutive years, it has become the only insurer to be included in the Top 50 of the world’s strongest brands in 2016.

As a result of Allianz’ strong premium growth, the Group’s brand value increased by 8.1% from €17.2bn to €18.6bn (US$ 20.3bn), putting Allianz at number 43 among the top 500 global brands (up from 44th place in 2015).

In the 2016 ranking, Brand Finance recognised Allianz’ resilience in a challenging environment and the Group’s strong financial performance driven by its flagship brand, ‘customer centricity’ and ‘digital by default’ approach. This made it also one of the most brand driven financial services companies in this year’s ranking.

Christian Deuringer, Head of Global Brand Management at Allianz, said:
“This excellent ranking shows that our flagship brand strategy as well as our clear focus on the customer and on digitalization are building trust and resonating with our clients around the globe. We would like to thank them for their growing loyalty.”

Assessing the future potential of Allianz, Brand Finance recognized that the Group’s customer-centric approach is capable of driving value and building on existing scale. It also considered the Allianz brand to be particularly well-positioned to benefit from growth opportunities presented by digitalization-driven changes in the insurance sector.

Allianz operates in over 70 countries. It has been operating on the African continent for over 100 years and is already among the leaders of the market in South Africa, Kenya, Egypt, Tunisia, Benin, Burkina Faso, Cameroon, Central Africa, Morocco, Ivory Coast, Ghana, Madagascar, Mali, Republic of Congo, Senegal and Togo.

About Allianz
Together with its customers and sales partners, Allianz is one of the strongest financial communities. About 85 million private and corporate customers insured by Allianz rely on its knowledge, global reach, capital strength and solidity to help them make the most of financial opportunities and to avoid and safeguard themselves against risks.

In 2014, around 147,000 employees in over 70 countries achieved total revenues of 122.3 billion euros and an operating profit of 10.4 billion euros. Benefits for our customers reached 104.6 billion euros.

This business success with insurance, asset management and assistance services is based increasingly on customer demand for crisis-proof financial solutions for an aging society and the challenges of climate change. Transparency and integrity are key components of sustainable corporate governance at Allianz SE.

$12.1tr: Price Tag for Paris Climate Change Deal in 25 Years

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02/02/2016

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If the world is serious about halting the worst effects of global warming, the renewable energy industry will require $12.1 trillion of investment over the next quarter century, or about 75 percent more than current projections show for its growth.

That’s the conclusion of a report setting out the scale of the challenge facing policymakers as they look for ways to implement the Paris Agreement that in December set a framework for more than 195 nations to rein in greenhouse gases.

The findings from Bloomberg New Energy Finance and Ceres, a Boston-based coalition of investors and environmentalists, show that wind parks, solar farms and other alternatives to fossil fuels are already on course to get $6.9 trillion over the next 25 years through private investment spurred on by government support mechanisms. Another $5.2 trillion is needed to reach the United Nations goal of holding warming to 2 degrees Celsius (3.6 degrees Fahrenheit) set out in the climate agreement.

“The clean energy industry could make a very significant contribution to achieving the lofty ambitions expressed by the Paris Agreement,” said Michael Liebreich, Founder of Bloomberg New Energy Finance, a London-based research group.

“To do so, investment volume is going to need to more than double, and do so in the next three to five years. That sort of increase will not be delivered by business as usual. Closing the gap is both a challenge and an opportunity for investors.”

The required expenditure averages about $484 billion a year over the period, compared with business-as-usual levels of $276 billion, according to Bloomberg calculations. Renewables attracted a record $329 billion of investment in 2015, BNEF estimates.

While the figures are large, they’re not as eye-watering as the International Energy Agency’s projection that it’ll cost $13.5 trillion between now and 2030 for countries to implement their Paris pledges, and that an extra $3 billion on top of that will help meet the temperature target. Those figures aren’t just limited to renewables: they also include energy efficiency measures.

Envoys from 195 nations sealed the first deal to fight climate change that binds all countries to cut or limit greenhouse gases at a United Nations summit in Paris last month. They agreed to hold temperatures to “well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius.”

“Policymakers worldwide need to provide stable, long- lasting policies that will unleash far bigger capital flows,” said Sue Reid, Vice-President of Climate and Clean Energy at Ceres, a non-profit group.

“The Paris agreement sent a powerful signal, creating tremendous momentum for policymakers and investors to take actions to accelerate renewable energy growth at the levels needed.”

Zika Virus: Brazil Advises Pregnant Women to Avoid 2016 Olympic Games

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02/02/2016

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Pregnant women are advised not to travel to Brazil during the 2016 Olympic Games to avoid potential birth defects related to an outbreak of the mosquito-borne Zika virus, President Dilma Rousseff’s Chief of Staff, Jaques Wagner, said.

“It’s a serious risk for pregnant women,” Wagner told reporters after an emergency cabinet meeting Monday. He added that “it’s not recommended” for them to travel to Brazil.

The risk for other adults is relatively small, and most people never even show symptoms, Wagner said. He said the chance of the Olympics being canceled “doesn’t exist.”

The Zika virus in Brazil has been linked to more than 4,000 suspected cases of micro-cephaly, a condition that causes babies to be born with abnormally small heads and development problems. Rousseff welcomed the World Health Organisation’s decision to declare a public health emergency about the virus because it will help raise awareness, Wagner said.

The WHO has estimated that there could be 3 million to 4 million cases of the Zika virus in Latin America. The travel industry has begun to feel the impact of the virus’ outbreak as worried vacationers and business customers avoid the affected areas. Cases have been found in at least 23 countries and territories in the Americas as of Jan. 28.

There is no vaccine for the Zika, which has long been endemic in Southeast Asia and parts of Africa where many people have developed immunity. It is new in the Americas, however, and a treatment or a vaccine it could take years to be available. As an alternative, health officials are emphasizing mosquito control to try and stop the virus from spreading.

“This has to be a long-term effort, or the mosquito will return,” Wagner said. “For now, the only vaccine is awareness.

Image Credit: Telegraph

Gabon Selects Gemalto for Visa Management System

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02/02/2016

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Gemalto, the world leader in digital security, has been selected as end-to-end solution provider by Gabon’s Department of Homeland Security DGDI to supply and implement a fully integrated border and visa management system.

The new scheme will strengthen national security, improve operational efficiency and enhance the traveling experience for people entering and leaving the Central African state.

The visa management system simplifies and speeds the issuance of visas, e-Visas and resident’s permits. This suite of applications was used to create Gabon’s e-Visa portal service in July enabling visitors to use the Internet to apply for a visa to enter the country.

Once the Electronic Travel Authorization (ETA) is delivered, the visa is issued at Libreville International Airport upon arrival.

The solution is built around the centralised, back-office Coesys Visa and Border Management System. This supports automation of queries to databases – such as Interpol’s that alert authorities to potential threats and risks. In addition, the Automated Border Control kiosks now offer travelers rapid, ‘self-service’ passport checks at the country’s main airport which handles around one million passengers annually.

Indian Achieves 1OOm Mobile Phone Manufacturing Capacity

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02/02/2016

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The manufacturing capacity of mobile phone factories in India has surpassed the 100 million mark, the Telecom Minister, Ravi Shankar Prasad has announced.

That represents a jump on the 68 million mobile phones assembled locally in 2014 following the opening of 15 new factories over the past year.

Smartphone sales in India also reached 100 million by the end of December, 2015, he added.

“All the major companies in the world namely Panasonic, Mitsubishi, Nidec, Samsung, Bosch, Jabil, Flextronics, Continental are in India besides all the top Indian companies who are already here,” Prasad said.

Due to the increasing switch to smartphones, the value of the phones assembled in India also nearly doubled — up by 95 percent — over the previous year, according to Indian Cellular Association founder and President Pankaj Mohindroo.

“Government has made sincere efforts to boost mobile phone production in the country. The new investment has created 30,000 new jobs in the country and state governments have shown keen interest in attracting these investments,” Mohindroo said.

ALARM! Nigeria is Running Out of Cash

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02/02/2016

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Another day, another oil producer in trouble!

Nigeria is considering asking the World Bank, the African Development Bank and other international organisations for help to plug a hole in this year’s budget created by the collapse in crude oil prices. The government said it is looking to borrow as much as $9 billion to fund its cash-starved economy.

The 75% plunge in crude prices to around $33 per barrel means Nigeria is now losing money on some of the oil it pumps.

Nigeria is the second major oil producing country, after Azerbaijan, to admit it might need emergency financing because of low crude prices.

Nigeria, Africa’s largest economy, is also the continent’s biggest oil producer. The sector accounts for about 35% of GDP, 75% of government revenue and 90% of export earnings.

Its currency is plummeting, with foreign exchange dealers offering much higher rates than the official 199 Naira per dollar. The government has been burning through its foreign currency reserves, which fell to $28 billion at the end of January from $43 billion two years ago.

And its budget deficit is growing fast. The government wants to invest in big infrastructure projects and make the country less dependent on oil.

The deficit is now expected to reach N3 trillion ($15 billion) in 2016, up from a previous estimate of 2.2 trillion.

Nigeria is also suffering from frequent power cuts and fuel shortages because it doesn’t have enough capacity to refine it own crude.

The finance ministry denied reports that it has already asked for emergency cash, but said it is considering a World Bank loan as one way of funding the deficit.

“The truth is that Nigeria… has indicated an intention to borrow N1.8 trillion principally for investment in capital projects to stimulate the economy,” Finance Minister, Kemi Adeosun said in a statement.

Nigeria is exploring the option of borrowing from multilateral organisations such as the World Bank and AFDB, as well as the Export-Import Bank of China, because they offer lower rates of interest than other lenders, she said.

Officials from the African Development Bank visited Nigeria last week.

Nigeria is a member of OPEC, and has been pushing for the Saudi-led oil cartel to cut production to support prices.

OPEC decided in 2014 to wage a price war with low cost producers in the U.S. and elsewhere in a bid to defend market share.

Many OPEC countries are still making money at these prices but others are losing.

Nigeria’s average production costs are estimated at about $31 a barrel.

By: Ivana Kottasova, CNN Money

Nigeria Seeking $11bn World Bank Loan

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02/02/2016

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Nigeria is holding talks with the World Bank to help it fund a forecast $11billion budget deficit.

However, Finance Minister, Kemi Adeosun said in a statement that it was not applying for an “emergency loan.”

Nigeria is believed to be looking for around $3.5 billion from the World Bank and the African Development Bank.

Africa’s largest economy has been hit hard by the recent fall in oil prices, and the government needs to find new sources of income to fund its budget.

Last year’s government budget was largely financed by oil revenue.

Ms Adeosun said that “Nigeria, as a member of World Bank Group is entitled to access available funds like every member-country,” but she is also looking at the domestic market as a means to get finance.

“No application for loans has been made. We are simply discussing options for funding [the] 2016 budget,” she added.

Chief Africa Economist for Standard Chartered Bank, Razia Khan told the BBC that going to the World Bank could be attractive as it may offer Nigeria better terms for a loan than it would get from the international money markets.

Nigeria is deliberately boosting spending on infrastructure development to try to boost the economy as it tries to deal with the oil price shock, she added.

The country is also under pressure to devalue the national currency, the Naira, as it tries to cope with the impact of declining oil price.

African Capital Markets Facing Challenging Times Ahead

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02/02/2016

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In line with global trends, 2015 was a challenging year for African capital markets in the wake of market volatility and the emergence of renewed global economic uncertainty in the latter part of the year, while the first half resulted in the highest levels of both equity capital markets transactions and proceeds raised in the past five years.

PwC released its 2015 Africa Capital Markets Watch publication yesterday, which analyses equity and debt capital markets transactions that took place between 2011 and 2015 on exchanges throughout Africa, as well as transactions by African companies on international exchanges.

Equity capital markets (ECM) transactions included in the analysis comprise capital raising activities, whether initial public offerings (IPOs) or further offers (FOs), by African companies on exchanges worldwide, as well as those made by non-African companies on African exchanges. Debt capital markets (DCM) transactions analysed include debt funding raised by African companies and public institutions.

Nicholas Ganz, PwC Africa Capital Markets Leader, says: “At 31 December 2015, African exchanges had a market capitalisation of about US$1 trillion, with 23% of this value residing on exchanges outside of South Africa.

Though statistics cannot be interpreted in isolation, certain metrics commonly used to analyse global market performance, such as the market capitalisation-to-GDP ratio, suggest that untapped value remains in Africa’s capital markets.”

African IPO Market
Overall, $12.7bn was raised in 2015 in ECM activity across the continent. Over the past five years, there have been 441 African ECM transactions raising $41.3 billion.

2015 showed a steady overall increase in IPOs of 12% in terms of transaction volume and 17% in terms of US dollar denominated value, as compared to 2014.

However, 72% of 2015 IPO value and 54% of IPO volume was carried out during the first half of the year, reflective of the relatively higher levels of consumer confidence as compared to the second half of 2015.

Over the past five years, there have been 105 IPOs raising $6.1billion by African companies on exchanges worldwide and non-African companies on African exchanges. The top 10 African IPOs by value in 2015 took place in South Africa and North Africa, namely Egypt and Morocco.

In 2015, capital raised from IPOs by companies on the JSE in US dollar terms decreased by 11% as compared to 2014, largely due to the weakening of the South African rand during the year; noteworthy is that the rand value of IPO capital raised on the JSE in 2015 increased by 11% over 2014 levels.

Capital raised from IPOs by companies on other African exchanges in US dollar terms increased slightly by 3% as compared to 2014. In terms of volume, the JSE saw a 33% increase in the number of IPOs as compared to 2014, and listings on the JSE’s AltX more than doubled.

Over the past five years, the JSE has led African exchanges in terms of IPO transactions and capital raised, at $2.7 billion. In second place in terms of IPO transaction volume after the JSE was the Bourse de Tunis with 23 issuances, while in second place by capital raised was the Egyptian Exchange with $861million.

In third place in terms of volume was the Casablanca Stock Exchange with 7 issuances, and third by capital raised was the Nigerian Stock Exchange with $751 million, over 70% of which relates to 2014 SEPLAT IPO.

Since 2011, capital raised from IPOs by companies on the JSE represented 45% of the total African IPO capital and 33% of the total transaction volume. Coenraad Richardson, PwC South Africa Capital Markets Partner, says:

“The JSE remains a significant anchor of African capital markets activity, with a ranking of second in the world for exchange regulation and a leading global ranking for ease of raising debt and equity capital, according to the World Economic Forum’s Global Competitiveness Report 2015-2016.”

On a sector basis, the financial services sector continued to dominate the African IPO market during 2015 at 46% of total value and 50% of total volume, followed by industrial, health care and consumer goods sectors in terms of value.

African FO Market
Over the past five years, there have been 336 FOs raising $35.2 billion by African companies on both African and international exchanges.

“Though the growth rate of 2015 FO activity did not match that of the prior year, the trend remained distinctively positive,” adds Andrew Del Boccio, PwC Associate Director, Capital Markets, South Africa. During 2015, FO activity increased by 20% in terms of transaction volume and by 13% in terms of US dollar value as compared to 2014.

In 2015, capital raised from FOs by companies on the JSE, specifically, increased by 17% (in US dollar terms), whereas proceeds from FOs on other African exchanges decreased by 30% from $1.2 billion in 2014 to $827million.

Over the five year period, the vast majority of FO activity was from sub-Saharan African countries, with 76% and 86% of total FOs volume and value, respectively.

Between 2011 and 2015, capital raised from FOs by companies on the JSE represented 85% of the total African FO capital raised and 67% of the total transaction value. Over this period, in second place in terms of both FO volume and value was the Egyptian Exchange followed by the Nigerian Stock Exchange.

On a sector basis, FOs were slightly lower than the five-year average in the financial sector during 2015. There was a significant increase in the technology sector from 7% on average to 23%, driven largely by a December rights issue by Naspers.

African Debt Markets
African DCM activity has declined since its peak in 2013. Over the past five years, 489 debt transactions took place on African debt markets or, more commonly, by African companies on international markets, raising $110.2 billion, of which 72% was US dollar-denominated.

The average of proceeds raised in 2015 was $411million per transaction, $85 million higher than 2014’s average of $326 million and 83% higher than the average per transaction over the past five years of $225 million.

Darrell McGraw, PwC Nigeria Capital Markets Partner, says: “Despite challenging economic times, which are felt heavily in Nigeria, 2016 will be pivotal as companies will be looking to reassess their strategies, which may include divesting of non-core businesses. This will create an opportunity for cash-rich investors, or other corporates to tap into the local debt markets to raise domestic currency bonds. Until relative certainty returns to the currency markets, the popularity of US dollar denominated bonds is likely to taper.”

Concludes Richardson: “Growth across the African continent will require continued investment in various sectors including infrastructure, agriculture, financial services, and telecommunications, alongside other industries more traditionally associated with Africa. In 2015, the capital markets reflected this continued need for investment and continued appetite from investors with key portfolio allocations targeted toward emerging and frontier markets.”

“Though this upward trend in activity has been observed over the trailing five-year period, we recognise that uncertainties in the market and economic trends may indicate a more challenging 2016 ahead.”

Red Star Express Restates Commitment to Compliance with Regulations

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02/02/2016

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Red Star Express Plc, a licensee of Federal Express Corporation has restated its commitment to comply with all laws as stipulated by various organisations governing logistics operations in Nigeria, the Nigerian Customs Service inclusive.

This was stated at an interview session with the Managing Director of the company, Mr Sule Bichi, recently in Lagos.

By law, all shipments crossing international borders must be cleared through Customs in the destination country prior to being delivered to the recipient. All dutiable shipments need formal Customs clearance. Customs duty is based on the value of the shipment and the commodity shipped.

Clean Report of Inspection (CRI) from the appointed inspection agents are carried out. Certain items are prohibited by Customs for import to Nigeria. Red Star Express Plc as responsible corporate entity ensures all laws governing import and export are duly complied with at all times.

According to Bichi, “Red Star Express Plc is committed to adhering to all regulations as tabled down by the Nigerian Customs Service (NCS). We are happy with what we do, and we ensure manufacturers are offered total logistics integration and speed to market. Like our mission states, we will always provide value added logistics solutions that will be secure, prompt and effective.

In order to ensure that we are in compliance with the Nigerian Customs Service, National Drug Law Enforcement, and other regulations, we are committed to ensuring that prohibited items are not shipped through our network.”

About Red Star Express Plc
Red Star Express Plc is a premium logistics solution provider in Nigeria in area of revenue, network coverage and market share in the domestic and international market.

It enjoys a domestic strength of 169 offices in Nigeria, delivers to additional 1,500 communities, over 1400 highly trained personnel and over 500 vehicle fleet.

It operates as the Nigerian licensee of FedEx, which is the world’s largest express transportation company, providing fast and reliable delivery to more than 220 countries and territories around the world.

Kenya Plans $127m Fund to Boost Cyber-security in 2016

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Business Journal

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02/02/2016

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According to the 2016 report by International Data Corporation (IDC) relayed by The Nation, government of Kenya increased by 15% its budget for cyber-security.

Indeed, Kshs. 13 billion ($127,400,000) disbursed this year for the fight against cyber criminality. The ramping up of budget falls in line with presidential directive aiming to protect the state’s computer system from any criminal intrusion.

Last October, President Uhuru Kenyatta demanded that all State’s institutions and ministries establish cyber-security divisions coordinated by one authority, so that government is no more vulnerable to cyber threats.

He also requested that ICT ministry elaborates and establish directives for a better management of prices, standards, quality and volume in terms of ICT equipment.

According to IDC’s 2015 cyber-security on Kenya, attacks by hackers have cost Kenya Kshs. 15 billion ($147 million). Asides companies, public sector was most affected.

By boosting cyber-security, Kenya aims to protect its important data and also block any intrusion susceptible to preventing the country from achieving its socio-economic growth goals.

Image credit: uonbr

MTN Nigeria Cancels Plan to Go Public

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Business Journal

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01/02/2016

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MTN Nigeria has cancelled its earlier plan to go public in 2016, citing the current face-off between the telecom operator and the Nigerian Communications Commission [NCC].

An authoritative source in MTN told Business Journal that the earlier plan to take MTN Nigeria public has been shelved for now until the lingering crisis between MTN and NCC over the $5.2 billion dollars, now $3. 9 billion is sorted out successfully.

The source said: “For now, the plan to go public is in the cooler until we settle the more important issue of the fine imposed on us by the NCC. The management is not talking about it at the moment. Even our Group officers in South Africa are also cool on the issue until the fine crisis is resolved.”

He said another reason could be what he called “an emerging perception at the Group headquarters in South Africa that Nigeria has suddenly become an unfriendly business environment for MTN, and thus, taking the company public in such a negative market could backfire on the firm in the long term.”

He continued: “Our people in South Africa are really feeling bad over the $5.2 billion or $3. 9 billion fine imposed on the company by the NCC. They consider it an act of bad faith to effectively bring down the company, thus making it difficult to take the company public in Nigeria.”

It would be recalled that MTN Nigeria took legal action against the NCC in late, challenging powers of the telecom industry regulator to impose the said $5.2 billion, but later reduced $3. 9 billion fine on it for failing to deactivate unregistered subscribers on its network.

But at the recent hearing of the matter, MTN Nigeria appealed for out-of-court settlement, which the court granted and adjourned the matter to March 18.

In a swift reaction however, the Minister of Communication Technology, Adebayo Shittu insisted that MTN Nigeria must first withdraw the suit against NCC from the court before any talk of settlement outside the court system.

Qatar Airways to Launch Longest Flight in History

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Business Journal

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01/02/2016

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Qatar Airways may be about to launch the longest flight in the world.

Airline CEO Akbar Al Baker told Bloomberg that Qatar will add an ultra-long-haul route between the company’s hub in Doha, Qatar, and Auckland, New Zealand.

Should Al Baker’s airline go ahead with the nonstop route, it would be the longest continuous flight in the world, with a distance of 9,034 miles that would last 18 1/2 hours.

Currently, the longest flight in the world is Qantas’ Sydney-to-Dallas route, which covers 8,577 miles and last 16 hours 55 minutes, according to Statista.

Next year, Emirates is expected to beat Qantas for the honor with a new route between Dubai and Panama City, Panama. That flight will cover 8,588 miles and last 17 hours 35 minutes.

But all three will be eclipsed when Singapore Airlines re-launches its direct flight from Singapore to New York.

The 9,500-mile, 19-hour affair was discontinued in 2013 because of high fuel costs and the early retirement of the A340-500 aircraft used to operate the flight.

But Singapore announced in October that it will resume the flight after it takes delivery of the airline’s new Airbus A350-900ULR.

Qatar is expected to deploy the airline’s existing fleet of Boeing 777-200LR Worldliners. The Worldliner can carry more than 300 passengers with a range of 9,845 miles.

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