AFRICA STRATEGY 6 July 2010

SUB-SAHARAN AFRICA BI-WEEKLY

„ Special focus: Nigeria’s Amcon Bill, aimed at removing toxic assets from rescued Ridle Markus
banks, has been approved by the Senate and is awaiting presidential sign-off. +27 (0)11 895 5374
Coupled with other reforms, we expect Amcon to have a positive effect on the ridle.markus@absacapital.com

stability and health of the banking system and overall economic growth.
Dumisani Ngwenya
„ SSA: Monetary policy in Botswana, Mauritius, Namibia and Nigeria was kept +27 (0)11 895 5346
unchanged in the past week. We expect monetary tightening to be delayed until dumisani.ngwenya@absacapital.com
next year as policymakers want economic growth to strengthen further.
Judy Padayachee
„ SSA: The economic recovery continues to gain traction and, except for Mauritius, +27 (0)11 895 5350
indications are that growth in several countries is going to surprise on the upside. judy.padayachee@absacapital.com

„ Technical strategy: USD/UGX – we expect a break above 2,300 in the near term.
www.barcap.com
„ Markets: Currency performance was mixed w/w with the MUR 2% firmer against
the USD. The Nigerian Stock Exchange closed 0.5% down on the week.

Special focus: Nigeria – Amcon falling into place

The Amcon Bill was passed by the Senate on 23 June and is awaiting approval from
President Jonathan. Coupled with other reforms, the Central Bank of Nigeria (CBN) is
hoping that the Amcon Bill, which is aimed at removing non-performing assets from
the balance sheets of rescued banks, will help unlock credit lending and restore
confidence in the country’s banking system. However, there are costs involved, with the
CBN and federal government likely to lose a substantial amount in purchasing these
toxic assets. Moreover, apart from the fiscal effect, the injection of extra liquidity into
the banking system may also be inflationary. Nevertheless, we expect these banking
reforms to have a positive effect on economic growth over the longer term.

Figure 1: Nigeria’s economic growth remains brisk despite headwinds

8
Real GDP (%) Currency Weekly w/w % ∆
per USD close
7 AOA 92.57 0.8
BWP 7.08 -0.5
GHS 1.45 -0.6
6 KES 81.55 0.0
MUR 31.90 2.0
MZN 34.25 0.0
5 NGN 149.85 0.6
TZS 1492 -1.7
UGX 2261 -0.3
4
ZMK 5150 -0.4
2004 2005 2006 2007 2008 2009 2010F 2011F
Note: Week-ending 5 July 2010
Source: IMF, CBN, Absa Capital Source: Reuters

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 13

Absa Capital is a division of Absa Bank Limited

Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly
CBN governor worked hard to
restore confidence in Nigerian
banking sector
The asset management company
which is to soak up toxic assets is
key to restoring confidence
6 July 2010
Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, has worked hard to restore
confidence in the Nigerian banking system since taking office in June 2009. Sanusi’s actions
are taking place within the broader context of the four pillars of banking reforms:
enhancing the quality of banks; establishing financial stability; enabling healthy
financial sector evolution; and ensuring the financial sector contributes to the real
economy. After determining that nine of the 24 Nigerian banks were insolvent and chronic
borrowers at the expanded discount window, Sanusi replaced the management of eight
banks (of which five banks accounted for 50% of the total exposure – Figure 2) and injected
about USD4bn of Tier 2 capital into the insolvent banks (the money is a loan and will need
to be paid back to the CBN). In addition, as the first phase to improve confidence in the
country’s banking system, the CBN guaranteed all foreign credit lines and interbank
placements, extending the guarantee to 31 December 2010. Changes were also made to
banking regulations in order to improve the quality of reporting and overall management –
these include the forced adoption of common accounting years for all banks, the adoption
of International Financial Reporting Standards, and limiting the term of banking CEOs in
office to a maximum of ten years.
Figure 2: Deposit money banks’ exposure to CBN expanded discount window
outstanding (NGNbn)
500
450
400
350
300
250
200
150
100
50
0
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09
Five Banks Total
Source: CBN
The key component of restoring confidence in the Nigerian banking system, however, was
the proposed establishment of an asset management company that would remove all the
non-performing loans from the troubled banks and “clean” their balance sheets. To that
end, the CBN and Ministry of Finance introduced the Asset Management Corporation of
Nigeria (Amcon) Establishment Bill. The main objectives of the Amcon Bill are to improve
liquidity; provide a vehicle for acquisition of bank shares; maximise returns on asset
disposal; and encourage investment in the capital market. Under this bill, toxic assets would
be exchanged for seven-year bonds or other debt issued by Amcon and guaranteed by the
finance ministry. The Amcon Bill has already been approved by the House of
Representatives (10 March) and the Senate (5 May), while the Senate approved the
harmonised bill (which includes the amendments of the two chambers) on 23 June. The Bill
has been submitted to President Jonathan for his approval, after which it will become an Act
of the National Assembly (The Guardian, 25 June). The CBN expects the process to be
completed by September and hopes that it will unlock credit lending and further restore
confidence into the country’s banking system.
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Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly
The economic cost of Amcon is
likely to be significant
Capital injection through
Amcon is likely to have an
inflationary effect
Banking reforms will have
longer-term positive effect
6 July 2010
Figure 3: Private sector credit growth a concern to the CBN
12 120
10 100
8 80
6 60
4 40
2 20
0 0
Apr 06 Oct 06 Apr 07 Oct 07 Apr 08 Oct 08 Apr 09 Oct 09 Apr 10
PSCE (NGNtn) PSCE (% y/y, rhs)
Source: CBN, Absa Capital
Conclusion
The CBN’s reform program over the past year to instil greater confidence into the sector still
has a long way to go, in our view. Indeed, on 28 June, Standard & Poor’s noted that the
country’s banking sector remains risky, with most banks rated in the single B category,
which is well below that of most other banks around the globe (Reuters, June 28). The
economic cost of Amcon could be significant, with the Debt Management Office (DMO)
estimating that the federal government and CBN are set to lose close to USD6bn of the
USD9bn planned to purchase toxic assets of the troubled banks. The DMO also revealed
that Amcon cost is to be shared between the Ministry of Finance and CBN in the ratio 10:90.
Apart from the fiscal effect, the injection of capital into the banking system is likely to have
an inflationary effect although the governor indicated last week that the CBN is unlikely to
tighten monetary policy any time soon because the Bank wants private sector credit growth
to expand.
Overall, we expect the negative effect of the ongoing banking problems on economic
growth in 2010 to be significantly less than last year. However, we believe that these
banking reforms, if sustained and successful, should have a positive effect on economic
growth over the long term. Despite the still wobbly banking sector, we expect economic
growth of 7.3% this year, compared with 6.7% last year, as growth is likely to be
underpinned by the non-oil sector, in particular the agriculture, trade and service sectors.
3
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly
Despite varied inflation trends,
policy rates were kept unchanged
Nigeria continue to face upside
inflationary pressures
Botswana inflation likely to
remain outside target band for
some time
6 July 2010
In review
SSA – monetary policy unchanged
The past two weeks saw monetary policy meetings in Botswana, Mauritius, Namibia and
Nigeria. Despite varying inflation trends, policy makers in all four countries left their policy
rates unchanged as the economic recovery in these markets continue to gain momentum.
In Nigeria, the central bank kept the monetary policy rate (MPR) unchanged at 6% at its 5
July MPC meeting. The committee also maintained the interest rate on its standing lending
and deposit facilities at 200bp above and 500bp below the MPR, respectively. Although
inflation moderated to 11% in May, the MPC reiterated that that upside inflation risk
remained in light of the expansionary fiscal stance, liquidity injection stemming from the
operationalisation of the proposed Asset Management Corporation of Nigeria (Amcon) and
food price pressures. Nonetheless, on balance, the committee viewed that the threat to
inflation remained subdued in the short to medium-term due to underperforming monetary
aggregates and given that Amcon is not yet operational. We project inflation to ease to
about 9% by December, driven lower by food prices (this projection exclude the possible
effect of the removal of fuel prices). The weak private sector credit extension (PSCE),
however, remains a key concern for the MPC. On the economic growth outlook, the
committee noted that the non-oil sector is expected to underpin growth this year with real
GDP forecast to be 7.7% (6.6% in 2009). We believe that the MPC is likely to keep rates
unchanged when it meets in September, given its concerns about weak credit extension.
Figure 4: Nigeria still faces upside inflationary risk despite the recent decline in inflation
16
14
12
10
4
Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10
Monetary policy rate (%) CPI (% y/y)
Source: CBN, NBS
The Bank of Botswana (BoB) kept the bank rate unchanged at 10% last Friday (2 July) in
spite of inflation concerns. Headline inflation has increased to 7.8% in May from 5.8% last
December, underpinned by a 2pp increase in value-added tax in April and an increase
electricity tariffs in May. At current levels, inflation is firmly outside the Bank’s 3-6% target,
and the committee now expects inflation to revert into the target range in H2 11. While
noting that upside risks to inflation outlook remain (on further adjustment to administered
prices and government levies), the committee was of the view that subdued domestic
demand and a projected benign external inflationary pressures were favourable for the
medium-term inflation outlook. In contrast, our inflation projections show inflation
remaining outside of the target range in 2011 – we project inflation to end the year at 9.3%
4
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly
Mauritian inflation likely
to remain benign
over medium term
Namibian policy rate likely to
remain unchanged until 2011
6 July 2010
y/y. On growth, the MPC maintained that GDP is likely to remain below trend in the
medium term, curbed by a reduction in government spending and supported by sustained
recovery in external demand. Given upside inflation risk in the medium term, we believe that
the MPC’s next move is likely to be up, but not until well into 2011.
The MPC of the Bank of Mauritius (BoM) released its monetary policy statement on 29 June
following its decision in the previous week to leave the repo rate unchanged at 5.75%. The
MPC noted that there were upside risks to the medium-term inflation outlook and that
downside risks to the economic growth outlook had increased. The MPC downgraded its
real GDP growth forecast (basic prices) for 2010 to 4.1% (4.6% in March meeting) owing to
risks from a weaker-than-expected recovery in the euro area and the United Kingdom.
(Jointly, these regions are the destination for about 67% of domestic exports.) The
committee also expressed concern about the significant slowdown in the annual growth
rate of private sector credit extension (4.5% y/y in April, compared with 17.2% in June
2009). Although headline inflation is sitting at comfortable levels (2.4% y/y in June), the
committee confirmed that there were upside risks in the medium term emanating from
higher imported and wage inflation. Over the next few quarters, the committee expects
inflation to rise to about 4% – our inflation trajectory shows annual inflation rising steadily
in H2, ending the year at 4.9% y/y. As a result of the MPC’s less optimistic view on growth
and despite upside risks to inflation, we continue to expect the BoM to keep the policy rate
on hold throughout 2010. (The MPC’s next meeting is set for 27 September.)
Figure 5: Mauritius’ inflation remains benign
14
12
10
0
Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10
Repo rate (%) CPI (% y/y)
Source: Mauritius CSO, Bank of Mauritius
In Namibia, the central bank’s Executive Committee (EC) was optimistic on the domestic
economic recovery. It expects the economy to grow about 4.2% this year (-0.8% in 2009),
supported by improved global demand and strengthening commodity prices. Indeed, data
released by the mining ministry show that the domestic recovery is entrenched with
diamond mining output rising 102% y/y from January to May 2010. At 4.7% y/y in May,
inflation had fallen to its lowest level in more than four years and remains less a concern to
the EC on account of lower food inflation. We believe that with possible increases in
administered prices (mainly electricity tariffs) in H2, the inflation cycle may reach a trough
in June and we project a year-end rate of 5.9% y/y. Despite our projected uptick in inflation
and the optimistic growth outlook, we continue to expect the MPC to leave rates on hold
this year.
5
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

SSA: Economic recovery gaining momentum

Key economic sector performing A slew of Q1 10 GDP releases for Sub-Saharan African (SSA) countries last week pointed to
well in SSA solid economic growth. Overall, the readings showed that economic growth for the year as
a whole may come in stronger than expected with the key sectors of economies showing
significant rebound from last year.

Botswana’s mining sector In Botswana, real GDP surged from 10.7% y/y in Q4 09 to 36.4% y/y as a stronger mining
recovery positive for sector and base factors boosted the growth rate. The mining sector (31% of GDP) grew
growth outlook 135.1% y/y in real terms (+21% in Q4 09). This large increase came as no surprise to us
given the low base in Q1 09 when diamond mines halted production for most of the quarter
as demand for diamonds collapsed. Diamond demand has improved markedly since, more
than doubling to USD477mn in Q1 10 compared with the corresponding period a year ago.
Other sectors with significant contributions to growth were the agriculture (+70.6% y/y)
and the trade, hotels and restaurant (+6.6%) sectors. Revisions to previous figures also
indicated that last year’s recession was less severe, with the domestic economy estimated
to have contracted only 3.7% (-6% previously) owing to a smaller contraction of the mining
sector than initially estimated. We expect GDP growth to normalize over the next few
quarters and, given the strong Q1 reading, we have revised our growth forecast for the year
from 6% to close to 10%.

Figure 6: Botswana’s mining sector is a key growth driver

60 135%

40

20

-20

-40

-60
Q109 Q209 Q309 Q409 Q110

Mining Real GDP (% y/y)

Source: Botswana CSO, Absa Capital

Real GDP outlook less optimistic
in Mauritius
In Mauritius, real GDP slowed to 4.1% y/y in Q1 from 6.7% in Q4 09, which is consistent
with seasonal trends. Growth in the quarter was mainly driven by the manufacturing (+4.5%
y/y), real estate, renting and business activities (+5.3%), hotels and restaurants (+7.2%) and
transport (+5.2%) sectors. Based on Q1 figures, the CSO now expects economic growth
(market prices) to be 4% this year, slightly lower than its March estimate of 4.3% (2.1% in
2009). This is in line with our expectations for growth of just over 4% in 2010 underpinned
by stronger exports, substantial policy stimulus and improved tourism receipts.

Kenya’s economic Kenya’s economy expanded by 4.4% y/y in Q1 rising from 3.3% in the previous quarter.
recovery continues This expansion is mainly attributable to strong growth recorded by the agriculture (4.6%
y/y), manufacturing (7.8%), transport (4.7%) and financial intermediation (11.9%) sectors.
The key agricultural sector (20% of GDP) registered its first positive reading after six
quarters of contraction following improved weather conditions. We continue to project
economic growth of about 4% for Kenya this year.

6 July 2010 6
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly
Economic growth of about 7%
likely in Mozambique
Oil production to commence in
Q4 at around 60,000bpd
6 July 2010
Mozambique’s economic growth surprised to the upside, coming in at 9.5% y/y in Q1 from
7% in Q4 09. The agricultural sector remained the main contributor to growth in the quarter
with a 26% share and contributing 3.1 percentage points to overall growth. The primary
sector grew 10.8% while the tertiary and secondary sectors grew 10.7% and 5.4%,
respectively. Given the brisk growth in Q1, we now anticipate growth of about 7% for
Mozambique this year.
Ghana: On track to deliver oil by Q4
Tullow Oil, which has a 49.95% stake in the Jubilee oil field in Ghana, released its trading
and operational update on 6 July. The key messages from this update were the following:
„ Operations are on track following the arrival of the FPSO (on 21 June), and operations
will commence shortly to connect all the flow lines and risers to the turret.
„ Oil production will commence in November/December 2010 (Ghana’s oil minister
earlier this year stated that it might start in December). First cargo is expected in
December 2010 to January 2011.
„ Initial production will be about 60,000bpd, which will be ramped up to 120,000 bpd 3-6
months after first oil is pumped.
„ The Jubilee reservoirs are of excellent quality, and the crude is light and sweet. Light
sweet crude oil from West Africa tends to trade at a premium to dated Brent as its global
supply is in decline in general.
„ Further high-impact drills will be made in H2 10. Tullow Oil is trying to replicate the
success in Ghana by identifying new prospects across the Equatorial Atlantic region, and
there will be drilling of more high-impact exploration wells in Sierra Leone, Liberia,
French Guiana and Guyana in H2 10.
„ Tullow Oil expects to complete the buying of Heritage Oil & Gas’s 50% stake in Block 1
and 3A in Uganda soon. Tullow Oil plans to enter into transactions with CNOOC and
Total to develop two-thirds of its interests in Blocks 1, 2 and 3A in the Lake Albert Rift
Basin. It expects to deliver production in excess of 200,000bpd by 2014-15.
We do not anticipate any substantial revenues for Ghana’s fiscus this year, but oil revenues
in 2011 could be substantial. As such, we expect a marked narrowing in Ghana’s fiscal
deficit in 2011 from our estimated 8% (of GDP) in 2010. For the economy as a whole, we
expect economic growth to surge from just over 6% in 2010 to close to 18% in 2011 as a
result of oil revenues.
7
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

Sub-Saharan Africa FX technical strategy

USD price trend USD price momentum

Weekly Monthly Weekly Monthly USD support USD resistance

USD/GHS Overbought Overbought 1.4100 / 1.4000 / 1.3975 1.4455 / 1.4500 / 1.4630

USD/KES Overbought Overbought 81.00 / 80.20 / 80.00 82.15 / 83.00 / 83.35
USD/NGN Neutral Neutral 149.00 / 148.50 / 147.30 150.75 / 151.75 / 152.50
USD/TZS Overbought Overbought 1455 / 1390 / 1360 1530 / 1565 / 1635

USD/UGX Bearish Overbought 2230 / 2200 / 2190 2285 / 2300 / 2335

USD/ZMK Neutral Overbought 5000 / 4900 / 4860 5170 / 5280 / 5315

Source: Thomson Reuters, Bloomberg, Absa Capital

Short-term view: Consolidations prevail

USD/GHS: More – Our short-term target of 1.4400 (60-week average) has been reached and has further to go. We believe that
USD/GHS could extend to 1.4500 before the overbought conditions show signs of unravelling.

USD/KES: Sideways – The topping signals we were watching for appear to be underway. However, the correction is subdued,
taking the form of a consolidation ahead of 78.00 (trendline). While underpinned at 78.00, the correction is not expected to
damage the long-term uptrend.

USD/NGN: No change – Given the tendency to consolidate for extended periods, we continue to advocate more of the same
sideways activity. However, we are changing the short-term range from 150-153 to 148-152.

USD/TZS: Impressive – Notwithstanding the overbought momentum reading on the weekly and monthly charts, we have to stick
with the trend and allow for a push towards 1,535 first ahead of renewed topping potential. Support is at 1,475.

USD/ZMK: Sideways – The consolidation we have been favouring is unfolding. Within this pattern, our stance is for a downward
leg towards 5,100-5,050 before the break above the range high at 5,280 occurs. Given the underpinning in the 4,700-4,500 zone,
the long-term uptrend remains firmly intact.

Chart of the week – USD/UGX sideways

Although the push to 2,300 we
have been advocating has not
materialised, we remain patient.
Indeed, the pair is forming an
extended consolidation pattern
between 2,200 and 2,295 first,
which is helping to unwind the
overbought conditions. Once
the unwinding is complete, we
expect fresh demand for a break
above 2,300, but that is probably
a story for later this month.

Source: Thomson Reuters

6 July 2010 8
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

Currencies and equities

Figure 7: Foreign exchange rates Figure 8: Equities

Currency Weekly close w/w, YTD Country Weekly w/w, YTD YTD USD
per USD %∆ %∆ close %∆ %∆ TR1 %

AOA 92.57 0.8 -3.7 Botswana Domestic Company 7368.8 0.1 1.8 -4.2
BWP 7.08 -0.5 -5.9 Ghana All Share Index 6558.7 -0.6 17.7 16.4
GHS 1.45 -0.6 -1.1 Kenya 20-Share Index 4323.9 0.1 33.1 23.8
KES 81.55 0.0 -7.0 Mauritius All Share 1660.5 0.7 0.0 -7.5
MUR 31.90 2.0 -7.5 Nigeria All Share 25149.6 -0.5 20.8 20.5
MZN 34.25 0.0 -16.9 Tanzania All Share 1173.4 -0.1 -1.6 -11.7
NGN 149.85 0.6 -0.2 Uganda All Share 1022.0 0.2 39.5 17.2
TZS 1492 -1.7 -10.3 Zambia All Share 2974.0 2.2 6.4 -4.1
UGX 2261 -0.3 -16.0
ZMK 5150 -0.4 -9.9

Note: Week ending 5 July 2010. Source: Reuters, Absa Capital Note: 1Total return. Week ending 5 July 2010.
Source: Reuters, Absa Capital

Figure 9: SSA currencies and equities

38 7.75 Botswana Pula (USD/ BWP) 8000 1.52 Ghanaian Cedi (USD/ GHS) 10000
99 Angolan Kwanza (USD/ AOA)
BSE - Domestic Company Index (rhs) 7750 GSE - All Share Index (rhs)
96 Mozambique Metical (USD/ MZN, rhs) 36 7.50 1.50 9000
7500
93
34 7.25 1.48 8000
7250
90

87 32 7.00 7000 1.46 7000

84 6750
30 6.75 1.44 6000
81 6500
28 6.50 1.42 5000
78 6250

75 26 6.25 6000 1.40 4000

Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

82 4700 35 Mauritian Rupee (USD/ MUR) 160 29000

Kenyan Shilling (USD/ KES) Nigerian Naira (USD/ NGN)
1800
81 4400 34 All Share Index (rhs) Nigeria Index (rhs)
NSE 20-Share Index (rhs) 27500
157
80 4100 1700
33
26000
79 3800 154
32 1600
78 3500 24500
31
77 3200 151
1500
23000
30
76 2900
1400 148
29 21500
75 2600

74 2300 28 1300 145 20000

Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

1520 1260 2350 1175 5800 3200

Tanzanian Shilling (USD/ TZS) Ugandan Shilling (USD/ UGX) Zambian Kwacha (USD/ ZMK)
DSE - All Share Index (rhs) USE - All Share Index (rhs) 1100 LUSE - All Share Index (rhs)
1480 3000
1240 2250
5450
1025
1440 2800
1220 2150
950
1400 5100 2600
1200 875
2050
1360 2400
800
4750
1180 1950
1320 725 2200

1280 1160 1850 650 4400 2000

Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

Source: Reuters, Absa Capital

6 July 2010 9
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

Economic data

Figure 10: Policy rates

Cumulative ∆ since
Country Current (%) Jan 2009 (bp) Last move Next move expected (bp)

Angola 30.00 +1043 01 Oct 09 (+500) 2011 and beyond

Botswana 10.00 -500 18 Dec 09 (-50) 2011 and beyond
Ghana 15.00 -200 16 Apr 10 (-100) -50 in 16 July
Kenya 6.75 -175 23 Mar 10 (-25) 2011 and beyond
Mauritius 5.75 -100 26 Mar 09 (-100) +25 in Q1 11
Mozambique 14.50 0 10 June 10 (+200) 2011 and beyond
Namibia 7.00 -300 17 Jun 09 (-50) 2011 and beyond
Nigeria 6.00 -375 07 Jul 09 (-200) +50 in H2 10
Note: No policy rates available for Tanzania, Uganda and Zambia as monetary policy is conducted through open market operations.
Source: Reuters, Bloomberg, central banks, Absa Capital

Figure 11: Consumer price inflation, % y/y Figure 12: FX reserves, USD bn (eop)

Country Dec 08 Dec 09 Apr 10 May 10 Jun 10 Country Dec 08 Dec 09 Feb 10 Mar 10 Apr 10

Angola 13.2 14.0 13.7 13.9 … Angola 18.4 13.2 14.1 14.1 15.7
Botswana 13.7 5.8 7.1 7.8 … Botswana 9.1 8.7 8.7 … …
Ghana 18.1 16.0 11.7 10.7 … Ghana 2.0 3.2 3.3 3.3 …
Kenya* 17.8 5.3 3.7 3.9 3.2 Kenya 2.9 3.8 3.7 … …
Mauritius 6.7 1.5 2.7 2.5 2.4 Mauritius 1.7 2.0 1.9 1.9 1.9
Mozambique 6.2 4.2 9.1 12.7 … Mozambique 1.6 1.7 1.7 1.6 …
Namibia 10.9 7.0 5.0 4.7 … Namibia 1.3 1.8 1.8 1.7 1.8
Nigeria 15.1 12.0 12.5 11.0 … Nigeria 52.7 42.4 41.4 40.7 40.3
Tanzania 13.5 12.2 9.4 7.9 … Tanzania 2.9 3.2 3.2 3.2 3.3
Uganda 14.2 11.0 5.9 4.3 4.4 Uganda 2.3 2.8 2.7 … …
Zambia 16.6 9.9 9.2 9.1 7.8 Zambia 1.1 1.3 1.2 1.2 1.3
Note: *Based on NBS’s geometric CPI calculation from December 2008 onwards. Source: Central banks, IFS, Absa Capital
Source: Statistics offices, central banks, Absa Capital

Figure 13: Real GDP, % y/y

Country 2003 2004 2005 2006 2007 2008 2009E Q4 09 Q1 10

Angola 3.3 11.2 20.6 18.6 23.3 13.8 -0.4 … …

Botswana 6.3 6.0 1.6 5.1 4.8 3.1 -3.7 10.7 36.4
Ghana 5.2 5.6 5.9 6.4 5.7 7.3 4.7 … …
Kenya 2.9 5.1 5.9 6.3 7.0 1.6 2.6 3.3 4.4
Mauritius 4.4 5.5 1.2 3.9 5.5 5.1 2.1 6.7 4.1
Mozambique 6.5 7.9 8.4 8.7 7.3 6.8 6.4 7.0 9.5
Namibia 4.2 12.3 2.5 7.1 5.5 3.3 -0.8 … …
Nigeria 9.6 6.6 6.5 6.0 6.4 6.0 6.7 7.4 7.2
Tanzania 6.9 7.8 7.4 6.7 7.1 7.4 5.9 … …
Uganda 6.2 5.8 10.0 7.0 8.2 8.3 4.8 … …
Zambia 5.1 5.4 5.3 6.2 6.2 5.7 6.4 … …
Source: Central banks, statistics offices, IMF WEO, Absa Capital

6 July 2010 10
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

Auction results

Figure 14: Latest auction results

Amount offered Amount
Previous Date of next
Country Date Tenor Yield (%) (mn, local allocated (mn, Bid/cover ratio
yield (%) auction1
currency) local currency)

Angola 2010/06/09 91 17.79 17.79 … AOA 978 … 2010/07/07

182 18.65 18.37 AOA 2 896 …
364 20.52 20.40 AOA 7 015 …
Botswana 2010/06/01 91 6.97 6.96 BWP 2 083 BWP 2 083 1.0 2010/07/06
Ghana 2010/07/02 91 12.86 12.88 GHS 122 (Total) GHS 122 (Total) … 2010/07/09
182 13.45 13.37 …
364 13.80 13.80 …
2
Kenya 2010/07/01 91 1.80 2.63 KES 4 000 KES 4 619 2.3 2010/07/08
2010/06/24 182 2.45 3.30 KES 3 000 KES 3 162 2.9
2010/06/09 364 4.20 6.09 KES 4 000 KES 3 953 4.3
Mauritius 2010/07/02 91 3.44 3.64 MUR 500 (Total) MUR 167 4.5 2010/07/09
182 4.22 4.40 MUR 164
364 4.67 4.73 MUR 169
Mozambique 2010/06/30 91 12.99 12.79 … MZN 120 … 2010/07/07
182 13.50 13.12 … MZN 20 …
364 14.10 14.00 … MZN 20 …
Namibia3 2010/06/03 91 6.93 6.93 NAD 160 NAD 160 1.2 2010/07/08
182 7.00 7.04 NAD 200 NAD 200 1.4
364 7.34 7.35 NAD 200 NAD 200 1.3
Nigeria 2010/06/17 91 2.52 2.11 NGN 18 700 NGN 18 700 1.3 2010/07/14
182 3.57 3.27 NGN 40 000 NGN 40 000 1.6
2010/06/10 364 4.06 4.16 NGN 40 000 NGN 40 000 1.2
Seychelles 2010/07/02 91 1.70 1.85 … SCR 15.5 … 2010/07/09
182 2.65 2.70 SCR 4.8
364 3.99 3.98 SCR 4.8
Tanzania 2010/06/23 91 2.99 2.79 TZS 35 000 TZS 29 981 1.7 2010/07/07
182 3.08 2.09 TZS 35 000 TZS 9 196 0.3
364 6.35 5.80 TZS 30 000 TZS 13 348 3.1
Uganda3 2010/06/30 91 4.46 4.42 UGX 20 000 UGX 20 000 1.7 2010/07/14
182 5.57 5.81 UGX 30 000 UGX 30 000 1.9
364 6.58 7.64 UGX 40 000 UGX 40 000 6.7
Zambia 2010/07/01 91 4.75 4.89 ZMK 20 000 ZMK 20 000 1.6 2010/07/08
182 5.81 5.95 ZMK 20 000 ZMK 20 000 2.3
364 7.23 6.89 ZMK 40 000 ZMK 38 700 0.97
Note: 1Official auction date to be announced/confirmed by central bank; 2cut-off interest rates; and 3 effective yields.
Source: Central banks, Reuters, Barclays, Absa Capital

6 July 2010 11
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

Short-term rates charts

Figure 15: Short-term rates

Angola 16 Botswana 33 Ghana

34 Rediscount rate
91-day 15 Prime rate 182-day 91-day
30
29 182-day 14
13 27
24
12
24
19 11
10 21
14 9 `
18
8 Bank Rate
9 15
7 BoBC Rate (91-day)
4 6 12
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

10 Kenya 9 Mauritius Mozambique

16 FPC 91-day
9
8 8 182-day
15
7
7 14
6
13
5 6
4 12
5
3
Central Bank Rate 11
2
91-day 4 Repo Rate 182-day 10
1 182-day 364-day
0 3 9
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10

13 Namibia Nigeria Seychelles

Repo rate Monetary Policy Rate 36
12 91-day 182-day
12 91-day 182-day
91-day 31 364-day
364-day 10
11 26
8
10 21
6
9 16

8 4
11

7 2 6

6 0 1
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

17 Tanzania 19 Uganda 25 Zambia

15 17
20
13 15

11 13 15
9 11

9 10
7

5 91-day 7
5 91-day 182-day
182-day 91-day 182-day
3 5 364-day
364-day 364-day
1 3 0
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10

Source: Central banks, Reuters, Barclays, Absa Capital

6 July 2010 12
Absa Capital, affiliated with Barclays Capital | Sub-Saharan Africa Bi-Weekly

EMERGING EMEA RESEARCH ANALYSTS

ABSA CAPITAL
Jeff Gable Ian Marsberg Jeffrey Schultz Divya Vasant
Head of Research Macro Strategist Macro Strategist Credit Analyst
ABSA Capital +27 11 895 5374 +27 11 895 5349 + 27 11 895 5345
+27 (0) 11 895 5368 ian.marsberg@absacapital.com jeffrey.schultz@absacapital.com divya.vasant@absacapital.com
jeff.gable@absacapital.com
Ridle Markus Dumisani Ngwenya Judy Padayachee Bulent Badsha
Africa Strategist Africa Strategist Technical Strategist Rates Strategist
+27 11 895 5374 +27 11 895 5346 +27 11 895 5350 +27 11 895 5323
ridle.markus@absacapital.com dumisani.ngwenya@absacapital.com judy.padayachee@absacapital.com bulent.badsha@absacapital.com
BARCLAYS CAPITAL
Piero Ghezzi Matthew Vogel Koon Chow Christian Keller
Head of Economics and Emerging Head of Emerging EMEA Research Senior FX Strategist Chief Economist - Emerging Europe
Markets Research +44 (0)20 7773 2833 +44 (0)20 777 37572 +44 (0)20 777 32031
+44 (0)20 313 42190 matthew.vogel@barcap.com koon.chow@barcap.com christian.keller@barcap.com
piero.ghezzi@barcap.com
Alia Moubayed Andreas Kolbe George Christou Daniel Hewitt
Senior Economist – Middle East & Credit Strategist EM Strategist EMEA Economist
North Africa +44 (0)20 313 43134 +44 (0)20 777 31472 +44 (0)20 313 43522
+44 (0)20 313 41120 andreas.kolbe@barcap.com george.christou@barcap.com daniel.hewitt@barcap.com
alia.moubayed@barcap.com
Vladimir Pantyushin
Russia and CIS Chief Economist
+7 495 78 68450
vladimir.pantyushin @barcap.com

6 July 2010 13
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