Friday, February 5, 2010

Country Insight

Rwanda: The Government reported that its plan to sell a 25% stake in local beer manufacturer BRALIRWA had reached an advanced stage. The sale would be the first IPO (Initial Public Offering) for Rwanda’s stock market. The government is also hinting at possible sales of its stock in other companies such as mobile operator MTN Rwanda, cement producer CIMERWA, BCR, and insurance company SONARWA. The Social Security Fund of Rwanda also announced that it wants to increase its investment portfolio, currently dominated by real estate investments. The fund will continue to target the housing and mortgage industries, while also venturing into the capital markets, as well as leisure, infrastructure and ICT.

Kenya: The Government will sell a 51% stake in five sugar companies (Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies) to strategic investors, reserving another 30% for farmers. The government will then sell the remaining 19% stake in an IPO once the factories are profitable. The Government expects the targeted strategic investors will bring in private sector skills on modernising technology and investing in the expansion of the existing mills. The millers owe the Government (and the Kenya Sugar Board) 42 billion Kenya shillings (or USD 530 million). About 80% of the debt will be written off by the Government and the balance will be converted into equity. Investors from Brazil, Mauritius and Turkey have shown interest in bidding for the factories.

Morocco: The Government will invest 60 billion Dirham (about USD 7.5 billion) on low-cost housing projects between 2010 and 2020. These projects are part of the government's efforts to make up for the deficit in housing services for low income families.

South Africa: The Government plans to introduce a new tax on vehicles designed to curb carbon dioxide emissions, despite concerns that this could hamper the ailing auto sector's recovery. The motor industry is struggling to get back on its feet after being hit by the global economic crisis and depressed local demand with new vehicle sales falling to 6-year lows in 2009. The new tax, mooted last February 2009, is part of government efforts to limit greenhouse gas emissions as well as increase tax revenues that have declined sharply as the economy grappled with its first recession in 17 years.

Zambia, Tanzania and Kenya: The three countries year start work on a 400 Megawatt power line to boost trade in electricity between them and ensure security of power supply. The countries were preparing formal proposals for funders and donors for the project, which would begin in 2011. The provisional cost estimate for the project is USD 860 million.