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AFRICA MACRO In an indication of the improved business environment st prevailing in Africa, South Africa is rated 1 of 183 countries in the ease of getting credit category in the 2012 World Bank Ease of Doing Business Survey, Rwanda, Zambia and Kenya are th th tied for 8 place, Namibia is 24 and in the category of investor th th protection, South Africa is ranked 10 , Mauritius is 13 , th Rwanda and Sierra Leone are tied for 29 and Botswana and th Ghana are tied for 46 place.

ANALYSIS AND STRATEGY

accounts for 80% of the total market capitalization in Africa. There are about 1,500 companies listed on African exchanges and South Africa accounts for about 27% of this total.

Many African countries have established “one stop shop” investment agencies and virtually all of the major African Investment Agencies have web sites that direct investors to potential opportunities, outline the rules and regulations regarding foreign investment including any foreign exchange controls or sectors not open to foreign investment and in many cases provide a link to download forms. There are also web sites for the Central Banks, the stock exchanges and the statistical offices, thus making it easy to follow economic and financial trends and developments. It has never been easier to find out the basic facts about investing in Africa. Stock Markets are becoming more Widespread Stock markets are proliferating throughout Africa and as a result, it is becoming easier to invest in shares as well as government and corporate bonds. There are 29 stock exchanges including one in Rwanda which opened this year. Seychelles plans to open an exchange either later this year or in 2012 and Angola has plans to open an exchange in 2012 (the opening though has been postponed several times since a 2006 target date). Most of the markets are shallow, lack liquidity, have few share listings and are highly concentrated with just a few issues accounting for the bulk of trading activity and market capitalization. But the same could have been said of many emerging markets such as Peru, Malaysia, Chile, India, Thailand and Indonesia twenty or thirty years ago. South Africa, Morocco, Egypt, Nigeria and Ghana have the largest stock market capitalization. A composite index of African stocks would have easily outperformed a similar index of stocks from the major OECD nations which have performed poorly since the end of 1999. The major indices of France, Germany, Japan, Spain, Switzerland and the US closed 2010 at lower levels than at the end of 1999. None of the major African indices however faltered and some of the indices produced returns that compare favorably with those of the major emerging markets of Latin America and Asia. Three markets; Mauritius, Tunisia and South Africa saw gains of 250% or more in US dollar terms, while for Botswana the figure was very close to 250%. South Africa has the deepest and most liquid stock market in Africa. In terms of market capitalization, the Johannesburg th stock exchange, which is the 16 largest in the world, Joab’s Technologies and Research, Natu Court Flat B.

In the FT Global 500 for 2011, which ranks companies by market capitalization as of the end of March, 2011, there were six South African companies. No other African nation had any listings. There have been several notable IPOs on African stock exchanges this year, which have helped to deepen and broaden trading activity. On October 7, the IPO for Tanzania Precision Air Service was begun with shares expected to be listed on the Dar es Salaam exchange on December 8. The offer price was Tsh475 (US$0.28) and the number of shares offered was 58,841,750 shares. The minimum application was 200 shares. Most of the proceeds from the IPO will go towards capital spending. Shares can be purchased through registered stock brokers and in any CRDB Bank or Stanbic Bank branches. Before the IPO, Kenya Airways owned 49% of the airline and Michael Shirima, the founder and chairman, owned 51%. After the IPO however, their holdings will be diluted to 34.2% and 34.6% respectively. The airline is the largest in Tanzania and is based in Dar es Salaam. It flies to Moroni, Comoros, Mombassa and Nairobi, Kenya, Johannesburg and Entebbe, Uganda. There are plans to extend the route structure to include the Democratic Republic of Congo and Angola. To further develop the stock market and to facilitate the economic and financial integration of East African, Gabriel Kitua, the CEO of the Dar es Saalam exchange, indicated on August 24 that steps will be taken to ease controls on the amount of shares foreigners can buy. Presently, 40% of the Page 17 of 104

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

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