Close
US Fed hikes will drive capital market activity in Africa next year, says Citigroup head

US Fed hikes will drive capital market activity in Africa next year, says Citigroup head

As commodity prices pick up – due in part to a boost brought on by OPEC’s decision to cut global oil supply and a recent fiscal stimulus in China – Africa’s economic outlook is strengthening following a tough year, according to Miguel Azevedo, head of investment banking at Citigroup. However, capital market activity and investors interest in the continent is unlikely to return to the heady highs seen in 2014, he said. 

“With fed hikes in the US, typically we see a diversion of funds from emerging markets back to their developed counterparts and this will impact capital market activity in 2017,” said Azevedo. “At the same time, access to capital markets in the continent will be linked to strong fundamentals, a liberal stance on the movement of capital, goods and services and where the use of proceeds is clear.”

“People are increasingly beginning to differentiate between issuers out of Africa. Investors are delving deeper into individual stories and backing the countries and businesses that have strong fundamentals and track records,” he added. “And while capital markets on the whole have been somewhat subdued, there have been some bright spots.”

In October this year, IHS – a Nigerian provider of mobile telecommunications infrastructure – raised $800m in the international capital markets over five years with a yield of 9.5%. Access Bank, a tier one bank in Nigeria also went to the capital markets this year with $300m Eurobond over five years at 10.5%.  

And following an IMF bailout in Ghana which came to fruition in 2015, Ghana successfully issued a $750m Eurobond, marking a successful return to international capital markets.

“Yet despite some of the good stories coming out of Africa, and some of the good deals we have seen, in terms of general economic growth for next year, this will remain driven by what happens within the major economies in the region – Nigeria, Ivory Coast, Kenya, Egypt and South Africa because these account for more than 50% of the continent’s GDP,” said Azevedo. “This might be unfair, but it’s still the case.”

You can read more about African Business’ outlook for Africa 2017 in the January 2017 edition out in December

10

Rate this article

Author Thumbnail
Written by Kanika Saigal

Kanika Saigal is deputy editor of African Business Magazine and African Banker Magazine based in London. Previously Africa Editor at Euromoney Magazine, Kanika has an undergraduate degree in Social and Political Science from Cambridge University and a double masters degree from the London School of Economics and Peking University in International Affairs.

Join our mailing list to receive a sharp, curated weekly round-up of African business news.

Help us deliver better content

Related Posts

  • James Mworia of Centum

    Centum Investment’s Midas touch

    Centum, East Africa’s largest publicly listed investment firm, seems to have the Midas touch – turning everything it comes into contact with into gold. James Mworia, the company’s CEO, tells Tom Collins why the Kenya’s consumer-oriented policy is such a boon for investors

  • Fishermen in Gazi Bay

    Africa must not be shortchanged on climate finance

    Climate finance, properly directed, not only mitigates the effects of global climate change, but also plays a significant part in economic and social development. However, the richer nations are still not paying their fair share of the climate bill

  • Moody's Senior Vice President Constantinos Kypreos

    Moody’s dim outlook on African banks

    Constantinos Kypreos, who leads a team of analysts covering banks in Africa, the Middle East and the Balkans, talks to Rafiq Raji about the reasons why the rating agency has downgraded its outlook for African banks

  • Mahin Dissanayake, Senior Director, Banks – EMEA, at Fitch Ratings

    Kenya brightens Fitch outlook

    Fitch Ratings has downgraded its outlook on African banks. Rafiq Raji talks to Mahin Dissanayake, Senior Director, Banks – EMEA, at Fitch to discover why 

Join our 70,000+ subscribers by signing up to our mailing list

Help us deliver better content