Fixed Income, Currency and Commodities

Transcription

1 Ecobank Middle Africa Guidebook 2013: Fixed Income, Currency and Commodities Translating Local African Knowledge into Performance. ecobank.com

2 : Currency Volatility (2009-) The front cover imagery illustrates the exchange rate volatility of Middle Africa currencies between The data clearly demonstrates that some currencies are more volatile than others Why? The strength of export revenues and import demand, the level of FX reserves, capital flows and capital account restrictions and economic growth are all contributory factors, but the key driver is the exchange rate regime, i.e. is it a fixed or floating system or a hybrid. For example, the Ghanaian authorities operate a floating exchange rate regime, which helps to explain the volatility of the Cedi relative to other currencies. Contrastingly, fixed exchange rate regimes or managed floats, such as that implemented in Nigeria, are much less volatile. The ability to maintain a fixed rate depends on the authorities holding sufficient FX reserves to defend their fixed rate if necessary. Nigeria, for example, currently has around USD47 bn of reserves, equivalent to the value of nearly 6 months of the country s imports. There are advantages and disadvantages to both types of regime. In some countries with floating regimes, currency risk and increased transaction costs have increased, in turn reducing the gains from international trade. Equally, with fixed regimes, if there is a sharp devaluation as FX reserves come under pressure, this can lead to major trading and investment losses. Ultimately, there is no right or wrong exchange rate regime. However, over the past decade, there has been a shift from intermediate exchange rate regimes (i.e. soft pegs) to fixed or floating regimes, as soft pegs are not viable in the long term and are more open to crises. Translating Local African Knowledge into Performance. Central Africa (XAF) Ghana (GHS) Zambia (ZMK) -0.5 Kenya (KES) (XOF) Nigeria (NGN)

3 Ecobank: Group at a glance Where we operate in Middle Africa Ecobank is a full-service bank focused on Middle Africa. It provides wholesale, retail, investment and transactional banking services to governments, financial institutions, multinationals, local companies, SMEs and individuals. The Group has 23,355 employees in 35 countries. Unrivalled pan-african network Ecobank is present in more countries in Africa than any other bank in the world. Ecobank currently is present in 32 countries across the continent, as highlighted in the map opposite. The Group also has a subsidiary in Paris and representative offices in Dubai and London. One Bank Ecobank operates as One Bank with common branding, standards, policies, processes and technology to provide a consistent and reliable customer experience across the entire network. At 31 December, Ecobank had a unique network of 1,226 branches, 1,681 ATMs and 4,259 POS machines, servicing over 9 million customers Diversified business mix Ecobank s mix of retail, wholesale and investment banking is diversified across geographies, customers and products to provide a sustainable platform for long-term growth and value creation. Sustainability Ecobank seeks to comply with international best practices in key areas such as business ethics, anti-money laundering and corporate governance. We also seek to factor social responsibility and sustainability into our business approach and to contribute to poverty alleviation and wealth creation. Investment story Incorporated in Lomé, Togo, Ecobank Transnational Incorporated (ETI) is the parent company of the Ecobank Group. ETI is listed on the BRVM in Côte d Ivoire, the Ghana Stock Exchange and the Nigeria Stock Exchange and has over 585,000 shareholders.

4 Key Not yet present in Ethiopia Not yet present in Angola and Mozambique 01. Benin 02. Burkina Faso 06. Mali 07. Niger Cape Verde 04. Côte d Ivoire 08. Senegal 09. Togo 05. Guinea Bissau Nigeria / Rest of 10. Ghana 11. Guinea 14. Sierra Leone 15. The Gambia Liberia 13. Nigeria Central Africa 16. Cameroon 17. Central African Republic 18. Chad 19. Congo 20. Equatorial Guinea 21. Gabon 22. São Tomé and Príncipe 34 East Africa 23. Burundi 24. Ethiopia 27. Tanzania 28. Uganda 25. Kenya 26. Rwanda Southern Africa 29. Angola 30. Democratic Republic of Congo 33. Zambia 34. Zimbabwe 31. Malawi 32. Mozambique

5 Contents Foreword by Albert Essien, Deputy Chief Executive Officer, Group Executive Director, Corporate & Investment Bank, Ecobank Group by Paul-Harry Aithnard, Group Head, Research Ecobank s FICC Credentials Ecobank: Group at a glance Page 3 Page 4 Page 5 Page 6 regional economic overview Banking and financial sector overview Hydrocarbons overview Soft commodity overview Page 8 Page 26 Page 32 Page 38 : Country Profiles Nigeria / Rest of : Country Profiles Central Africa: Country Profiles East Africa: Country Profiles Southern Africa: Country Profiles Benin Burkina Faso Cape Verde Côte d Ivoire Guinea-Bissau Ghana Guinea Liberia Nigeria Cameroon Central African Republic Chad Congo, Republic of Equatorial Guinea Burundi Ethiopia Kenya Rwanda Angola Democratic Republic of Congo Malawi Mozambique Page 54 Page 60 Page 66 Page 70 Page 76 Page 108 Page 116 Page 122 Page 126 Page 148 Page 154 Page 158 Page 164 Page 170 Page 188 Page 194 Page 198 Page 206 Page 226 Page 232 Page 238 Page 244 Mali Niger Senegal Togo Sierra Leone The Gambia Gabon São Tomé and Príncipe Tanzania Uganda Zambia Zimbabwe Page 82 Page 88 Page 94 Page 100 Page 134 Page 140 Page 176 Page 182 Page 212 Page 218 Page 250 Page 258 Southern Africa East Africa Central Africa Nigeria / Rest of 1

6 Foreword Welcome to this second edition of Ecobank s Fixed Income, Currency and Commodities (FICC) Guidebook. It reflects our commitment to providing our clients with an essential reference document to assist in monitoring key developments in debt markets, exchange rates, macroeconomic performance, and commodities across the 30 plus African countries that constitute our Middle African footprint. Middle Africa represents a market of over 910 million people with a combined GDP of nearly USD1.3 trillion. It remains one of the fastest growing regions in the world, thanks to macroeconomic policy improvements, a stronger business climate brought about by ongoing reform, and attractive demographics, with an emerging middle class whose disposable income is increasing each year. Yet it tends to be a region that is under-researched and, as a result, misunderstood or overlooked by international institutional investors. Having seen first-hand the development of Africa s financial markets and investment opportunities for more than 30 years, I understand the complexities of investing in Africa and recognize the importance of having access to up-to-date and comprehensive information when making investment decisions. Thanks to the combination of the Ecobank Research platform and a seamless retail, corporate and investment banking presence across Middle Africa, we believe that we are able to gather information that is often difficult to access and present it in a clear and concise manner. In turn, our expertise and local knowledge helps to support our clients business operations, underpinning not only their growth but also that of Middle Africa. Whether you are relatively new to the continent or are an experienced investor, I would encourage you to consider Ecobank as a key strategic partner as you look to expand and diversify your African businesses and portfolios. I strongly believe that Ecobank s pan-african reach and local knowledge can afford you a competitive edge. Albert Essien Deputy Chief Executive Officer Group Executive Director, Corporate & Investment Bank Ecobank Group Southern Africa East Africa Central Africa Nigeria / Rest of 3

7 Nigeria / Rest of Central Africa East Africa Southern Africa 2013 is proving to be another year of strong growth in Middle Africa, which we define as the region between the Maghreb and South Africa, despite external headwinds from the global economy. The Eurozone crisis is slowly being resolved and the US recovery appears more resilient than previously thought. Meanwhile, growth in Asia remains robust, notwithstanding a recent slowdown in China. Despite these ongoing challenges, Africa continues to grow, thanks to numerous attractive investment opportunities and strong domestic demand. Moreover, Middle Africa is growing in importance for global investors searching for yield; thanks to our pan-african footprint, Ecobank can provide this wider, international audience with unique investment perspectives. This under-researched region is the fastest growing part of Africa, including many of the world s fastest growing economies in , according to the IMF. Middle Africa s macroeconomic fundamentals have improved significantly, thanks partly to the bull run in commodities, but also to ongoing policy reform. On average, public debt levels remain moderate at around 40% of GDP (down from an average of 64% in 2007, before the global crisis). Inflation has fallen significantly from over 16% in 2008 to an average of 6%, affording greater currency stability and more flexible exchange rate regimes. Domestic fixed income markets have expanded, with domestic public debt issuances, now in excess of USD20 billion, exceeding foreign and external debt. The yield curve in several countries has extended to 20 years and, in one case, 30 years, and market infrastructure has been reinforced. The investor base has also widened, with increased appetite for these markets from local and international investors. Nevertheless, there remain risks to Middle Africa s outlook. A renewed Eurozone crisis would have a major impact on the continent s prospects, due to Africa s dependence on European bank credit and trade. The policy options of African governments are limited by reduced fiscal space, inflationary pressures from higher fuel and food prices and the limited effect of monetary policy on some African financial sectors. More importantly, weaker global investor confidence would affect Africa s local currencies and markets, especially in those countries where foreign portfolio inflows add to local market liquidity. In general, however, the continent s exposure to European banking risks has been reduced significantly and the growing depth of domestic financial markets is reducing its dependence on European funding. Our bullish stance is not solely predicated on Africa s growth story. There is a structural trend the global search for yield which will underpin Africa s performance, despite challenging market conditions. As African capital markets deepen and become more sophisticated, institutional asset allocations will diversify to include fixed income markets, following the model of other frontier markets. The fixed income asset class in Africa is becoming increasingly attractive as liquidity improves and local credit markets attract new issuers. Indeed, Ecobank launched the first ever African domestic bond index, the Ecobank MABI (Middle Africa Bond Index), in late 2011 to provide a much needed benchmark for Middle Africa s fixed income markets We hope you will enjoy using our second edition of the Middle Africa FICC Guidebook and that it will encourage you to investigate Ecobank s wider research, corporate and investment banking capabilities further. For example, our online research portal ( provides easy access to up to date, insightful analyses of Middle Africa s FICC markets from Ecobank s award winning research team. Successful investing in Africa requires patience, but the rewards can be very high. As this is a continent of 55 very diverse countries at varying stages of economic development, it is very important to understand local regulations, business practices and culture. Ecobank is uniquely positioned to inform your investment decisions by providing such local knowledge. We look forward to working with you in the future. Paul-Harry Aithnard Group Head of Research 4

8 Ecobank s FICC Credentials Ecobank s Corporate and Investment Banking division is responsible for the Group s Fixed Income, Currencies, and Commodities-related business across Middle Africa. We offer African and international clients an unrivaled capability to trade currencies and sovereign and corporate fixed income securities, together with a wide variety of soft commodity financing instruments in these markets. Ecobank s in-country Treasury teams undertake fixed income and currency transactions via a one-stop shop facility to provide a seamless service. Thanks to our thorough knowledge of Middle African markets, economies, and policies, Ecobank is able to meet any requests, be they local, regional, or global, from initial enquiries to completing trades for a wide range of products. We understand local business customs, regulations and country-specific risks better than any other bank in Africa because we operate on the ground each and every day. This enables us to support our clients in developing their businesses across Middle Africa. Our clients receive a dedicated service which, based on a thorough understanding of their business, provides tailored options and solutions. The country-based client service team is supported by our Paris-based global treasury business and our team of economic, financial, and commodity specialists. Clients can also access Ecobank s wide range of corporate and investment banking services via our team of in-house corporate advisory specialists and our network of correspondent banks. Please direct any questions or requests to the Ecobank country contacts provided below or to the affiliates using their contact details as provided in the country pages of this guidebook. Alternatively, please visit for further information regarding the Ecobank Group. Key Contacts Group Head, Treasury Aziz Dia adia@ecobank.com Tel: Tel: Regional Treasurer, International Olivier Carrolaggi ocarrolaggi@ecobank.com Tel: Tel: Head of Currencies and African Assets Distribution Vicente Pons vpons@ecobank.com Tel: Acting Group Head, Investment Banking Ikenna Onyejiaka ionyejiaka@ecobank.com Tel: Tel: Group Head of Research Paul-Harry Aithnard phaithnard@ecobank.com Tel: Tel: Group Head, Financial Institutions and International Organizations Sebastian Ashong-Katai sashong-katai@ecobank.com Tel: / 6431 Tel: / Head of Economic Research Angus Downie adownie@ecobank.com Tel: Tel: Southern Africa East Africa Central Africa Nigeria / Rest of 5

9 Ecobank: Group at a glance Central Africa East Africa Southern Africa Nigeria / Rest of Our global network Ecobank s international operations are in six countries, running six offices, with over 70 employees that look after corporate and investment banking clients. Very strong revenue and profit growth reflects the relatively new operations, particularly in London, that opened in early The importance of the international operations lies in their ability to channel investors interest and finances towards Middle Africa and the development of its people and resources. Our representative offices are located in: A Dubai B Johannesburg C London D Luanda E Paris F Beijing G New York* * Plans to open representative office in the near future. Our key figures as at 31 December 18,564 Ecobank employees 9.6 mn Ecobank customers F 20 bn Total assets US$ 2.2 bn Total equity USD C E 1,226 Branches and offices 1,681 Ecobank ATMs D B A Our business segments Corporate and Investment Bank We provide financial solutions to global, regional, and public corporates, financial institutions, and international organisations. Products and services include pan-african lending, trade services, cash management, internet banking, and value-chain finance. We also provide treasury services, corporate finance, investment banking, and securities and asset management. G Domestic Bank We provide a full range of convenient, accessible, and reliable financial products and services to more than 9 million individuals, small businesses, local corporates, and public sector organizations, through our extensive network of 1,226 branches and offices, 1,681 ATMs, and 4,259 points of sale. 6

10 MOROCCO TUNISIA ALGERIA LIBYA WESTERN S AHARA EGYPT CAPE VERDE THE GAMBIA GUINEA-BISSAU SENEGAL MAURITANIA GUINEA MALI BURKINA FASO BENIN NIGER NIGERIA CHAD SUDAN ERITREA DJIBOUTI SIERRA LEONE CÔTE D IVOIRE G HANA CENTRAL AFRICAN REPUBLIC SOUTH SUDAN ETHIOPIA CAMEROON EQUATORIAL GUINEA SÃO TOMÉ & PRÍNCIPE CONGO GABON D.R. CONGO RWANDA BURUNDI UGANDA KENYA SOMALIA 9 Countries Benin Burkina Faso Côte d Ivoire Cape Verde Mali Niger Senegal Togo Guinea Bissau 246 Branches 2,672 Employees Rest of 5 Countries Ghana Guinea Liberia Sierra Leone The Gambia 147 Branches 2,408 Employees 1 Country 610 Branches 9,993 Employees Nigeria 7 Countries Cameroon Chad Central African Republic São Tomé Rep. of Congo Gabon Equatorial Guinea 76 Branches 989 Employees Central Africa 5 Countries Rwanda Kenya Burundi Uganda Tanzania 76 Branches 1,220 Employees ANGOLA NAMIBIA East Africa SOUTH AFRICA BOTSWANA ZAMBIA SWAZILAND LESOTHO ZIMBABWE 5 Countries D.R. Congo Malawi Zambia Zimbabwe Angola 40 Branches Southern Africa 515 Employees TANZANIA MOZAMBIQUE MADAGASCAR 5 Countries France UK Dubai South Africa USA China Branches 74 Employees International Southern Africa East Africa Central Africa Nigeria / Rest of The number of employees for the Group is inclusive of employees of ETI, EDC, and eprocess, which are not represented in our geographic cluster distribution. The number of branches for the Group is inclusive of a number of offices that are not part of the numbers for the clusters. The Group total assets and revenues are made up of numbers from our geographic clusters, other entities not part of our cluster grouping, and the impact of consolidation adjustments. 7

11 regional economic overview Nigeria / Rest of Central Africa East Africa Southern Africa Global Economy The global economy is beginning to recover after the slowdown in, which was largely caused by adverse developments in the eurozone and the US fiscal/debt crisis. However, while global economic prospects appear to be improving in 2013, there is a concern that a pattern first seen in 2010 may be repeating: growth in developed economies starts each year on a relatively strong, upward trend only for it to slow significantly by Q2 onwards as a result of pressures in developed economies. It is too early to confirm whether or not this trend will be repeated, but what appears clear is that the recovery in many developed economies is likely to remain weak through end 2013, although the likely tapering of quantitative easing in the USA starting in the latter part of 2013 signals a stronger recovery in the USA than previously predicted. Global GDP growth is likely to accelerate by 3% in 2013 with a slight pickup to 4% in Following a weak start to 2013, activity in large developed economies is expected to increase gradually, with the USA at the forefront despite the fiscal and debt problems it continues to face. Despite this somewhat uncertain start, policymakers in developed economies successfully tackled two major problems in and early 2013, preventing the eurozone from breaking up, and reducing a sharp fiscal contraction in the USA caused by sequestration linked to the fiscal cliff. In contrast, growth in many emerging markets and less developed economies remains relatively strong, supported by policy easing that has boosted internal demand. Caution is necessary, and this could require monetary policy tightening to prevent asset bubbles from forming. A weak but steady improvement looks likely for the global economy: however, ongoing pressures remain evident and new risks have emerged. There are risks stemming from what happens in the eurozone (for example, adjustment fatigue, insufficient reform, and prolonged stagnation) and from how the USA tackles its large fiscal deficit and high level of debt. Meanwhile, Japan recently adopted more expansionary macroeconomic policies in response to its long-standing economic malaise. However, if monetary easing is mishandled, it could disrupt global trade and lead to currency wars. Faced with these challenges, developed economies will probably maintain a gradual but sustained fiscal adjustment that supports growth along with a continuation of accommodative monetary policy. 8

12 regional economic overview Sub-Saharan African Economy Sub-Saharan Africa (SSA) continues to withstand most of the effects of the global crisis and is expected to remain largely insulated from adverse global economic developments in the remainder of 2013 and beyond. Strong real growth at some of the highest levels in the world reflects various factors: improved weather prospects, robust domestic demand, strong population growth, ongoing demand for exports (particularly from Asia), and high global commodity prices along with strengthening macroeconomic policies, capital markets, and infrastructure. Although nearly all countries expanded in, some were adversely affected by weakness in the eurozone. Currency pegs to the euro and/or strong trade links to Europe highlight some of the direct links that will remain a major concern for the continent in Moreover, weak global growth is likely to moderate growth in Middle Africa s export sector, which in turn could increase pressure on some currencies following relatively strong depreciation in. Inflation slowed in, particularly in eastern Africa, largely due to stabilizing global food and energy prices. Tighter monetary policies helped slow inflation in early 2013 although prices rises have recently strengthened. Nonetheless, inflation should remain somewhat moderate under the assumption that there will be no oil or other commodity price shocks. Macroeconomic policies vary between countries, but many were generally accommodative for most of However, strong growth in many countries should help rebuild support for future policy interventions. The business operating environment in many countries in SSA has improved over recent years. Although there has been some slippage, governments recognize the benefits of strengthening their investment climates, which is something that in SSA has underpinned many countries improved scores in global competitiveness rankings. Meanwhile, most Middle African banking sectors remain largely insulated from global financial strains owing to limited levels of global financial integration (bar the trade channel). However, improvements in portfolio quality, liquidity, and revenues would be welcome. There are major risks in the outlook due to global uncertainties. Sustained financial pressures in the eurozone could slow growth in sub Saharan Africa in the remainder of 2013 with an adverse impact on individual countries depending on the importance of direct links to Europe. Another oil price shock could drive inflation up, cut growth, and strain fiscal and external balances in oil-importing countries. Southern Africa East Africa Central Africa Nigeria / Rest of 9

13 regional economic overview Africa in a Global Context: Key Indicators Middle Africa continues to grow strongly despite ongoing weakness in the global economy. Strong growth reflects robust domestic demand and a buoyant demand for exports in emerging markets (particularly Asia). Although sub-saharan Africa (SSA) accounts for a small share of global GDP, resilient growth over recent years has seen its share increase steadily. Moreover, strong population growth offers many opportunities to investors, which in turn will indirectly support increased exports and help underpin higher increases in FDI over coming years. Sub-Saharan Africa s share of global GDP SSA s share of global GDP is small compared with other regions. However, it remains one of the fastest expanding regions in the world in real terms. This is all the more interesting given investors sustained weak outlook for global growth in, some of which has carried over into 2013 as a result of the US fiscal/debt crisis and the ongoing crisis in the eurozone. Middle Africa s share of global GDP will rise in 2013 (and beyond) as its economies continue to grow robustly and the growth of developed economies stagnates or contracts over the short-term. Global GDP (2013e) Sources: IMF, WEO Africa s share of global GDP (USD mn) Sources: IMF, WEO Nigeria / Rest of 7% 4% 2% 32% Europe North America East Asia South America Middle East and North Africa Sub-Saharan Africa Europe North America East Asia South America Middle East Sub-Saharan Africa 25% Central Africa East Africa Southern Africa 30% Sub-Saharan Africa s share of global exports Highlighting the continent s dynamism, growth in the share of global exports has also accelerated sharply in recent years, and continued progress in infrastructure and policy improvements, will improve the business environment and make Middle Africa a more attractive location for investment. This in turn will drive productivity, much of which will be in export sectors. Sub-Saharan Africa s share of global population Population growth remains strong, which represents attractive opportunities for many firms looking to expand in Middle Africa s growing markets. Opportunities will increase across income brackets: at the low end, the huge number of consumers creates good prospects for providers of mass-market goods and services. Meanwhile, at higher income levels, sustained growth in the middle class, which remains relatively small, offers the potential to service these growing markets with more sophisticated products and advice e 10

14 regional economic overview Africa s share of global exports (%) Source: World Bank Europe North America Developing Asia South America Middle East and North Africa Sub-Saharan Africa Others Africa s share of global population (mn) Sources: IMF, WEO Europe North America East Asia South America Middle East Sub-Saharan Africa f f Sub-Saharan Africa s share of global FDI Hydrocarbons continue to represent the main sector attracting foreign direct investment (FDI) into Africa (excluding South Africa), but manufacturing, financial services, and telecoms are all growing in importance. The oil and gas sector will remain of great interest to oil majors because of investment opportunities that exist not only in countries that are established producers (Angola, Nigeria, and Gabon for example), but also for new producers (Ghana and Mozambique), and countries that offer the prospect of good returns (such as Kenya, Uganda, and Sierra Leone). Meanwhile, textiles, foodstuffs, and consumer goods are some of the growth areas to be exploited as are financial services, given Middle Africa s huge unbanked and underbanked population. Telecoms has seen strong growth in recent years, but the development of mobile banking and other telecom-based consumer services such as call-centers suggests there will be increased investment ahead as returns remain robust. Overall, FDI is likely to increase as investors seek to take advantage of these and other opportunities that will serve consumers in Middle Africa as well as those in Asia and developed economies. Africa s share of global FDI inflows (%) Source: World Bank f Europe North America Developing Asia South America Middle East and North Africa Sub-Saharan Africa Others Regional GDP (2013e) 35% 10% 7% 18% 7% 19% 4% Sources: IMF, WEO CEMAC UEMOA Nigeria Rest of West Africa SADC South Africa East Africa Southern Africa East Africa Central Africa Nigeria / Rest of 11

15 regional economic overview Nigeria / Rest of Central Africa East Africa Southern Africa Africa in a : Key Indicators Business climate The business operating environment in Middle Africa has improved over recent years in many countries. Although there has been some slippage, governments recognize the benefits of improving their investment and business climates, and this has underpinned many sub-saharan African countries improved scores in global competitiveness rankings. Of particular note is the progress made in improving infrastructure, such as power infrastructure, road networks, and customs efficiency, although progress comes from a low base and further improvements would be welcome. Meanwhile, as scores have improved, so too has economic performance: real GDP growth remains at some of the highest levels in the world, external sector performance has benefited from high global commodity prices, and inflation has recently started to fall, although some currencies have weakened owing to a combination of loose fiscal policies, external sector pressures, and economic shocks. World Bank/IFC Doing Business Recent trends indicate that governments in Middle Africa have increased their efforts to reform regulatory frameworks, particularly in the areas of launching a business, obtaining licenses, and registering properties. However, in many countries across Middle Africa, the private sector continues to struggle to conduct business owing to the poor quality of transport infrastructure and frequent power outages, both of which sustains the high cost of doing business in the region. Nonetheless, most governments realize the benefits to be gained from opening up their economies and improving the operating environment, such as higher tax revenues, improved standards of living, and greater access to capital. World Economic Forum Global Competitiveness Report In the WEF s most recent GCR, the majority of African countries continue to rank poorly in terms of global competitiveness, reflecting major challenges in the region. This includes infrastructure deficiencies, weak institutional capacity, labor market rigidities, weak property rights, poor access to finance, and the burden of customs procedures (although these are improving). However, governments realize the magnitude of these problems and are increasing their efforts to improve road, port, and power infrastructure. While improvements to infrastructure continue to be made, with further investments planned by multilateral and bilateral donors as well as the private sector, a huge workload remains to be undertaken and tens of billions of dollars in investments are required. World Bank/IFC Ease of doing business rankings 2013 (1=Best, 185=Worst) Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Comoros Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Mali Liberia Madagascar Malawi Mauritania Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa Source: IFC Doing Business 2013 Sudan Swaziland Tanzania Togo Uganda Zambia Zimbabwe 12

16 regional economic overview WEF Global competitiveness ranking Source: WEF Global Competitiveness Report -13 (1=Best, 142=Worst) Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Chad Côte d'ivoire Ethiopia Gambia, The Ghana Guinea Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Nigeria Rwanda Senegal Seychelles Sierra Leone South Africa Swaziland Tanzania Uganda Zambia Zimbabwe Business competitiveness ranking (select countries) Sources: IFC Doing Business 2013, WEF Global Competitiveness Report Better Better World Economic Forum Global Competitiveness Report -13 World Bank/IFC Doing Business 2013 WEF GCR IFC DB South Africa 1 South Africa 1 Zambia 2 Ghana 2 Ghana 3 Zambia 3 Kenya 4 Uganda 4 Cameroon 5 Kenya 5 Nigeria 6 Ethiopia 6 Senegal 7 Nigeria 7 Tanzania 8 Tanzania 8 Ethiopia 9 Mozambique 9 Uganda 10 Cameroon 10 Côte d Ivoire 11 Senegal 11 Mozambique 12 Angola 12 Angola 13 Côte d Ivoire 13 1 = Best; 142 = Worst 1 = Best; 185 = Worst Southern Africa East Africa Central Africa Nigeria / Rest of 13

17 regional economic overview Nigeria / Rest of National Accounts Market size Nigeria dominates the continent (excluding South Africa) and accounts for nearly one-third of sub-saharan GDP owing to the size of its population, which drives domestic demand, and its wealth of natural resources that provide high levels of fiscal and export revenues (GDP is likely to increase significantly following the rebasing of national accounts that appears likely to take place in 2014). After Nigeria, Angola is the next largest economy an economy which is based mainly on the production of hydrocarbons and minerals. There are several medium-sized economies that are relatively diversified, given limited or no natural resources: they are based on agriculture/the agro-industry, the exploitation of some natural resources, and relatively developed manufacturing and services sectors, (Côte d Ivoire, Ethiopia, Ghana, and Kenya, for instance). Apart from these main countries, most economies in Middle Africa are relatively small and reliant on one or two main exports (usually agricultural). Real GDP growth Several countries continued to expand strongly at over 8% in real terms in, including Côte d Ivoire, Ghana, Liberia, Niger, and Sierra Leone. Côte d Ivoire s expansion reflected the economic rebound following the end of conflict, while growth in Ghana, Liberia, Niger, and Sierra Leone mostly reflected the development of natural resources. Outside these high-growth economies, most countries in Middle Africa continue to expand at around 5% in real terms, which is good given ongoing global weakness and uncertainty. However, real growth rates in the high single digits are required in many countries to lift vast sections of their populations out of poverty as well as to provide employment to the new entrants to the labor markets of each country. Real GDP growth (%) Source: IMF e Central Africa East Africa Southern Africa Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Comoros Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa Swaziland Tanzania Togo Uganda Zambia Zimbabwe 14

18 regional economic overview Economic structure Agriculture still accounts for a substantial part of GDP in most countries, although manufacturing and services continue to grow in importance as countries develop. Agriculture in Middle Africa is mainly based on subsistence production, as is the case in Malawi, but commercial output remains a large, growing, and important sub-sector as it is for example in Ghana. Industrial activity generally remains constrained by weak power supply and infrastructure; however, countries like Kenya show what can be achieved despite infrastructure deficiencies. Services such as banking and telecoms are reasonably developed in most countries. However, while telecom coverage is widespread across the continent, most countries still display significantly high unbanked/underbanked levels. Economic structure, (% share of agriculture, industry, services) Source: World Bank 100 Services Industry Agriculture Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa Tanzania Uganda Zambia Zimbabwe Southern Africa East Africa Central Africa Nigeria / Rest of 15

19 regional economic overview External Sector Main exports and trade partners Exports vary across Middle Africa, but many are based on natural resources like hydrocarbons, minerals, and metals. Some countries produce these commodities for export, reflecting the high level of natural resources on the continent. Agriculture, horticulture, floriculture, and other crops/grains also account for a large share of exports in many countries. Again, with large tracts of fertile land in many Middle African countries, production of food and other crops provides the base for a strong level of exports. Middle Africa s trade partners are located around the world. Traditional export markets are in Europe (supported by the EU s Everything But Arms trade agreement with African, Caribbean, and Pacific (ACP) states); more recent export markets range from the USA (for hydrocarbons, textiles, and other goods under the African Growth and Opportunity (AGOA) trade agreement) to Asia and now Latin America. Exports of goods and services, 2013e (% of GDP) Source: IMF Nigeria / Rest of 20 0 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Comoros Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa South Sudan, Rep. Swaziland Tanzania Togo Uganda Zambia Zimbabwe Central Africa East Africa Southern Africa Imports of goods and services, 2013e (% of GDP) Source: IMF Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Comoros Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa South Sudan, Rep. Swaziland Tanzania Togo Uganda Zambia Zimbabwe 16

20 regional economic overview Main exports and trade partners Country Main exports Main export partners Main import partners Angola Oil, diamonds Portugal, China, US China, US, Brazil Benin Cotton, cashew, re-exports Nigeria, Côte d Ivoire France, Nigeria Botswana Nickel, copper, beef, tourism EU, South Africa South Africa, EU, US Burkina Faso Gold, cotton, shea butter Singapore, China, Ghana France, Togo, South Africa Burundi Tea, coffee, sugar UK, Germany, Benelux Benelux, France, Germany Cameroon Oil, timber, cocoa EU, CEMAC, China France, Nigeria, Italy Cape Verde Re-exports, fish, clothing, tourism Spain, Portugal, France Portugal, Benelux, Spain Central African Rep. Timber, diamonds, cotton Benelux, China, France France, US, Cameroon Chad Oil, cotton, livestock US, Nigeria, France US, France, Cameroon Comoros Vanilla, cloves, scent Turkey, France, Singapore France, UAE, South Africa Congo, Dem. Rep. Copper, cobalt, minerals EU, Japan, South Africa EU, China, South Africa Congo, Rep. Oil, timber, minerals US, China France, China, Benelux Côte d Ivoire Cocoa, coffee, oil Germany, Nigeria, Benelux Nigeria, France, China Equatorial Guinea Oil, timber US, Spain, China US, Spain, China Eritrea Livestock, animal products Saudi Arabia, Yemen, Italy UAE, Saudi Arabia, Italy Ethiopia Coffee, textiles, livestock Saudi Arabia, Italy, US, China Djibouti, Switzerland Gabon Oil, timber, manganese US, China, EU France, US, China Gambia, The Groundnuts, fish, tourism India, France, China China, Senegal, Côte d Ivoire Ghana Oil, cocoa, timber US, UK, Benelux Nigeria, China, Côte d Ivoire Guinea-Bissau Fish, cashews, groundnuts India, Nigeria, Pakistan Portugal, Senegal, France Kenya Tea, coffee, horticulture, tourism UK, Netherlands, Uganda UAE, China, India Liberia Rubber, diamonds, iron ore India, US, Poland South Korea, Singapore, Japan Madagascar Vanilla, tourism, cloves, clothing France, US, Germany France, China, Iran Malawi Tobacco, tea, sugar US, UK, South Africa South Africa, China, India Mali Cotton, gold, livestock France, Switzerland, Côte d Ivoire, Senegal, China Côte d'ivoire Mauritius Financial services, clothing, tuna EU, UK, India India, France, South Africa Mozambique Aluminium, minerals, sugar Belgium, South Africa, Zimbabwe South Africa, Netherlands, Portugal Namibia Diamonds, uranium, zinc, copper EU, US, Canada China, India, South Africa Niger Uranium, livestock, gold France, Japan, US China, France, US Nigeria Oil, cocoa US, EU, India EU, US, China Rwanda Tea, coffee, coltan Kenya, DRC, China Kenya, Uganda, UAE São Tomé and Príncipe Cocoa, copra, palm kernels Portugal, Netherlands, Spain Portugal, France, UK Senegal Peanuts, phosphates, tourism Mali, India, The Gambia France, UK, China Seychelles Tourism, fish, cinnamon UK, France, Mauritius South Africa, China, France Sierra Leone Diamonds, rutile, bauxite Belgium, US, Netherlands South Africa, China, US South Africa Metals & minerals, maize, China, US, Japan, UK China, Germany, US wine, cars Swaziland Sugar, fruits, cotton South Africa, EU, Mozambique South Africa, China, EU Tanzania Coffee, cotton, tea, gold UK, Germany, India UK, Germany, Japan Togo Phosphates, cocoa, coffee France, Burkina Faso, Ghana, France, Germany Netherlands Uganda Coffee, tea, fish South Sudan, Kenya, UK Kenya, UAE, China Zambia Copper, cobalt, lead, zinc Switzerland, China, Pakistan South Africa, China, DRC Zimbabwe Tobacco, tea DRC, South Africa, Botswana China, Italy, Netherlands Source: Ecobank Southern Africa East Africa Central Africa Nigeria / Rest of 17

21 regional economic overview Current account Most countries in SSA are import-dependent for many goods and services, particularly refined petroleum products. With a limited array of exports, the current accounts in many countries remain locked into a structural deficit. Producers of large amounts of hydrocarbons (such as Nigeria, Angola, and to a lesser degree Gabon and the Republic of Congo) have generally maintained current account surpluses, reflecting recent high oil prices and despite fluctuating production levels. In most cases, non-oil producers record current account deficits because of the high costs associated with refined petroleum product imports despite cyclical high export levels. Current account (% GDP including grants) 15 Source: IMF EAC SADC CEMAC ECOWAS Nigeria / Rest of Central Africa East Africa Southern Africa -12 FX reserves e Faced with persistent current account deficits, drawing down foreign reserves has been one way many countries have maintained balance of payments equilibrium. However, owing to sustained strong import demand, many countries (particularly non-oil producers) struggle to raise their levels of foreign reserves from one year to the next. FDI and portfolio inflows remain largely directed towards countries that have respectively attractive resource and capital market investment opportunities, which helps boost reserves in those countries. FX reserves (months of import cover of goods and services equivalent) e Source: IMF EAC SADC CEMAC ECOWAS 18

22 regional economic overview Inward FDI Southern Africa (dominated by South Africa) accounts for the largest share of FDI inflows to the continent owing to the strength of its manufacturing and mining base. While the hydrocarbons sectors in West and Central Africa are also important FDI destinations, East Africa remains a recipient of small FDI inflows reflecting the smaller costs linked to manufacturing compared to resource exploitation. There is a large potential for inward FDI given Middle Africa s growing population, rising levels of disposable income, and increasing demand for Africa s exports (particularly from fast-growing emerging markets such as in Asia). Inward FDI (USD bn) 20 Sources: UNCTAD, WIR EAC SADC CEMAC ECOWAS f Remittances Remittances are an important form of capital inflow to all countries in Middle Africa. Remittances come from both outside and within Africa. dominates inflows of remittances owing to the large size of its aggregate population and the increased mobility of its people compared with those living in other regions of the continent. Ease of movement between countries is also a contributing factor. East Africa benefits from remittances sent from a large population living outside Africa, but its intra Africa remittances are relatively small when compared with those of. Remittances (USD bn) f Source: World Bank EAC SADC CEMAC ECOWAS (rhs) Southern Africa East Africa Central Africa Nigeria / Rest of 19

23 regional economic overview External debt to official creditors The average stock of external debt owed to official creditors is currently averages less than 25% of GDP, reflecting recent HIPC and MDRI debt relief initiatives (some of which are still ongoing). However, several countries have sustained high levels of external debt (Cape Verde, Guinea, São Tomé and Príncipe, and Zimbabwe), while others (such as Ghana, Malawi, Mali, Niger, Senegal, and Uganda), have seen their debt stocks rise despite earlier debt relief and strong nominal GDP growth, which is a cause for concern given the uncertainty of export revenues caused by the weak global economy. Nonetheless, Middle Africa s indebtedness is significantly lower than that of some European countries, such as Greece, Spain, Italy, and France. External debt to official creditors, 2013e (% GDP) Source: IMF Nigeria / Rest of Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa Tanzania Togo Uganda Zambia Zimbabwe Central Africa East Africa Southern Africa External debt, e (USD bn) Source: World Bank Excluding South Africa Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Chad Congo, D.R. Congo, Rep. Côte d'ivoire Equ. Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone Tanzania Togo Uganda Zambia Zimbabwe 20

24 regional economic overview External debt service The average external debt service ratio is around 4% of exports of goods and services, which is reasonably low. As external debt stocks have diminished (in general) and export revenues have remained reasonably strong, the ratio has fallen for many countries over recent years. However, with growth in global GDP still weak and the outlook remaining uncertain, export revenues are now less robust than in pre-crisis years, highlighting the pressures some countries face in servicing their debts. While these pressures are not critical, as was the case in the early 2000s prior to HIPC and MDRI debt relief, it is worth monitoring developments in many countries in order to take action to reduce potential debt-servicing pressures. Debt service (% exports of goods, services, and income) Source: World Bank Southern Africa East Africa Central Africa Nigeria / Rest of e Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Congo, Dem. Rep. Côte d'ivoire Ethiopia Gambia, The Ghana Guinea Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Mozambique Niger Nigeria Rwanda São Tomé & Príncipe Senegal Seychelles Sierra Leone South Africa Tanzania Uganda Zambia 21

25 regional economic overview Nigeria / Rest of Central Africa East Africa Southern Africa Currencies, Interest Rates, and Inflation Nominal exchange rates vs USD (annual average) Middle Africa s exchange rate regimes have generally moved from fixed/pegged arrangements to floating-type arrangements. This policy change, along with weakening terms of trade, has largely led to currency depreciation against the US dollar over recent years, which also reflects high levels of import dependency and the costs related to importing high levels of goods and services. Meanwhile, currencies linked to the euro performed relatively well in, appreciating by an average of 1.8% compared to 2011, highlighting the strong support provided by the currency arrangement, which is underpinned by the French Treasury and, ultimately, the European Central Bank. Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank Gambia (L) Liberia (L) Cape Verde (L) 160 Nigeria (L) 7000 Guinea (R) Ghana (R) XOF (L) Sierra Leone (R) e Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank e Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank Zambia (R) Malawi (L) Botswana (L) South Africa Angola (L) 35 (L) 9 Mozambique (R) e Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank Kenya (R) Uganda (L) Tanzania (R) Burundi (L) Rwanda (L) Ethiopia (R) e Nominal exchange rates vs USD (annual avg.) Sources: Bloomberg, Ecobank Congo, D.R. (L) Cameroon (L) São Tomé & Príncipe (R) e e 22