Africa Market Update - March 2017

2SEPTEMBER 2015 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
Company
MARCH 2017 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
NIGERIA 4
KENYA 5
TANZANIA 6
RWANDA 8
ZAMBIA 9
UGANDA 7
http://answersafrica.com/african-cities-2.html
CAIRO, EGYPT
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Table of Contents

3MARCH 2017 | MARKET UPDATE – AFRICA www.stratlinkglobal.com
Company
Capital Invested by Country (USD)
AFRICA DEALS LANDSCAPE
JANUARY - FEBRUARY 2017
Source: PitchBook, StratLink Africa
8.0 Million
7.5 Million
130.0 Million
900 Million
38.0 Million
390,000
Egypt
Congo
Uganda
Kenya
4.0 MillionIvory Coast
Tanzania
Mauritius
9.0 MillionLesotho
2 Billion
922 Million
Nigeria 110,000
Swaziland
502 MillionSouth Africa
Deal Activity by Industry (Proportions) Deal Activity by Types (Proportions)
Major Deals – February 2017
• Eland Platinum Mine (South Africa) was acquired by Northam Platinum for USD 13.4 Million on February 24th, 2017
• Awale Resources (Ivory Coast) was acquired by Mariana Resources for USD 4.04 Million on February 24th, 2017
• Dale Capital Group (Mauritius) received USD 2.0 Million in development capital from undisclosed investors on February 14th, 2017
9.9%
0.2%
63.8%
6.0%
Others
2.3%Communication & Networking
Commercial Products
Capital Markets
Business Products & Services
Morocco
Secondary Transaction - Private... Buyout/LBO................
Merger/Acquisition......................... Management Buyout...
PIPE.................................................. Others...........................
82.2%
82.2%
10.6%
10.6%
2.2%
2.2%
0.8%
0.8%
1.3%
1.3%
2.9%
2.9%
20.9%Minerals & Mining

Company
Recovery of USD 160.0 Mln: Boost for War on
Graft
Recovery of USD 160.0 Million of funds allegedly
lost through corruption in February 2017 was
significant for two reasons:
• It came as a positive indicator of the
government’s fight against graft and stepped
up efforts to seal fiscal leakages as the country
grapples with economic downturn
• The timing of the recovery also comes as a
major boost for the economy looking to tap into
the international markets through a USD 1.0
Billion Eurobond. It casts the image of reforms
efforts bearing fruit, boding well for investor
perception of the economy
POLITICAL OUTLOOK
GDP: USD 481.1 Bln | Population: 187.0 Mln
NIGERIA
Banking on the Central Bank’s Stimulus
The business environment remains in a lull even
as news of the Central Bank’s stimulus package
elicited hope that the market could be relieved
of dollar scarcity and reported slowdown in
investment across key sectors. Interest indicate
that conditions remain tight for business’ access
to credit with interest rates trending as high as
17.0%.
Unlikely Near-Term Improvement in the
Monetary Environment
Whereas we do not anticipate improved monetary
conditions in the near term (with inflation in
double digits, the Central Bank is unlikely to slash
rates in a bid to nudge lending rates downwards),
the agriculture and manufacturing sectors will
be of interest to observe through Q2 2017 in
view of the stimulus. The manufacturing sector,
in particular, is likely to come under sharp focus
given the slowdown witnessed in 2016 that saw
the sector contract by 4.4% in Q3.
BUSINESS NEWS ENVIRONMENT
USD 2.3 Bln Disbursed to Stimulate Recovery
The Central Bank has made public disbursement
of USD 2.3 Billion in a bid to stimulate recovery of
the economy. Some of the main sectors targeted
in this exercise are manufacturing and agriculture.
This move mirrors StratLink Africa’s position in the
‘Review 2016 and Outlook 2017’ issue in which
we tabled three key arguments in assessing the
business environment:
• The fact that growth in the non-oil sector
was falling below expectations, effectively
stagnating in Q3, 2016, and presenting the
government with an economic recovery head
ache as it looked to countervail the slump in the
oil sector
• Agriculture was emerging as a bright spot and
that it was highly likely the government would
be keen to harness the opportunity presented
by the sector’s growth in the latter half of 2016
• Dollar aridity remained the key challenge
derailing the business environment as investors
experienced hurdles in meeting import
demands
ECONOMIC OUTLOOK
The short-term end of the yield curve rose further
between January 2017 and February 2017 sending
a signal that the market was wary of the continued
uptick in inflation which saw it stand at 18.7% in
January 2017, 170.0 bps higher than it did in the
preceding month. This trend is important for two
reasons:
• Investors will be keen to observe whether
inflation crosses the 20.0% mark in the coming
months as it last did in July 2005
• A key point of concern for investors is that with
the economy in recession, the Central Bank has
little, if any, room for tightening the monetary
environment to address inflation pressures
DEBT MARKET UPDATE
Full report available for purchase via:

Company
IEBC Concludes Voter Registration
In line with StratLink’s expectation, the second and
final phase of mass voter registration ahead of
the August 2017 general election posted a much
higher performance rate than the first phase,
62.3% versus 35.7%, registering 3.8 Million new
voters. The following are worthy of mention in
view of the concluded exercise:
• The Race for New Voters
The race for capturing first time voters is set to be
a key factor shaping the political landscape over
the next six months with Nairobi poised to be a
key battle ground since it accounts for the largest
proportion as well as a cosmopolitan electorate.
POLITICAL OUTLOOK
KENYA
Disruption in the Mobile Money Market
The mobile money transfer market has become
more competitive since the entry of Equitel in
2015. Its share of the value of mobile money
transaction grew significantly from 5.6% in Q4
of 2015 to 20.3% in Q3 of 2016 in contrast to
M-Pesa’s share that fell from 92.8% to 78.7% over
the same period.
PesaLink
Banks have joined forces to launch a new player in
this space called PesaLink, an electronic payments
platformwhichallowsforreal-timemoneytransfers
between bank accounts via mobile phones as well
as other channels including ATMs, bank branches
and internet banking. PesaLink is operated
through the Integrated Payment Services Limited
(IPSL) which does not charge for transfers below
KES 500.0, above which a transaction fee of 10.0 –
12.0 shillings applies, providing an opportunity for
banks to undercut M-Pesa depending on whether
and how these costs are transferred to customers.
This, together with permitted transactions ranging
from 10.0 – 999,999.0 shillings, may entice low
income users but the service will certainly attract
large transactions considering that M-Pesa caps
these at 140,000.0 shillings per day.
Inflation Breaches Central Bank’s Ceiling on Food
and Fuel Prices
Our January 2017 issue tabled a dim outlook on
inflation with the expectation that a combination
of a general rebound in commodity prices, rising
food index and a sharp rise in money supply were
bound to nudge inflation closer to the ceiling of
7.5%. In February 2017, inflation surged to 9.0%
breaching the Central Bank’s ceiling by 250.0 bps.
Acceleration in the price level has been faster than
our expectation in what we assess was informed,
principally, by two factors:
• The February 2017 upward review in fuel
products which was the highest across
most products over the last six months. The
consequent rise in the cost of energy is likely to
have had a knock-on effect on other sectors thus
pushing the price level further up
ECONOMIC OUTLOOK
Government Checks Debt Appetite
There was minimal movement in the yield curve
between January 2017 and February 2017 in what
is likely to have been informed by moderated
appetite for domestic debt by the government.
Across most tenures, the government absorbed
less funds than received, a likely indication of
efforts to avoid expensive credit.
DEBT MARKET UPDATE
Performance Improves on Banking Stocks
February 2017 was a relatively favorable month at
the bourse with the NSE 20 Share Index clawing
back ground ceded in the preceding month to
close at 2,994.0 points. This gain was propelled
by the uptick posted by banking stocks with the
sector’s index gaining by 8.9%, month-on-month.
EQUITY MARKET UPDATE

Company
Tanzania Looks to Increase Traded ties with
Uganda
President Museveni’s visit to Tanzania on 25th,
February,2017,highlightedtherecentlydeepening
ties between Uganda and Tanzania which have
grown stronger since President Magufuli came
to power in October 2015, as the traditional
trade ally Kenya gets side-lined. Since beating
Kenya to the lucrative deal for the construction
of the 1,443.0-Kilometre pipeline to transport
crude oil from Hoima in Uganda to Tanga Port,
relations between Tanzania and Uganda continue
to flourish. In another show of growing relations,
Uganda has joined Tanzania in delaying the signing
of the European Union-East Africa Community
Economic Partnership Agreement deal, even as
Kenya and Rwanda already signed.
POLITICAL OUTLOOK
TANZANIA
Tanzania’s Fresh Demands on EPA Deal
Tanzania’s withdrawal from the East Africa
Community (EAC)-European Union talks over the
Economic Partnership Agreement (EPA) deal was
thehighlightofthecountry’sbusinessenvironment
in the latter half of 2016, stoking concerns over
the country’s commitment to regional integration.
As highlighted in our 2016 Market Review and
Outlook, how this story evolves will majorly
impact regional trade trends in the region in
2017. Consequently, the EPA deal is hanging in
the balance after Tanzania allegedly demanded
for a review of the impact of the EPA deal on EAC
before it can consider signing it. However, the EAC
Customs Union Protocol dictates that the deal can
only be operationalized after EAC partners sign
the deal as a bloc. Tanzania’s protectionist policies
threaten regional integration, therefore, we expect
that the debate on EPA deal will pervade the 18th
EAC Summit talks to be held in Arusha on April 6th,
2017 to chart the way forward.
Current Account Deficit Narrows by almost half
Tanzania’s current account registered positive
movements in 2016, narrowing by 48.8%, year-
on-year, to about USD 2.1 Billion, on the back of
improved export receipts and declining imports.
Receipts from gold exports, the highest export
revenue earner, rose by 22.5% to USD 1.5
Billion as gold prices recovered on the back of
rising production. Exports rose by 5.3% to USD
5.7 Billion while imports declined by 12.0% to
USD 8.7 Billion². Consequently, during the year
ending December 2016, the balance of payments
significantly improved to a surplus of USD 305.5
Million compared to a deficit of USD 199.1 Million
in the corresponding period in 2015.
ECONOMIC OUTLOOK
Yields Decline as Liquidity Rises
Yields in the short-term market declined slightly in
the face of relative liquidity ease between January
and February, 2017. The interbank rate declined by
100.0 bps to 7.3% in the period under review. On
the other hand inflation rose slightly by 20.0bps to
5.2% in January 2017 on the back of the effects of
the ongoing drought in the country.
DEBT MARKET UPDATE
Market Maintains Bullish Trends
The market defied the tumultuous operating
environment to register positive performance as
majority of listed securities stayed in the green.
The All Share Index gained by 8.8% month-on
month, to 2,335.3 units. However, the share price
of Acacia mining company, the largest mining
company in Tanzania, plunged by over 13.0% on
March 3rd, 2017 their biggest one-day drop since
October 2015, after the company halted exports
of gold and copper from Tanzania following a ban
by the government on unprocessed ore.

Company
Uneasy Calm as Opposition seeks Dialogue with
Government
Available data suggests that opposition has sought
audience with the government for dialogue to
solve the political impasse in the country and help
lower the current political temperatures that have
remained heightened since the highly contested
February 2016 election that has left the country
deeply divided.
Pre-Conditions for Dialogue
The contentious issues alleged to be stalling the
dialogue talks are the pre-conditions for dialogue
set by the opposition including demands that
dialogue can only take place in the presence
of a mutually agreed upon mediator and the
requirement that the President agrees to an
international audit of the 2017 elections. Though
previous attempts at building a lasting national
consensus have failed, both President Museveni
and opposition luminary Kizza Besigye should
provide an enabling environment for dialogue to
take place if the country is to tackle the escalating
tension and move forward.
POLITICAL OUTLOOK
UGANDA
Mixed Outlook in the Business Environment
Two Issues Dominate Uganda’s Business
Environment
Escalating Inflation: The biting drought continues
to inflict upward pressure on Uganda’s inflationary
trends as inflation moved 60.0 bps up, month-
on-month, to 6.7% in February 2017 , above the
bank’s medium-term target of 5.0%, on the back
of rising food inflation occasioned by the long dry
spell in the country. Likewise increasing money
supply offers lingering risks to inflationary trends
in the near term: Money supply rose by 11.1%
between January and December, 2016.
How effective is the Sustained Rate Slash
2016 was a turbulent year for the Ugandan
economy. The economy has been facing mild
headwinds from a myriad of factors including the
slowdown in economic activity during the 2016
general elections, the high interest rates that
negatively affected private sector credit growth, as
well as spill-over effects from the conflict in South
Sudan, one of Uganda’s most important export
markets. These developments coupled with a
weaker than expected private sector demand,
contributed to the slowdown in the growth of
the economy. Moreover, the prospects for the
economy in 2016/17, remain low, as the Central
bank revised economic growth downwards to
4.5% from the previous 5.0%.
ECONOMIC OUTLOOK
Yields Decline as Liquidity Increases
Liquidity in the money market remains relatively
high as the Central Bank maintains expansionary
monetary policy. On February 15th, 2017, the
Central Bank slashed the benchmark rate by
50.0 bps to 11.5% to increase money supply in
the economy, signaling to improving liquidity
conditions. In the same breath, the interbank
rate declined marginally by 15.0 bps, month-on-
month, to 11.0% as of January 31st, 2017.
DEBT MARKET UPDATE
Bourse Remains Bullish
The market maintained bullish trends in February
on the back of calm macroeconomic environment.
The bourse has survived poor results posted
by listed companies: British American Tobacco
Uganda’s profit tanked by 65.0%, year-on-year to
USD 2.1 Million in 2016 attributable to increased
taxation on its products and harsh operating
environment. 50.0% of the company’s loss was
occasioned by the decision by government to ban
exportation of the tobacco leaf in 2015

Company
Rwanda Strengthens Ties with India
On the international front, Rwanda is seeking
to strengthen bilateral relations with India after
signing three bilateral deals during the state visit
by India’s Vice-President to Rwanda in February
2016. The deals include a bilateral air service
agreement between Rwanda and India, coming in
at a time when RwandAir is planning to commence
flights to India. The two nations are also looking
to double bilateral trade in five years: India’s
Rwanda’s third import origin representing 9.6% of
total imports as of 2014.
POLITICAL OUTLOOK
RWANDA
MineralSectorCouldbenefitfromtheSuspension
of the Dodd-Frank Act
The mining industry in Rwanda, the largest export
earner for Rwanda at about 40.4% of total exports,
could benefit immensely from the decision by the
United States of America to repeal the Dodd-
Frank Act that has seen Rwanda spend over USD
4.0 Million annually on mineral due diligence to
ensure compliance with the Act ─ a legislation
that was enacted in 2010 to safeguard stability in
mineral-rich conflict-prone countries by ensuring
that natural resources are not used to fund
conflicts.
Act Stifling Nascent Manufacturing Sector
The suspension would eliminate negative
international bias against minerals from Central
and East Africa nations like Rwanda, a major
consequence of the Dodd Frank Act. The Act has
been castigated for stifling growth of the nascent
manufacturing sector due to the high compliance
fees that Rwanda has to incur: Between January
and August 2015, USD 3.2 Million was spent on
due diligence, representing 4.0 % of the value of
minerals produced⁴. However, the flip side of the
suspension could mean more scrutiny to Rwanda’s
minerals. The minerals involved include cassiterite,
wolfram, tantalum and gold ore, which are also
Rwanda’s principal mineral exports.
Rwanda Misses Half-Year Revenue Target
Despite putting in measures to widen the tax
base, Rwanda continues to miss its tax revenue
collection targets posing a challenge to the
country’s fiscal balance in the face of increasing
drought conditions which are bound to negatively
impact export earnings from agricultural exports,
second export revenue earner after minerals. The
Rwanda Revenue Authority missed its financial
year 2017 half-year target, collecting USD 643.8
Million, against a target of 647.0 Million, between
July-December, 2017.
ECONOMIC OUTLOOK
The harsh macroeconomic environment
notwithstanding, Rwandan investors maintain
confidence in the economy as exhibited by
the increasing over-subscription in long-term
government fixed income instruments. The 12.4%
USD 12.1 Million three-year Treasury bond issued
in February posted an over-subscription of 201.9%.
DEBT MARKET UPDATE
I&M Lists at the Rwandan Bourse
I&M bank finally listed on the Rwanda Stock
Exchange after postponing the listing that was
initially slated for December 2016. The offer
for sale of 19.81% shareholding held by the
government of Rwanda in I&M Bank (Rwanda)
Ltd. was launched on 14th, February and it set
to close on March 10th, 2017. The offer price for
the share has been set at USD 0.1. I&M is one of
the two banks on the Rwanda Stock Exchange
(KCB and Equity) that have been cross-listed. The
Rwandan bourse remains dormant in the face of
poor performance of bourse across the region.

Company
Favorable Outlook
StratLink maintains a favorable view of the
country’s political risk climate informed by the
following considerations:
• Key indicators suggest the macroeconomic
environment is on the mend with inflation
reverting to single digits whilst the exchange rate
has been stable over the last six months. These
developments are vital in diminishing the build-
up of socio-political pressure from the masses.
What we will be keen to observe in the coming
months is how the government deals with the
challenge of power outage which continues
to plague the economy. Additionally, drought
affecting parts of the region will be a key risk
factor to watch out for as it could reverse gains
made in mitigating inflation
International Monetary Fund Visit
The investment community will be looking forward
to the International Monetary Fund visit due in
March 2017 to see whether the country receives a
shot in the arm to spur economic recovery further.
This will be important for two reasons:
• With the global economy pervaded with weak
recovery, many will be keen to observe the
fund’s assessment as an indicator of whether
the emerging rebound of Zambia’s economy
is transient or sustainable. The key focus in
this regard is bound to be debt and fiscal
sustainability as the country looks to stimulate
key sectors
• With available data showing that the current
account remains in deficit despite gradual
improvement since Q1 2016, we expect that
provision of support to cushion potential foreign
exchange headwinds to be amongst the key
items shaping discussion.
POLITICAL OUTLOOK
ZAMBIA
Bank of Zambia on an Expansionary Offensive
In December 2016, we projected a bias, by Bank
of Zambia, for gradual monetary expansion
within Q1 2017. This was informed, primarily, by
consideration of three factors:
• Decline in inflation which gave confidence in
recovery of the macroeconomic environment
• Need to catalyze the economy following a
generally adverse environment in 2015 and the
better part of 2016
• Relative resilience by the Kwacha after an
episode of wild depreciation in 2015 and the
start of 2016. Recovery in copper prices was a
key factor underlying this trend
ECONOMIC OUTLOOK
Short-Term Yields Trend Upwards
Two trends have stood out with regard to the yield
curve between Q4 2016 and January 2017:
• There was minimal movement across the yield
curve in spite of the decline in inflation and
general rise in liquidity as indicated by the
interbank rate. Upward pressure is likely to be
coming from the government’s appetite for debt
especially in the short-term end of the market.
January 2017 reported an 89.6%, year-on-year,
growth in T-Bill sales compared to an average
27.9% between 2013 and 2016 pointing at a rise
in demand for short-term debt
DEBT MARKET UPDATE
Bullish Month at Bourse
The market was on rally between January and
February 2017 in a likely indication of favorable
investor sentiment buoyed by improving
macroeconomic conditions. Copperbelt Energy
Corp stood out as an outlier counter in the period
under review with its price surging by 18.4% year-
to date.

Company
StratLink in the News
In the period under review, StratLink’s research department analyzed South Africa’s macroeconomic environment with a
focus on changing demographics and rising long-term unemployment.
Please click the button to view the full article:
What the South African anti-foreign riots say about the country’s economy

Company
STRATLINK - AFRICA TEAM
Konstantin Makarov – Managing Partner
konstantin.makarov@StratLinkglobal.com
Dina Farfel – Partner
dfarfel@StratLinkglobal.com
Vimal Parmar – Consultant
vimal.parmar@StratLinkglobal.com
Kyle Drexler – Associate
kyle.drexler@StratLinkglobal.com
George Waithaka – Senior Corporate Finance Analyst
george.waithaka@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
Easton Ochieng’ – Intern Research Analyst
easton.ochieng@StratLinkglobal.com
Peter Mutisya – Director Graphic Design
peter.mutisya@StratLinkglobal.com

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

Africa Market Update - March 2017

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