Following a trend among exchanges worldwide, the Johannesburg Securities Exchange will decide at a meeting in March whether to float an initial public offering as a way of improving corporate governance in the face of increased competition. Many of its largest companies have moved their primary listings to London in the past few years, with listings on the JSE falling from 600 to around 400 since 1999.
The exchange became a public company last year, and its shareholders will be asked to endorse the decision to list, should that action be decided on by the board of directors next month. According to Russel Loubser, the president of the JSE, the board could make the decision on its own, but the company is determined to be “ultra-transparent” in its decision-making process.
The possible listing comes at a time when the South African economy has reached record-low inflation, the budget is close to being balanced, and the market is up due to strong prices in the precious metals market. In addition, with a relaxing of strict foreign-exchange controls in 2004, a few foreign companies have listed on the JSE and the exchange is currently engaged in pursuing listings from foreign multinationals based in South Africa as well as from other companies in Africa.
On top of all the other problems facing Africa, rising oil prices have begun to have an effect, especially in non-oil producing nations.
In Kenya, for example, higher oil prices have been a big factor in driving inflation in the year ending in June to 16 percent, its highest level in over 10 years. Last year in Kenya, inflation remained in single digits.
The higher prices are not just felt in one part of the economy. Manufacturers face higher rates to run their operations, but ordinary people also must pay more for kerosene to cook and to light their homes.
Consumers are charged higher prices for goods, as well, because transport costs are driven up as oil costs more, and those costs are passed on to the consumer.
Even oil-producing states in Africa, however, are not entirely protected from the harmful effects of rising oil prices, even if those effects are different for them.
More income from selling their oil and increased investment as new oil resources are developed can cause those nations’ currencies to appreciate beyond reasonable levels.
Additionally, these oil-producing nations have little incentive to develop other resources or industries while the oil money continues to roll in.
New African airline Virgin Nigeria will begin operations on June 28 with a once-weekly flight between Lagos and London Heathrow. It is expected to expand to three flights on this route shortly.
Service within Nigeria and to regional destinations elsewhere in Africa is expected to be announced soon and is scheduled to commence in July.
Virgin Nigeria is owned by Nigerian investors who hold 51 percent of the company and by Sir Richard Branson’s Virgin Atlantic with 49 percent of shares.
The new airline will begin service using an Airbus A340-300 leased from Virgin Atlantic, and plans to be flying 10 airplanes by the end of 2006. At that time, the airline expects to employ about 100 Nigerian pilots and 400 Nigerian cabin crew.
Virgin Nigeria’s chief executive was quoted as saying that the airline’s goals are to build the leading African-based airline and to create a network of routes serving Africa and other destinations on a base of quality standards and service.
Africa’s largest oil producer - and a neighbor that has never produced even one barrel of oil - have jointly given five deep-water exploration licenses to US oil companies.
Nigeria and its neighboring island state of Sao Tome have been trying for five years to establish a Joint Development Zone (JDZ) after a long maritime dispute between the two nations.
Sao Tome is a tiny, impoverished, politically volatile island nation with a population of 170,000.
The awarded blocks will be developed over the next seven years and are located in the Gulf of Guinea. They hold an estimated billions of barrels of oil. The US is expected to satisfy a quarter of its oil needs from this area within the next 10 years.
US companies awarded rights in the area include a group led by ChevronTexaco, Devon, Pioneer, Anadarko, and Noble.
Nigerian companies Filtim Huzod, Conoil, Hercules, and Dangote Energy Equity Resources also received stakes in some of the awarded blocks, and due to preexisting rights, US-based Environmental Remediations Holding Co (ERHO), controlled by a Nigerian businessman, secured stakes in all awarded blocks.
Three more blocks will be awarded at a later date.
South Africa is now actively pursuing a share of the international call center industry as more and more companies begin to outsource that aspect of their operations.
With an unemployment rate of 30 to 40 percent, call centers are seen as a good solution to at least part of that problem.
Supporters of bringing more call centers to South Africa say that in contrast to India, South Africa’s biggest competitor for jobs in the sector, South Africa shares a time zone with much of Europe, and it is more culturally aligned with Europe.
Another advantage, they say, is the similarity between the Afrikaans language and Dutch. While the two languages have diverged since the seventeenth century, they still share around 85 percent of words.
This makes it relatively easy to train Afrikaans speakers to operate in Dutch, besides serving the English-speaking populations of the UK and the US.
Currently, most of the 50,000 South Africans who work in call centers handle callers from their own country, but international companies such as Kodak, Samsung, and Lufthansa are now beginning to locate call centers in South Africa.
At mid-day in New York on Tuesday, the US dollar was only fractionally off six-month highs against the euro, sterling, and Canadian dollar and it was up against the yen on mixed economic data.
The dollar was trading at $1.2641 against the euro, at $1.8392 in relation to sterling, and at C$1.2655 against the Canadian dollar. The dollar was up 0.2 percent in relation to the yen, at ¥107.12.
In Asian trade, however, the yen was trading at ¥106.57 in relation to the dollar before news that Japan’s deflation seems to be deepening.
The yen also fell off early spikes of ¥134.55 in relation to the euro and ¥195.63 against sterling to end 0.2 percent down in relation to the euro at ¥135.48 and down 0.3 percent to ¥197.13 opposed to sterling.
Meanwhile, in South Africa, the rand fell 1.2 percent in relation to the dollar to R6.4259, a seven-month low. This came after the African National Congress advocated a more competitive exchange rate, to be achieved by “aggressive” purchase of dollar assets while the rand is strong or by speeding up liberalization of exchange controls. The strength of the rand has more than doubled since 2001.
UK bank Barclay’s has concluded negotiations to purchase a majority share of Absa, South Africa’s largest retail bank.
This is a return to South Africa for Barclay’s, which had done business in the country since the days of the British Empire but had left in 1986 in the days of anti-apartheid sanctions.
With the acquisition, Barclay’s will generate half of its earnings from overseas operations, with about 10 percent coming from Africa, up from 2 to 3 percent.
While some critics have said that the purchase could expose Barclay’s to greater than acceptable economic risk, the bank says that the acquisition will benefit shareholders and predicts R4.1 billion ($232 million) in cost savings and revenue benefits over four years.
Absa has almost 700 outlets and over 4,500 cash machines, with around 30,000 staff. Barclay’s does not plan to close any branches.
Absa has actively sought the business of the half of South Africans who do not have bank accounts. Besides its South African operations, Absa has holdings in Angola, Tanzania, Mozambique, Zimbabwe, and Namibia. It is currently negotiating to buy a stake in a Nigerian bank.
A valuable Italian soccer-shirt sponsorship deal is reportedly in peril due to the opposition of traditionalist government leaders in a North African nation.
The deal would put the trademark of Tamoil, Libya’s state oil company, on the shirts of Italian soccer team Juventus for up to ten years.
But Saadi Gadaffi, son of Libyan leader Muammer Gadaffi and a representative of Tamoil in Italy, says that traditionalists at the top of his father’s government want to stop the deal, which is worth up to $311 million.
Gadaffi gives no reason for the government’s position but calls it “backward.” He claims that the prime minister is among those who oppose the contract.
Juventus, based in Turin, is one of Italy’s most famous, and most successful, soccer clubs and shares in its stock are traded on the Milan stock exchange.
The Libyan Arab Foreign Investment Company owns 7.5 percent of the team’s shares. Sixty percent of the club is owned by Ifil, a holding company owned by the Agnelli family of Italy.
