Dialectic Africa Analyst

Dear Africa interested individuals:                                                        African banks are raising capital across the continent to adjust to regulatory requirements and the challenges of the competitive environment going forward.  When is debt accumulation too much?  Which banks are utilizing their debt optimally?  Find below a list of 40 African banks with a breakdown of those that are not debt burdened and those that are.  An assessment is also undertaken to determine which banks got positive returns on their debt in excess of what it cost them.         (More details will likely be extracted at a later time and I will update.)    1. All six (6) Kenyan banks selected are not debt burdened and have generated positive returns on debt usage. 2. All six (6) Nigerian banks selected are debt burdened and have generated negative returns on debt usage. 3. Nine (9) banks did not borrow in excess of the cost of their property and equipment.  All nine banks a

Dear Africa interested individuals:                                                         I took a quick look at the biggest bank in Egypt, Kenya, Nigeria and South Africa.  Size (asset base and market capitalization) are key drivers of first-line attention when seeking alpha across the banking industry.  How have these banks performed relative to each other given their size domination in their respective countries?  How much profit could each bank eke out given the abundance of assets available to them relative to the local competition?  As at December 31st, 2014, this is what I have.   Commercial International Bank, Egypt:   Asset Size: $20.1 Billion    ROE:  32.7%  Pre-tax income/Assets :  3.8% Year-to-date performance: 7% (as at July 14th, 2015) Human Capital as an Asset Ranking:  9th  (See article on this blog for details) Kenya Commercial Bank: Asset Size:  $5.45 Billion ROE:  22.3% Pre-tax income/Assets:  4.85% Year-to-date performance:  -(3.5%) H

Dear Africa interested individuals:                                                         There are three major macroeconomic indicators globally: GDP/GDP growth, inflation (CPI) and unemployment rate.  Whenever a country's number is called, these are typically the first three indicators that are looked at before other indicators like balance of payments etc.  Nigeria's unemployment rate computation methodology was recently revised.  Before now, anybody employed must work for at least forty (40) hours before they are considered employed.  Any individual who works less than forty (40) hours is deemed to be unemployed as the natural assumption is that an individual's inability to work a forty hour work week was involuntary.   Nigeria has now made a significant adjustment to unemployment computation.  An individual that works a twenty (20) hour work week is now deemed to be employed and not unemployed for the purposes of national unemployment computation.  This signi

Dear Africa interested individuals:                                                         It is Monday, July 13th, 2015 and I have to decided to think out loud.  Ponder along with me.   I am just asking ... 1. Why does Ecobank Transnational Incorporated (ETI) have a different auditor from its subsidiaries?  ETI uses PriceWaterhouse Coopers (PWC) while Ecobank Nigeria uses Deloitte and Ecobank Ghana uses KPMG. (These are the two main individual country subsidiaries of ETI.)  The auditing process for ETI and its many subsidiaries will be smoother and more integrative in nature if the same auditor is utilized.  There is a reason why the word uniformity exists.  Life is hard enough, let us try to simplify it as often as possible.  Let us zip by Africa and see what other companies in the same situation did.  Illovo Sugar South Africa uses Deloitte and so does it subsidiary Zambia Sugar.  Qatar National Bank (QNB) (ironically a prominent shareholder in ETI) uses Ernst & Youn

Dear Africa interested individuals:                                                         As sugar companies grapple with lower sugar prices amid a supply glut, I decided to take a look at SSA based listed sugar companies.  I also wanted to avoid reviewing the companies from a stock-market related perspective instead, opting for an operational perspective; therefore, no price-related variables were factored into my assessment.   I reviewed eleven (11) metrics (with seven of them covering multiple-year assessments) and ranked the five sugar companies.  The best in each comparative metric gets a 1 and the worst a 5 .  The rest fall in between.  The lowest score became the best performing sugar company among the five selected.  My expectation was that the most resilient and consistent sugar company should be the best and have the lowest ranking score.  I have no idea about results of scenarios I create; I am a doer as well as an onlooker.   The sugar companies evaluated were:

Dear Africa interested individuals:                                                         Capitec Bank's February 2015 annual report was a joy to review.  I am a big supporter of detailed corporate financial disclosure as you might already know.  If any bank CEO wants to know how to put together a transparent, detailed, free flowing, explanatory integrated annual report, kindly go to the website of Capitec Bank and review their annual report for FY 2015 .  Reports like that make my work as an Africa analyst a lot easier in so many ways I cannot fully explain.   So many companies will state capital expenditure without stating whether it is for replacement or addition.  This is important information as far as I am concerned.  A company sells multiple SKUs but will not break down sales by SKU so that we can know how each SKU is performing as it relates to the bigger picture.  Banks will not state their top 10 biggest loans, to whom it was extended to, interest rate and perfor

Dear Africa interested individuals:                                                        I started taking a much closer look at Stanbic IBTC after the release of its FY 2014 result.  Why?  Beyond me being an Africa analyst, I noticed something strange on their income statement for a bank operating in Nigeria .  That perennial instinctual urge to delve deeper hit me again and I could not say no.  After the bank released its half-year 2015 result on July 9th, 2015, I had observed enough to speak out while keeping my explanations as simple as possible.  The more we look, the more we are supposed to see; when the more we look, the less we see, then, something is out of place and needs to be put right and quickly.  I will provide enough (not exhaustive) information to state my case without being verbose.  Here we go.    While taking a cursory look at the fiscal year 2014 income statement of Stanbic IBTC, I noticed that the bank's interest expense was less than its staff costs