Africa News blog

African business, politics and lifestyle

Time for an Afribond?

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KENYA

“Europe possibly needs an Afribond,” commented one contributor this week on the Thomson Reuters chatroom for fixed income markets in Kenya.

A nice quip from Henry Kirimania of The Cooperative Bank of Kenya and a reminder of just how much better placed Africa is now in terms of its debt burden than it once was and particularly in relation to what might now be regarded as the world’s Heavily Indebted Formerly Rich Countries.

debt picture“It used to be that when you thought about highly indebted countries, you thought about those in our part of the world,” Maria Ramos, head of South Africa’s Absa Bank told the recent World Economic Forum on Africa. “You can’t any longer.”

By global standards, African debt has also performed fairly well during the crisis over Greece. Although the yield on Ghana’s Eurobond spiked when concerns over Greece reached fever pitch before the EU and IMF safety net announced at the weekend, it has been on a steady downtrend and has fallen back somewhat this week.

Hope and fear in African business

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It might surprise some that African business leaders are much more optimistic than the global average, which is what a new survey from PricewaterhouseCoopers shows.

The study, for which hundreds of executives were surveyed, suggested optimism had held up in Africa despite the global downturn.

A tale of two Africas

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Good news and bad news for Africa from the latest take on global risks from the World Economic Forum. Not much danger for most of the continent, it says, from an asset bubble burst. That’s the good. The bad, of course, is that this is because there are not many financial assets to bubble. In fact, it deems the overall exposure even to economic risks is small because African economies are not particularly tied in to global markets.

Actually, the report shows that there are two Africas. Mapped by their susceptibility for economic and asset bubble trouble, most African countries are bunched together in a low risk range. But another, smaller cluster, including Nigeria and South Africa, finds itself in much more peril and shares space on the WEF risk map with Western and Eastern Europe.

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