The high public debt many African governments face could become a problem for them. As reported, Ghana is in difficult negotiations with the International Monetary Fund (IMF) to get a better handle on its public debt. The context: President Nana Akufo-Addo once promised to keep Ghana off foreign aid dependency. As late as May, Finance Minister Ken Ofori-Atta said that an IMF deal was not an option. But Ghana’s debt, totalling 81.8% of GDP, is too heavy to be picky.
Angola is in an even more difficult situation. And this is despite the fact that Angola is Africa's second-largest oil producer after Nigeria. Although the IMF expects high oil prices to push Angola's GDP up 40% this year, the fund also expects its government to spend 70% of state revenue on debt servicing in the near term. Angola's main creditor is China.
Unfortunately, the West tends to take a black-and-white view of Africa. When individual countries like Angola or Ghana experience difficulty, Western observers assume that the entire continent finds itself in a debt trap. The reality is much more nuanced. Of course there are many African governments that must significantly reduce public debt. This will only get more difficult as global interest rates rise.
But we are far away from a pan-African debt crisis. Consider that Nigeria has a government debt-to-GDP ratio of just 37%. Kenya’s stands at 68.4%, though its public-debt-to-GDP ratio is a bit higher at 70.3%. Moreover, the ratios for the Ivory Coast (51.4%), Morocco (77.9%), Senegal (73%) and South Africa – all important economies - are at manageable levels.
Angola has made the right decision by launching a wave of privatisations. These will not only bring much-needed income for the state, but also will provide momentum to the economy. State-owned enterprises in Africa tend to be unreliable and inefficient. People who depend on the electricity from public grids in South Africa, Nigeria and other countries experience this every day.
African governments should follow Angola’s example. The privatisation of state-owned companies, along with their listings on stock exchanges, would promote economic growth, bolster capital markets and help reduce public debt.
A strange movement of shares in Beltone Financial Holding (ISIN: EGS691G1C015) was observed at the Egyptian Exchange (EGX) last week. On Monday, Beltone’s stock lost 2.8% and on Tuesday, another 2.4%. On Wednesday it was down 2.5%. A downward trend is not unusual following a takeover battle.
But on Thursday, Beltone’s stock price jumped 20% to EGP 2.34 (EUR 0.12). A total of 10,276,280 shares were exchanged that day, even though there was no news that could influence the share. We asked around, but did not get any answers.
We can only speculate as to why the stock has suddenly appreciated. First some background: Beltone specialises in investment banking, securities brokerage and asset management. The bank recently advised Swiss logistics company Natco in its issuance of an EGP 1 billion bond on the EGX. The strong man at Beltone is non-executive chairman Mounir A. Fakhry Abdel Nour. Nour also acts as senior advisor at Rothschild & Cie. Beltone’s next CEO will be Dalia Khorshid, a former Egyptian investment minister and chairwoman of the financial advisory Masar.
After a long decline, Beltone’s share rebounded this summer, gaining 136%. One key reason: On 6 June, WM Legal Consultancy made an offer to acquire a majority stake in Beltone. The timing of the announcement, however, raised the question: Did insiders start buying shares on 1 June? If so, that would be illegal insider trading.
Interestingly, on 13 June Abu-Dhabi-based Chimera Investments challenged WM by announcing that it sought to acquire the majority stake in Beltone held by Orascom Financial Holding and other investors for EGP 600 million.
Chimera Investments was declared winner on 4 August and acquired 56% of Beltone for EGP 385 million (EUR 20.1 million). That works out to EGP 1.485 per share - or 18% below the share’s closing price the day before. On 3 August, Beltone opened at EGP 1.713 and closed at EGP 1.764. One explanation for Beltone’s price surge late last week is that some investors believe Chimera could make an attractive bid for all of Beltone. We will keep a close eye on events.
There was heavy trading in the stock of Maroc Telecom (also known as Itissalalt Al-Maghrib - ISIN: MA0000011488) last week. More than 292,000 shares, or 3% of the total 879,095,340 shares outstanding, changed hands. The activity also accounted for 46.3% of all trading volume on the Casablanca Stock Exchange (CSE) last week. But even after all this, Maroc Telecom’s share price was down just 0.8% to MAD 121 (EUR 7.23).
The reason for the heavy trading in Maroc Telecom was not immediately clear. Recently, however, Morocco’s telecoms regulator ordered the company to pay MAD 2.45 billion (EUR 146 million) for anti-competitive behaviour. The regulator’s complaint against the company dates back to 2017 and concerns its alleged abuse of a monopoly on Morocco’s telecoms infrastructure. Maroc Telecom has appealed the regulator’s fine with the Court of Appeals in Rabat.
Our own view is that while the company could improve its earnings, earnings growth is quite weak. Analysts estimate that Maroc Telecom’s earnings per share (EPS) will total MAD 3.20 (EUR 0.19) in 2021. For the coming year, they are projecting that its EPS could return to 2021 levels, namely MAD 6.80 (EUR 0.41).
The Johannesburg Stock Exchange (JSE) has fined former Steinhoff CFO Ben la Grange ZAR 2 million (EUR 120,000). The JSE also disbarred him as a director of any listed company for ten years. La Grange was found to have processed a handwritten invoice for EUR 23.5 million given to him by the former CEO Markus Jooste in 2016, that the JSE found was fictitious.
The action against la Grange follows a separate fine on Steinhoff International (ISIN: NL0011375019) in 2020 that totalled ZAR 13.5 million (EUR 803,000). The JSE had punished Steinhoff for releasing dodgy financial information.
The latest fine on la Grange may satisfy shareholders in Steinhoff looking for justice. The South African retail group offers household goods, clothing, furniture and other consumer products in Europe, Africa, Australia, New Zealand and the US. But owing in large part to its legal troubles, Steinhoff’s share has not been a source of comfort for investors. Since January, it has shed 52% to ZAR 2.44 (EUR 0.15).
Steinhoff’s fortunes in the first half contrast with those late last year. Between the end of November 2021 and mid-January 2022, Steinhoff’s gained 185% to ZAR 5.54 (EUR 0.33). One key reason for the surge was the announcement that it would take its Texas-based subsidiary Mattress Firm Group public. But the IPO has yet to take place.