Dialectic Africa Analyst

Dear Africa Interested Individuals:                                                          Six years ago, Lamido Sanusi (then CBN governor) used his executive powers to take over control of 8 banks in two batches.  Six of the eight banks were later on sold to other existing banks while one was sold to a core investor who recapitalized it and the other is still awaiting sale by the Asset Management Company of Nigeria. I remember being on a conference call four years ago with Access Bank CEO when the acquisition of Intercontinental Bank was announced.  Size and the capabilities it provides clearly stuck out as the driving force behind the acquisition.  So, four years on, how is the merged entity doing compared to when either bank was independent and immediately after the merger?  Given that size is most clearly evidenced by assets and performance is most clearly evidenced by profit, the ratio pre-tax income to assets will guide our discussion in this article.     Access Ban

Dear Africa Interested Individuals:                                                         Appointments typically send a particular message to the general public.  It shows the direction the person appointing wants to go with the organization in question.  Appointments of a federal nature are supposed to be driven by national best interests and not personal best interests even though the appointments are made by people.  I picked six countries and four are in Africa to review their Central Bank appointments which were all made in the past two years (this was not a preset criterion for selection.)  I picked the USA, U.K., Nigeria, Kenya, Angola and South Africa.  I picked the USA and U.K. because they are developed countries with advanced financial systems that should understand by now the proper way to do things.  I picked Nigeria as the largest economy and most populous nation in Africa, Kenya as the dominant economy in East Africa and a prominent frontier market, Angola as a maj

Dear Africa Interested Individuals:                                                         After reviewing Nigerian banks over the years and up to the half-way mark of 2015, I have now come to the following nutshell summations.   1. Nigerian Banks have always had a problem with fully disclosing their state of affairs.  There has been a slight improvement with the emergence of conference calls, investor relations teams and IFRS reporting.  Have looked extensively at the financials of African Banks from North to the South of the continent, I can say without a doubt that Nigerian banks have a lot more information to provide (and can provide) to the investing public and have not yet done so.  I will mention a few : Capital expenditure broken out into replacement & addition .   Breaking out of loan book into detailed tenors: <1 year, 1year - 2 years, above 5 years etc. Revealing interest rate(s) charged on comprehensive loan book in narrow value ranges   Employee turnov

Dear Africa interested individuals;                                                                 I got thinking today when I saw the different price trends for ZCCM on the Lusaka Stock Exchange and NYSE Euronext.  Why are prices on majority of African stock exchanges not fully reflective of present day operational, structural and event specific developments?  Let us welcome Ecobank Transnational Incorporated (ETI) into the picture. ETI trades on the Nigeria, Ghana & BRVM stock exchanges.   ETI on the Nigeria Stock Exchange closed on September 21st, 2015 at $0.093 , $0.094 on the BRVM exchange and $0.076 on the Ghana stock exchange (GSE.)  ETI's price on the GSE is 18% - 19% less than that on the NSE & BRVM respectively. Clearly, Ghanaian investors do not rate ETI equitably and the reason may not be farfetched. Ecobank Nigeria was delisted from the NSE in January 2012.  Just prior to delisting, ETI was trading at a price approximately 5X greater than that o

Dear Africa interested individuals:                                                          Tea is a major foreign exchange earner for Kenya.  Kenya Tea prices have risen about 66% year-to-date.  How did the stock price of three of its listed tea companies fare so far this year?  Williamson Tea rose 35% , Kapchorua Tea rose 33% and Limuru Tea rose 41% .  The price of the Tea companies have risen but, below the price surge of the underlying commodity.  The overall market gloom in Kenya may have something to do with this.  The key is that both (commodity price & commodity company price) are in positive growth territory.   Raw Tobacco prices in Zimbabwe have risen by about 1.5% so far in 2015 while, British American Tobacco, Zimbabwe has risen 4.46% year-to-date as at September 18th, 2015.  Both are on the same page in terms of direction though, the stock price is ahead  of the commodity price which is the reverse of the Kenya case.   Zimbabwe is also a major exporter of

Dear Africa Interested Individuals:                                                         In 2006, Cadbury Schweppes UK increased its stake in Cadbury Nigeria from 46% to 50.04% giving the parent majority control.  By December 2006 a grievous accounting scandal broke that led to the removal of top management of Nigerian origin and the restatement of earnings going back three years.  The increase in stake took place in the same year of the accounting scandal.  Less than three years later in 2009, the parent increased its stake to 75%.  Unilever UK earlier in 2015 successfully increased its stake in Unilever Nigeria from 53.4% to 75%.  Unilever Nigeria is struggling and has been struggling since 2011 from my own vantage point.  The best analogy I can give here is when a baby's cry becomes a shrill .  Many people are talking about Unilever Nigeria's struggles now because it is more than obvious.  Another multinational sought an increased stake when the going got rough an

Dear Africa Interested Individuals:                                                         Happy Hump Day!  Let us get to it.  As African countries seek more listings on their respective stock exchanges, I decided to look at developments and strategies deployed to achieve more listings.   First Rand Bank is the third largest bank in South Africa and has listed subsidiaries in Namibia and Botswana.  First Rand Bank has contributed to the increased listing of companies on African Stock Exchanges.  Rand Merchant Bank has been operating in Nigeria for over four years.  Will they ever list?   Barclays Africa (Absa) is the second largest bank in South Africa and has listed subsidiaries in Botswana and Kenya.  Barclays Africa has applied for a merchant banking license from the Central Bank of Nigeria.   Illovo Sugar South Africa owns Zambia Sugar Company (ZSC) and ZSC is listed on the Lusaka Stock Exchange and the Johannesburg Stock Exchange.     Societe Generale is a pop