November 2017 Africa Market Update (Full Report)

2NOVEMBER 2015 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
A Financial Advisory
Company
NOVEMBER 2017 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
ANGOLA 4
NIGERIA 8
KENYA 13
UGANDA 24
RWANDA 29
TANZANIA 19
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Nairobi, Kenya
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Cover image:
Table of Contents
ANGOLA
• Political landscape in a post-dos Santos era
• Why regional trade is poised to be a key policy pillar for the new administration
NIGERIA
• Why recovery is bound to be fragile
• A case for likely shift to expansionary policy
KENYA
• Government moves towards more expansionary Fiscal Policy
• Poor rainfall hits second quarter economic growth
• Government struggles to raise funds
At a Glance
TANZANIA
• Tanzania flirts with term limits
• Mining deal sets regional precedence
• Fiscal consolidation on course as current account deficit shrink
UGANDA
• Doctors Plan Strike
• Agriculture drives uptick in last quarter of FY 2016/17
• Shilling slides against US Dollar
RWANDA
• Opposition faults electoral laws
• Economy shows signs of recovery

Capital Invested by Country (USD)
AFRICA DEALS LANDSCAPE
JANUARY - OCTOBER 2017
Source: PitchBook, StratLink Africa
Deal Activity by Industry (Proportions)
Deal Activity by Types (Proportions)
Major Deals – October 2017
• Pentaﬂoor (South Africa) was acquired by Accentuate for USD 2.8 Million on October 23rd, 2017
• Kamoso Distribution (Botswana) was acquired by RMB Ventures and Investec Asset Management for an undisclosed sum on October 23rd, 2017
• Berkeley Mineral Resources sold an undisclosed minority stake at Kabwe Mine (Zambia) to Jubilee Platinum for USD 3.0 Million
South Africa
Kenya
Ghana
Congo
Nigeria
Egypt
Morocco
Uganda
Namibia
Ethiopia
Mauritius
Benin
Ivory Coast
Tunisia
Tanzania
Lesotho
Madagascar
Swaziland
Guinea
Niger
7.8 Billion
3.1 Billion
2.7 Billion
2.2 Billion
2.0 Billion
1.8 Billion
945.0 Million
938.0 Million
476.0 Million
378.0 Million
297.6 Million
170.4 Million
59.2 Million
44.2 Million
13.3 Million
12.2 Million
8.7 Million
7.9 Million
1.2 Million
10,000.0
21.3%
21.3%
17.2%
17.2%
15.0%
15.0%
11.3%
11.3%
7.0%
7.0%
5.2%
5.2%
4.2%
4.2%
3.7%
3.7%
2.3%
2.3%
12.8%
12.8%
Metals, minerals & mining Exploration, production & reﬁning
Other business products & activities Communications & networks
Utilities Commercial services
Consumer non-durables Software
Commercial products Others
36.9%
9.0%
8.9%
8.7%
7.2%
7.0%
6.8%
15.5%
Secondary Transaction - Private ....................
Merger/Acquisition ...........................................
Asset acquisition ...............................................
Corporate Divestiture .......................................
Buy Out/LBO .....................................................
Growth/Expansion Capital ................................
Asset divestiture ...............................................
Others ............................................................

ETHIOPIA
KEY THEMES IN THE POST-DOS SANTOS ANGOLA
ANGOLA MARKET UPDATE

MPLA in a Post-dos Santos Era
Despite MPLA’s decisive win in the August 23rd, 2017 election, growing opposition is gathering momentum and continues
to weaken the party’s foothold in the political landscape which could be setting the stage for possible transition in the
years ahead. Efforts to claw back the party’s lost ground are bound to present a litmus test for the new President as
MPLA enters a post-dos Santos era.
• Economy to side-step recession, growth to remain subdued
The largest risk factor to Angola remains low diversification of the economy with commodities accounting for almost
100.0% of merchandise exports¹. Angola is one of Africa’s least diversified economies and has consequently faced
considerable headwinds following the plunge in commodity prices. Unlike Nigeria, we expect the economy to side-step
recession with growth likely to remain below 2.0% in 2017.
We expect two issues to be pivotal in shaping the country’s political risk profile:
Diminished event risk
The opposition’s decision to petition the disputed outcome in the Constitutional Court was a major gain for the country’s
political risk profile, dissipating fears of a possible outbreak of violence. The move also marked a major stride for Angola
as a country transitioning from political strife to a stable democracy with widening space for dissent
Weakened leverage of incumbency
MPLA’s dominance has weakened over the last decade and this suggests there is weakened leverage of incumbency
in securing electoral victory. This is an area in which the opposition is bound to draw considerable political capital in
solidifying its base in the coming months especially as MPLA adjusts to post-dos Santos leadership
Source: Comissão Nacional Eleitoral de Angola
POLITICAL OUTLOOK
ECONOMIC OUTLOOK
23.2%
8.6%
86.8%
2008 LegislaƟve Seats
MPLA UNITA Others
79.5%
2012 LegislaƟve Seats
68.2%
7.3%
5.9%
14.5%
6.0%
2017 LegislaƟve ElecƟons
GDP: USD 102.6 Bln | Population: 25.8 Mln
ANGOLA
1
UNCTAD Data

ANGOLA
Angola
Nigeria
Gabon
Ghana
Cameroon
Algeria
Libya
Botswana
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 98.0% 100.0% 102.0%
CommodiƟesasaPercentageofGDP
CommodiƟes as a Percentage of Merchandise Exports
Commodity Reliance
Sovereign Yield Curve (Oct 11th, 2017) Ten Year Eurobond Yield
Source: UNCTAD, StratLink Africa
Source: Africa Development Bank, StratLink Africa
Sectors likely to provide key pillars for the economy’s diversification are construction, agriculture and manufacturing
whose proportions of the economy have grown over the last decade. The three sectors now account for 28.4% of GDP
compared to 15.1% in 2008 making them vital engines in the diversification plan.
Sectors as a Percentage of GDP
Agriculture 4.9% 9.9%
Manufacturing 3.5% 5.4%
Construction 6.7% 13.1%
Mining and Quarrying 50.7% 23.6%
2008 2015
• Yields are high, monetary policy set for gradual expansion
The sovereign yield curve remains inverted whilst the country’s Eurobond continues to attract a much higher yield than
those of a similar tenor from peer economies. Risk perception continues to be largely bearish notably with regard to the
short-term with inflation being a key factor. Declining volatility by the Kwanza and lower inflation are likely to bring about
an adjustment to gradual monetary expansion in Q1 2018.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
91
Days
182
Days
364
Days
2
Years
3
Years
4
Years
5
Years
5.5%
6.5%
7.5%
8.5%
9.5%
10.5%
11.5%
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Angola Ethiopia Kenya

ANGOLA
Monetary Policy Rate
SADC Merchandise Trade Heat Map
Aggregate Household Spending (USD) 2016
Angola Kwanza Exchange Rate (Day-on-Day Change)
7.5%
8.5%
9.5%
10.5%
11.5%
12.5%
13.5%
14.5%
15.5%
16.5%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 -2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Source: Central Bank of Angola, Bloomberg, StratLink Africa
Source: SADC Statistical Year Book 2015, StratLink Africa
Source: Business Monitor International, StratLink Africa
• Regional trade: Angola likely to remain cautious on integration
Available data shows that Angola is one of the least regionally integrated economies in the Southern African Development
Community (SADC) bloc with intra-SADC merchandise exports accounting for a meager 4.1% of total merchandise
exports whilst intra-SADC merchandise imports accounting for 6.1% of imports. There has been little, if any, update on
the country’s planned entry into the SADC Free Trade Area which was slated for 2017. Angola is still likely to be cautious
in its interest in the Free Trade Area with a view to safeguarding domestic enterprises against stiff competition from
peers across the region.
Higher aggregate household spending in Angola is, however, likely to trigger a build-up in pressure, from investors in
neighboring economies, to have the country join the Free Trade Area with a view to widening access to untapped
potential.
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10%
Angola
Madagascar
Malawi
Seychelles
MauriƟus
South Africa
20%
30% Mozambique
40% Zimbabwe DRC
50% Zambia
60%
70% Namibia
80% Botswana
Lesotho
Swaziland
90%
100%
Intra-SADCImportsasPercentageofTotalImports
Intra-SADC Exports as Percentage of Total Exports
13,096.0
11,470.9
9,154.1
0.0 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0 14,000.0
Angola
Gabon
South Africa

NIGERIA MARKET UPDATE
FISCAL POSITION HARBINGERS WEAK REBOUND FOR THE ECONOMY

House Receives Medium Term Expenditure
Framework
President Buhari passed the Medium Term
Expenditure Framework and Fiscal Strategy (2018-
2020) to the House of Representatives on October
18th, 2017. The hope remains that this move will
createampletimefordeliberationonthesameand
stave off the likelihood of delay, as has happened
in the recent past, in passing the budget. Coming
against the backdrop of fiscal strain (as shall be
shown in the Economic Outlook section), it will be
important that the country ensures the budget is
passed in good time to provide support economic
recovery in 2018.
With revenue mobilization falling below target in
2017, we will be keen to observe the balance taken
between tapping into non-tax revenue measures,
notably in tapping into domestic and international
capital markets, and austerity measures. In 2017,
the Federal Government has been active on
this front, mobilizing non-tax revenue, through
issuance of the country’s debut Diaspora bond
and Sukuk.
POLITICAL OUTLOOK
NIGERIA
Rebound to Boost Business Climate
We expect the business environment to wrap up
2017 benefiting from the rebound of the economy
and slowdown of inflation. As indicated in our
October2017issue,agricultureandmanufacturing
are poised to be some of the main attractions of
investor interest based on the momentum posted
in the first half of 2017 as well as the Economic
Recovery and Growth Plan (ERGP) for 2017–2020
which is anchored on economic diversification.
Foreign Exchange Headache Persists
The foreign exchange front, however, is likely
to continue presenting headwinds for the
manufacturing sector due to imports in hard
currency. Agriculture is likely to play a particularly
significant role, accounting for 48.2% of the sector,
given the significant share of agro-processing in
the manufacturing sector
BUSINESS NEWS ENVIRONMENT
Source: Nigeria Data Portal, StratLink Africa Ltd
Manufacturing Sector
Non-Oil Revenue
Source: Central Bank of Nigeria
Excise & Fees, import duty & other Customs
Companies Income Tax & Other Taxes
65.1%
34.9
Food, beverage & tobacco
TexƟle, apparel & footwear
Cement
Others
PlasƟc & rubber products
Wood & wood products
Oil reﬁning
Basic metal, iron & steel
Chemical & PharmaceuƟcal
Pulp, paper & paper products
Motor vcehicles & assembly
Electrical & electronics

Naira to USD
Oil Revenue (Jan - Jul 2017)
Source: National Bureau of Statistics, StratLink Africa
Source: National Bureau of Statistics, StratLink Africa
NIGERIA
Fiscal Headwinds Prevail despite Economy’s
Rebound
Despitetheeconomy’sbouncebackfromrecession
in Q2 2017, we maintain a bearish outlook
anticipating generally weak recovery through Q1
2018 based on the following considerations:
• Available data suggests the economy continues
to grapple with significant fiscal headwinds
with revenue mobilization performance rate
for the first seven months of 2017 standing at a
paltry 64.9% characterized by particularly weak
performance in oil revenue at 62.7%¹
• Against this backdrop, capital expenditure has
been relatively low in the period under review
compared to the same period in 2016, denying
the economy much needed momentum
for recovery. At USD 384.8 Million, capital
expenditure in the first seven months of 2017
was a dismal 33.8% of the amount spent in the
same period in 2016, threatening to derail the
economy’s rebound
Headache for Monetary Policy
With the country caught in fiscal headwinds,
it is important to look at the monetary side
and determine whether there is room for
accommodative policy to prop growth. Two
factors suggest such headroom for such support
is minimal:
• Weakened Naira
With the local unit having undergone a 16.2%
devaluation in August 2017, there is likely to be
enormous effort to stave off wild depreciation
by the local unit in the coming months. Available
data shows that the country’s trade surplus
(merchandise trade) contracted in Q2 2017 by
30.2% to USD 1.6 Billion suggesting the local unit
could come under growing pressure driven by
strong growth in imports.
• Slow disinflation
After a steady decline in inflation between Q4
2016 and Q1 2017, the pace of disinflation seems
to have decelerated. Inflation has now stood in the
16.0% band for four months, significantly higher
than the target ceiling of 9.0%. This is undermining
confidence that the tightened monetary cycle was
reversing the tide of runaway price levels.
ECONOMIC OUTLOOK
1
Nigeria Bureau of Statistics
54.8%
26.9%
13.5%
4.4%
0.4%
Crude Oil Sales PPT & Gas Tax
RoyalƟes Oil & Gas Gas Sales
Miscellaneous
300.0
310.0
320.0
330.0
340.0
350.0
360.0
370.0
380.0
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17

Sovereign Yield Curve
Growth in Private Sector Credit 2017
Monetary Policy Rate
Source: Central Bank of Nigeria, StratLink Africa
Source: Central Bank of Nigeria, StratLink Africa
Source: Bloomberg, StratLink Africa
General Decline in Yields
The yield curve has been on a general decline
across all tenors and exhibiting signs of correction,
albeit slow paced, from the inversion. This trend
is likely to be informed by revised inflation
expectations as well a relatively high liquidity with
the interbank rate averaging 18.2% in Q3 2017
compared to 29.8% and 21.8% in Q2 2017 and
Q3 2017, respectively². Appetite for government
paper remained low in October 2017 with the
exception of the 364 Day T-Bill issued in the first
week of the month which registered a bid-to-
cover ratio of 6.8.
We expect cautious monetary expansion given
that growth in money supply remains relatively
high averaging 11.3% for the first eight months of
2017 compared to 5.0%, 6.3% and 6.1% for the
same period in 2016, 2015 and 2014³.
November 2017 Monetary Policy Meeting
Investors will be waiting eagerly for the November
2017 monetary policy meeting, the last for the
year. We expect to witness a switch in stance to a
cautiously dovish position in view of the meeting
with the benchmark rate likely to be slashed by
50.0 – 100.0 bps in a bid to support the economy’s
recovery in the months ahead. By August 2017,
credit to the private sector was contracting, year-
on-year, to stand at 3.5% compared to the 22.4%
growth posted in the same period a year earlier.
DEBT MARKET UPDATE
NIGERIA
2
Central Bank of Nigeria 3
Central Bank of Nigeria
Year-on-year growth in private
sector credit as at August 2017
-3.1%
9.5%
11.5%
13.5%
15.5%
17.5%
19.5%
21.5%
23.5%
3M 6M 1Y 3Y 5Y 7Y 10Y 15Y 20Y
Oct-17-2017 Jun-30-2017
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Jan Feb Mar Apr May Jun Jul Aug
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17

Financial Services Others
EQUITY MARKET UPDATE
Financial Services Dominate Activity
The financial services segment continues to
dominate activity in the market accounting for
87.1% of turnover in October 2017. This can be
ascribed to the fact the segment, mainly banking
stocks, have consistently outperformed the market
over the last nine months with the gap between
the two widening in Q3 2017 as shown in the
graph below. This segment is likely to remain the
main attraction of investors through Q4 2017 as
many continue assessing the economy’s bounce
back from recession to determine the outlook for
2018.
Available data shows that foreign investor inflows
picked up in August 2017 to USD 165.5 Million,
38.0% higher than the amount registered in the
preceding month. We note that outflows also
declined between July and August 2017 to USD
42.9 Million, posting the second lowest outflow
after April’s USD 25.2 Million.
Nigeria Banking Stocks Index YTD
as at October 19th, 2017
Nigeria Stock Exchange 30 Index
YTD as at October 19th, 2017
73.4%
42.5%
Market Activity
Foreign Investor Activity (USD)
Nigeria Stock Exchange
Source: Nigeria Stock Exchange, StratLink Africa
NIGERIA
80.0
90.0
100.0
110.0
120.0
130.0
140.0
150.0
160.0
170.0
180.0
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nigeria Stock Exchange 30 Index
Banking 10 Index
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
Jan-15
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Millions
Inﬂow Ouƞlow

UPTICK IN SECOND QUARTER GROWTH
KENYA MARKET UPDATE

A Test of Democracy
Our position on the political risk environment
remains pallid following the October 2017 repeat
Presidential poll, where Uhuru Kenyatta won 98%
of the vote with a 38.8% voter turnout, whose
aftermath has been rocked by tension build-up
and protests in parts of the country.
Macro-political Risk
From a macro-political standpoint, three things
are worthy of note:
• The risk of the already protracted electoral
cycle prolonging beyond 2017 is imminent with
a likelihood that the outcome of the poll could
be challenged at the Supreme Court
• With the Supreme Court having failed to raise
quorum to hear a case that sought to have
the repeat election postponed, it is unclear
whether the judiciary still enjoys the perception
of independence that had been buoyed by the
annulment of the August 2017 presidential poll
• The character and form of the main opposition,
the erstwhile National Super Alliance, presents a
guessing game for many given its conversion to
National Resistance Movement. We, however,
expect little, if any, change with the faction
likely to continue relying on mobilization of its
supporters for demonstrations as the main tool
of agitation
Micro-political Risk
From a micro-political risk standpoint, our main
concern is that protraction of the electoral cycle
and political rhetoric are eclipsing more pressing
policy concerns that ought to be at the forefront of
public debate. Most significantly, the September
2017 Budget Review and Outlook Paper (BROP)
suggests that the country is falling behind its fiscal
consolidation agenda. With revenue expected
to be 3.7% lower than earlier projected and
expenditure revised upwards, the country is likely
to face challenges on the fiscal front in the coming
POLITICAL OUTLOOK
KENYA
According to the BROP 2017 the net effect of the
revised projections would imply a wider fiscal
deficitforthefinancialyear2017/18of7.9%,which
is significantly higher than the previous estimate of
6.2%. Furthermore, the new projections take the
public debt to GDP ratio from 51.8%, as seen in the
budget, to 59.0%, as stated in the BROP 2017. This
raises concerns that the government is unlikely to
maintain its intentions to fiscally consolidate, at a
time when the fiscal deficit trajectory and stock
of debt is increasingly worrying with credit rating
agency Moody’s undertaking a review of Kenya’s
current B1 rating for a possible downgrade.
quarters. Crucial to observe is the fact the under
the International Monetary Fund’s Standby Credit
Facility, Kenya had entered a commitment to scale
down the fiscal deficit to 3.7% of GDP by the
financial year 2018/19.
Government Fiscal Projections for FY 2017/18
¹Source: The National Treasury
1
BROP 2017 – Budget Review and Outlook Paper 2017
-6.2%
-7.9%
-8.5%
-8.0%
-7.5%
-7.0%
-6.5%
-6.0%
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
23.0
24.0
Budget BROP 2017
Total Revenue (USD Billions)
Expenditure (USD Billions)
Deﬁcit as % of GDP (RHS)

KENYA
Nakumatt Woes put Retail Segment on the Spot
Woes bedeviling retail chain, Nakumatt, continue
to place the state of the retail segment of the
economy under the radar. StratLink holds the
following view in this regard:
• Data shows that late repayment of suppliers by
retail chains stands out as a key challenge. Given
the sale of goods in cash, this is a pointer to
underlying cash flow management challenges
and, by and large, calls to question corporate
governance standards and adherence to best
practice within the sector
• Despite the present headwinds, we still
believe the retail segment of Kenya’s economy
offers great promise for long-term investors.
The segment has mostly outperformed the
economy’s growth over the last five years.
One of the factors likely to be driving this
bullish growth has been the rise in households’
disposable income whose average, per
household, stood at USD 1,785.0 in 2015²
• With one of sub-Saharan Africa’s largest formal
retail sectors, Kenya is poised to remain a key
attraction for investors targeting retail in this
region in the coming years. With a formal retail
penetration estimated at 30.0%, ahead of peer
economies such as Nigeria and Tanzania, the
Kenyan market is uniquely positioned to offer
investors strategic access to the growing spend
in not only in Kenya but also the wider Eastern
Africa
• Changing consumer habits and the growing
shift towards proliferating e-commerce
platforms suggest there is need for players in
the retail segment, and other consumer facing
industries, to adjust to emerging trends. In the
recent past, telco service provider, Safaricom,
has been reported to be eyeing entry into the
e-commerce space, a development that will be
of great interest should it materialize
Retail Chains by Late Repayment as at Dec 31st 2016
(Debt whose repayment is late by more than 60 days)
Growth Rate
Source: Ministry of Industry Trade and Cooperatives, StratLink Africa
Source: Kenya National Bureau of Statistics, StratLink Africa
2
Business Monitor International
NakumaƩ Uchumi Tuskys
Naivas Chandarana Others
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Retail Aggregate Economy

GDP Growth Rates, Second Quarters
Similarly, the energy and water sector experienced
a stark deceleration in growth from 9.6% in the
second quarter of 2016 to 6.1% in the quarter
under review. Insufficient long rains led to a
reduction in hydro generation of electricity which
was compensated with higher thermal generated
power thus adversely affecting performance in the
sector. The fact that inadequate rainfall is able to
have such a widespread effect on the economy
is cause for concern as it leaves the country
vulnerable to changing weather patterns.
It is also important to note that the financial and
insurance industry slowed to 4.3% growth in Q2,
2017 from 8.1% in Q2, 2016 while the Financial
Intermediation Services Indirectly Measured
(FISIM) actually contracted by 0.8% in the second
quarter of this year where the reduction of growth
in credit provision to the private sector played a key
role. Accelerated growth in the second quarter of
2017 does improve StratLink’s economic outlook
for the year however, recent political events have
extended uncertainty in the country beyond what
was previously anticipated thus deteriorating our
expectations of GDP growth in the second half of
the year.
Growth Rates of Select Sectors, year-on-year
2
2017 forecasted figures provided by BMI
Poor Rainfall had Wide Ranging Effect on Second
Quarter Growth
Economic growth accelerated to 5.0% in the
second quarter of the year, from 4.7% in the
preceding quarter however, this marked a
slowdown relatively to the second quarter growth
of 6.3% achieved in 2016.
The sectors that performed the best in the second
quarter of this year included accommodation and
restaurants, real estate, ICT, and transport and
storage which expanded by 13.4%, 9.7%, 9.2% and
8.2%, respectively, year-on-year.
On the other hand, while the agriculture sector
bounced back from the contraction it experienced
in the first quarter of the year to record a 1.4%
expansion in Q2, 2017 this is still far below the
7.1% growth achieved in the same quarter of
the previous year. Lackluster performance by the
sector was driven by a drought that led to reduced
crop outputs including maize, the country’s staple
food. The effect of the poor weather affected the
performance of other sectors beyond agriculture;
growth in manufacturing dropped from 5.3% in
Q2, 2016 to 2.3% over the same period in 2017
with a contributing factor being agro-processing
activities suffering the knock on effect of lower
agricultural production.
ECONOMIC OUTLOOK
KENYA
4.3%
7.5%
6.0%
5.6%
6.3%
5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2012 2013 2014 2015 2016 2017
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
Accom. & Restaurants
Real Estate
ICT
Transport and Storage
ConstrucƟon
Electricity and Water
Mining and Quarrying
Financial & Insurance
Trade
Manufacturing
Agriculture
FISIM
Q2, 2017 Q2, 2016

KENYA
Government Struggles to Borrow from the
Market
Yields on short term papers fell in the month to
23rd October, 2017 while rates on longer term
bonds remained relatively constant.
This comes at a time when the Government is
struggling to raise funds from the market with
subscription rates below 50.0% for the 12th
and 19th October, 2017 Treasury bill auctions as
political uncertainty encourages caution among
investors. The five year bond (issue no. FXD
2/2017/5) issued on the 18th October, 2017 also
underperformed with a 66.9% subscription rate
and only 45.0% of what was on offer being raised.
Liquidity conditions in the market have been
relatively tight for the month of October with
the interbank rate remaining above 6.0%³.
Commercial banks’ excess reserves above 5.25%
percent dropped drastically over the month as a
result of tight liquidity conditions and the onset of
the Cash Reserve Ratio (CRR) cycle.
Bloomberg BVAL Yields Index
91, 182 and 364 Day T-Bill Subscription and
Acceptance Rates
Commercial Banks Excess Reserves (USD Million)
Source: CBK, StratLink Africa
DEBT MARKET UPDATE
3
From 1-Oct-17 to 23-Oct-17
10.0%
10.4%
10.8%
11.2%
11.6%
12.0%
12.4%
12.8%
13.2%
13.6%
14.0%
3M 1Y 3Y 5Y 8Y 10Y 20Y 30Y
23-Oct-17 22-Sep-17
0%
25%
50%
75%
100%
05-Oct-17 12-Oct-17 19-Oct-17
SubscripƟon rate Amount Accepted / Bids Received
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
06-Sep-17
13-Sep-17
20-Sep-17
27-Sep-17
04-Oct-17
11-Oct-17
18-Oct-27

Foreign Investor Sentiment hit by Political
Uncertainty
Share prices continued to fall in the month of
October, maintaining the bearish trend that began
after the Supreme Court nullified the election that
took place in August.
The negative impact of the political uncertainty
plaguing the country is evident when looking
at foreign investor participation in the Nairobi
Securities Exchange which dropped from
79.8% in January, 2017 to 55.7% in September,
2017. Furthermore, the third quarter of 2017
experienced a foreign equity outflow from
the country of USD 108.0 million, highlighting
negative investor sentiment toward the political
climate. StratLink’s outlook for the equity market
is that the deterioration experienced over the last
couple of months will continue as long as political
uncertainty remains.
NSE 20 Share Index
KENYA
NSE 20 index percentage
change in month to 23
October 2017
NSE 20 index percentage
change in year to 23
October 2017
-5.9%
10.2%
Foreign Investors Participation and Equity Inflow
-60.0
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Net Foreign Equity Inﬂow (USD Millions)
ParƟcipaƟon of Foreign Investors (LHS)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
3,500.0
3,600.0
3,700.0
3,800.0
3,900.0
4,000.0
4,100.0
4,200.0
01-Jul-17
08-Jul-17
15-Jul-17
22-Jul-17
29-Jul-17
05-Aug-17
12-Aug-17
19-Aug-17
26-Aug-17
02-Sep-17
09-Sep-17
16-Sep-17
23-Sep-17
30-Sep-17
07-Oct-17
14-Oct-17
21-Oct-17
Millions
Volume (RHS) NSE 20 Index

TANZANIA MARKET UPDATE
TANZANIA FLIRTS WITH TERM LIMITS

Tanzania Flirts with Presidential Term Limits
The wave of electoral law and constitutional changes
seems to be sweeping across Africa as several
countries try to amend their constitutions to give
incumbents an extra term in office beyond that
which they are legally allowed. The wave appears to
be gathering steam in Tanzania going by the motion
expected to be tabled before Parliament seeking to
extend the presidential term from five to seven years,
as is the case in Rwanda. On the other hand, the
opposition coalition Chadema is looking to table an
opposing motion that reduces the President’s term
to four years, as they accuse ruling CCM legislators
of trying to extend President Magufuli’s tenure.
Mixed Outcomes from other Countries
Similar moves have been met with mixed reactions
in countries who have attempted constitutional
changes. Case in point is the turmoil being witnessed
inBurundisinceApril2015afterPresidentNkurunziza
forcefully changed the constitution to allow himself
another term, plunging the country into civil war.
Burundi’s neighbor Rwanda, went through the same
exercise but with different results; the referendum
vote result was an overwhelming 98.0% in favor of
constitutional change to allow President Kagame,
another seven-year term and two more five-year
terms at the helm. Their contemporary, Uganda, is
grappling with the same issue as legislators allied
to the ruling National Resistance Movement (NRM)
seek to amend the constitution in favor of lifting the
presidential age limit (currently at 75) supported by
President Museveni, whose term expires in 2021
due to his age limit, another term (s) in office.
Stalled Constitutional Referendum
The conversation around term limits is bound to
have a bearing on the constitutional referendum
that has stalled since April 2015. The appointment
of two proponents of the review process to key
government positions ignited fresh excitement on
the possibility of reopening the debate. We have
previously reckoned that continued stalling of the
constitution review shows a lack of goodwill on the
part of President Magufuli and we expect that these
new developments will re-ignite the process.
POLITICAL OUTLOOK
TANZANIA
Tanzania sets Precedence through Mining Deal
Tanzaniahasbeenmakingheadlinesrecentlyowing
to its increasingly difficult operating environment
for operators in the extractive sector owing to the
tussle between mining firms and government.
This has led to what has been termed as the
President’s increasing high handedness in view of
the new mining laws perceived as being punitive to
investors and which have affected the operations
of Acacia Mining and Petra Diamonds firms.
However, government emerged as the eventual
winner from the stand-off with Acacia Mining
after signing a land mark deal with Barrick Gold,
the owners of Acacia Mining that will ensure that
economic benefits generated by Acacia Mining’s
operations in the country are shared between the
two parties on an equal basis. The mining firm
also agreed to cede substantial proceeds from
mineral sales to government; give government
a 16.0% stake in each mine owned by Acacia as
the government seeks what it terms as enjoying
the full benefits from its natural resources. The
agreement will also see Acacia mining pay Tanzania
USD 300.0 Million in tax arrears, which Acacia has,
however, indicated that it can only pay in tranches.
Mining remains a key sector to Tanzania’s economy
and the deal is deemed as a win for the President,
who since the beginning of the year, has resolutely
pushed through changes to laws governing the
extractive sector to institute reforms, despite
the potential risk of investor flight. Investors will
watch the developments with renewed interest in
Tanzania’s extractive sector as the deal is bound
to embolden other governments to review their
extractive sector laws.
GDP,Industry and Mining Growth
Source: Bureau of Statistics, StratLink Africa
0.0%
5.0%
10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
Q2
2015
Q4
2015
Q2
2016
Q4
2016
Q2
2017
Industry Mining GDP

on government to review its modus operandi to
create a conducive environment for business and
investment, particularly, if it is to meet its revenue
collection targets.
Current Account Deficit Narrows on Declining
Imports
Tanzania exports receipts continue on a recovery
trajectory and we expect that they should
support the country’s fiscal consolidation plans.
The improvement is buoyed by the recovery in
global commodity prices, favorable to Tanzania’s
major export commodities- gold and agricultural
produce, as well as the implementation of the EAC
Single Custom Territory. The increased receipts
and declining imports have seen the current
account narrow by 63.3%, quarter-on-quarter, to
USD 335.0 Million during the quarter ending June
2017.
Tanzania’s Fiscal Consolidation Efforts on Course
Tanzania’s revenue collection body received a
boost on the back of improved revenue collection
totaling USD 1,625.6 Million in the first quarter of
this fiscal year (July-September, 2017)¹, reflecting
a growth of 1.2% over a similar period in the last
fiscal year as the Tanzania Revenue Authority
targets a total revenue collection of USD 7.6 Billion
in 2017. The increase in revenue was boosted by
continued vigilance by TRA and government: The
President has not only been outspoken against
corruption but has also taken action aimed at
boosting the country’s revenue collection kitty,
and the increasing collections are, principally, as a
result of most of these deliberate decisions.
Some Measures to Boost Collections hurting
Businesses
Sincebeingelectedinlate2015,PresidentMagufuli
began a tax reform drive aimed at weaning
Tanzania off international aid and which has raised
government revenues, but drawn complaints from
some businesses, who accuse the government
of unfairly targeting them as government tries to
streamline operations in key sectors which has
had the negative impact of reducing profitability
among businesses; for instance, the move by
government to raise taxes last year on mobile
money transfers, banking, tourism services and
cargo transit services. In this regard, the onus is
Government Expenditure for the Quarter Ending
June 2017 (USD/Mln)
Current Account Balance (USD/Mln)
Revenue Collection Statistics, Quarter-on-Quarter
ECONOMIC OUTLOOK
Source: National Bank of Tanzania, StratLink Africa
Source: Bank of Tanzania, StratLink
Source: Tanzania Revenue Authority, StratLink Africa
TANZANIA
1
Tanzania Revenue Authority
1,540.0
1,550.0
1,560.0
1,570.0
1,580.0
1,590.0
1,600.0
Q3 2017 Q4 2017 Q1 2018
0 500 1000
Wage Bil
Interest Payments
Recurrent Expenditure
Local Development Expenditure
Foreign Development Expenditure
Jun-17 Jun-16
-1500.0
-1000.0
-500.0
0.0
500.0
1000.0
1500.0
2000.0
2500.0
Q4 2016 Q4 2017
Exports Imports Current Account

Shilling Maintains Resilience
The Shilling has been under pressure from the
greenback in recent months, but has managed to
remain resilient on the back of increasing liquidity.
The local unit depreciated, albeit marginally, by
0.1%, month-on-month, and 2.8%, year-on-year,
in the period under review.
Yields Maintain Downtrend
Yieldstrendedsouthonthebackofrelativeliquidity
in the money market even as the interbank rate
halted a four-month decline, thanks to improving
liquidityinthebankingsector,toremainunchanged
at 3.5% between September and October, 2017.
Inflation on the other hand, moved in the opposite
direction, rising marginally by 30.0 bps to 5.3%
between August and September, 2017.
The 91 Day, 182 Day and 364 Day yields’ dropped
by 10.0bps, 130.0bps and 97.0bps down to
4.0%, 7.4% and 10.2%, respectively, in the
period under review. However, the demand for
short-term instruments reversed the tide to
post undersubscriptions compared to the trend
witnessed in the past months, despite the current
easing liquidity. We expect liquidity to remain
relatively tight, however the recent rise in inflation
should abate soon supported by improving crop
yields. In this regard, we foresee sustained decline
in yields in the coming months.
Source: Bank of Tanzania, StratLink Africa
Shilling vs USD
Interbank rate, month-on-month
Source: Bank of Tanzania, StratLink Africa
T-Bill Yield Trend
DEBT MARKET UPDATE
TANZANIA
Shilling change, month-
on-month
Shilling change, year-
on-year
-0.1% -2.8%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
91 Day 182 Day 364 Day
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
31-Mar-17
30-Apr-17
31-May-17
30-Jun-17
31-Jul-17
31-Aug-17
30-Sep-17
InterbankRate
Volume(Green)
2,120.0
2,140.0
2,160.0
2,180.0
2,200.0
2,220.0
2,240.0
2,260.0
2,280.0
Oct-16 Jan-17 Apr-17 Jul-17 Oct-17

All Share Index, month-on-month
Source: Dar es Salaam Stock Exchange, StratLink Africa
Source: Dar es Salaam Stock Exchange, StratLink Africa
Sector Indices
Equity Turnover
TANZANIA
All Share Index Rises
The All Share Index trended north in October 2017,
buoyed by positive movements on majority of the
cross-listed companies’ shares save For KCB and
EABL, as the Tanzania Shilling weakens against the
Kenya Shilling. The Index rose by 1.6% to 2,163.8
units, in the period under review. However, the
market continues to witness tight liquidity which
has hampered investor performance despite
the fairly low prices for majority of shares at the
bourse. Tanzania Breweries Ltd (TBL) continues to
be the security of choice for foreign investors while
local investors target CRDB. CRDB, NMB, DSE and
TBL were the most traded shares in the month.
Sector Indices Appreciate
Sector indices mirrored the performance of the
All Share Index, staying in the green territory
in the period under review. The Industrial and
Commercial Services Indices appreciated by
4.6% and 8.7%, to 5,380.5 and 5,034.1 points,
respectively, while the Banking Index remained
generally unchanged at 2514.9 units in the period
under review.
Tight Liquidity Dims Local Participation
The bourse witnessed increased foreign investor
participation in October, attributed to the current
liquidity crunch that is affecting local investors’
participation at the bourse. However, despite
their market domination, foreign investors have
remainedselectiveonthecounterstobidon,shying
away from low-volume counters. Nonetheless, we
expect the participation to improve on both fronts
as liquidity eases.
All Share Index year-on-
year change, as at 24th
October 2017
All Share Index month-
on-month change, as at
24th October 2017
-13.2%
1.6%
0.0
20.0
40.0
60.0
80.0
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Oct-Dec, 17 Jul-Sep, 17
Buying Local Buying Foreign
Selling Local Selling Foreign
Total Turnover
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2,000.0
2,020.0
2,040.0
2,060.0
2,080.0
2,100.0
2,120.0
2,140.0
2,160.0
2,180.0
2,200.0
Sep-17
Sep-17
Oct-17
Oct-17
Oct-17
Volume(Millions)
SharePrice(Red)
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
Industrial Index Commercial
Services
Banking Index
Sep-17 Oct-17

AGRICULTURE DRIVES SECOND QUARTER GROWTH
UGANDA MARKET UPDATE

Doctors Plan to go on Strike
Doctors under the Uganda Medical Association
(UMA) almost unanimously voted to go on strike
across all public hospitals in the country at the
beginning of November unless their demands are
fulfilled. The requests by the medical professionals
are to have better salaries and allowances
including overtime, transport, housing, medical
risk and improved retention.
This comes while neighboring Kenya undergoes
what is arguably its worst ever health crisis after
having resolved a doctors strike that lasted 100
days even as nurses remain on strike. Doctors
in Uganda are likely to have drawn courage
from their Kenyan counterparts and adopted to
strike with an expectation that they will have a
successful outcome. Going forward, this may spark
a trend among other government-funded sectors
to take to striking in order to achieve improved
compensation or working conditions. However, it
remains to be seen how the Ugandan government,
that has in the past treated protesters rather
heavy-handedly, will respond to the proposed
strikes.
President Offers more Troops for Somalia
In the wake of the deadly bomb blast that killed
hundreds in Mogadishu on 14 October, 2017,
President Museveni has offered to deploy an
additional 5,000 Ugandan troops in support of the
African Union Mission for Somalia (Amisom) that
is fighting the terrorist group Al-Shabaab. The AU
led mission that has been ongoing for ten years
has of late suffered from reduced funding and as a
result the President’s offer to send more troops is
conditional on the international community giving
some guarantees with regard to funding as well as
donations of equipment for the soldiers.
Whereas the government’s previous stance was to
begin withdrawing troops from Somalia starting in
2018, the recent attack has shown that the conflict
is far from over and will require increased effort
before it is resolved.
POLITICAL OUTLOOK
UGANDA
Government Crackdown on Civil Society to have
Repercussions
The debate around changing the presidential age
limit in Uganda has continued to sour with the
government going head to head with civil society.
In September, 2017 the government raided the
offices of a think tank, Great Lakes Institute for
Strategic Studies (GLISS), and an NGO, Action
Aid Uganda, claiming that the organizations were
undertaking illegal activities. The government
went as far as freezing the organizations’ bank
accounts later in October. It is widely believed that
these are intimidation tactics the government is
employing because the two organizations have
been vocal critics of the proposed constitutional
change to allow President Museveni to stay in
power beyond his current term.
Thisraisesaconcernthatdonorsmightpullfunding
to Uganda which would have a significant effect. In
FY 2014/15, 8.4% of government revenues were
from Grants. In August, 2017 Grants amounted to
USD 3.8 million, only 6.7% of what the government
planned on receiving which led to a drop in public
expenditure for the month as well as a fiscal
deficit. Going forward the government will need
to exercise caution when dealing with civil society,
lest grant funding be withdrawn.
Government Revenue from Grants (USD Millions)
Source: Bank of Uganda, StratLink Africa
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17

Improved Agricultural Performance Drives
Growth in Q4 FY 2016/17
GDP growth (year-on-year) in the last quarter of
the Financial Year 2016/2017 recorded 5.4%¹,
marking a pronounced acceleration relatively to
the 3.3% growth seen in the same quarter of the
previous financial year. The economy performed
better in the last quarter of the financial year
2016/2017 than it did in the first three which
recorded expansion rates of 2.8%, 2.9% and 4.5%,
respectively.
The Agriculture sector recorded a strong
performance, expanding by 4.6% in Q4 FY 2016/17
from a contraction of 0.5% in Q4 2015/16. This
was heavily driven by food crop production which
grew by 6.5% in the quarter under review while
cash crop production contracted by 0.7%. The
Services sector also showed improved output with
a growth rate of 7.2% in Q4 FY 2016/17 up from
4.6% in Q4 2015/16, the main driver being the
Information and Communication sub-sector. The
Industry sector on the other hand decelerated
in growth to 2.8% in the quarter under review
from 3.9% in the same quarter of the previous
Source: Uganda Bureau of Statistics, StratLink Africa
Source: Uganda Bureau of Statistics, StratLink Africa
Sector Growth Rates
GDP Growth Rates
Fourth Quarter (FY)
ECONOMIC OUTLOOK
UGANDA
1
Original Unadjusted Real GDP Growth. Source: Uganda Bureau of Statistics
Interest Rate Cut comes with Risks
In their October meeting, the Monetary Policy
Committee cut the Central Bank Rate by 0.5%
to 9.5% in order to drive private sector credit
growth and support economic expansion. While
the aforementioned benefits are expected from
a cut in interest rates the following risks must be
considered:
• Core inflation increased to 4.2% in September,
2017 from 4.1% in August marking an increase
in demand side price pressure that is likely to
be further stimulated by loose Monetary Policy.
This implies a likelihood of increasing inflation in
the medium term
• The Uganda Shilling has slipped against the
greenback in the past few weeks, losing 1.5% of
its value in the month to 24th October, 2017.
Cutting interest rates has the effect of lowering
the real yields on government securities, making
them less attractive thus reducing demand for
the local currency and adding depreciatory
pressure
financial year driven by contractions in the Mining
and Manufacturing sub-sectors of 7.3% and 2.2%,
respectively.
1.1%
4.6%
7.1%
5.5%
3.3%
5.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Agriculture Industry Services
Q4 2015/16 Q4 2016/17

UGANDA
The Uganda Shilling depreciated to its weakest
value of the year against the greenback in October,
threatening to cross UGX 3,700.0 to the dollar.
There are downside risks to the currency in the
medium term as foreign lenders and donors that
are opposed to plans to change the constitution
to prolong the President’s rule may withhold
budgetary support thus curtailing hard currency
inflows to Uganda and furthering currency
depreciation.
T-bill Yields fall as Shilling Slips
Yields across the three government papers, 91
Day, 182 Day and 364 Day, fell between August
and September, 2017 despite the slight uptick
in headline inflation from 5.2% to 5.3% over the
same two month period. Over the same time
frame, yields for the one year and six month T-bills
fell by 0.5% and 0.4%, respectively while that of
the three month paper fell by only 0.1% which is
an indication of greater demand for the longer
term papers possibly resulting from the political
uncertainty in the short term due to the change in
the presidential age limit debate.
T-Bill Yields
DEBT MARKET UPDATE
UGX to USD
Shilling depreciation against the
US dollar, month to 24 October,
2017
Shilling depreciation against the
US dollar, year to 24 October,
2017
1.5%
6.0%9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
91 Days 182 Days 364 Days
3,570.0
3,580.0
3,590.0
3,600.0
3,610.0
3,620.0
3,630.0
3,640.0
3,650.0
3,660.0
03-Jan-17
03-Feb-17
03-Mar-17
03-Apr-17
03-May-17
03-Jun-17
03-Jul-17
03-Aug-17
03-Sep-17
03-Oct-17

Prices Fall with Political Uncertainty in
Neighboring Kenya
The All Share Index continued its downward trend
with a 3.7% reduction in the month leading up to
24 October, 2017. Again, the fall was largely driven
by a drop in share prices of Kenyan firms cross
listed on the Uganda Securities Exchange resulting
from the political uncertainty stemming from the
second election that took place.
All Share Index
All Share Index month – on –
month change as at 24 October,
2017
All share index year – on – year
change as at 24 October, 2017
-3.7%
11.0%
1,300.0
1,400.0
1,500.0
1,600.0
1,700.0
1,800.0
1,900.0
02-Jan-17
02-Feb-17
02-Mar-17
02-Apr-17
02-May-17
02-Jun-17
02-Jul-17
02-Aug-17
02-Sep-17
02-Oct-17

ECONOMY SHOWS SIGNS OF RECOVERY, ACCELERATING BY 4.0% IN Q2, 2017
RWANDA MARKET UPDATE

Opposition faults Electoral Laws
Rwanda’s opposition has also been hit by the
electoral reforms wave as it seeks electoral
reforms in the hope of improving the performance
of the opposition in a country with near-zero
opposition presence. The main opposition party,
the Democratic Green Party of Rwanda, has
insinuated that it intends to start the electoral
reforms process, a statement coming on the
back of an election where the incumbent won
by an overwhelming 99.0%. The party is looking
to challenge sections of the electoral law that
restrict political parties from accepting foreign
donations, in preparation for the September 2018
parliamentary elections from which the opposition
hopes to reap some gains. The prohibition for
donor funding and fundraising for campaigns was
one of the laws faulted by the opposition and cited
as a major hindrance for effective campaigning
and as giving undue advantage to the ruling RPF
over smaller political parties given its incumbency
benefits, as well as, large resource base including
the recently listed Crystal Ventures Limited valued
at approximately USD 500.0 Million. A party can
only get government funding after elections and
if they score at least 5.0% of the vote, which locks
all opposition parties out. Regional comparisons
show that in Tanzania, parties are not barred from
external funding While in Uganda, parties are
not allowed to receive direct cash funding from
foreigners and foreign organizations, but they
can help parties organize trainings and capacity
building efforts.
Sustained Harassment of Government Critics
The continued harassment of opposition parties,in
light of the recent crackdown on opposition
leaders, is another story making headlines in
Rwanda’s political landscape and which continues
todentthecountry’sstellareconomicandbusiness
records. It also goes to show that government is
unwilling to accept the role of opposition parties.
Therefore, Rwanda needs to do more to expand
space for political dialogue and competition and to
strengthen its democratic institutions.
POLITICAL OUTLOOK
RWANDA
A New Dawn for Rwanda’s Mining Sector
To improve capacity in the mining sector, add
value, increase investments and promote the
industry, the government in partnership with the
UK Department for International Development,
launched a USD 5.9 Million programme dubbed
Sustainable Development of Mining in Rwanda
Programme. We expect that the programme will
go a long way in helping government achieve its
target to earn circa USD 1.5 Billion from mineral
exports by 2024 from the current USD 200.0
Million recorded in 2016. The sector is punching
well below its weight, given that minerals are the
leading export earner at about 26.5% of total
exports and the negative effects of depressed
global prices exacerbated the situation.
Modernizing Mining Activities
The ambitious targets have also been informed
by the growing confidence by stakeholders of the
sector’s potential. However, sector riskiness and
use of rudimentary production methods has seen
financiers shy away from lending to the sector
borrowers: Up to 96.0% of loan applications
from the sector were rejected in 2015, up from
68.0% in 2014, highlighting the extent to which
the sector is starved of funding. Therefore,
sustained investments into modernizing mining
activities, exploration for new types of minerals,
and adding value to the gems before exportation
should help Rwanda achieve its mineral export
revenue targets. Government, has however made
notable steps to intervene through regulation and
reorganization of the sector, besides investing in
exploration studies, to understand the extent of
deposits to not only attract serious investors but
also encourage the financial sector to be more
cooperative. We believe all these measures will go
a long way in attracting potential investors to the
sector and improving sector output, to eventually
tame the growing trade deficit, in the long run.

Source: National Institute of Statistics of Rwanda, StratLink Africa
Trends in Coffee and Tea Production (Value in Mln Kg)
Construction Industry Value and Capital Formation,
Real Growth
Real GDP vs Sector Growth
Economy Shows Signs of Recovery
TheRwandaneconomyisshowingsignsofrecovery
growing by 4.0% in the second quarter of 2017
(April-June, 2017) largely driven by improvement
in the agriculture and services sectors, despite
slow growth in consumer spending owing to
liquidity squeeze. The growth, coming against the
backdrop of a nadir of 1.7% in the first quarter
-the lowest growth point in over a decade, raises
optimism about Rwanda’s prospects of achieving
the 6.2% economic growth target in 2017.
Agriculture, Services Rise; Industry Contracts
The 6.0% growth in agriculture was dominated
by improvement in cash crops (coffee and tea,
accounting for about 23.9% of the country’s
exports), which grew by 22.0% on account of a
good harvest season in the period under review.
We expect this increased production to extend
into 2018. The services sector posted an even
stronger growth rate of 7.0% thanks in large part
to the hotels and restaurants sub-sector which
grew by 9.0% on the back of increased investments
in to the tourism sector that have seen Rwanda
crowned as Africa’s leading destination. On the
other hand, the industry sector posted lethargic
growth of 1.0%, attributable to deceleration in the
construction sector which shrunk by 4.0% as the
country completed major infrastructure projects,
such as the Kigali Convention Centre.
ECONOMIC OUTLOOK
Source: National Bank of Rwanda, StratLink Africa
Source: BMI, StratLink Africa
New Projects to Bolster Capital Formation
We expect that the projected 6.2% growth will
also be achieved through strengthening capital
formation. After sluggish growth due to the
completion of several investment projects in
Q4, 16 and Q1, 17, we expect gross fixed capital
formation to ramp up in the coming quarters as
new projects begin to be implemented in the
country. For instance, the first phase of the Kigali
Busegera international airport worth USD400.0
Million whose construction began in July 2017
with 2019 as the completion date, as well as the
November 2017 construction of the USD 100.0
Million Lake Kivu methane production site.
RWANDA
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
GDP (RHS) Agriculture
Services Industry
0.0 5.0 10.0 15.0 20.0 25.0
Coﬀee
Tea
Jan-Aug, 2016 Jan-Aug, 2017
20.0%
21.0%
22.0%
23.0%
24.0%
25.0%
26.0%
27.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2010
2011
2012
2013
2014
2015
2016
2017e
2018f
2019f
2020f
Real Fixed Capital FormaƟon
ConstrucƟon Industry Value
Fixed Capital FormaƟon as % of GDP (RHS)

RWANDA
Source: National Bank of Rwanda, StratLink Africa
T-Bill Yields
Rwanda All Share, year-on-year
Relative Liquidity in the Money Market
Rwanda continues to witness relative liquidity
in the money market on the back of improving
macroeconomic variables. Rwanda’s inflation has
beensubdued,despiterisingmarginallyby60.0bps
to 3.8% in September 2017. Likewise, the pressure
on the exchange rate has reduced, and credit
to the private sector is growing. The interbank
interest rate, however, rose marginally from 5.7%
recorded in August to 5.8% in September 2017
partly in a bid to curtail the lingering inflationary
pressure. Meanwhile, the Franc depreciated
marginally by 0.4%, month-on-month and 5.0%,
year-on-year.
Generally, short-term government instruments
recorded marginal declines in the period under
review. The 91 Day, the 182 Day and the 364 Day
papers’ yields all declined albeit, marginally by
0.1%, to 6.8% and 8.0% and 8.6%, respectively,
in the period under review. In view of the recent
monetary policy decisions, we envision further
downward movement of yields in the near to
medium terms.
DEBT MARKET UPDATE
Bourse Remains Bullish as Equities Recover
The Rwanda stock exchange (RSE) maintained
the bullish run that began last month, though at
a slower pace, with an increase of 1.7%, month-
on-month, compared to an increase of 4.8% in
September 2017, attributed to the drop in the
share price of Crystal Telecom Ltd, one of the
actively traded stocks.
I&M Bank Listing Boosts Activity at the Bourse
In the year to September 2017, the value traded
on the equities market grew by 40.3% buoyed by
I&M Bank Rwanda’s shares which started trading
on March 31st, attracting new investors to the
market, which has boosted the liquidity on the
bourse after a slow start last year. The turnover
on the equities market rose by USD 5.0 Million,
year-on-year, to USD 17.4 Million¹ in the first nine
months 2017. We expect that improving economic
growth and secondary bond trading, which have
maintained a strong growth path, should boost
activity and liquidity at the stock market going
forward.
1
Original Unadjusted Real GDP Growth. Source: Uganda Bureau of Statistics
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
91 Day 182 Day 364 Day
123.0
125.0
127.0
129.0
131.0
133.0
135.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17

Julio De Souza
Julio is a Brazilian national who has lived and worked in Africa since
2005. He spent three years with UNDP in Kenya and Uganda working
in the private sector development unit and later co-founded Nuru
Energy East Africa in Rwanda, an award winning social enterprise in
the renewable energy sector. In 2012, Julio returned to Kenya to run
Farm Shop – an agro-dealer network distributing agricultural inputs
for small holder farmers. Over the next five years he co-founded
Let it Grow, a boutique marketing and branding agency and left for
West Africa to work for a DFID funded project as a private sector
adviser. Julio holds a Bachelor’s degree in International Studies
and Economics from California State University Long Beach and a
Master’s in Development Studies from University of Oslo. He joins
StratLink as the director of SME and Impact Finance.
Ahmed Wurie
Ahmed is an analyst, with experience working in the M&A industry.
He has worked on a range of transactions in Kenya, most notably in
the agricultural,financial services and retail sectors. Ahmed has been
actively involved in the entire life cycle of the transaction process and
also plays a key role in providing management consulting services
to companies and startups in the financial services and payments
industry. Ahmed previously worked as an Analyst at BlackGold
Investments, a boutique investment and transaction advisory firm
and started his career in finance at African Development Solutions,
a developmental organization active in the Eastern African Region.
AhmedholdsaBachelorofSciencedegreeinEnvironmentalSciences
and is currently a level 1 candidate for the CFA qualification.
NEW STAFF

STRATLINK - AFRICA TEAM
Konstantin Makarov – Managing Partner
konstantin.makarov@stratLinkglobal.com
Dina Farfel – Partner
dfarfel@stratLinkglobal.com
Julio De Souza - Director of SME and Impact Finance
julio.desouza@stratLinkglobal.com
Kyle Drexler – Associate
kyle.drexler@stratLinkglobal.com
Benson Njeri – Analyst
benson.njeri@stratLinkglobal.com
Julians Amboko – Senior Research Analyst
julians.amboko@stratLinkglobal.com
Gianluca Storchi – Senior Research Analyst
gianluca.storchi@stratLinkglobal.com
Sophia Sifuma – Research Analyst
sophia.sifuma@stratLinkglobal.com
Ahmed Wurie - Analyst
ahmed.wurie@stratLinkglobal.com
Peter Mutisya – Director Graphic Design
peter.mutisya@stratLinkglobal.com
STRATLINK AFRICA LTD - WHO WE ARE
StratLink is an Africa focused financial advisory company
with Capital Raising Advisory, Corporate Advisory and
Market Research as our core business lines. We believe in
the growth potential of sub-Saharan African economies and
partner with our clients to execute their vision by providing
quality services and access to capital. We recognize
opportunities in the region and connect the fastest growing
middle market companies with leading global investment
banks, private equity firms and family offices. We value the
importance of making informed decisions and leverage our
regional knowledge to the advantage of our clients.
Sub-Saharan Africa: In-depth macro and microeconomic
research
Within our purview of coverage are nine economies –
Kenya, Tanzania, Uganda, Rwanda, Ethiopia, Nigeria, Ghana,
Angola and Gabon. We undertake incisive research and
analysis of each of the countries’ macro and microeconomic
environment, debt and equity markets. We also conduct
sector specific research and analysis shedding insight on
market landscape, existing gaps and opportunities as well
as potential challenges.
Our guarantee: Competent team, reliable data
Our research is anchored in a competent and versatile
team traversing the fields of economics and finance with
qualifications from globally recognized institutions. The
team is backed by subscription to reliable databases such
as Business Monitor International, Bloomberg, Thomson
One Research, World Economics and The World Today.
As such, our guarantee is reliable and up to date data in
an increasingly dynamic region. Further, we reach out to
relevant bodies in concerned markets including Central
Banks, ministries and state departments.
Authoritative voice on regional economics
StratLink has become an authoritative voice for commentary
and opinion on issues pertaining to Sub-Saharan African
economies and investment. Reputable media including
CNBC Africa, Nation Media Group, CCTV and Bloomberg
have reached out to the company for opinion and analysis.
Where we are based
Our head office is in Nairobi, Kenya with satellite offices in
New York, Kampala and Kuala Lumpur.

Company
ContactDetails
STRATLINK AFRICA
StratLink - Africa, Limited.
Delta Riverside, Block 4,
4th Floor, Riverside Drive,
Nairobi, Kenya
nairobi@stratlinkglobal.com
www.stratlinkglobal.com
+254202572792

November 2017 Africa Market Update (Full Report)

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