In Namibia, Home Buyers Are Entering Bidding Wars for Scarce Housing -- Wall Street Journal

According to a recent report by the Wall Street Journal's Devon Maylie, Namibia, with a population of 2 million, ranked fourth globally in 2012 for the biggest housing price increases, after Hong Kong, Dubai and Brazil, according to South Africa-based First National Bank. Although price gains eased a bit in 2013, average prices still are double what they were six years ago. The rapid increase in property valuations is pricing many first-time buyers out of the market and increasing competition for the meager supply in the $100,000 to $300,000 bracket that is available. The average home price in Namibia today is $120,100, six times as high as the average price in 2000 of $18,800, according to the FNB data.
For more, click through this link to read Maylie's WSJ coverage in its entirety.

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A Giant Awakens: Inside Africa's Economic Upsurge

“When Kirinya drops into the iHub café to buy a latté, he pays his bill of 100 Kenyan shillings (€0.85 or $1.16) by text message. First he types in the café's telephone number and enters a PIN. Then he hits "send" and the transaction is complete.”

In roughly a decade, Africa has gone from being labeled "the hopeless continent" to enjoying an unprecedented boom. In a three-part series, SPIEGEL Online explores this transformation -- its drivers, winners and losers -- and asks if it can last.

Here are the facts beyond fiction:

1. No other continent has developed as rapidly in the last decade as Africa, where real economic growth was between 5 and 10 percent annually. In oil-rich countries, such as Angola, it was a possibly record-breaking 22.6 percent in 2007.
2. A World Bank study shows that 17 of the 50 national economies currently displaying the greatest economic progress are in Africa.
3. China the world's largest economy has overtaken the West to become Africa's most important trade partner. The volume of Sino-African trade amounted to nearly $200 billion last year.
4. Many countries have become better governed, and Africa as a whole is more peaceful and democratic than it once was.
5. At the same time, a revolution is taking place in the information and communications sector, as Africa connects itself to the world via modern data highways. Nowhere is the spread of the Internet as all-encompassing as it is between Cairo and Cape Town, and nowhere is mobile-phone use increasing as explosively. There are now 650 million African mobile-phone users -- more than in North America.
6. By 2050, at least 2 billion people will live in Africa, accounting for one quarter of the world's labor force.
7. Child mortality, illiteracy rates and AIDS infection rates are declining, and life expectancy has increased by 10 percent.

To access the SPIEGEL Online series, follow this link -- A Giant Awakens: Inside Africa's Economic Upsurge.

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Madiba Laid to Rest

Alexander Joe/ AFP/ Getty Images

From CNBC:

South Africans united in mourning for Nelson Mandela on Friday, but while some celebrated his remarkable life with dance and song, others fretted that the anti-apartheid hero's death would leave the nation vulnerable again to racial and social tensions. "We will spend the week mourning his passing. We will also spend it celebrating a life well lived," said South African President Jacob Zuma.

To read the article in its entirety, follow this link to the CNBC coverage. 

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More on the Political and Economic Implications of Mandela's Passing

Nelson Mandela, 1918 - 2013

Political and Economic Implications

Our thoughts on the political and economic implications of Nelson Mandela’s death on the South African economy are as follows:

On the Economic Impact

• Has been out of public life since middle of 2000’s
• This event has largely been foreseen for sometime
• He has not been contributing to SA public policy for a very long time
• There has been no impact on the stock market, in fact the market is up today – not related to the event.
• The South African economy continues to struggle – slow GDP growth (1.9% in 2013) and 7% Current Account deficit – (the economy continues to rely on foreign inflows to fund the CA deficit).
• The bad news has already been priced in the market – the Rand is down 22% versus the dollar in 2013.

On the Political Impact

• Mandela inherited high unemployment, poverty and inequality after centuries of apartheid – and the current ANC government continues to face similar challenges
• ANC government is failing to deliver services to the population and as a result there are constant strikes for ever increasing pay and wages
• Recently, there have been serious doubts raised about the competency of the government, with some reports questioning the integrity of many government officials
• South Africa will soon go through national and municipal elections on or around first quarter of next year, and its anticipated that the ANC will win, albeit with a shrinking majority relative to prior years
• Recently, some divisions within the ANC have surfaced – with indications that some groups may break away from the ANC coalition.  We don’t see strong evidence for an imminent split; however, there is a risk now that Mandela will no longer be there to exert his considerable influence on the outcome.

Finally – on the potential for violence or riots.

We see little risk for violence or riots as a result of Mandela’s passing.  Here is why –

• SA has a strong constitution that has been followed by the government
• SA has a robust financial system that was tested after apartheid ended in 1994
• The media is free and unrestrained -- there is no political or governmental interference
• In the early 1990’s, the country came close to a civil war – between the Inkatha Freedom Party, from Kwazulu Natal and the ANC – but since elections in 1994 the tensions have reduced.  In fact, the ANC has been winning elections in the Kwazulu Natal region with the majority of people voting for the ANC

As ever, we shall miss Madiba!  R.I.P!

Larry Seruma

Portfolio Manager

“It always seems impossible until it’s done.”

Nelson Mandela, 1918 - 2013

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CNBC: Will South African Politics Change After Mandela?

I spoke to CNBC last evening about the sad passing of Nelson Mandela, and the economic and political implications for South Africa.

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Mandela 1918 - 2013

I was interviewed late last evening by CNBC about Nelson Mandela's death -- what it  means for South Africa, and the rest of Africa.

I offered my two cents -- but it's tough to describe his legacy, his accomplishments -- he was a hero, courageous, patient, and strong. He was a mentor -- and the glue that united blacks and whites in South Africa. He was a model for all African leaders, all leaders everywhere, and his legacy will forever be felt. South Africa will continue with the democracy he founded, and the institutions he forged with his ability to bring people together during the reconciliation process.

Here at Nile Capital, we shall deeply miss Madiba!

( For the full interview and my comments, check back. We'll post it when available.)

Bloomberg: Porsche and Rolex Lead Luxury Invasion in Nigeria

Bloomberg reports that high-end luxury brands are establishing shops in Nigeria, looking to cater to the country's top spenders - "As Nigeria's economy grows -- 6 percent this year -- so does the wealth of some of it's citizens." Watch the video for the full story.

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Fitch: Sub-Saharan Africa Resilient to Fed Tapering; Sees Strong Growth Continuing

In its recently released Sub-Saharan Africa (SSA) Credit Overview, Fitch Ratings says that it expects average GDP growth for the 16 countries rated by the agency to rise above 5% in 2014, despite more subdued emerging market growth and less favorable commodity prices. The agency also does not expect Fed tapering to place significant pressure on SSA countries' domestic and external financing capacity.

Fitch expects SSA to continue benefiting from rising foreign direct investment (FDI), particularly in emergent oil and gas producers like Mozambique, Kenya and Uganda. Public infrastructure spending will trend upwards, as governments gain access to new sources of funding and on improved implementation capacity. Rising public sector wages in a number of countries, combined with improving access to credit, will support private sector consumption.

Follow this link to get the full story from FitchRatings.

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Google Invests in Uganda for Growth

Like the growing number of other multinational corporations Google is bullish on the future of Africa -- especially the sub-Saharan region. Recently Google announced plans to invest as much as $14 million in a fibre Metronet that will cover most of Uganda's largest city and capital, Kampala, home to an estimated 2.5 million people.
"The aim is to connect every building or base station ISPs operators want to get to, " says Kai Wulff, Google's Access Field Director.
Click through here to get the full story from AllAfrica.com.

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Marriott CEO: "Africa has significant untapped potential"

Bloomberg reported this week that Marriott International has agreed to buy the three brands and management business of Cape Town-based Protea Hospitality Management,which operates or franchises 116 hotels in South Africa and six other sub-Saharan countries. The deal will increase Marriott's room total on the continent to 23,000.
Follow this link to get the full story from Bloomberg.

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Porsche Aims to Enter Africa

Bloomberg.com reports today that as part of its growth strategy Porsche AG is looking to enter 15 new countries before 2020, mainly in Africa. Porsche's global sales chief Bernhard Maier said, "We're covering new markets where we have not been in yet"  Follow this link to Bloomberg to get the full story. 

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Kenya's Economy Seen as Resilient to Mall Attack in Nairobi

(Source: Bloomberg)

Security worries are nothing new in Kenya and so the country is unlikely to see long-term investors pull money out after the deadly attack on a Nairobi shopping mall. Click through this link for more from Reuters.
Several key points to keep in mind:
1) Recent elections were transparent, and cemented Kenya's political stability.
2) Tourism accounts for only 10% of Kenya's total GDP, and at this time no travel advisories have been issued.
3) The Kenyan market's reaction was a slight, approximately 30 basis point pullback.
4) The Kenyan shilling has remained stable (see chart above).

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John Deere Focuses on Africa for Growth

"Greater political and economic stability and a push by some nations for food self-sufficiency has made the continent more attractive, says Ganesh Jayaram, Deere vice president of agriculture and turf sales and marketing for Asia and Africa. Follow this link to get the full story from Bloomberg.

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More on Egypt

From ThinkAdvisor.com:

The volatile situation in Egypt is headline news and is changing rapidly with very little clarity on what the final outcome will be, and when it will be. And yet despite all that’s going on, the Egyptian stock market has remained almost eerily stable. While there has been some weakness, of course, “the damage hasn’t been that great,” said Larry Seruma, chief investment officer and managing principal of Nile Capital Management in New York, a firm that invests throughout the Middle East North Africa (MENA) region, Egypt included, “and the weakness has been far less than one would have expected.”

Click through to read the entire article - As Investors Wait on Egypt to Settle, Africa Holds Up.

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Upgrade Nigeria to Emerging Market? Downgrade Egypt to Frontier Market?

No?  (OK, maybe only dropping Egypt out of EM is more likely.) In any event, consider the following...

Nigeria has surpassed Egypt as the second largest stock market in Africa – at least by market capitalization.  The Nigeria Stock Exchange market capitalization now stands at $72 billion compared to $32 billion for Egypt, and the average trading volume is $40 million per day versus $15 million, respectively.  Now this is just the market data – but other metrics are also favorable for Nigeria relative to Egypt, for example, increasing political stability. For more on Egypt's current turmoil click through to read Egypt's Market Regression from BloombergBusinessweek.

Nile Capital Management

We Know Africa: From Cairo to Cape Town

For more information please call 646-367-2820