NAIROBI, May 18 (Reuters) – Plans to create a 26-nation free trade area by integrating three existing African trade blocs by July 2014 are on track and the only major sticking point is likely to be harmonising rules of origin, the three blocs said on Friday.

The East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC) aim to create a free market of 525 million people with an output of $1 trillion when they unite.

Although African economies are growing fast – second only to Asia – the continent has attracted criticism over its slow pace of integration, a delay that is seen as driving up the cost of doing business.

Sindiso Ngwenya, secretary general of COMESA, said tough negotiations on rules aimed at making cross-border trade easy for firms and small traders lie ahead.

“The major challenge for the tripartite FTA negotiations will be rules of origin. Whereas COMESA and EAC have identical rules of origin, SADC has got different rules of origin so we have to engage with them,” Ngwenya said.

The World Bank said in a report in February that red tape and trade barriers were costing Africa billions of dollars and depriving the region of new sources of economic growth.

Ngwenya however said the process would move quickly because of the experience gained in building the existing trade blocs.

NAIROBI, May 14 (Reuters) – Africa Finance Corporation

(AFC), a Lagos-based development financier, is considering potential investments worth $3 billion across sub-Saharan Africa over the next year, its chief executive said on Monday.

Created in 2007 to help increase much-needed investments in the key infrastructure, transport and heavy industries sectors in Africa, AFC – 46 percent-owned by seven west African states including Nigeria and Ghana – has already invested $500 million in projects worth a total $4 billion from Cape Verde to Zambia.

“In our sectors we see a lot of opportunities. We are currently reviewing investments totalling $3 billion across the continent. That is what our pipeline is,” Andrew Alli told Reuters in the Kenyan capital.

“These are projects from Senegal down to Mozambique. Virtually every country in sub-Sahara Africa has a power deficit so there is obviously quite a lot of opportunity in power.”

Alli said AFC – part of a growing phenomenon of Africans investing in their own continent – also looks for a commercial return on its investments, was looking to conclude the potential deals soon.

“It is almost certain that we won’t invest in all of them but we would expect to review them and close them over the course of the next year or so,” he said.

NAIROBI, May 10 (Reuters) – Higher call charges and a strong performance at its money transfer business helped Safaricom , Kenya’s top telecoms operator, to report a smaller-than-expected fall in full-year pretax profit on Thursday.

The company, which is 40 percent owned by Britain’s Vodafone , posted a 5.4 percent drop in pretax profit to 17.37 billion shillings ($208 million), which beat analyst forecasts of a decline of between 10 to 15 percent.

Safaricom’s first-half pretax profit had slumped 48 percent, hurt by higher costs and a punishing price war in the industry.

Chief executive Bob Collymore attributed the improvement to an 11 percent increase in users to 19 million, which came despite the higher call charges as customers were attracted by its wide network coverage and money transfer business. That helped to improve average revenue per user.

Safaricom found itself in a tight position in 2010 when Indian operator Bharti Airtel entered the market through the acquisition of Zain’s Africa assets and cut prices sharply, causing a price war in the sector.

“We are all feeling vindicated that the strategy we pursued was the right one,” Collymore told reporters.

He forecast low to mid-single digit percentage growth in total revenue this financial year, and said the company would maintain its earning before interest, taxes, depreciation and amortisation (EBITDA) margin at 35 percent.

NAIROBI, May 3 (Reuters) – South Africa’s FirstRand Bank plans to acquire a mid-sized Kenyan bank when the opportunity arises to boost its presence in the largest economy in one of the fastest-growing regions on the continent, its Africa head said.

Foreign lenders have been looking to set up operations in Kenya, driven by a desire for a piece of the action in a market where collective industry profits jumped 20.4 percent last year to 89.3 billion shillings ($1.07 billion).

Jabu Khethe, chief executive for FirstRand Africa, said the sector was very competitive, with 43 lenders, making it difficult for a new entrant to adopt a greenfield model.

A law requiring banks to raise their minimum capital to 1 billion shillings from 250 million shillings by the end of this year, would also throw up consolidation and acquisition opportunities, Khethe said.

“We tend to come in the mid-tier type level. It is easy to merge the cultures, people, systems, etc,” Khethe said at the launch of the bank’s representative office in Nairobi late on Wednesday.

“More importantly you still have some work to do in capturing the market share. To buy a bank that is dominant already is not always the best solution.”

The representative office will initially deal in infrastructure deals, project financing and pave the way for the acquisition that would eventually allow FirstRand to roll out its full spectrum of services, including retail banking.

NAIROBI, April 26 (Reuters) – Kenya Commercial Bank (KCB) and Equity Bank predicted strong profits this year after a resilient performance in the first quarter in the face of high interest rates and inflation.

The central bank raised its key lending rate by 11 percentage points to 18 percent in the final quarter of last year to prop up the shilling and fight high inflation, creating worries that the demand for loans would fall and defaults rise.

James Mwangi, the chief executive of Equity, whose shares are amongst the most traded on the Nairobi bourse, said his bank had kept the cost of funds low, allowing it to charge affordable lending rates that buoyed its profits.

“Equity maintained an average (lending rate) of 17.8 percent, which was very low compared to the 32 percent (other) banks are charging,” Mwangi told reporters.

“If that is maintained, even in these difficult conditions we would expect Equity to perform better than last year.”

In addition to being well capitalised with a liquidity ratio of 15 percentage points above the statutory minimum of 20 percent, Equity has cheaply priced loan agreements with multilateral lenders like the International Finance Corporation.

Focused on the lower-income part of the market, and operating in Uganda, South Sudan and Rwanda, Equity posted a 29 percent jump in first-quarter earnings to 3.73 billion shillings ($45 million).

NAIROBI (Reuters) – Nakumatt, Kenya’s largest retailer, plans to expand across Africa by focusing on opening stores in more eastern Africa countries over the next two years, its managing director said on Thursday.

After starting three decades ago as a small mattress shop in the provincial town of Nakuru, family-owned Nakumatt has grown into a firm with $500 million annual turnover and pan-African ambitions.

It aims to raise sales to 50 billion shillings ($600 million) this year from last year’s 40 billion, at its 36 stores in Kenya, Uganda, Rwanda and Tanzania, Atul Shah told the Reuters Africa Investment Summit.

He said Burundi and South Sudan were the next targets and space had already been identified in both.

“It is a 12-18 months project to get what we want,” Shah said at the Reuters office in Nairobi. The stores would cost between 2 and 3 million euros.

Shah said he was not concerned at the growing conflict between South Sudan and Sudan, expecting it to be resolved by the time Nakumatt moved in.

Shah said he was also looking to set up a joint venture in Ethiopia, one of the most populous countries in Africa, and hoped to be established in a couple of years.

NAIROBI (Reuters) – Kenya’s top telecoms operator Safaricom (SCOM.NR: Quote, Profile, Research, Stock Buzz) will lay a fibre-optic cable network to offer faster and more efficient Internet data services in expectation of a mobile “data tsunami”, its chief executive said.

Safaricom, in which Britain’s Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) has a 40 percent stake, has a big lead over rivals such as the local unit of France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz), but its network has been struggling with fluctuating data speeds and dropped calls.

“The next set of investments is going to be around fibre because we have major dependency on fibre,” Bob Collymore told the Reuters Africa Investment Summit.

“The data tsunami will come and it will come maybe 12 months or 18 months from now,” he said.

Safaricom expects a surge in demand for data services in the east African nation of 40 million people, thanks to an explosion of Internet-ready, hand-held devices, an increase in the number of relevant applications and content.

It also sees Kenya positioned as a possible information technology hub for the entire continent.

Safaricom, which has 5 million data users and 17 million mobile phone subscribers, currently relies on other carriers that have their own fibre networks.

NAIROBI (Reuters) – Asia-focused Standard Chartered Plc (STAN.L: Quote, Profile, Research, Stock Buzz) said it aims to double its branches in Africa to ride a consumer boom which has several years to run in the fast-growing continent.

The consumer business in Africa made up $131 million of the bank’s total pretax profit of $6.78 billion in 2011 but earnings rose 27 percent from the previous year on the back of growth in segments like personal loans.

“We have got roughly in Africa about 170 branches and our goal is to double that over the next 3-5 years and we will be increasing that by a 100 branches in the next 18 months,” Steve Bertamini, global head of the consumer banking, told Reuters in an interview on Tuesday.

He said the new braches would be in Nigeria, Botswana and Ghana.

Growth of earnings from Africa has been accompanied by slower growth in costs, Bertamini said, meaning the new outlets would be funded internally.

Big multinationals like Standard Chartered have stepped up their game in Africa following years of fast growth and the emergence of a consumer class, thanks to higher earnings from commodity exports and the spread of telecoms in the last decade.

Bertamini said the consumer boom would stay intact for several years to come, thanks to trends like urbanization and investment in infrastructure which would drive growth.

NAIROBI (Reuters) – Kenya’s TransCentury (TCL.NR: Quote, Profile, Research, Stock Buzz) expects net profit for the first half of this year to surpass full year profit for 2011 after it tripled capacity at its electric cable and transformer plants, its chief executive said on Monday.

Founded just over 10 years ago as an investment club, the firm has grown into a specialist infrastructure company with interests in power, transport and engineering thanks to rapidly growing demand for energy and infrastructure in the region.

“By half year, profitability will be above what we did the full year, for the simple reason that all our businesses are in the expansion phase where we are growing our market,” Gachao Kiuna told the Reuters Africa Investment Summit.

He attributed the projected growth in net profit from 616 million shillings ($7.4 million) last year to the acquisition of Civicon, an engineering and transport firm, and increased production of cables, transformers and switchgear.

TransCentury is the regional market leader in the production of the equipment and controls East African Cables (CABL.NR: Quote, Profile, Research, Stock Buzz).

Kiuna said he was not worried by an upcoming election, due by March next year. It has raised concerns among many businesses of a possible pre-election slowdown because of the violence which followed the last poll in 2007.

Kiuna said demand for services such as electricity would hold for at least the next 20 years, as millions of homes and businesses get connected to the grid.

NAIROBI (Reuters) – African nations joining the elite club of oil and gas producers should invest in education and roads while supporting traditional sectors to avoid the “oil curse” trap, the head of the African Development Bank said.

Ghana, Kenya, Mozambique, Tanzania and Uganda have all discovered oil and gas in recent years, thrusting them into a crossroads between following the likes of diamond-rich Botswana into prosperity or the likes of Nigeria into over-dependence on oil.

Donald Kaberuka said governments should resist using windfalls from oil and gas exports to pursue populist policies like sharply raising public sector wages.

“(They should) avoid using the resources to rapidly increase recurrent expenditure. That is what people will be expecting but that would be the wrong thing to do,” he told Reuters in an interview late on Tuesday.

Over-reliance on oil exports has created an imbalance in the economies of producers like Angola and Gabon, with the oil sector overshadowing others and giving rise to inflationary pressures that curb citizens’ purchasing power.

In extreme cases in the past, it has led to outright conflicts and exclusion of vast segments of the population, leading to the term “oil curse”.

“This region (East Africa) has done very well without oil, without gas, without minerals. These are finite resources. In other countries they have become a curse, so make the right public policy choices,” Kaberuka said.