One of the major highlights for the Nigerian Stock Exchange (NSE) in 2013 was the launch of the X-Gen. It is a new trading platform that was introduced in a bid to improve and deliver a first-rate technology platform. The system will also enable the NSE to host other exchanges across the region and acts as a great impetus for new market participants to enter the African capital market space.
The NSE was established in 1960 as the Lagos Stock Exchange and as of December 2013 had 200 listed companies with a market capitalization of around $80 billion.
The NSE closed the year with two new equity listings on the main board, while the bond market recorded 19 new listings with an uptick in the value of new issues.
The bourse also had a re-launch of its Alternative Securities Market (ASeM) for small and medium companies. It introduced a new market structure for trading equities and Fixed-Income Market Making.
“In 2014, the Exchange’s primary focus will be on growing the capital market in preparation for achieving emerging market status. The NSE will facilitate access to and participation in the market; increase our footprint on the continent and deploy a risk framework to safe-guard the market venue,” said Oscar Onyema, the CEO of the NSE, at the exchange’s yearly review for 2013 and outlook projections for 2014.
“Our goal is to get promoted to the emerging market index,” he added.
The NSE started operations in Lagos in 1961 with 19 securities listed for trading. Data on listed companies’ performances are published daily, weekly, monthly, quarterly and annually.
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Nigerian_Stock_Exchange_7D_0001

The Floor Worth $80 Billion

At the beginning of August, Africa’s richest man according to FORBES, Aliko Dangote, signed an energy infrastructure partnership with the world’s two largest private equity firms, American-based Blackstone Group and Carlyle Group.
Dangote made a commitment to invest a combined $5 billion by 2019 with New York-based Blackstone in power projects in sub-Saharan Africa and formed a joint venture with Carlyle to invest an unspecified amount in Nigerian oil and gas ventures and other African projects.
This is one of many examples from the continent, showing a step in the right direction in the private equity space for companies hoping to implement projects that require copious amounts of capital.
Private equity refers to shareholder capital invested in private companies. Firms seeking private equity funding often want to finance business expansions, develop new technologies, and complete acquisitions of other businesses among other reasons. The size of the private equity market has grown steadily since the 1970s. Africa accounts for around 1% of private equity investment worldwide, says the Chief Executive of the Carlyle Group, David Rubenstein.
Patrycja Kula, a Business Development Manager at the Johannesburg Stock Exchange, says private equity is also good for the stock exchange. She gives Alexander Forbes, the pension fund giant that delisted in an R8.2 billion buyout in 2007, as an example. It was a R9.7 billion-company when it relisted, showing that private equity helps a lot.
Although the South African private equity industry is small in comparison to those of the United States and Britain, it is well established and locally significant. It may be argued, according to the Southern African Venture Capital and Private Equity Association (SAVCA) Industry Performance Survey in 2013, that the country has one of the most sophisticated private equity industries among emerging and developed markets, with different funds at all stages of business development, from start-up venture capital funds through to late-stage and buy-out funds.
According to the World Bank, African nations need an extra $50 billion a year to ease energy shortages and transportation bottlenecks. Since the mid-1990s, financing for African power projects has averaged around $1.2 billion a year. This is split between public and private money.
In South Africa, the report on the Economic Impact of Venture Capital and Private Equity in South Africa in 2013 emphasized the benefits of private equity and venture capital transactions to the development of the country’s economy. It stressed that they are not confined to investee companies. Besides providing access to capital, Aubrey Shabane, the Manager of the Development Bank of South Africa’s Private Equity &amp; Direct Equities unit, says these investors bring dynamism, a depth of operational experience, huge financial acumen, strategic partners and foresight.
“As we face several economic challenges, including exceptionally high and persistent unemployment, it is rewarding to note the effect of this type of investment on job creation,” says Shabane.
“Companies with private equity and venture capital investors clearly do create employment and those in our survey indicated they have grown their staff by around 40 percent in the two-year period covered by this research.”
According to the KPMG and the SAVCA survey on the industry’s performance in the country over 2013, the private equity industry has R162.2 billion in funds under management, an increase of 16.9% from 2012. It adds that R58.6 billion of the funds under management are in undrawn commitments at the end of 2013, meaning that R46.1 billion is available for future investments in South Africa and R12.5 billion for the entire African continent.
This report also notes that private equity is an important source of Foreign Direct Investment, both indirectly via the raising of offshore money by local fund managers and by direct co-investment by foreign investors.
Speaking at the SAVCA Gordon Institute of Business Science for Private Equity in Illovo, Johannesburg, Stuart Bradley, a Senior Partner at Phatisa, a private equity fund manager investing in Africa, says that private equity is the most expensive way of getting funding or capital and should be a last resort for any business. Bradley adds that it is advisable for businesses to try other avenues first, like internal cash generation, family and friends, banks, mezzanine finance or even defer projects.

An Expensive Necessity  For Africa

The world’s second largest exporter of cocoa is currently experiencing serious economic pain.
Proceeds from Ghana’s cocoa, timber and gold exports have not been enough to cater for its national lifestyle. Add liquid gold to the mix and suddenly this regional champion is showing symptoms of the proverbial Dutch disease so early in its crude oil career.
Ghana’s financial system is now frequently constipated, coping with low savings and high borrowing rates. Its also is characterized by unsustainable appetite for foreign goods, resulting in missed spending targets, inflation and dollar-denominated thinking. Sustaining real economic growth has therefore been difficult. In a nutshell, West Africa’s second largest economy is engulfed in a failing currency crisis.
The Ghanaian cedi is suffering its worst humiliation against major trading currencies in decades. Consumer price inflation peaked at 14.5% in April. Public sector spending has remained way above the regional sub-Saharan average for many years, even as the country continues to record fairly strong growth.
By contrast, the cedi has depreciated in recent years. As a result, equities on the Ghana Stock Exchange (GSE) have also been losing weight, shedding about 16% of their value in US dollar terms this year alone.
The business community and ordinary Ghanaians feel helpless. Their view is that politics now threaten to transform their currency into ordinary tissue paper.
“Notwithstanding the fact that Ghanaians are resourceful and resilient people, local businesses have been hit hard by this currency crisis… the authorities need to cultivate public empathy, they need to involve the business community in their fiscal planning process,” says Albert Ngumba, general manager of e-commerce firm Cellulant Ghana.
The crisis has induced a total slowdown of the once stable polity and left politicians and economists puzzled on how to stop this once bubbling economy from drifting away.
How is it that Ghana now finds it difficult to pay its bills after years of sustained economic growth and after commercial production of crude oil began in 2010? How can a nation be growing into poverty?
For those interested in the fortunes and foibles of African nations over the last five centuries, this is an old tale. The logic of the international marketplace is a simple linear equation: if weaker economies have weak currencies then stronger currencies will produce stronger, more robust economies. This is the turf of the world’s central banks.
Of course, beyond the currency conundrum, one of the reasons why economies fail is fiscal indiscipline. This has been the bane of Ghana’s current economic woes. Its current account deficit, according to the Bank of Ghana (BoG), the banking industry regulator, was a whopping 12.30% of its GDP, as at December, 2013. Debt-to-GDP ratio is forecast to reach 51.2% by the end of 2014. If this figure ever gets to the 60% mark, Ghana might lose its status as a lower middle-income country, according to the IMF.
Government’s quest to increase teachers and civil servants pay blew up in its face: public sector salaries now gulp 70% of internally generated revenue. These civil servants represent less than 1% of the population. With falling commodity prices, and energy supply hiccups, the fiscal deficit is expected to persist for at least another five years.
To stem the negative currency tide, the BoG outlawed companies from maintaining domiciliary accounts and engaging in foreign currency denominated transactions in February. It also limited withdrawals to approximately $10,000. The plan did not work. The cedi has depreciated by more than 6.4% since then. The BoG promptly unfastened the guidelines in July. The effect of this policy flip-flop on the psychology of the markets has been mixed: macro- and micro-level economic pains, heightened currency and sovereign risk ratings, faith in the ability of the economy to turn around in the long term, and erosion of confidence in government’s economic management capabilities.
The matter is threatening Ghana’s hard won reputation as a magnet for foreign investment. Ghana’s share of Africa-bound FDI ($3.3 billion per annum) needs to grow. The value of exports also needs to grow. Ghana’s business and political elite need to be stimulated to increase their appetite local products.
For most Ghanaians, whose outlook on life has been defined by decades of mass penury and perseverance, this is proving to be a bitter pill to swallow, especially after President John Mahama made promises of steady and sustained economic progress.

Growing Into Poverty

Philanthropy is entering what some economists and academics believe is another golden age. Previously, there were booms in giving in Renaissance Europe, 18th-century Britain, the Victorian era, and during the age of industrialization in the 19th-century.
It is hardly surprising, considering how the number of millionaires has increased across the world. But inequality remains widespread. Besides the fact that giving makes one feel good for various reasons, it also makes business sense.
“Philanthropy in Africa, strateg-ically pursued, will contribute to broad-based growth, which creates markets, which in turn enables commerce. How could it not make good business sense?” says Jane Wales, who is the CEO of the Global Philanthropy Forum (GPF).
<div id="attachment_5881" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-5881" class="size-medium wp-image-5881" src="/wp-content/uploads/2017/05/FWA-2013-Dec-Jan-024-026-CA-Phil-001-300x200.jpg" alt="" width="300" height="200" />Mona T Brooks |</div>
Besides opening up markets, many philanthropists are able to provide risk capital for social innovation where governments and businesses are averse to go. John D. Rockefeller, who was one of the first philanthropists in the United States (US), was key to helping eradicate yellow fever and hookworm.
A contemporary example is Eli Broad, whose Broad Foundation is sponsoring medical research in human genomics to revolutionize clinical medicine and make that knowledge freely available across the globe.
“Philanthropy is not and should not be about sure bets. It should include a very healthy dose of risk taking. In fact, in an era of 24-hour news cycles, snap judgments, and the tyranny of quarterly reports, one could argue that the philanthropic sector is the only societal actor that can take risks, withstand short-term setbacks and make long-term investments in the social good,” says Wales.
In the US, philanthropy and charities are encouraged through massive tax breaks. This is very different in Africa, where there is little legal framework for philanthropy. However, there is a push by philanthropic organizations, such as the Kenya Community Development Foundation, for governments to adopt policies that are favorable for philanthropy.
But what is philanthropy? The most common definition is that it is a humane act aimed at creating a better life. So how do we value human life?
Acclaimed philosopher Peter Singer believes that if we were forced to put a price tag on human life, we would say it is in the millions.
He then goes onto to argue that we are all created equal, “at least to the extent of denying that differences of sex, ethnicity, nationality and place of residence change the value of a human life”.
This is especially true for many Africans, who continue to live in abject poverty and survive on handouts.
But its not all doom and gloom. This picture is changing, albeit it painfully slowly in some areas. Philanthropy is gaining momentum in Africa, and it is not only international do-gooders who are helping communities uplift themselves in a sustainable way.
Africans are increasingly becoming involved in philanthropic projects, with the belief that we should be driving the broad-based growth on the continent.
In South Africa, the tax regime is slightly more beneficial. Currently, donations to public benefit organizations are deductible up to 10% of an individual’s taxable income in the year the donation is made.
But the South African Revenue Service (Sars) has noted that large donations are discouraged, because donations in excess of the limit cannot be carried over. It is now looking at allowing donations in excess of 10% of taxable income in any given year to be rolled over as allowable deductions in subsequent years.
According to Nedbank’s Giving Report II, which surveys the giving practices of high-net worth individuals in South Africa, respondents highlighted insufficient tax benefits as a reason for not being philanthropic.
“In 2012 a total of 29% of donors (104) said they would give more if there were more tax perks for giving. This is almost double the 15% of respondents in 2010 who said that changes to the tax regime would influence their giving behavior.”
The Private Philanthropy Circle (PPC), an independent forum of individual philanthropists, is in the process of preparing a formal submission to Sars and the National Treasury on amending the tax regime.
“We believe that tax legislation that promotes philanthropy through benefits or relief for the establishment and growth of philanthropic foundations (institutionalized giving) will ultimately encourage and ensure the sustained strategic support of civil society. Likewise, the non-profit sector would benefit from a more enabling environment for their donors a well,” says PPC member Amanda Bloch. The forum wants a number of changes, including an increase in the upper limit of 10%, the lengthy turnaround times at the Tax Exemption Unit to be addressed, and a clarification from Sars on gifts in kind and services donated, such as time, skill and effort.
Many types of philanthropy are practiced around the world and they all have varying benefits.
“Impact investing”, which aims to achieve financial and social environmental gain at the same time, is becoming more popular. Bill Gates, the founder of Microsoft and one of the greatest philanthropists of our time, is an advocate for program-related investments (PRIs).
Instead of giving money away through grants, PRIs allow philanthropic foundations to make investments as loans or equity stakes, hoping to regain them at a later stage, plus a reasonable rate of return.
The Bill &amp; Melinda Gates Foundation’s $400 million investment program encourages employees to weigh up the social and financial returns involved in proposed projects.
In 2009, non-profit social investment fund Root Capital was chosen as the foundation’s first PRI. The organiz-ation is expanding opportunities for 500,000 rural households in Africa with an investment of $10 million and a $4 million grant. It is being used to extend access to credit, financial management training, and global market opportunities for small and growing rural businesses.
As privatization and the scramble for Africa’s mineral wealth continues, some philanthropic organizations and academics believe there are new opportunities to harness these resources for the public good.
Lester Salamon, a director at the Institute for Policy Studies at John Hopkins University in the US, argues for what he calls “Philanthropication thru Privatization (PtP)”. Basically, it is the phenomenon of capturing, in charitable endowments, at least some of the proceeds of the sales of state-owned enterprises or common-use resources underway around the world.
In one study, Salamon says that more than 500 endowed, independent charitable foundations have been created or enriched during the privatizations, and together they control assets of $128 billion.
The African Grantmakers Network believes PtP will help to prevent the continent’s civil society from relying solely on external funding. An example cited is the Newmont Ahafo Dev-elopment Foundation in Ghana. It was formed in 2008 when Newmont Ghana Gold Limited and the Ahafo Social Responsibility Forum pledged to support community development programs near the mine.
The company contributes $1 per ounce of gold produced and 1% of net profits from the mine to the foundation. In turn, the foundation supports economic empowerment, infrastructure development and sports and social amenities.
Becoming financially self-sufficient and not over reliant on aid and donors is not to be scoffed at. But just how many good deeds can be done when the overwhelming leitmotif of the initiative is driven by profit? Surely a case can be made that profit would, in most instances, trump philanthropy?
Whatever the method of benevolence, Africans are stressing that it needs to be sustainable. Earlier this year, GPF launched its most recent regional affiliate, the African Philanthropy Forum (APF).
Its aim is to contribute to the expansion of strategic philanthropy by Africans in Africa by seeking to address the underlying causes of a given problem. Put differently, don’t give a handout; give a hand up.
“But it would be a mistake to assume that strategic philanthropists ignore such inputs as instinct and intuition. It would also be a mistake to assume that deep in their hearts they are not in search of a ‘silver bullet’ that will solve all. It’s human nature to be impatient in one’s search for a better world. And that’s a good thing,” says Wales. APF’s members define philanthropy broadly to encompass all private means of financing the social good – from grants and microfinance to investments in enterprises that provide goods, services and income-generating opportunities for the poor. Some put their companies to the service of social goals, pursuing what is known as a ‘shared value’ or ‘inclusive business’ strategy.
APF believes the next wave of philanthropic innovation will come from the continent. The forum’s impressive membership includes Nigerians Tony Elumelu and Hakeem Belo-Osagie. Elumelu wants to rewrite Africa’s story by leveraging markets in a strategy he refers to as ‘Africacapitalism’, while Belo-Osagie supports a number of higher-education institutions and philanthropic funds to advance education and build leadership skills among young Africans.
Other members are South Africans Hylton and Wendy Appelbaum, who support a variety of causes, and Benin’s Angelique Kidjo, who promotes the empowerment of women and girls.
One of Africa’s most well-known couples involved in philanthropy is mining magnate Patrice Motsepe and his wife, Precious Moloi-Motsepe, who is a key player in Africa’s fashion industry. They made headlines earlier this year when they announced that they would donate half of their wealth to their foundation, which is involved in a number of initiatives to uplift communities.
The Motsepes join the likes of Gates and US business magnate Warren Buffet, who started the Giving Pledge, which encourages the super-rich to donate at least half of their wealth to charities.
Although the super-rich are often criticized that their philanthropic efforts are in part motivated by self-interest, their impact on making changes for good cannot be scoffed at.
As Albert Einstein so aptly put it: “It is every man’s obligation to put back into the world at least the equivalent of what he takes out of it.”

The value of philanthropy

Annual meetings of the African Development Bank (AfDB), Africa’s premier financial institution, are no longer what they used to be. While Africa remains the world’s poorest continent, the narrative and attention it receives has changed in the past decade. And nowhere is this more visible than in the conversations at the annual meetings of the AfDB, rated AAA by all the major rating agencies—Standard &amp; Poor’s, Moody’s and Fitch. 
In Marrakesh, Morocco, this year, a record 3,000 delegates showed up, ranging from the owners of the bank—the finance ministers of the 53 African countries—to non-governmental organizations and the ubiquitous consultants from around the world. Africa’s newest country, South Sudan, is not yet a member. 
The mood was buoyant, as befitting a continent that is growing faster than any other. The bank forecasts economic expansion across Africa will average 4.8% this year and climb to 5.3% next year. If you exclude South Africa, the continent’s largest economy, the advance tops 7% at a time when most of Europe is in recession, the United States is battling anemic growth at around 2% and the Chinese locomotive is slowing. 
“Now is the time. After 10 years of improved stability, sound macroeconomic policies and blossoming trade links, growth has made African nations freer than ever to choose their own development paths and implement active policies for economic transformation,” says the bank’s vice president and chief economist Mthuli Ncube. 
This is a far cry from the doom and gloom of the two decades ending in the 1990s, when the London-based Economist published its now infamous `Hopeless Continent’ cover, which to be fair, was recanted years later. 
According to the International Monetary Fund, seven of the 10 fastest-growing economies are African—Mozambique, Zambia, Ethiopia, Nigeria, Ghana, the Democratic Republic of the Congo and Tanzania. Growth has been broad-based, with 27 of the region’s 30 largest economies expanding since 2000. Mckinsey &amp; Co. notes that Africa already has a bigger middle class than India. 
While some suggest this is due to China’s resurgence, there is little doubt that painful economic and political reforms carried out in the 1990s and Africa’s new leaders are responsible. 
The private sector believes in the reforms and sustainability of the continent’s new growth path and is, in many instances, outpacing government initiatives through investments on the ground. Aliko Dangote, Africa’s richest man, is pouring $7.5 billion in his businesses in the next four years. 
Acha Leke, a director at Mckinsey &amp; Co. in Johannesburg, says that Africa has gone from battling to generate growth, to the challenge of how to improve the quality of jobs and ensure that the rising tide carries all boats. 
This was reflected at this year’s meeting, the theme of which was Africa’s Structural Transformation; it aimed to ensure that future growth is equitable and sustainable. While economic expansion has lifted some people out of poverty, the majority of Africans remain desperately poor, according to AfDB. 
“Structural transformation is about improving the quality of African growth by diversifying the sources of that growth, and expanding economic opportunities for all. In many ways it is about turning natural wealth into created wealth,” says AfDB president Donald Kaberuka. 
The governors, economists and other delegates addressed how to use wisely the continent’s vast natural resources; how Africa’s cities of the future might look and strategies to take advantage of the world’s youngest population. 
To ensure the current economic growth is sustained, the AfDB approved a 10-year strategy, built on infrastructure development, regional economic integration, private sector development, skills, technology and improved governance and accountability. 
“The strategy reaffirms the bank’s strategic choices around infrastructure, economic integration and the private sector. It charts the way towards inclusive growth that spans age, gender and geography,” says Kaberuka, who is in his second and final term. 
The 2013 meetings were also notable for the launch of the bank’s Africa50 fund. It will address Africa’s infrastructure funding gap, which is estimated at more than $50 billion annually. 
Africa’s positive economic outlook is set to further improve, especially with new mineral discoveries. But some warn that Africa must guard itself against the Dutch disease, a conflict fuelled by the fight for resources, which would set it back and dash both Kaberuka and Ncube’s dreams of making Africa the new workshop of the world.

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FORBES AFRICA SOCIAL MEDIA

The Floor Worth $80 Billion

An Expensive Necessity For Africa

Growing Into Poverty

The value of philanthropy

hopeless no more