Economy

Global Economic Uncertainty Threatens FDI Flows to Africa

Published

9 years ago

10/05/2017

By Modupe Gbadeyanka

The flow of Foreign Direct Investment (FDI) into Africa is being threatened by global economic uncertainty and if nothing is done promptly about this, the continent may continue to suffer economic hardship.

For African governments, part of what is at stake are much needed foreign direct investments and access to affordable financing necessary to spur development and, specifically, to close the estimated $900 billion infrastructure gap.

Equally, the private sector stands to lose billions of Dollars in lost opportunities if the requirements for a favourable investment environment are not adequately addressed.

To address this problem, a roundtable event was held in Nairobi, where Ministers from across Africa sat together with investors and the private sector to determine how best to tackle the investment and credit risk hurdles in order to make African risks bankable.

Participants to the roundtable saw the event as timely because it came at time of geopolitical uncertainties which, according to The World Bank, could lead to “higher borrowing costs or cut off capital flows to emerging and frontier markets”.

The half day forum, the 4th Roundtable to focus on Political and Credit Risks in Africa, took place on the side lines of the African Trade Insurance Agency’s (ATI) Annual General Meetings. The event opened with pointed remarks from H.E. Patrice Talon, President of Benin.

Subsequent discussions focused on possible solutions to the challenges facing governments from the private sector and export credit agencies from panellists such as: Patrick Chinamasa, Minister of Finance & Economic Development, Zimbabwe; Romuald Wadagni, Minister of Economy & Finance, Benin; Felix Mutati, Minister of Finance, Zambia; Chamsou Andjorin, Director Government Affairs & Market Development, Boeing Intl; Helen Mtshali, Syndication Lead – Sub-Saharan Africa, Industrial Finance Solutions, GE; and Nisrin Hala, Senior Director, Global Trade Finance Bus. Development Emerging Markets, SMBC.

Investors are not immune to political and social developments in emerging regions like Africa. In fact, with reduced earnings – the benchmark emerging-market stock index has lost approximately 4 percent annually since 2010 from a high of 22 percent annual return in the preceding decade – investors are now focusing on more than the bottom line in these markets. During the boom years of the last two decades, Africa was experiencing unprecedented GDP growth rates but depressed commodity prices have seen growth in the sub-Saharan Africa region slow to 1.5 percent rate in 2016. According to World Bank estimates, oil exporters account for most of the slowdown owing to their two-thirds contribution to regional output.

In a Bloomberg article published in March 2016, emerging market investors from some of the most prominent companies noted the dramatic change in their investing tactics due to global fragility, which they see as unveiling institutional weakness, corruption, poor governance and efficiencies. In this current climate, investors are now keenly tracking social indicators such as corruption rankings, gender parity and the extent that rule of law is respected within emerging markets.

“Africa is in a period of realignment in this new global order but I don’t think anyone should bet against its resilience. We are still home to some of the fastest growing economies in the world – as of 2017, the World Economic Forum ranks Côte d’Ivoire, Tanzania and Senegal on the list of the top ten fastest growing economies in the world,” notes George Otieno, ATI’s CEO.

In this climate, it is more imperative than ever for African governments to focus on economic diversity to maintain growth while addressing risks to investors. As an internationally respected African institution, the African Trade Insurance Agency (ATI) offers the ideal solution precisely because the company has strong relationships with governments and because its risk assessments and mitigation solutions are seen as credible by global financiers and investors. With ATI involved in a transaction, governments are able to provide security to investors and suppliers against a range of investment risks.

In 2016, ATI insured close to $2 billion (KES202.8 billion) worth of trade and investments and the company is increasingly supporting some of the continent’s most important transactions such as Ethiopian Airline’s fleet expansion and a USD660 million investment in Lake Turkana, Africa’s largest wind farm and, to date, the single largest investment in Kenya.

In this environment, ATI’s products are being seen as a valuable tool to enable lenders to take sub-investment grade risk in Africa thus allowing governments and corporates to access more affordable financing. Importantly, in its role as an investment insurer of last resort, ATI is also providing the necessary comfort to support continued investments into the continent amidst a period of uncertainty.

Economy

Customs Street Chalks up 1.08% on Renewed Buying Pressure

Published

6 hours ago

06/12/2025

Dipo Olowookere

By Dipo Olowookere

A 1.08 per cent growth was further printed by the Nigerian Exchange (NGX) Limited on Friday on improved appetite for Nigerian stocks.

Data showed that the insurance sector lost 0.61 per cent yesterday due to profit-taking as the energy space gave up 0.08 per cent, while the commodity counter closed flat.

However, the industrial goods landscape appreciated by 2.06 per cent, the banking index improved by 1.31 per cent, and the consumer goods sector expanded by 0.83 per cent.

At the close of business on Customs Street, the All-Share Index (ASI) increased by 1,563.92 points to 147,040.07 points from 145,476.15 points and the market capitalisation went up by N996 billion to N93.722 trillion from N92.726 trillion.

UAC Nigeria led the advancers’ log yesterday after it grew by 10.00 per cent to N96.80, Transcorp Hotels jumped by 9.71 per cent to N172.80, Royal Exchange appreciated by 8.89 per cent to N1.96, Ikeja Hotel soared by 8.74 per cent to N31.10, and Veritas Kapital leapt by 8.07 per cent to N1.74.

On the flip side, Union Dicon declined by 10.00 per cent to N6.30, ABC Transport slipped by 9.88 per cent to N3.10, AXA Mansard depreciated by 7.19 per cent to N12.90, FTN Cocoa lost 4.62 per cent to trade at N4.75, and Guinea Insurance dropped 3.36 per cent to finish at N1.15.

A total of 38 stocks ended on the gainers’ table and 17 stocks finished on the losers’ table, representing a positive market breadth index and strong investor sentiment.

Traders transacted 361.6 million equities for N14.8 billion in 21,051 deals yesterday versus the 1.9 billion equities worth N19.2 billion traded in 23,369 deals a day earlier, showing a decline in the trading volume, value, and number of deals by 80.97 per cent, 22.92 per cent, and 14.20 per cent, respectively.

The busiest stock for the session was Zenith Bank with 59.5 million units worth N3.6 billion, Access Holdings traded 46.1 million units valued at N973.0 million, Fidelity Bank exchanged 29.4 million units for N560.4 million, FCMB transacted 27.9 million units worth N293.9 million, and Tantalizers sold 13.0 million units valued at N29.8 million.

Economy

Nipco, 11 Plc Crash OTC Securities Exchange by 4.76%

Published

7 hours ago

06/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.

The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.

Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.

The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.

Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.

During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.

Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.

InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.

Economy

Naira Depreciates to N1,450/$1 at Official Forex Market

Published

7 hours ago

06/12/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.

The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.

Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.

Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.

As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.

However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.

Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.

As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.

With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.

Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.

Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.