Nigeria gets tough on offshore gambling operators

 Director-general of the Nigerian Lottery Regulatory Commission, Lanre Gbajabiamila

The West African country of Nigeria is the continent’s largest economy, primarily due to its petroleum production and export industries, and is well-known for its long-time love affair with gambling of all kinds. Many in the gambling industry believe that Nigeria has the potential to become the continent’s largest online betting market.

Due to its economic leadership in Africa, what happens in Naija may affect the financial state of the rest of the continent. Yet, despite the apparent success of both online and offline gambling enterprises in Nigeria (with many benefits to the state), government officials are now looking to seriously crack down on offshore and unregulated gambling operators.

Cracking down on unregulated sites
The unprecedented growth of the gambling industry in Nigeria has proved to be the largest obstacle for authorities to properly govern the actions of the operators and players within the country.

When in December of 2019, the state of Lagos began granting licenses for online sports betting, Nigerians were able to start playing at offshore online casinos for decades without fear of prosecution.

Unfortunately, not all government agencies were kept apprised of the swift growth in players playing in offshore establishments, causing a backlash of issues such as capital flight, tax evasion, the non-disclosure of financial transactions and movements of illicit funds.

The collaboration
Recently, the Nigerian Lottery Regulatory Commission (NLRC) sought out the country’s Financial Intelligence Unit (NFIU) in order to form a cooperative task force to restrict Nigerian gamblers from playing on unregulated sites.

Earlier in 2020, the NLRC had partnered with the country’s Corporate Affairs Commission (CAC) to fight “unscrupulous companies” in the country’s gambling industry. Although these organizations have previously worked together to scrutinise operators, they’re now ramping up their efforts.

In a statement, NLRC director-general Lanre Gbajabiamila said, “Our alliance and mutual cooperation are now more imperative, and as responsible agencies, it is our duty to keep pace with the dynamic and growing complexity of the modern lottery industry which features multi-channel availability, the electronic delivery of play, and complex financial transactions.”

It will be interesting to see how this new partnership affects the ongoing reorganization of federal and state cooperation in regulating this ever-growing and ever-changing industry.

Australia as a case study
We expect that Nigeria will continue its aggressive enforcement against offshore operators. Nigerian officials, however, should be wary that many countries have tried this in the past.

Australia is a perfect case-in-point. When the Australian government regulators decided to crack down, they began by implementing site blocking at an ISP (internet service provider) level. This did little to stop the online casinos from simply bypassing the attempted blocks and then it’s back to business as usual for the offshore operators.

For this reason, the two federal departments in cooperation with the state regulators must come up with better ways of combating the unlicensed operators than have been tried in the past.

Gambling in Nigeria
The state of gambling in Nigeria is a complex beast. There’s no doubt that in any nation, the gambling industry does provide significant benefits in the form of jobs, revenue to healthcare and education, and, of course, general entertainment for the population.

For many years, Nigeria’s offline sports betting and gambling industry saw significant year-to-year growth, with its online gambling counterpart gaining strength in the last decade or so with an increase in the country’s population and widespread access to the internet. In 2018, it was reported that Nigeria was the second-largest online betting market in Africa, with gross gaming revenues of $58 million for that year.

The downsides, however, can be just as significant without proper regulation. Federal and state regulatory agencies have never been on the same page about current laws, licensing, or legal procedures for dealing with gambling entities.

Corruption
Public officials in Nigeria do have good reason to fear for the future of unregulated gambling in their country. Concerns have surfaced recently about the uses of illicit money generated by illegal gambling in Nigeria. These include things like money laundering, terrorism financing, “financial leakages” to the unlicensed sector, and other issues that the new regulations are aiming to stamp out.

Recently, the NLRC and the NFIU signed a Memorandum of Understanding that contains their plans to combat these harmful forms of corruption within the nation.

Ambiguous legal status
Confusingly, gambling is currently both legal and illegal in Nigeria, complicating the status of regulated and non-regulated operators. Depending on the type of gambling, the status of the game, operation, or casino could be deemed legal or outside the law.

It’s not surprising then, that many Nigerian government officials have called for new laws to clarify the status of gambling operators in the country. Only time will tell whether the ongoing struggle between federal agencies and state lottery boards issuing licenses and blacklisting operators will solve the country’s current problems or only further muddy the issue going forward.

 

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Rwanda's economy in recession

 

 

Rwanda’s economy

Rwanda’s economy is in a recession. Restrictions imposed to curb the coronavirus is piling pressure on the economy. Thousands face unemployment and there’s risk of more Rwandans falling into poverty. That’s why analysts are urging the government to take additional measures to spur growth in this East African nation. Retail trade, leisure, hospitality and conference tourism are key sectors hard hit.

The country of 12 million people has seen strict coronavirus-prevention measures in place since the onset of the COVID-19 pandemic. However, the Rwandan population has felt the effects of these measures - with 5% more unemployed since the start of the health crisis i.e. 550,000 people in 2021.

Over 80% of those recently out of work are in rural areas, according to data published by the World Bank this week. The pandemic has affected all sectors in the nation - including services, small to medium enterprises and the leisure and tourism industry.

There has been a significant drop in activity as Africa’s technology hub has been in lockdown - leading to a notable decline in growth.

The government has adopted an economic recovery plan estimated at 900 million USD - whose implementation will span the two fiscal years 2019/20 and 2020/21.

"Tourism has been the top foreign exchange earner, and when the pandemic kicked in, this sector was heavily affected. If you look into the growth that we experienced in 2019, you are talking about where the economy grew by 9.4 percent, but if you go into the numbers from 2020, we are projecting to receive a growth rate that is going to be even less than 2 percent’’, Zephanie Niyonkuru, Deputy CEO, Rwanda Development Board tells Ignatius Annor.

 

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What Kenya stands to gain from South Sudan peace

President Uhuru Kenyatta and South Sudan's Salva Kiir Mayardit at State House in Nairobi on July 1, 2019. PHOTO | DENNIS ONSONGO | NATION MEDIA GROUP 

By CHARLES WASONGA

Kenya stands to benefit significantly from Saturday’s formation of the Transitional Government of National Unity (TGoNU) as announced by South Sudanese President Salva Kiir and opposition leader Riek Machar.

Dr Machar, leader of Sudan People’s Liberation Movement-in Opposition (SPLM-IO), accepted to rejoin the government as the First Vice President, based on the Revitalised Agreement on the Resolution of Conflict in South Sudan (R-ARCSS), signed in September 2018 in Addis Ababa, Ethiopia.

The two pledged to end a five-year civil war that had sent the country's nascent economy into convulsions.

Kenya, being one of the largest foreign investors in that country, stands to benefit tremendously with the return of the peace and stability.

Many Kenyans who have invested in sectors such as construction, insurance hospitality, transport and banking will see their businesses recover from effects of the 2016 civil war.

BANKS

Formation of the TGoNU is good news for KCB, Equity, Co-operative and Stanbic banks. 

They are among the Kenyan lenders which scaled down their operations after war erupted. 

The banks set up shop in South Sudan after it attained independence in 2011, attracted by a large unbanked population and oil wealth.

TRADE

Formation of the unity government is also expected to boost trade between Kenya and South Sudan.

In the recent past, the youngest country in Africa has been a valuable export destination for many Kenyan products including foodstuff.

According to the latest statistics from the Kenya Bureau of Statistics (KBS), Kenya’s exports to South Sudan account for 11.2 per cent of the total exports to the Common Market for East and Southern African (Comesa).

This, arguably, places South Sudan as one of the largest export destinations for Kenya out of 18 other Comesa members.

DEVELOPMENT PROJECTS

The return of peace in Southern Sudan will also boost key projects such as the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor, which will spur socio-economic development in Kenya and the region.

Kenya, South Sudan and Ethiopia jointly launched the infrastructure project in March 2012.

It involves construction of a new transport corridor for the new port of Lamu, through the Kenyan towns of Garissa and Isiolo. 

One part of the corridor is meant to connect Kenya and Ethiopia while the other will connect Kenya and South Sudan through the border town of Nakodok.

The project entails construction of a new road network, a railway line, an oil refinery in Lamu, airports in Lamu and resort cities at Isiolo and the shows of Lake Turkana.

It will promote trade along the corridor hence open northern Kenya up to faster development

REFUGEES MENACE

The number of South Sudanese refugees hosted in Kenya reached 120,452 as at end of October 2019, according to figures from United Nations High Commissioner for Refugees.

Many are likely go back home if political stability returns with establishment of the unity government. 

This will relieve Kenya of the pressure of hosting many refugees in camps such as Kakuma in Turkana County and Dadaab in Garissa County.

When he meet Dr Machar in Juba on Thursday, President Kiir expressed hope that the next three years of the transitional period will pave way for refugees in neighbouring countries and internally displaced persons to return to their homes.

“The recent changes are meant for peace to be achieved. They are not meant to bring conflict back. In the next three years, we want to see new changes,” he said.

REGIONAL PEACE

The return of peace in South Sudan is also likely to enhance regional stability. 

It will stem the proliferation of illegal small arms and weapons.

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Tanzania’s gold, dollar reserves reach $5.5b

By BEATRICE MATERU

Gold bars. Tanzania accumulated $5.5 billion worth of gold and dollar reserves by the first half of 2019/2020. PHOTO | FILE | NATION MEDIA GROUP 

Tanzania accumulated $5.5 billion worth of gold and dollar reserves by the first half of 2019/2020, covering more than six months of imports.

The country’s benchmark is at least four months’ reserve of imports cover, while for EAC is four and a half months and SADC six months of import cover.

The Bank of Tanzania, in its Monetary Policy Statement Mid-Year Review released last week, attributes the good run to the increase in value of exports specifically from the non-traditional goods counter of minerals and manufactured goods.

“The value of exports of goods and services increased by 25.5 per cent to $5.554 billion from the level registered in the first half of 2018/2019, due to increase in the value of export of non-traditional goods,” said BoT.

By the end of the first half of 2019/2020, data shows the value of non-traditional goods exports increased by 39.3 per cent to $2.363 billion, largely driven by manufactured goods and gold.

Exports of manufactured goods increased by 19.2 per cent to $518.6 million from $435.2 million in the same period in 2018/2019. The increase is attributed to a rise in exports of iron and steel products, glass and glassware, manufactured tobacco, sisal yarn and twine.

As of January 2020, manufactured goods recorded a 24 per cent increase of $984.9 million, driven by sisal yarn and twine, iron and steel products, glass and glassware, manufactured tobacco and fertilisers.

Gold, which accounted for 53.7 per cent of non-traditional goods exports, increased by 59.6 per cent to $1.268 billion from $795.1 million in 2018/2019 on account of both volume and favourable prices at the world market.

“Higher volumes of gold exports correspond with government initiatives to effectively manage mining activities in the country, which curbed smuggling and tax evasion,” said Prof Florens Luoga, BoT governor in the midyear review.

Traditional goods exports also increased to reach $634.4 million compared with $322.1 million in the same period last year, driven by exports of cashewnuts.

Services receipts increased to $2.257 billion, boosted by a good performance in travel and transport receipts.

According to BoT gross domestic product maintained an average growth of 6.9 per cent, same as in 2018, occasioned by scaling up of public investments, steady private sector activity, and stable consumption expenditure.

The main contributors to growth for the first half of 2019/2020 were the construction sector by 28.9 per cent, agriculture by 18 per cent and transport by 9.9 per cent.

With the ongoing public investments in social and physical infrastructure, continued improvement in power supply, expansion of credit to the private sector, and enhanced capacity utilisation in the manufacturing industry real GDP growth is expected to remain robust at the end of the 2019/2020 financial year.

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Rand falls: Moody’s warns investors about South Africa's economy

A downgrade by Moody's could generate outflows from South Africa's bond and stock markets.

by Robert Brand

South Africa's rand weakened and bond yields rose after Moody's Investors Service lowered its forecasts for economic growth, raising the risk the country may lose its last investment-level credit rating.

The rand declined as much as 0.7% to trade above 15 per dollar for the first time in a week. Yields on benchmark 2030 government bonds rose four basis points to 8.9%.

Moody's, which is scheduled to review South Africa's Baa3 credit rating in March, said the country's lackluster economic performance was due to domestic challenges rather than external factors such as the coronavirus. A downgrade by Moody's would see South Africa lose its place in investment-grade indexes, sparking outflows from its bond and stock markets.

"Markets are betting that this could be a precursor to a downgrade into junk at the March review, which follows next week's budget," said Christopher Shiells, an analyst at Informa Global markets in London. "However, the Treasury may be able to buy itself more time with a statement that outlines credible steps toward fiscal and general economic reform."

Recent economic indicators suggest that industrial activity in South Africa remains weak amid low business and consumer confidence, while recurring power outages have weighed on manufacturing and mining output, Moody's said in a report. The company lowered its forecast for gross domestic product growth to 0.7% in 2020, from 1%, and predicts expansion of just 0.9% in 2021.

"Slow growth of economic activity is hampering the rate of jobs creation," Moody's said. "Our sub-1% projections reflect our view that the pace of economic activity will remain subdued, well below the country's potential, over our forecast horizon."

Tight Policy

South Africa's relatively high real interest rates are bolstering the rand while constraining economic growth, Moody's said. While the central bank reduced its policy rate by 25 basis points in January, the real rate, which adjusts for inflation, remained above 2%, higher than the GDP growth rate.

"It's not a huge surprise," said Paul McNamara, a fund manager at GAM Investment Management in London. For South Africa, "it's a long death march rather than anything more spectacular. We're reluctant to own a lot of rand, but the bonds look priced for a lot of bad news already."

While the country may avoid a credit downgrade in March, much hinges on the government's commitment to curb spending and consolidate debt. That would require capping the public-service wage bill in the face of opposition from labor unions.

"A downgrade will happen anyway for lack of reform reasons rather than what forecast numbers are," said Peter Attard Montalto, head of capital-markets research at Intellidex in London.

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Burundi Diesel Genset Market Expected to Grow with a CAGR of 4.8% During the Forecast Period, 2019-2025 - ResearchAndMarkets.com

According to this research, Burundi Diesel Genset Market size is projected to grow at a CAGR of 4.8% during 2019-25.

The economy of Burundi is recovering slowly after two consecutive years of recession in 2015 (-3.9%) and 2016 (-0.6%). The diesel genset market of Burundi witnessed sluggish growth during the last few years owing to political instability and fuel shortages in 2017 due to lack of hard currency which brought many businesses to a standstill. 

During the forecast period, the diesel genset market in the country is anticipated to witness moderate growth owing to increasing reports of power failure and rising demand for diesel generators across all verticals as a source of backup power. 

Moreover, the diesel genset market of Burundi is primarily import driven due to lack of OEM manufacturers of diesel gensets in the country

In Burundi, diesel gensets with 75.1 - 375 kVA rating, accounted for the majority of the revenue share in the overall market in 2018, due to increasing demand for diesel gensets across various sectors such as banking, power utilities and construction. Additionally, increasing utilization of lower rating gensets across domains, such as telecom infrastructure, unreliable and off-grid areas, and other commercial sectors, would help the 5 - 75 kVA diesel genset segment to register higher growth during the forecast period.

The Burundi diesel genset market report thoroughly covers the market by kVA rating, verticals and regions. Burundi diesel genset market outlook report provides an unbiased and detailed analysis of the on-going Burundi diesel genset market trends, opportunities/high growth areas and market drivers which would help the stakeholders to devise and align their market strategies according to the current and future market dynamics.

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South African government bonds offer refuge to investors in search of income

By David Whitehouse

South Africa's President Cyril Ramaphosa and finance minister Tito Mboweni (AP)

The latest article in our series on income investing in Africa considers the case for South African government bonds.

Previously we have considered Grit Real Estate, Anglo American, Mondi and Aspen. The articles are not presented as investment advice and readers should take professional advice and/or do their own research.

What will it take to end South Africa’s love affair with equities?

At over 200%, the ratio of the Johannesburg stock market’s capitalisation to the country’s GDP is higher than anywhere else in the world.

Meanwhile, the yield on 2-year South African government bonds currently stand at 6.7%, with 8.2% available on 10-year paper.

A switch by South African institutions into bonds would provide support for international investors who face negative bond yields in their domestic markets and who need to find new homes for their money.

Current yields indicate that the market is already pricing South Africa as sub-investment grade, argues Grace Debeila, co-portfolio manager at Mergence Investment Managers in Cape Town. That suggests that the loss of the last remaining investment-grade rating with Moody’s would “confirm their perception rather than change their outlook of sovereign risk in a meaningful way,” she says.

The importance of a downgrade would lie in the exclusion of South Africa’s debt from global indices that track investment grade securities. This could briefly cause a spike upward in yields, but it would also attract buyers of sub-investment grade debt, Debeila says.

Many foreign investors have already bailed out: overseas ownership of South African government debt slumped to 37% at the end of August.

Bottom of Form

Yet as dire as South Africa’s financial situation is, the country is not yet at the point where an IMF bailout is required, Debeila argues.

The risks of a bailout being needed would increase if there were multiple sovereign downgrades deeper into sub-investment grade territory, acceleration of flight of and an inability to borrow at reasonable rates. “For now, these risks remain muted,” she argues.

The country’s central bank has kept its credibility, while the floating exchange rate regime and healthy level of foreign currency reserves help in managing the balance of payments, she says.

Hard currency debt

Crucially, Debeila says, South Africa’s issuance of hard currency debt is a relatively small proportion of overall debt – 10% at the last budget presentation in February. Keeping it low will help to avoid the need for a bailout, she says.

A higher proportion of hard currency debt is initially positive for the central bank’s foreign reserve balance. But in the long run it increases the risk of being unable to manage the country’s balance of payments in a distress scenario.

Updated figures will become clear at the treasury’s medium-term budget policy presentation on October 30. Moody’s is due to give a rating review on South Africa by November 1.

The country also has the advantage of time.

Much of its borrowing has been in the form of long-dated bonds, so there is still scope for gradual management of economic reforms and public finances.

That window won’t last forever: Debeila sees little room left to increase taxes, so it is the expenditure side of the budget that will have to take the strain.

So far, political pressures have prevented these measures being taken, Debeila says.

Debeila also sees a potential red flag is the treasury’s suggestion of increased issuance of shorter-term T-bills rather than long-dated debt.

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Demand slumps in Burundi, Rwanda for Kenya’s exports

Kenya Export Promotion and Branding Agency CEO Peter Biwott (left) with Trade PS Chris Kiptoo at a past event. PHOTO | DIANA NGILA | NMG 

Demand for Kenyan products has slumped in Rwanda and Burundi amid competition from China, India and Saudi Arabia, a study by Kenya Export Promotion and Branding Agency (Keproba) shows.

Kenya, which mainly exports iron sheets, steel, oils, perfumes, paints, paper and cigarettes to the two landlocked States, has recorded slow export growth as other players come into their turf.

Rwanda and Burundi officially joined the East African Community trading bloc in 2009 where they are able to trade with Kenyans without tariff and import quota restrictions.

“There is a notable trend in the abandonment of the Kenyan brands in Rwanda and Burundi due to increasing prices, unavailability of products, competition from substitute products and counterfeiting,” says the study released yesterday.

Kenya commands three percent share of the import market in the two countries, valued at about Sh6.5 billion in Burundi and Sh17.8 billion for Rwanda.

“Kenya needs to improve competiveness of its export commodities, better the export penetration strategies to grow its market share vis-à-vis competing countries,” the agency chief executive Peter Biwott told the Business Daily.

The research shows that Burundian household spends mostly on household items such as clothes and footwear (32 percent), cereals (18 percent), meat and groceries (14 percent, oils (10 percent) and cooking energy (five percent).

Similarly, Rwandan households’ budget is dominated by clothes and footwear (up to 34 percent) and food items (cereals, groceries, mea, cooking oil, and dairy) making up to 52 percent of the budget.

“New opportunities for Kenyan exports products should target household items such as clothes, cereals (rice) and groceries,” states the study, adding opportunities also exist to deepen market penetration for confectionery, footwear, toiletries and plastics.

“The survey of consumers in Burundi established that price was the most important driver influencing their purchase decision for most products,” says the agency.

Kenya can compete with local industries in Rwanda, where consumers value quality, to get a share of the 78 percent domestic supply, it said.

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Where Africa’s rich live

By Jeune Afrique

A

Mauritian bank AfrAsia has published the third edition of the Africa Wealth Report, ranking the richest people and their assets on the continent. The report looks at 17 African countries.

• Africa’s ‘Big 5’ wealth markets are South Africa, Egypt, Nigeria, Morocco, and Kenya.
• Mauritians are the wealthiest individuals in Africa, followed by South Africans, based on wealth per capita.

A country’s wealth refers to the “net assets held by all individuals living in a country, including all their assets (real estate, cash, shares, commercial interests) minus liabilities,” the report states. This equation gives more populated countries a significant advantage.

• The total wealth held in Africa “has increased by only 14% over the last ten years (2008-2018),” according to the report.
• Due to a lack of sufficiently reliable sources, data for Algeria, the DRC and Zimbabwe were not included in the report.

Despite Africa containing 16% of the world’s population, it has only accumulated 1% of the world’s wealth of $204trn.

• Africa’s wealth totalled $2.2 trn.
• At least 42% of Africa’s wealth ($920m) is held by high net worth individuals.
• 23 billionaires live on the African continent.
• On average, the net wealth per African is $1,900, compared to $27,000 worldwide.

Future prospects

AfrAsia predicts that total wealth held on the African continent will climb by 35% over the next 10 years, reaching $3trn by 2028.

Mauritius, Ghana, Rwanda, and Uganda are emerging as the best performing countries on the continent, set to more than double their wealth over the next decade.

South Africa, Tanzania and Côte d’Ivoire are expected to experience moderate wealth growth of around 30%.

Morocco, Egypt and Nigeria are likely to face difficulties due to their low growth prospects of around 10% to 20%.

Bottom of Form

South Africa’s woes

Despite South Africa’s ongoing economic worries, it remains the richest on the continent with a total wealth of $649bn. The report cites several factors affecting its performance: mismanagement of large public companies, weaker currency, depressed property market, and the exodus of wealthy individuals.

Mauritius on the move

“Mauritius was the best performer in Africa over the past decade. It was also the second fastest growing wealth market worldwide during this period (after China),” stated the report.

Safety is one of the key drivers of growth in any country, and Mauritius comes out on top. It is rated as the safest country in Africa, according to New World Wealth.

The report cites several reasons for its stellar performance, including a thriving financial sector, rising residential and commercial property prices, and a large number of wealthy immigrants over the past decade.

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