I Spy Africa 5.29
29 August 2008
1. SA can learn from India on IT training
ITWeb (Johannesburg), 25 August
SA IS not alone in suffering from a severe shortage of skilled technicians since India’s world-famous IT industry will also run out of steam unless the country can double the number of IT graduates. Ideally India needs at least 300000 new technicians a year. But its university training is so disconnected from requirements that 75% of graduates in all disciplines end up in jobs that bear no relationship to their studies, says Ganesh Natarajan, chairman of the National Association of Software and Services Companies (Nasscom). Its IT industry employs 2-million people and is growing by 25% a year, yet only about 60000 technology graduates enter the workforce each year. Natarajan was in SA this week to strengthen ties between the two countries and to encourage South African businesses to get more involved with schools and universities.
2. SA: Retail market turns on its head
Moneyweb (Johannesburg), 25 August
The results of two major South Africa retailers last week suggest something totally counter-intuitive is taking place in retail market; the rich are under pressure while the poor are the ones keeping the tills clanking.The results of Woolworths (JSE:WHL) and Massmart (JSE:MSM) last week, both of which sell a odd range of both food, clothing and other items, constitute what appears to be a strange contrast.Woolworths - known for its imported balsamic reductions and designer clothing collections - reported net income down 12% even after sales climbed 17%. Incredibly, net bad debts surged to 8% of sales, almost double last year's level.Massmart on the other hand - known for its suitcase-sized cooking oil containers and its Chinese-made track-suites designed for people not likely to be using it them on an athletics track - comparable-store sales for the 52-week period rose by 10,8% and gross profit was up 18%. The store does not have bad debts because it's a cash business.The share prices of both stocks have turned around sharply since mid-June when the interest rate cycle appears to have reached its peak, but Massmart's has gained ground faster.Consequently, strange as it may seem, it appears that the rich have decided to cut back on shopping while poor or perhaps poorer South African are still out there pounding the shop floor.
3. Cellular boom rings big changes in Nigerian business and society
Business Report (Cape Town/Johannesburg), 25 August
Seven years after launch, cellular services had transformed Nigeria's society and economy, bringing unprecedented changes in just a short time, according to officials. Earlier this year, Nigeria outstripped South Africa as the continent's biggest market for mobile telephony. Nigerian Communications Commission head Ernest Ndukwe said that as of March, there were 60.9 million subscribers - 70 times more than before cellular services were launched in 2001. The opening up of the industry came with the licensing of three operators - MTN Nigeria, Econet Wireless Nigeria (first known as Celtel, now as Zain) and M-Tel, a unit of state-run group Nitel. Local operator Globacom and United Arab Emirates group Etisalat were later licensed, but the latter has not yet started operations. Analysts said MTN ranked as market leader, followed by Globacom and Zain, with the number of subscribers likely to rise by 10 million a year over the next five years. "The exponential growth … has pushed up Nigeria's [cellular penetration rate] from 0.73 percent in 2001 to 32.79 percent in March 2008," said Ndukwe.
4. Google eyes cable as Infraco flounders
Moneyweb (Johannesburg), 22 August
Google has held exploratory discussions with a number of South African telecommunications operators on building an undersea cable to the country, as government's Broadband Infraco's West Coast cable stumbles, sources say.Telkom, with cellular operators MTN and Vodacom, also wants to build a SAT-4 cable as its current SAT-3 is close to maximum capacity.Sources say Telkom specifically wants to exclude its major new competitor Neotel from SAT-4, even though the two are shareholders in the East African Submarine Cable System (Eassy). Neotel is also involved in landing the privately-financed Seacom East Coast cable.MTN, Vodacom, Neotel and Telkom were supposed to be anchor investors in Broadband Infraco's African West Coast Cable project, but have decided to pull out. This is mainly due to the fact that Telkom, in particular, does not believe bandwidth prices should go as low as Broadband Infraco was planning to charge. It is also concerned about the project's finance arrangements.
5. Retail reflection
Business Day (Johannesburg), 25 August
THE latest round of financial results and trading updates from JSE-listed retailers confirms the downturn that is evident, at macro level, in data from Statistics SA showing that retail sales have been falling in real, inflation-adjusted terms for some months. In June, retail sales were down 2,6% in real terms, and for the second quarter the trade sector as a whole was a drag on SA’s economic growth for the first time in seven years. So the boom times in consumer spending have clearly ended, as higher interest rates as well as higher food and fuel prices have savaged disposable incomes. But the reports from the retailers help to fill in the details of the downturn story, a story that is likely to get quite a lot worse before it gets better.
6. Cell C gains weight
ITWeb (Johannesburg), 22 August
SA's third cellular operator, Cell C, has published strong half-year results, with revenue up by 17% in the six months ending June 2008. CEO Jeffery Hedberg entered the 2007 financial year with a turnaround strategy for the company, which seems to be paying off. Results have been steadily stronger, both in the year-end report, released in April, and this financial half-year.
7. Rwanda: African Central Bank Governors Discuss AU Financial Institutions
The New Times (Kigali), 23 August
Kanimba,Central Bank of Libya Governor (and Chairman of AACB) Farhat O Bengdara and Bank of Uganda's Tumusiime Mutebire. Governors of African Central Banks convened in KigaliSerenaHotel to discuss issues concerning the creation of three African Union (AU) financial institutions.
8. Kenya: Kenswitch Opts for Regional Expansion
The Nation (Nairobi), 22 August
Local national payments switch provider, Kenswitch has put in place an ambitious plan to bring 19 more banks into its existing network. The new initiative will make it possible for Kenswitch cardholders to access ATM and Point of Sale (POS) services in Kenya, Uganda, Tanzania and Rwanda without the need for extra identification. Kenswitch General Manager, George Wainaina, said the roll out will not require additional installation of network software as it will simply involve interconnection to switches in the three countries running on similar technology. The three switches include Bankom of Uganda, Simtel of Rwanda and Umoja of Tanzania with five, eight and six banks respectively. Kenswitch's move is one of the many private sector initiatives designed to further integrate and strengthen the regional economies in line with the East African Community's (EAC) vision. "We are making it possible for residents of the EAC to move and trade freely without worrying about cash and their safety," says Mr Wainaina. The decision to go regional reflects the company's growth strategy as the financial sector gets more sophisticated.
9. Kenya: First ATM Fund Raiser Launched
The Nation (Nairobi), 21 August
Kenya's first ATM-based fund raising effort has been launched. Known as 'Key in your donation and help save a child's life,' the drive is a collaboration between Imperial Bank, Unicef Kenya and cash machine firm Paynet. Through it, anybody with a Visa card will be able to make a contribution to the welfare of Kenyan children at any of the 110 Pesapoint cash machines. The campaign hopes to raise to $200,000 (Sh13.4 million) towards Child Alive, an initiative by the UN agency to support Malezi Bora, a programme through which the Government aims to train communities on child survival practices such as growth monitoring, hygiene, nutrition and sanitation.
10. Kenya: Big Growth for the Country's ICT Sector
The East African (Nairobi), 23 August
The Kenyan ICT sector has registered substantial growth, thanks to competition introduced in most market segments by the industry regulator, the Communications Commission of Kenya (CCK). Kenya now has one national operator, two regional telecommunications operators, 51 Internet service providers, two Internet exchange points, 20 public data network opera Âtors, 8 Internet backbone gateway operators, 6 VSAT hub/commercial VSAT operators, 19 local loop operators and two mobile operators.
11. Kenya: Econet Pledges Phone Service By December
The Nation (Nairobi), 21 August
Econet Wireless has promised to deliver Kenya's third mobile telephone network by December this year. Mr Michael Foley, CEO for Econet Wireless Kenya, said his firm had secured an extension of an earlier September deadline to have the network running, after it lapsed.
12. Africa's Ecobank opens $2.5 bln cross-border offer
Reuters (Johannesburg), 25 August
African regional banking group Ecobank launched on Monday a simultaneous $2.5 billion rights issue and public offer on stock exchanges in Ghana, Nigeria and Ivory Coast, a bank executive said. The offer, which will close on October 3, is the first simultaneous cross-border regional offering of this size in Africa and will help fund the expansion of the leading Pan-African banking group. It ran on the stock exchanges of Lagos and Accra and on the West African regional BRVM bourse in Abidjan. "We are expecting that the offer will be oversubscribed because of the interest shown when we were going through the approvals process," Michael Ashong, managing director of Ecobank Development Corporation, the regional investment bank of the Ecobank Group, told Reuters. Ecobank is offering 3.76 billion shares to existing shareholders at $0.27 per share and at a rate of five new shares for every nine held on August 18. The public offer is made up of almost 5.12 billion shares at $0.29 each. The pricing for shareholders implied a 20 percent discount to the 30-day volume weighted average on all three exchanges, while the discount for the public offer was 12.5 percent.
13. Boom in remittances arouses Western Union
Business Report (Cape Town/Johannesburg), 26 August
A surge in inward remittances from $344 million (R2.7 billion at yesterday's exchange rate) in 2000 to $735 million last year could have prompted Western Union, the global money transfer firm, to open operations in South Africa in partnership with Absa, said a source. The source - who did not want to be identified because the partners were not prepared to disclose the details before the date of the formal announcement - said the rise in remittances made South Africa attractive, with many of its people migrating to the UK, US and Australia. "Remember, the UK has been hiring … our skilled healthcare practitioners and the US had also taken some of our people," said the source. "Australia, of course, we know that it is a destination of choice for many South Africans who leave the country. These have left families and friends behind and they are sending money to them." Western Union would be opening branches in South Africa in the next few months and its partnership with Absa had been described as a landmark move, said the source.
14. Nigeria: Stockbrokers Laud Zenith Bank's Performance
Vanguard (Lagos), 25 August
Zenith Bank's recently released twelve month result for the period ending June 2008 has won the commendation of stockbrokers who at a forum in Lagos at the weekend described it as astounding. Speaking at the stockbrokers' forum organized by the bank at the Civic Centre, Victoria Island, Lagos to review the 2007/8 result, the doyen of stock broking in Nigeria, Reverend Olu Odejmi said the result was a product of the culture of excellence for which Zenith Bank is known, powered by a sound management team, led by the bank's Managing Director, Jim Ovia.
15. East Africa: Fina Bank in Money Transfer to Kenya, Uganda
East African Business Week (Kampala), 23 August
Money transfer between Kenya and Rwanda has been made easier with 'Fina Direct', Fina bank's new money transfer product. The product was launched mid this month at the bank's head office in Kigali. The bank officials say 'Fina Direct' is secure and fast. The service can be accessed by non Fina bank clients and its clients residing in Kenya and Rwanda. With Fina Direct, money is transferred with in 30minutes although the bank has plans to reduce this time to 5 minutes. With 'Fina Direct', transferring $50,000, one is required to pay $35 and $45 in excess of $50,000.
16. Nigeria: Banks - Mega Profits, Poor Services
Vanguard (Lagos), 25 August
AS several banks release their profits, which have increased dramatically over the previous years, the Central Bank of Nigeria and the Governor in particular should to some extent justifiably feel that the optimism that consolidated banks will generate better results and provide reassurance has been vindicated. Even if the economic performance in other sectors of the economy failed to match the heady performance of the banking sector, the fact remains that the sector has been the major driver of the Nigerian economy in the past two years.
17. Kenya: Fina Bank in Regional Expansion Blitz
The East African (Nairobi), 24 August
Keen on increasing its visibility and customer base, Kenya-based Fina Bank has launched a regional expansion blitz that will see it open several new branches in Kenya, start operations in Uganda and relocate its Rwanda branches to better sites. However, the bank says it has no plans to enter Tanzania and Burundi -- the other two partners in the five-member East African Community -- in the near future.
18. BCX continues to grow African ops
Finance24 (Cape Town/Johannesburg), 26 August
ICT company Business Connexion on Tuesday reported diluted headline earnings per share of 44.3c for the year ended May 2008 from 37.5c a year ago. Revenue grew by 16% to R4.1bn and operating profit improved by 51% to R164.2m. Profit for the year declined to R128.1m from R167.3m a year ago. Headline earnings increased by 17.6% to R114.9m and basic earnings reduced from R136.9m in 2007 to R114.7m, with 2007 earnings benefiting from the profit on sale of land and buildings and positive fair value adjustments to investment property. "We are pleased with the progress in the second six months of the year. The revitalisation programme announced in February 2008 has had a positive influence on the business and its performance.
19. How healthy are South Africa's banks?
Moneyweb (Johannesburg), 26 August
What guarantees are there for local depositors and what do the international ratings agencies say?
20. RMB’s Mike Pfaff goes small
Moneyweb (Johannesburg), 27 August
Michael Pfaff, outgoing CEO of RMB, is to join a close friend to offer long term private-equity-type services when he leaves the bank at the end of the year.Pfaff believes hundreds of entrepreneurs with medium-sized businesses need the access to capital, the dealmaking skills, the network, the leadership and operational skills that he and partner, Michael ten Hope will be able to offer through their company, CAVI.Pfaff explains the business model: "Most private-equity deals are based on the buyer eventually selling. We want to buy to build. The idea is to partner with entrepreneurs, who want to realise the full potential of their businesses without the object of selling."
21. 'We cannot live in debt'
Business Report (Cape Town/Johannesburg), 27 August
South African households that are deeply indebted are a worrying trend, finance minister Trevor Manuel said on Tuesday. Speaking at a policy debate in Johannesburg on the country's economic future, Manuel said the trend of borrowing was a disinvestment for the country. "There is something wrong. We have to make choices as a nation as we cannot live in debt and not save for tomorrow," Manuel said.
22. Global economy losing more speed
Business Report (Cape Town/Johannesburg), 27 August
The International Monetary Fund has cut its world growth forecasts for this year and next in light of the global slowdown, an official said yesterday. The IMF now expects world growth of 3.9 percent in 2008, down from a previous estimate of 4.1 percent , said an official close to one of the delegations attending a meeting of G20 developed and developing countries at the weekend. "The IMF gave the figures in a note prepared for the meeting ... in Rio (de Janeiro)," the official said. The IMF also downgraded its 2009 forecast to 3.7 percent from 3.9 percent, the official added.
23. Kenya: Credit Bureau to Benefit SMEs, Says Lender
The Nation (Nairobi), 26 August