Dialectic Africa Analyst

Dear Africa Interested Individuals:                                                          In the current world market of low commodity prices and strong dollar which negatively impacts the natural resource rich continent of Africa, diversification of business interests may just be the best route to survival.  Is it or is it not?   I selected a diversified industrial company in the major economy of Southern, East and West Africa (South Africa, Kenya and Nigeria) and Mauritius for having the best bank performance weighting relative to size of the economy in my recent article.  The companies reviewed are: 1. Gamma Civic for Mauritius 2. Beige Holdings for South Africa 3. Centum Investments for Kenya 4. UAC for Nigeria.   1. Gamma Civic is into building materials, construction, investments, property (residential and resorts,) and lottery gaming.  The company's fiscal year end is December.   The company made an operating loss as at June 2015.  H1 pr

Dear Africa Interested Individuals:                                                         This is a concise look at Nigeria's largest bank by deposits (First Bank) and largest bank by assets (Zenith Bank ) as at June 30th, 2015 .  This article will focus on insightful commentary and not a display of the numbers crunched etc.   Zenith Bank is a more profitable bank than First Bank.  First Bank's twelve-month outlook is brighter than that of Zenith Bank.  This simply means that First Bank has more of an upside than Zenith Bank from where both banks are presently perched from a portfolio investment and net income growth perspective.   Both banks achieved negative loan value-added as at H1 2015.  Zenith had -0.45% and First Bank has -0.55% .  Zenith Bank and First Bank achieved +1.88% & 0.93% loan value-added respectively as at FY 2014.  Zenith bank's loan value-added regressed 233 basis points while First Bank's loan value-added regressed 148 basis points

Dear Africa Interested Individuals:                                                           I just looked at the 2014 GDP of the major economies of Africa (excluding Algeria) and other select economies and the financial performance of the largest banks by assets in these countries for fiscal year 2014.  I selected sixteen (16) African countries and their respective largest banks.  I intend to compare the percentage weighting of each country's GDP against other selected African economies against the percentage weighting of 2014 net income (in dollars) of the largest bank in each country.  Which banks' financial performance percentage weighting among the largest bank in the sixteen countries will exceed that of the GDP in the country it is domiciled in relative to the GDP of other selected African countries for 2014?  Let us get to it.  The countries selected are:                                               GDP % weighting                              Net Income % weight

Dear Africa interested individuals:                                                                  We have heard the rampant advice that African oil exporting countries should devalue their currency whenever oil dips significantly and remains there for a prolonged period of time. Proponents say it generates more income for the countries in question to use internally and reduce the impact of the lower revenue on government spending.  I agree that more revenue will come into the country in local terms (assuming constant demand.)  Continual devaluation of African currencies portends serious danger for African economies. I will highlight just three in this article in a concise form. 1. Devaluation leads to a currency being dumped by even those who do not need dollars. Why?  No one wants to hold a currency that does not hold value.  The devaluation creates an expectation of future near term need to devalue further and this puts sell pressure on the local currency as all sorts of peo

Dear Africa Interested Individuals:                                                         We take a look at the latest earnings from the largest bank in Africa's largest economy.  The same bank where the Central Bank Governor of Nigeria was sourced from and the Governor of Akwa Ibom State was Zenith Bank's former CFO.  Let us get to it, starting with key observations.   Zenith Bank did not experience a lull in activity that characterized some other banks as at H1 2015.  Non-interest income grew by $79.1m relative to net interest income (post-impairment) that grew by $48.9m year-on-year. Non-interest income growth is 62% higher than post-impairment net income growth.  Customers are transacting more with the bank at least in terms of value of transactions despite the tighter business environment.  Gross loans increased by 10.4% which equates to an increase of $914.2m over the first six months of 2015.   Contingent liabilities are 74% of total assets; in simple terms,

Dear Africa Interested Individuals:                                                         About eight years ago, equity public offers was the popular way to raise capital when needed.  Some companies even came to the market twice within a fifteen-month frame.  No company thought of raising debt; stock prices were at all-time highs which made it easier for companies to raise desired sums without piling up on shares outstanding.  Besides, who wants to raise capital that has to be fully repaid with interest and the company has to try to generate income from utilization of debt in excess of interest due plus principal repayment?   When companies raise equity, shareholders recourse is to sell their stake on the exchange for whatever the market says the company is worth and move on.  In other words, the management of  companies do not have to pay back equity shareholders directly.  Once they get the equity, it belongs to the companies to pretty much do as they please.  The equity ca

Dear Africa Interested Individuals:                                                         SAB Miller is the second largest brewer in the world and has major Africa brewing operations in Nigeria, Tanzania, Zambia, Mozambique, Botswana, South Africa and Uganda.  We take a look at the performance of the brewer in three African countries all based in different regions: East, Southern and West Africa.   Tanzania Breweries Limited (TBL) TBL is the best performing of the three SAB Miller breweries selected.  It has the most demand for its products.  The combined relative demand for the other two breweries is still less than that of TBL over a two-year average period.  TBL is also the most profitable by a wide margin.  Its pre-tax income margin is 29.3% while Zambian Breweries is 16.4% and International Breweries is 17.4%.  TBL's 2-year average RoE is more than the combined RoE for theNigeria and Zambia locations.    TBL is also the most liquid of the three and is the lea