Atta Africa Financial Update

Executive summary: Pick n Pay to seek new growth engine in Nigeria.

Nigeria’s fundamentals continue to attract investors seeking high return - Lagos alone accounts for over 20 million people and continues to see double digit growth.

The Cape Town based supermarket chain has seen a 26% increase in earnings, but seeks to enter high growth markets to counter head winds at home. PnP is partnering with Lagos-based AG Leventis to enter Nigeria, where there are currently fewer than 20 malls for 180 million people. PnP executives feel they have learnt from their competitors’ mistakes, as seen by both Woolworths and Truworths pulling out of Nigeria in recent times; a strong local partner was a key step in the right direction. Already present in Botswana and Zimbabwe where operating profit rose by 20% in 2016, PnP has not yet set a date for market entry in Nigeria.

Fact: By 2035, Africa's labour force will be bigger than that of any individual country in the world

Uganda chooses Tanzania pipeline route while Kenya to go it alone

  • It looks likely that Uganda will take its oil to the market through Tanzania’s Tanga port, leaving Kenya to build its own pipeline to Lamu
  • The outcome of recent talks was closely guarded, with the technocrats meeting in Kampala insisting that the final position would be announced during the Northern Corridor Heads of State Summit next week
  • Total reaffirmed its commitment to construct the US$4 billion crude oil pipeline to Tanga
  • Total is eyeing production of an estimated 6.5 billion barrels of Uganda’s crude oil by 2018
  • Over about 25 years of standalone pipeline, Kenya is projected to lose US$3.32 billion, and Uganda the US$3.32 billion in revenue collection for not constructing the joint pipeline - If the two countries go for a standalone pipeline, Uganda will lose US$300 million every year due to an increase of US$4.07 in tariff per barrel, and Kenya will lose US$250 million per year due to the increased tariff of US$6.96 per barrel

President Buhari’s haul from the East

  • Nigerian President Muhammadu Buhari went to China on April 10 (his 26th trip abroad since May 2015 when he was sworn in) - his basket of goodies from China upon return has kept many, including his foes, marvelling at the magic of the fiery 73-year-old retired army general and former military head of state
  • China has offered Nigeria a US$6 billion loan to fund critical infrastructure projects
  • According to Nigerian officials, it is a credit that is on the table as soon as the country identifies projects
  • In addition, the Industrial and Commercial Bank of China, the world’s biggest lender, and the Central Bank of Nigeria, signed an agreement on Yuan transactions
  • This means the renminbi (Yuan) is free to flow among different banks in Nigeria and the renminbi has been included in the foreign exchange reserves of Nigeria