Category Archives: South Africa

Using the AMIB50 ETF to track Africa Investments

A new fund offers South African investors a chance to invest in 50 large, non-South African companies that are listed on other exchanges and in other countries across Africa. The AMI Big50 ex-SA AMIB50  ETF (exchange traded fund) was launched at the Johannesburg Stock Exchange on April 20.

The ETF is promoted by investment firm – Cloud Atlas Investing and targets institutional and retail investors, offering them a way to invest away from the Rand and South Africa. The current basket of the fund is composed of Itissalat Al Maghrib (Maroc Telecom) (20.6% of the fund), Coml.Intl.Bank (Egypt) (11%), Lafargeholcim Maroc, Guaranty Trust Bank, Safaricom (4.3%), Nigerian Breweries, Tanzania Breweries, Mcb Group Ltd, Attijariwafa Bank and Delta.

In terms of countries, exposure to Morocco 28.4%, Egypt 19.3%, Nigeria 13.7% and Kenya 11%, and for sectors, the spread is banking shares 29.3%, telecom firms 27.8%, food & beverage 17.7%, and industrial ones 14.6%.

Investors need to have a brokerage or custody account in South Africa to buy the AMIB50 and the fund management fee is a total of 1.17% per year.

Barclays Exiting Africa: Part II

Almost a year after Barclays Africa announced a decision by (parent) Barclays PLC to exit Africa, they released their Barclays 2016 results (PDF). While the world is now a different one after BREXIT and President Donald Trump, the exit plans are still on course.

Excerpts of the some statements released on Thursday 

  • Revenue from (the rest of) Africa) has been growing at about 16% a year, compared to 5% in South Africa, but, the rest of Africa (excluding SA) is still just 23% of revenue for Barclays Africa. They expect that rest of Africa growth should exceed South Africa’s
  • They have agreed with Barclays PLC on terms of the “separation payments and transitional services  – Barclays PLC will contribute £765m, comprising of £515m in recognition of the investment required in technology, rebranding and other separation projects, £55 million to cover separation related expenses, £195 million to terminate the existing service level agreement relating to the rest of Africa operations”.
  • Barclays PLC will contribute an amount equivalent to 1.5% of Barclays Africa market capitalization towards a black economic empowerment (BEEP) scheme and Barclays plans to create an equity plan for employees in the next 12 to 18 months.
  • They will continue to use the ‘Barclays’ brand in the rest of Africa for three years from the date on which Barclays PLC reduces its shareholding in BAGL to below 50%.
  • During 2016, Barclays PLC reduced its shareholding from 62.3% to 50.1%. Other shareholders include Public Investment Corporation (SA) 6.86%, Old Mutual Asset Managers 3.31%, Allan Gray Investment Council 2.16%, Prudential Portfolio Managers 2.01%, Schroders Plc 1.93%, BlackRock 1.69%, Vanguard Group 1.66%,  Dimensional Fund Advisors 1.65%, and Sanlam Investment Management (SA) 1.62%.

£1 is $1.25, £1 = KES 128.5, and  £1 = 16.1 ZAR.

What Africa means to Barclays

Last week, Barclays Africa released their our 2015 Integrated Report (PDF). It comes in the  backdrop of the Barclays Africa sale that is still reverberating, with denials that the Bank will be divesting from Africa.

It notes that :

  • The Barclays PLC sale is meant to deconsolidate Barclays Africa from an accounting and regulatory perspective and that the Barclays Africa chairman, Wendy Bull, has already resigned from two Barclays (UK) PLC boards so there’s no conflict of interest.
  • The 2015 results demonstrate that we are delivering against our strategy and ambition. We made a profit of R14.3bn, with headline earnings up 10% and a return on equity of 17%.
  • Barclays Africa has a presence in 10 countries. Kenya is the second largest of the 10, but they all trail South Africa by a large margin (79% of the group revenue is from South Africa,). Tanzania has similar numbers to Kenya, but they are contributed by two different banks (BBT and NBC)
  • Barclays parent owns, 62%. The other top 10 shareholders include Public Investment Corp (SA) with 5.6%, Stanlib assets 2.2% and others with 1% each including old Mutual, Sanlam, Prudential, Vanguard, and Blackrock.
  • Barclays Africa has 12.3 million customers.
  • Retail & business banking account for 72% of revenue, corporate & investment-banking 20%, and wealth management 7%.
  • They paid 8.6 billion rand in dividends, 7.3 billion in taxes and 20.9 billon rand in salaries to their 41,000 employees across Africa.

Barclays Africa CEOThe report (We actively sought shareholder views so as to further develop our remuneration reporting) has a levels of disclosure,that would be welcome in Kenyans banks and companies  who have endured a horrible year of governance issues with almost 20 companies declaring profit warnings after previous ‘robust’ years, under long-serving CEO’s.

  • It details the salaries and bonus of the CEO (Rand 28 million), top executives, and non executive (independent) directors of board members (which included the Barclays Kenya chairman).
  • It also lists the performance dashboard of al the executives, and of all the key segments of the bank in their own pages.  Not like Kenyan banks which have the Chairman’s statement noting the tough economy, then (after magic happens) the super profit that was achieved.
  • It lists key matters discussed by the board , tabled month by month, and incorporates the balanced scorecard.
  • No individual director or group of directors has unfettered powers of decision-making.

1 Rand  was about Kshs 7.2, and 1 Rand was about $0.07 in December 2015. 

Africa’s New TFTA Economic Bloc

So what’s the TFTA (download an English language PDF here)? Why is it so important?  And what’s good about it for Kenya? A lot of that is in this nice article by the Oxford Business Group titled Kenya to benefit from newly agreed TFTA. 

Extracts

  • The Tripartite Free Trade Agreement (TFTA) is an economic integration initiative pursued by the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), which will create a 26-country integrated economic bloc.
  • Members of the TFTA aim to progressively eliminate tariffs to trade in goods, liberalise trade in services, cooperate on customs matters, among other areas.
  • Kenya is expected to be 1 of only 5 countries in the bloc to see exports increase by more than $100m following full implementation of the TFTA.
  • The TFTA gives Kenyan exporters preferential access to 6 new markets not already covered by the EAC or COMESA, namely Angola, Botswana, Lesotho, Mozambique, Namibia and South Africa.
  • “Sensitive” agricultural goods like sugar, maize, wheat and rice will be subject to duty and quota restrictions, as will other products such as cement, plastics, electronics and paper. till at least 2017 to give these industries in some countries time to adjust to increased competition.Highland tea export journey
  • Members of the TFTA aim to progressively eliminate tariffs to trade in goods, liberalise trade in services, cooperate on customs matters, among other areas.

Ahead of the Word Trade Organizations (WTO) 10th Ministerial Conference (MC10) to be held later this month in Nairobi, Kenya’s parliament (national assembly) hurriedly ratified the TFTA . This was in a debate just before their year-end recess, and during this, some members chastised the government (executive) for being slow to bring  the TFTA before parliament – and legislative assent is a conditions that all member states must meet.

Guide to Stellenbosch

A guest post by @AmkaKenya after a visit to Stellenbosch – a town in South Africa famous for wealth, education, and wines.
 Getting There: It cost about 8,900 Rand (~Kshs 90,000) to Cape Town on South African Airways (SAA). Ethiopia Air is about half the cost, but one would have to take a much longer trip. SAA was really lovely and the airports in SA are nice.  I only had hand luggage, but if you check in baggage, you have to collect and check it in again at Johannesburg, before continuing to Cape Town.
You also have to get a visa from the South African High Commission in Nairobi ahead of your trip and it’s quite fast, with the visa being free for tourists staying less than 30 days. 
Getting Around:  A friend collected me from the airport and the drive to Stellenbosch took about 40 minutes. It seems like everyone had a car in Stellenbosch, I didn’t see any buses and I hear the taxis are quite expensive. I felt secure during the day, but all houses have alarms and secured gates at night.

Communications:  I tried not to use my Safaricom roaming, as it was expensive to call and receive calls. Text messages were Kshs 10/- and I accidentally drained Kshs. 1,000 of credit because I switched my data on!

Where to Stay  I stayed at a GORGEOUS hotel based in a vineyard – Spier.  I think the average room there was about $250 per night B&B. Not sure about the others.

Food & Drink Stellenbosch is wine country and friends gather to drink several bottles of wine almost every night.  This is accompanied with billtong (cured meat) and possibly a brai (barbeque) when weather permits.  They talk about the weather and traveling out of Stellenbosch! There is also a large student population who are very intelligent and fun to talk to about current affairs, politics and social change.

Shopping & Sight Seeing: I didn’t get enough time to explore, but there’s are lots of lovely (if a little pricey) little artisan shops with unique gifts and knick knacks on Church Street and Andringa Street. One gift shop called Big Blue was very cool with lots of funny and not too expensive gifts like ZUMA Presidential Shower Gel.  (Eventually), I took home wine and billtong for most people. 

Getting around costs about $25 per day and  you can get by with English, but Afrikaans is also commonly heard. I didn’t meet many black people, so didn’t hear much Zulu.
Local legends: The town was founded in 1679 by the Governor of the Cape Colony, Simon van der Stel, who named it after himself – Stellenbosch means “(van der) Stel’s Bush”.  Also a few famous rugby and cricket players are from there.

Biggest surprise  It was so cold!

Author with Zapiro, the famous cartoonist
Odd Points:  On the surface, Stellenbosch is a rich town – people drink lots of wine, eat good billtong and enjoy fine cheeses.  On the weekend, they go to farmers markets, smile a lot, and have “brais” (BBQs) with friends.  However, there is an interesting racial tension, dimension, as I assume there is all over South Africa.  The Black Economic Empowerment (BEE)  policy is  a contentious method of “leveling the playing field”. A black banker told me that, without BEE, he would never have the job he has in Stellenbosch. He admitted that since BEE, life has been great for him, but probably not much different for the lower class black South Africans that it was supposed to target.  There was a young white couple I spoke to, and they expressed a surprisingly hostile attitude towards BEE; The young man came from a wealthy family that owns several vineyards and he claimed some of the farms had been “snatched” (back?) from his family and given to black people who had no idea how to farm sustainably.  He claimed many of the farms are being ruined because black people, with no experience, are running them.
Note: Zapiro, is the famous cartoonist who coined the controversial Zuma shower-head cartoons.