IMPORTANT NOTICE:

The information in this PDF file is subject to Business Monitor Internationals full copyright and entitlements as defined and protected by international law. The contents of the file are for the sole use of the addressee. All content in this file is owned and operated by Business Monitor International, and the copying or distribution of this file, internally or externally, is strictly prohibited without the prior written permission and consent of Business Monitor International Ltd. If you wish to distribute the file, please email the Subscriptions Department at subs@businessmonitor.com, providing details of your subscription and the number of recipients you wish to forward or distribute this information to.

DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.

ISSN 1474-5615 Vol 12 Issue 8

August 2011

West Africa
Business Monitor Internationals monthly regional report on political risk and macroeconomic prospects

gHaNa

THiS MONTHS TOP STOrieS

Oil Exports To Propel Growth Boom

BMI View: We forecast double-digit economic growth for Ghana in 2011, with the onset of oil production set to drive the stellar performance. But we acknowledge macroeconomic risks stemming from the budget and inflation.
BMI continues to view Ghana in a very favourable light, with the economy forecast to massively outperform on a regional and global basis in 2011. We see real GDP growth leaping to 14.0%, up from 7.7% in 2010, driven primarily by the onset of oil exports, but also supported by buoyant foreign investment and a broadly stable macroeconomic environment. This strong performance will be maintained over the medium-to-long term, in our view: we forecast annual economic growth of 7.0-8.0% over 2012-2013, followed by a double-digit number (12.5%) in 2014 when oil production is ramped up to a second phase. Of course, there are risks to our bullish outlook: the budget is on shaky ground and inflationary pressures are building. Provided that the authorities negotiate the choppy waters with appropriate policy responses, we believe these risks will not derail Ghana from a stellar economic performance over the coming months and years. We expect the external sector to be the key driver behind the growth boom. Drilling down, oil will be the major propellant of the external sector. Production is coming along nicely: having begun at 50,000 barrels per day (b/d) in December 2010, output currently stands at around 7080,000b/d and is expected to rise to
...continued on page 7

Cameroon: Spending Shifts Further From Investment

BMI View: Government spending continues to tilt away from public investment and towards current expenditure as Cameroon expands the civil service, and tries to cap food and fuel prices. With domestic revenues likely to disappoint over the short term, the government may increase its reliance on local currency bonds.
page 4

Cote dIvoire: June Default Delay, Not Desertion

BMI View: Cte dIvoires announcement that it will not meet the June payment of its outstanding US$2.3bn eurobond is an indication of the short to medium-term financial difficulties that confront the administration of incoming President Alassane Ouattara. We expect that the countrys external debts will be honoured once circumstances permit.
page 5

Gabon: Oil Industry Burgeoning

page 6

Africa: Ready For Business

page 8

OiL MarKeT OUTLOOK

Nigeria

Reform Takes Centre Stage

BMI View: Now that Nigerias general election and subsequent unrest have come to an end, officials attention will be increasingly turned to the longstanding need for reform. Oil sector reform should have a net positive effect on the business environment, fiscal management and economic performance.
With the general elections concluded, and the ensuing violence largely brought under control, Nigerian legislators are looking to the future. Prominent on the agenda are significant reforms in the oil sector, namely the Sovereign Wealth Fund (SWF) and the Petroleum Industry Bill (PIB). While the bill creating the SWF was successfully passed in the middle of May, the PIB is likely due for a longer struggle. The SWF will more tightly codify the management of Nigerias immense
...continued on page 2
Source: BMI

Front-month Brent crude has weakened significantly in recent trading after a deterioration in investor sentiment following poor economic data out of the US and concerns about the Greek debt crisis. The International Energy Agency recently decided to tap into emergency supplies to increase 60mn barrels of crude in order to offset the decline in supply from Libya. This should help allay any fears that the market is tight, particularly given that US crude inventories remain high by historical standards. We see oil prices averaging US$106/bbl in 2011 and US$98/bbl in 2012.
Editorial/Subscriptions Office: Senator House, 85 Queen Victoria Street, London EC4V 4AB, UK Tel: +44 (0)20 7248 0468 Fax: +44 (0)20 7248 0467 email: subs@businessmonitor.com www.businessmonitor.com www.meamonitor.com

Visit www.meamonitor.com for the following subscriber benefits: Instant access to the latest issue on the day of publication via pdf download, as well as access to pdfs of back issues. Access to the latest stories, analysis, charts, graphs and data online 24 hours a day, from any location.
sector or country. Find what you want when you want. Dont know your password? Contact Esther Lopez at elopez@businessmonitor.com or call +44 (0)20 7248 0468 today. Not a subscriber? Go to www.meamonitor.com today, register your details and get instant trial access.

ISSN: 1754-2251

Search across a 3-year archive of stories by keyword,

Nigeria
...continued from bottom of front page

riSK SUMMarY
POLITICAL RISK

Cabinet Delays
Local reports have said that President Goodluck Jonathans delay in forming a cabinet is due to his insistence that he will only work with the best possible candidates. Jonathan has asked state governors to supply him their top nominees, although he may go against their wishes if he finds a superior candidate. Meanwhile, there are increasing rumours that the position of finance minister may be filled by Ngozi Okonjo-Iweala, a previous finance minister who is currently serving as managing director at the World Bank.
Our short-term political risk rating is 47.9.

oil wealth. It is comprised of three separate funds, which will use windfall oil revenues to finance infrastructure (through the Nigerian Infrastructure Fund), stabilise current expenditures (through the Stabilization Fund), and save revenue for when Nigerian oil eventually dries up (through the Future Generations Fund). The SWF is central to a wider strategy the Finance Minister Olusegun Aganga has said was needed to transform our finite oil endowment into an investment in the growth and development of our country, so that we can achieve ever-growing wealth. PIB Remains A Priority The passage of the SWF gave hope to many observers that the Petroleum Industry Bill (PIB), which has been in the legislature for over two years, might also be passed before the outgoing lawmaking session concluded at the end of May. The PIB is meant to clarify the legal and regulatory framework in which oil companies operate, and is widely considered vital for the development of the industry. The PIB also incorporates environmental protection and local content requirements that are popular with Nigerian companies and individuals living in the Delta region. The bill has been delayed multiple times as stakeholders wrangle over the finer points of legislation. Oil companies have sought to protect their profit making ability, and maintain a level of flexibility to respond to changing conditions. Osamede Okhomina, CEO of Energy Equity Resources expressed concerns about the governments proposal to control Incorporated Joint Ventures, saying that government direction would inhibit firms ability to raise capital to fund operations. While the bill was never likely to pass by the end of May, BMI believes that the recent uptick in the bills politicisation and prospect of industrial action means that further setbacks should be expected. According to Managing Director of Mobil Oil Nigeria Tunji Oyebanji, the delay in passing the PIB has contributed to a state of confusion among oil companies and firms operating downstream in the sector, a sentiment that BMIs Oil & Gas team has long identified as a major drag on investment. We believe that the bill will be passed before the end of 2011. Banking Reforms In The Works, Too BMI expects that the moves by the Central Bank of Nigeria (CBN) to accelerate banking reforms, including hastening mergers and acquisitions and setting a deadline to divest

ECONOMIC RISK

Car Imports Climb

Vehicle imports in Nigeria climbed by almost 80% in the first five months of 2011 compared with the same period last year according to industry officials. A total of 18,377 units were imported in the five months to May, compared with 10,324 in the same period of 2010. The improvement signals a significant improvement in consumer confidence, as well as an increase in lending, both of which have been slow to recover since 2009 following the stock market crash and subsequent US$4bn bank bailout.
Our short-term economic risk rating is 67.1.

BUSINESS ENVIRONMENT

Debt Rule Relaxed

In an effort to attract increased investments, the government of Nigeria has relaxed the rule for holding government debt. Previously, foreign investors had to hold debt for a minimum of one year, a control that has limited inflows from portfolio investors who would prefer more flexible exit options. According to Central Bank of Nigeria governor Lamido Sanusi, the new regulations are expected to bolster the naira in the near term, as investment increases and help restrain inflation. The changes are due to take effect from July 1 2011.
Our business environment rating is 38.0.

non-banking assets, will help strengthen the sector. Furthermore, the granting of new licences specific to banks operations should help regulate the industry, avoiding the type of crisis seen in the past. Late in May 2011, the CBN announced that banks seeking to meet new, more stringent capital requirements through mergers and acquisitions must complete the deals before the end of September 30 2011. According to bank governor, Lamido Sanusi, this is a firm deadline which is necessary to avoid an indefinite transition period. Sanusi was the driving force behind the bailout of troubled banks in 2009, costing US$4bn, after it was determined that their capitalisation positions threatened the entire economy. If the mergers and acquisitions are not completed by the deadline, the CBN will have to recapitalise (through the Asset Management Company, AMCON), or even liquidate, the banks in question, according to Sanusi. Meanwhile, deputy governor Kingsley Moghalu announced May 2012 as the deadline for banks with monoline banking licences to divest non-banking subsidiaries, particularly asset management and capital market activities. BMI sees the CBNs tough stance as an indication of the banks dissatisfaction with the pace of reform in the banking sector, and we believe that the imposition of discipline bodes well for the sectors long-term viability. While the deadlines will help underscore the banks needs for haste, we dont anticipate any significant bank failures as a result of the policy. Nine banks were part of the 2009 rescue package; of these, four (Afribank, Finbank, Intercontinental Bank, and Union Bank) have already signed merger deals. Two others Bank PHB and Oceanic Bank are currently in talks with potential partners, and will likely reach deals eventually (perhaps requiring a relatively short-term injection of capital from AMCON following the September deadline). As a result, we do not expect that the CBN will need to liquidate the assets of any of the most important banks. The timing of the announcements coincides with the CBNs issuance of seventeen new banking licences (granted to existing banks) which reflect the central banks interest in improving its regulatory ability. Following the abolition of one-size-fitsall universal licences, the latest versions included nine international licences (with a NGN50bn minimum capital requirement), six national licences (requiring NGN25bn), and two regional licences (NGN10bn).

weSt AFRICA AUGUST 2011

www.meamonitor.com

POLITICAL OUTLOOK

Growing Boko Haram Threat To Be Contained

BMI View: Boko Haram represents a significant threat to Nigerian security, as its loose organisation, hard-line ideology and violent tactics complicate diplomatic efforts at pacification. Nevertheless, we believe that the organisation will ultimately be contained, owing to its lack of any real public support and the governments experience in dealing with terrorism.
Boko Haram, an Islamic extremist organisation, has supplanted the Movement for Emancipation of the Niger Delta over the course of recent months. In June, the organisation claimed responsibility for a bombing at police headquarters in the capital Abuja, killing at least six people, including the bomber. Less than a week later, gunmen raided a police station in northern Nigeria, killing several officers. Although most Nigerian Muslims and Christians live together peacefully, there has long been tension between the two communities in the northern part of the country, a fact that has been used to political advantage by state leaders seeking to leverage power away from the federal government. This came to a violent head in 2000 and 2001, when thousands were killed on both sides during clashes over the establishment of sharia law in predominately Muslim states.
DATA & FORECASTS
BMI View: Nigerias trade account will be bolstered by historically high oil prices which have remained elevated since the beginning of 2011, as oil-producing coun Population, mn [2] Nominal GDP, US$bn [3] GDP per capita, US$ [4] Real GDP growth, % change y-o-y [4] NGN nominal growth, % change y-o-y [4] Unemployment, % of labour force, eop [5] Budget balance, % of GDP [8] Consumer prices, % y-o-y, eop [6] Lending rate, %, eop [9] Real lending rate, %, eop [1,10] Exchange rate NGN/US$, eop [8] OPEC Basket price, US$/bbl, ave [11] Oil production, 000 b/d [12] Goods exports, US$bn [10] Goods imports, US$bn [9] Current account, % of GDP [10] Foreign reserves ex gold, US$bn [13] Total external debt stock, % of GDP [15] Short term foreign debt, % of total [15]

During this time, a gang of especially brutal thugs rallied around a religious teacher called Ustaz Mohammed Yusuf. In 2002 Yusuf formally organised Boko Haram, which in the Hausa language of northern Nigeria is interpreted as Western education is forbidden. The group officially denounces all Western influence and products and has called for the establishment of an Islamic state. Locally nicknamed Nigerias Taliban, it claims ideological affiliation to al-Qaeda, and has reportedly sought to boost ties with the terrorist group al-Qaeda in the Islamic Maghreb (AQIM). While not influential enough or sufficiently coordinated to launch full-scale war on the Nigerian state, Boko Haram has played a role in exacerbating the intermittent clashes that have emerged between Muslims and Christians for various reasons. In 2009 the group started attacking rival Muslim

groups, in addition to Christians and police forces. The security response was severe, and a total of about 500 Boko Haram members were killed. Yusuf was arrested and executed in police custody, although officials claim he had tried to escape. Since the death of Yusuf, Boko Harams leadership structure which was always illdefined has become vaguer than ever. Nevertheless, the group has been able to capitalise on widespread unemployment in northern Nigeria, particularly among the less educated youth. The group has also claimed to receive reinforcements from AQIM and Somalia. Although it is likely true that the groups ranks are growing, Boko Haram remains extremely unpopular with the vast majority of Nigerians, who see the organisation as brutal and backward. Its opposition to constitutional democracy, trade and relations with the West, and skills-based education is a losing battle, as Nigerias momentum builds in precisely the opposite direction. Aside from the lack of public support, Boko Haram is also likely to face tougher security moving forward. Since the latest attacks, officials have met in high-profile meetings to discuss what local reports called urgent and drastic measures to address Nigerias security challenges. We expect that while further attacks are likely, a firm government response is a near certainty.

tries in North Africa and the Middle East experience increased political uncertainty. We believe that the current account deficit will narrow significantly, and finally break
2008 151.2 226.8 1,500 5.9 18.0 14.6 -0.6 15.1 17.7 2.6 136.00 94.07 2,146.6 73.2 41.8 2.6 52.8 5.1 64.8 2009 154.7 216.8 1,401 6.9 20.2 17.3 -3.7 12.2 18.7 6.5 149.90 60.86 2,050.0 43.2 36.6 -2.8 42.4 3.6 44.8

into the black in 2012, when we expect a current account surplus of 0.8% of GDP , supported by a trade account surplus of nearly US$12bn.
2010 158.3 265.4 1,677 7.9 22.8 19.3 -4.9 11.4 18.8 7.4 150.00 77.38 2,152.5 53.9 37.8 -0.3 32.4 6.3 39.4 2011f 162.3 315.5 1,944 7.8 19.7 17.1 -2.3 10.8 15.4 4.6 152.00 90.00 2,302.5 60.2 41.3 -0.1 44.0 7.2 47.2 2012f 166.4 377.5 2,269 7.6 18.9 17.9 -1.6 10.1 15.0 4.9 148.00 95.00 2,452.5 68.3 44.8 0.8 56.0 7.0 46.0

Notes: e BMI estimates. f BMI forecasts. 1 Real rate strips out the effects of inflation; Sources: 2 World Bank/BMI calculation/BMI. 3 Nigerian National Statistics Bureau, Central Bank of Nigeria; 4 Nigerian National Statistics Bureau, Central Bank of Nigeria, BMI; 5 Nigerian Authorities; 6 Central Bank of Nigeria; 7 IFS; 8 BMI; 9 IMF; 10 IMF/BMI; 11 OPEC; 12 BP Statistical Review; 13 IMF IFS; 14 IMF IFS/BMI; 15 World Bank/BMI.

www.meamonitor.com

AUGUST 2011 weSt AFRICA

CaMerOON
ECONOMIC OUTLOOK

riSK SUMMarY
POLITICAL RISK

Robust Voter Registration

The chairman of the Electoral Board of Elections Cameroon, Samuel Fonkam, said that he was impressed with the progress the body is making in registering voters. So far, around 1.7mn new voters have registered, a figure that Fonkam called very good. The drive is meant to clean up the voter register and compile a more accurate list. However, the main opposition party, the Social Democratic Front (SDF), claims that there have been irregularities in voter registration, and threatened to disrupt the upcoming vote. John Fru Ndi, leader of the SDF, said the electoral commission is not independent.
Our short-term political risk rating is 61.3.

Spending Shifts Further From Investment

BMI View: Government spending continues to tilt away from public investment and towards current expenditure as Cameroon expands the civil service, and tries to cap food and fuel prices. With domestic revenues likely to disappoint over the short term, the government may increase its reliance on local currency bonds.
Cameroons government is in the midst of contending with a more-or-less permanent drop in revenues (as a share of GDP), after oil production fell sharply between 2008 and 2010. Going forward, we see the budget deficit coming in at 1.7% of GDP in 2011, before quickly pulling into a 0.1% deficit in 2012 and a 0.5% surplus in 2013. Over the same period, we see capital expenditure recovering to 2008 levels only by 2013 (for comparison, we estimate current expenditure continued to grow each year through the recession). Indeed, in recent months, the outlook for public investment in Cameroon has dimmed further as a result of the governments decision to begin stockpiling food in a move to keep prices under control. With high food and fuel prices a trigger for large anti-government protests in 2008, the government has set up an agency to provide staple foods at regulated prices. Details on
DATA & FORECASTS
BMI View: Although we expect oil prices to remain elevated during 2011 and production to remain relatively stable, the trade account is forecast to deteriorate over this period on the back of rapidly rising imports. This trend is expected to reverse in 2012, however, as deficits on both the trade and current accounts start to decline.
Population, mn [3] Nominal GDP, US$bn [4] GDP per capita, US$ [4] Real GDP growth, % change y-o-y [4] XAF nominal growth, % change y-o-y [4] Unemployment, % of labour force, eop [1,5] Budget balance, % of GDP [4] Consumer prices, % y-o-y, eop [6] Lending rate, %, eop [6] Real lending rate, %, eop [2,4] Exchange rate XAF/US$, eop [7] Goods exports, US$bn [4] Goods imports, US$bn [4] Balance of trade in goods, US$bn [4] Current account, % of GDP [4] Foreign reserves ex gold, US$bn [6] Import cover, months g&s [4] Total external debt stock, % of GDP [8] Short term foreign debt, % of total [8] 2008 19.1 22.9 1202 2.9 3.2 6.0 2.4 5.3 14.0 8.7 468.54 5.9 5.4 0.5 -2.0 3.1 6.8 12.2 18.2 2009 19.5 23.6 1206 1.9 8.3 7.0 -0.1 0.9 12.0 11.1 457.34 4.1 4.4 -0.3 -4.8 3.7 10.0 12.5 16.0 2010 20.0 25.1 1255 3.2 11.7 8.0 -0.5 2.6 13.0 10.4 490.36 4.7 4.6 0.0 -3.4 4.4 11.4 12.3 14.0 2011f 20.4 27.0 1323 3.7 -0.1 7.8 -1.7 4.1 14.0 9.9 458.71 4.9 5.2 -0.3 -4.6 5.1 11.8 12.0 12.4 2012f 20.8 29.7 1424 5.7 14.0 7.6 -0.1 4.1 14.0 9.9 489.52 5.8 5.7 0.1 -3.2 5.6 11.8 11.4 10.9

ECONOMIC RISK

Sonara Gets US$164mn

The Sonara oil refinery, the only such facility in Cameroon, is set to receive XAF75bn (US$164mn) to fund a major expansion, according to its general manager, Charles Metouk. Capacity will increase from current levels of 2.1mn tonnes to an estimated 4mn tonnes of crude by 2015. The refinery equipment will also receive an upgrade: after the refurbishment, it will be able to refine heavy crude, the type that Cameroon produces, Metouk added. Currently, the refinery is only able to process light crude.
Our short-term economic risk rating is 47.1.

the cost of the programme are scarce, but for it to have a significant impact on food prices, we believe it must be non-negligible (fuel subsidies account for approximately 1% of GDP, for comparison). Over the longerterm, there is some scope for phasing the program out after elections, but we believe the fear of political unrest will likely lead to the adoption of similar tactics any time the price of food climbs sharply. Meanwhile, costly fuel subsidies, which were supposed to be phased out last year, look likely to remain for the foreseeable future, by similar logic. The civil service is also being expanded in an effort to combat youth unemployment, with an announcement that the government would be hiring an additional 25,000 workers coming the day before scheduled protests. Finally, in the near term, the normal expansion of government spending preceding an election is also likely to boost spending this year.

BUSINESS ENVIRONMENT

Bond to Fund Infrastructure

According to Cameroonian state TV, President Paul Biyas igned a decree authorising the finance minister to issue treasury bonds to provide the funds for infrastructural improvements across the country. The announcement said that the government will issue a XAF200bn (US$445.5mn) treasury bond to help finance a wide range of infrastructure projects, meant to help facilitate economic activity in the country. Although further details were not given, the government has ambitious infrastructural plans, including hydroelectric dams, water distribution pipelines, road improvements, and a deep sea port.
Our business environment rating is 26.3.

Notes: e BMI estimates. f BMI forecasts. 1 Actual data only available for 1996, 2001 and 2005. All other data are estimates and forecasts.; 2 Real rate strips out the effects of inflation; Sources: 3 World Bank/BMI calculation/BMI. 4 IMF/BMI; 5 ILO/Cameroon National Statistics; 6 IMF; 7 BMI; 8 World Bank/BMI.

weSt AFRICA AUGUST 2011

www.meamonitor.com

COTe divOire
ECONOMIC OUTLOOK

June Default: Delay, Not Desertion

BMI View: Cte dIvoires announcement that it will not meet the June payment of its outstanding US$2.3bn eurobond is an indication of the short to medium-term financial difficulties that confront the administration of incoming President Alassane Ouattara. We expect that the countrys external debts will be honoured once circumstances permit.
Finance Minister Charles Koffi Diby has announced that Cte dIvoire will not be able to honour the timeframe for its eurobond debt, and will have to renegotiate and draw up a new schedule of payments. In BMIs view, Cte dIvoires announcement that it will default on its June 30 payment on its 2032 US$2.3bn eurobond the second consecutive payment it will have missed is a signal of competing financial priorities, and not an indication of the governments unwillingness to honour its debts under normal circumstances. The instability and violence which left around 2,000 people dead brought economic activity to a virtual standstill, disrupting commerce and destroying productive capacity. As a result, the need for funding to revive the economy has coincided with a significant decline in government revenues. The market reacted with a sharp selloff, to below 52.00 cents on the dollar, down from around 57.00 cents through most of
DATA & FORECASTS
BMI View: Cte dIvoire is unlikely to make the June 30 payments on its defaulted eurobonds, according to statements from officials. The country remains in financial strife following post-election violence.
2008 Population, mn [1] Nominal GDP, US$bn [2] GDP per capita, US$ [2] Real GDP growth, % change y-o-y [2] XOF nominal growth, % change y-o-y [2] Budget balance, XOFbn [3] Budget balance, % of GDP [3] Consumer prices, % y-o-y, ave [4] Consumer prices, % y-o-y, eop [4] Exchange rate XOF/US$, eop [5] Exchange rate XOF/EUR, eop [5] Goods exports, US$bn [6] Goods imports, US$bn [6] Balance of trade in goods, US$bn [6] Current account, US$bn [6] Current account, % of GDP [6] Foreign reserves ex gold, US$bn [6] Import cover, months g&s [6] Total external debt stock, % of GDP [7] Short term debt as a % of International reserves [7] Short term foreign debt, % of total [7] 20.6 21.9 1,064 2.3 4.2 -61.0 -0.6 6.3 8.9 468.54 655.96 10.4 7.1 3.3 0.5 2.1 2.2 3.8 57.3 55.8 10.0 2009 21.1 24.4 1,157 3.8 3.8 -240.2 -2.2 1.1 -1.6 516.50 655.96 10.6 6.4 4.2 1.7 7.0 2.5 4.8 54.7 52.9 10.0 2010 21.6 25.8 1,195 3.2 17.2 -229.5 -1.8 2.5 2.5 490.36 655.96 11.6 7.0 4.5 1.9 7.2 2.6 4.4 50.9 40.8 8.0 2011f 21.1 25.3 1,197 -5.4 -9.0 0.0 0.0 3.5 4.5 458.71 655.96 12.5 8.4 4.2 1.4 5.6 2.6 3.8 40.9 31.6 8.0 2012f 21.6 28.0 1,293 7.7 14.6 -66.5 -0.5 2.9 3.2 489.52 655.96 12.0 8.6 3.4 0.6 2.1 2.7 3.8 36.4 37.3 9.8

riSK SUMMarY
POLITICAL RISK

Ouattaras Forces Under Scrutiny

President Alessane Ouattaras adminstration is facing a backlash amid reports from a Human Rights Watchdog that his forces indiscriminately carried out numerous violent acts such as torture, rape and extrajudicial killings. These atrocities are believed to have been based on ethnicity or political affiliation. Former President Laurent Gbagbos stronghold neighbourhood of Yopougon is said to have been the worst affected area, with many killings taking place after Gbagbo had been arrested on April 11. President Ouattara has promised an investigation into the claims and to prosecute those deemed responsible.
Our short-term political risk rating is 23.3.

May. However, the bond is still trading well above the lows seen during the height of the post-election crisis in February and March. It appears that investors still believe that the eurobond coupons will be paid, albeit on an altered schedule. BMI expects such optimism will be validated. Newly elected President Alassane Ouattara has worked professionally as an economist with the IMF, and appreciates the importance of debt management. Furthermore, Cte dIvoires fiscal position should be bolstered to some degree by the support of emergency funding from multilateral organisations. While a new repayment schedule has not been determined or even approved, BMI expects that creditors will be lenient given Cte dIvoires unique circumstances. Apart from the sense of obligation to show a measure of compassion following the trauma of the past several months, investors will also be keen to avoid an all-out default and debt restructuring.

ECONOMIC RISK

Concerns Over Cocoa

Concerns are mounting over the quality of this years cocoa bean yield, with heavier than usual seasonal rains leading to a high proportion of mouldy and humid beans, and increasing fears of black pod disease. Despite the disruption caused by post-election violence, cocoa output has actually increased by 14% since last year, but the declining quality of bean has led to a slight weakening in price. Low revenues have prevented farmers from properly treating their plantation, creating a vicious circle. Cte dIvoire is the worlds top grower of cocoa, which is the countrys largest export industry, making up 34% of total export revenue.
Our short-term economic risk rating is 46.3.

BUSINESS ENVIRONMENT

FDI wanted
Cte dIvoires government is aiming to attract foreign direct investment to fund its offshore oil exploration. State oil company Petroci director Daniel Gnagnin announced that the countrys entire offshore basin would be open to foreign investors for exploration. The country wants to diversify away from its reliance on cocoa and coffee bean exports, the goal is to boost oil production to 150,000 200,000 barrels per day (b/d) within five years, a significant increase from the current 35,000 50,000 b/d rate of production. Oil currently makes up around 14% of total export revenue.
Our business environment rating is 24.2.

Notes: e BMI estimates. f BMI forecasts. Sources: 1 World Bank/BMI calculation/BMI. 2 IMF/BMI Calculation; 3 BMI/IMF; 4 Cote dIvoire Statistics Institute; 5 BMI; 6 BMI/IMF/IFS; 7 BMI/World Bank.

www.meamonitor.com

AUGUST 2011 weSt AFRICA

 gabON
riSK SUMMarY
POLITICAL RISK ECONOMIC OUTLOOK

Oil Industry Burgeoning

BMI View: Gabon is set to benefit from growing interest in West Africas subsalt oil potential, though we see short-term risks in an uncertain business environment.
Brazils Petrobras has acquired a 50% operating stake in two deepwater subsalt blocks off the coast of Gabon from Africafocused independent Ophir Energy. The move is in line with the companys plan to export its subsalt expertise to West Africa, which is attracting increasing attention for its underexplored subsalt potential. Optimism surrounding Gabons subsalt potential so far remains largely based on speculation, but that looks certain to change over the coming years. Forthcoming seismic data will dramatically improve the understanding of the geology of the region, which will be crucial as companies look for drilling targets. If Petrobras and Ophir decide to drill at the blocks they will hope to emulate US independent Harvest Natural Resourcess recent subsalt exploration success. The company announced on June 13 that it had made a discovery at the shallow-water subsalt Gamba prospect. Harvests exploration success and growing interest from deep-pocketed industry
DATA & FORECASTS
BMI View: We forecast Gabons goods exports continuing to grow this year, up 7.8% from 2010. This will largely be driven by high oil prices.
Population, mn [2] Nominal GDP, US$bn [3] GDP per capita, US$ [3] Real GDP growth, % change y-o-y [3] XAF nominal growth, % change y-o-y [3] Budget balance, XAFbn [4] Budget balance, % of GDP [4] Consumer prices, % y-o-y, ave [5] Consumer prices, % y-o-y, eop [5] Lending rate, %, eop [6] Real lending rate, %, eop [1,6] Exchange rate XAF/US$, ave [7] Exchange rate XAF/US$, eop [7] Exchange rate XAF/EUR, eop [7] Goods exports, US$bn [8] Goods exports, % change y-o-y [8] Goods imports, US$bn [8] Goods imports, % change y-o-y [8] Balance of trade in goods, US$bn [8] Current account, US$bn [6] Current account, % of GDP [6] Foreign reserves ex gold, US$bn [6] Import cover, months g&s [6] Total external debt stock, US$mn [9] Total external debt stock, % of GDP [9] 2008 1.4 14.5 10,006 2.3 16.5 59.1 0.9 5.3 5.6 4.8 -0.8 446.23 468.54 655.96 9.3 31.1 2.1 23.4 7.2 3.1 21.3 1.9 11.0 2,128.0 14.7 2009 1.5 11.3 7,686 -1.0 -17.9 580.0 10.9 2.5 0.9 4.2 3.4 468.54 516.50 655.96 5.6 -39.6 1.7 -19.2 3.9 1.4 12.6 2.6 18.1 2,069.0 18.3 2010 1.5 11.6 7,732 4.0 8.1 657.5 11.5 3.3 3.6 4.5 0.9 494.52 490.36 655.96 7.0 25.0 1.8 3.8 5.3 1.9 16.5 3.2 21.6 1,758.7 15.2 2011f 1.5 13.5 8,830 4.5 7.8 705.9 11.4 2.6 2.1 5.0 2.9 458.71 458.71 655.96 7.6 7.8 2.0 13.2 5.6 2.0 15.0 3.8 22.6 1,494.8 11.1 2012f 1.6 14.1 9,043 5.1 8.0 715.9 10.7 3.8 4.1 5.5 1.4 475.33 489.52 655.96 7.5 -0.4 2.1 6.2 5.4 2.0 14.0 4.3 24.1 1,270.6 9.0

Corruption Still a Key Risk

US President Barack Obama urged President Ali Bongo Ondimba of Gabon to do more to tackle corruption and stop human rights abuses, reinforcing BMIs view that although the Gabonese government has made some strides in improving the countrys reputation and legitimacy both at home and abroad, there is still much more work to do. Transparency International ranks Gabon a lowly 110 of 178 rated countries on its corruption perception index 2010, and furthermore ranks the nation only 18 out of 33 states amongst its SubSaharan African peers.
Our short-term political risk rating is 72.5.

ECONOMIC RISK

Government Going Green

The Gabonese government has signed an agreement with the University of Oregon to create a research centre to help promote sustainable economic development. The centre aims to carry out research and provide training to students on topics including ecotourism, environmental governance and land use near national parks. This partnership demonstrates President Ali Ondimbas ambition to diversify Gabons economy away from a long-term, sole reliance on oil production. National parks make up 11% of Gabons landmass, with rainforests covering 85%, meaning the country has vast potential to develop its fledgling tourism industry.
Our short-term economic risk rating is 61.7.

players comes at a good time for Gabon, which has seen a long-running dispute over local content take its toll on the oil sector. Production is well below where it stood in the early-2000s, with the best hope for major new production coming from the countrys potentially oil-rich deepwater subsalt acreage. Investment, however, is unlikely to flow into the region until the local content matter is settled and proposed new oil legislation is passed. Signs of resource potential in Gabons subsalt acreage would be likely to renew interest in the countrys subsalt acreage. A hotly anticipated licensing round was cancelled in late-2010 and is now expected to be awarded through direct negotiations. Given the uncertain business environment, however, we see little prospect of intensive exploration in Gabons deepwater subsalt acreage anytime soon. As a result, BMI sees Gabons oil production rising from 229,000 barrels a day (b/d) in 2009 to 260,000b/d in 2011, before steadily falling off to about 221,000b/d in 2019.

BUSINESS ENVIRONMENT

Petrobras Seeks Government Approval

Brazils state-owned oil giant Petrobras is planning to acquire a 50% stake in two exploration blocks off Gabon, pending approval from the Gabonese central government. The value of the purchase of half of the Ntsina Marin and Mbeli Marin blocks has not been disclosed. Petrobras is aiming to refocus on foreign operations in a bid to become the worlds largest publicly listed oil company. This interest will serve as good news for the already booming oil industry, which makes up around 80% of Gabonese exports.
Our business environment rating is 29.7.

Notes: e BMI estimates. f BMI forecasts. 1 Real rate strips out the effects of inflation; Sources: 2 World Bank/BMI calculation/BMI. 3 ADB/ BMI Calculation; 4 ADB/BMI; 5 IMF/ BMI Calculation; 6 IMF/BMI; 7 BMI; 8 ADB/IMF; 9 IMF/ BMI.

weSt AFRICA AUGUST 2011

www.meamonitor.com

gHaNa
...continued from top of front page

120,000b/d by August 2011. We estimate that production will average 95,000b/d in 2011 and 120,000 in 2012, generating export revenues of US$2.7bn in 2011 and US$3.5bn in 2012. Developments in the cocoa sector should reinforce the trend for export-led growth. BMIs agribusiness analysts predict that Ghana will see a bumper cocoa crop this year thanks to the confluence of three main factors. Firstly, yields are rising due to favourable weather and the fact that the government has raised the set price it pays to cocoa farmers, enabling them to spend more on fertiliser. Secondly, less cocoa is being smuggled to Cte dIvoire, following the ban on exports there amid political turmoil. Thirdly, and relating to the second point, some cocoa is being smuggled from Cte dIvoire to Ghana although we caution that the volumes may not be high, since Ghana has a much lower price for cocoa than Cte dIvoire. Taking all the above into account, we are forecasting production of 775825,000 tonnes in 2010/11, which would
DATA & FORECASTS

be a significant increase from the 700,000 tonnes production recorded for 2009/10. Turning away from the external sector, there are several signs that strong economic growth is in the pipeline. The infrastructure industry is looking particularly promising, with the government currently seeking private investors for participation in the management of Ghanas ports and airports, as well as roads, railways and utilities. The forthcoming development of the Sekondi Industrial Freezone is especially notable as it entails a significant foreign investment and will create a major growth area in West Ghana. While the overall outlook for the Ghanaian economy is bright, we are cognisant of the key risks to the growth trajectory. In this regard, we believe the size of the budget deficit is salient following the apparent relaxation of fiscal policy in 2010. Indeed, the IMF cautioned at the end of its latest mission that the fiscal balance was a concern, given that spending ran well above budgeted levels last year, and grant financing was lower than anticipated. Although there are structural reforms in the pipeline, aimed at enhancing revenue collection, these have been delayed.

riSK SUMMarY
POLITICAL RISK

Rising Income Levels

We expect Ghana to be a major economic outperformer over the coming years on both a regional and global level a view that looks even stronger with the onset of domestic oil production. With a solid backdrop of political stability, which is especially important in West Africa, following a succession of, by all accounts, peaceful democratic transitions, Ghanaians are going to get a lot richer over the next few years. This bodes well for poverty levels and income inequality both of which currently exert a drag on Ghanas political risk ratings.
Our short-term political risk rating is 72.7.

ECONOMIC RISK

O&G Booming
The latest oil and gas discoveries bode well for future production. US-based Hess has confirmed the finding of around 149 metres of net oil and gas condensate pay with the Paradise-1 exploration well in the Deepwater Tano Cape Three Points block offshore Ghana. Just one day before Hess confirmed its discovery, it was announced that the Kosmos-led consortium hit hydrocarbons with the Banda-1 wildcat at the West Cape Three Points block. Although Exploration Director Angus McCross of Tullow Oil, has said that the reservoir is of poor quality, the discovery of such light, sweet oil is positive news.
Our short-term economic risk rating is 53.8.

BMI View: Headline inflation continued its year-on-year downtrend in May, falling to 8.90% from 9.02% in April. Although price pressures may stay subdued in the short term, we see inflation moving back into double-digit territory by year-end, likely prompting an interest rate hike.
Population, mn [3] Nominal GDP, US$bn [1,4] GDP per capita, US$ [1,5] Real GDP growth, % change y-o-y [5] GHS nominal growth, % change y-o-y [1,5] Budget balance, GHSbn [6] Budget balance, % of GDP [7] Consumer prices, % y-o-y, ave [4] Consumer prices, % y-o-y, eop [4] Exchange rate GHS/US$, ave [8] Exchange rate GHS/US$, eop [8] Exchange rate GHS/EUR, eop [8] Goods exports, US$bn [9] Goods exports, % change y-o-y [10] Goods imports, US$bn [9] Goods imports, % change y-o-y [10] Balance of trade in goods, US$bn [10] Current account, US$bn [2,9] Current account, % of GDP [2,10] Foreign reserves ex gold, US$bn [9] Import cover, months g&s [9] Total external debt stock, US$mn [11] Total external debt stock, % of GDP [12] Total external debt stock % of XGS [12] Short term debt as a % of International reserves [12] Short term foreign debt, % of total [12] 2008 23.4 28.2 1,232 8.4 32.0 -2.4 -7.9 16.5 18.1 1.08 1.26 1.77 5.3 25.6 10.3 27.4 -5.0 -3.5 -12.6 1.3 -1.2 4,970.1 17.6 70.3 104.3 27.3 2009 23.8 25.8 1,100 4.0 21.2 -1.3 -3.5 19.3 16.0 1.43 1.43 1.81 5.8 10.8 8.1 -21.6 -2.2 -1.2 -4.7 2.5 -2.7 6,823.5 26.5 87.4 57.5 20.7 2010 24.3 32.6 1,344 7.7 26.6 -3.0 -6.3 10.8 8.6 1.43 1.48 1.98 7.5 29.1 10.0 24.7 -2.5 -1.8 -5.6 3.9 -3.7 7,484.8 23.0 82.1 24.4 12.8 2011f 24.8 38.8 1,566 14.0 21.5 -2.4 -4.2 9.9 12.0 1.46 1.42 1.97 12.5 65.6 11.7 16.9 0.8 1.1 2.7 4.4 -3.6 11,146.7 28.7 79.1 87.5 34.4 2012f 25.3 50.0 1,981 7.9 21.1 -2.9 -4.2 12.5 13.0 1.37 1.32 1.68 13.2 5.3 12.7 8.1 0.5 0.8 1.6 5.2 -4.0 16,812.2 33.6 113.5 111.3 34.4

BUSINESS ENVIRONMENT

Glo Still Facing Obstacles

Six months after the December 2010 deadline issued by the Ghanaian president, John Atta Mills, for the countrys ministries of environment and communications to remove all bottlenecks preventing Globacom (Glo) from starting full mobile operations, uncertainty still surrounds the launch of commercial mobile services by the operator. According to Ghana Broadcasting News, senior officials of Glo who attended the West and Central Africa telecoms conference in Dakar, Senegal, in June 2011 declined to comment on the companys rollout plans. This does not bode well for the company.
Our business environment rating is 44.0.

Notes: e BMI estimates. f BMI forecasts. 1 2006 data onwards reflect GSSs November 2010 revision of nominal GDP; 2 Including official transfers; Sources: 3 World Bank/BMI calculation/BMI. 4 Ghana Statistical Service; 5 Ghana Statistical Service/BMI Calculation; 6 Ministry of Finance and Economic Planning; 7 Ministry of Finance and Economic Planning/BMI calculation; 8 BMI; 9 Bank of Ghana; 10 Bank of Ghana/BMI calculation; 11 World Bank GDF; 12 World Bank GDF/BMI calculation.

www.meamonitor.com

AUGUST 2011 weSt AFRICA

regiONaL

ECONOMIC OUTLOOK

Africa: Ready For Business

BMI View: Business and political leaders with a vested interest in Africa recently met in London to discuss the continents ongoing changes in the realms of security, economic growth, and politics. There is a consensus that Africas potential is immense, although the way business is conducted needs to continue changing.
BMI attended a forum held on May 25 2011, organised by Thompson Reuters and held at their headquarters in London. The event, entitled Is Africa Open For Business?, brought together a panel of politicians, activists, investment managers, and journalists to discuss the rapidly changing business environment throughout the continent. The panellists unanimously agreed that African countries represent immense potential for businesses of all kinds, with particular emphasis on the fast-growing population, rapid economic growth, and improving regulatory regimes. BMI expects the combined value of SubSaharan African GDP will increase dramatically over the next decade, surpassing US$4.5trn by 2020. Although African prospects were lauded, there was also a noticeable sense of frustration among some panellists as well as others attending the forum with the difficulty of breaking through stereotypes of African problems in the minds of foreign investors, particularly those from Europe and North America. This sentiment was shared not only by African politicians and diplomats, but also business leaders who have struggled to attract sorely-needed capital investments. A few themes emerged throughout the course of the forum, which fall largely in line with long-standing BMI views: Foreign observers should avoid the tendency to treat the region or even countries within the same economic bloc as homogeneous. They should more fully understand the political idiosyncrasies of various markets. Potential investors should broaden their perspective over the types of opportunities available Africa offers more than resource extraction. Western businesses are falling behind their Eastern counterparts in taking advantage of the opportunities presented across the continent. The Political Diversity Of Africa, Both Positive And Negative Throughout the panels discussion, a common refrain was that the political upheaval in places such as North Africa and Cte dIvoire should not be used to paint the continent as a whole with the broad brush of instability. The strength of government institutions, and the responsiveness with which governments address the demands of the people vary widely across Africa, and some nations Botswana, Mauritius, and Ghana come to mind are extremely stable. Panellist Amani Abeid Karume, the former president of Zanzibar, said that most African countries have functional democracies with presidential term limits and that the emerging generation is more engaged in civil society and more involved in business. Substantial momentum for further democratisation is coalescing in many nations. Related to the need to understand the idiosyncrasies of various African markets is the need for businesses to adjust the way they interact with African governments. Lord Paul Boateng, a UK Labour politician who was born in Ghana, said that many Western corporations still operate under the mentality that they need only deal with thes trong men at the top, rather than respecting the more democratised contexts of a modern Africa. This take me to your leader frame of mind must change, and businesses must sell themselves as positive forces not only for the economy, but for communities and national goals of social justice, according to Boateng. While the panel broadly agreed with this assessment, BMI notes that the appeal to respect the regions diversity works both ways. While negative perceptions of some African countries should not tarnish the image of other nations, neither should the immense potential of Africa as a continent blur in potential investors minds the need to understand serious weaknesses in some states. Sweepingly positive characterisations of Africa are little better than negative

stereotypes. But the underlying message, that Africa is enormously diverse, is one we certainly agree with. Opportunities are Multifaceted Karume said that while many have identified Africa as a region of strong economic growth the UNs Economic Commission for Africa has estimated that African investment would reap four times the return as investment into G7 countries many still have a narrow vision of the character of this growth. The success of industries such as telecoms and retail demonstrates that Africa offers much more than natural resource extraction. Investors looking for cost efficiency, new markets and access to resources have all engaged profitably in Africa. Pressing needs for residential construction, transport infrastructure, energy, communications, and consumer goods are all expected to continue to see strong growth moving forward. From a policymaking perspective, economic diversification is changing the dynamic of many African nations priorities for social programmes. While past decades have been dominated by the need for basic healthcare and primary education, in the future governments and multilateral donors will likely shift their focus to secondary and skills-based education to respond to the growing need for a trained workforce. With the demographic profile of many nations foretelling a huge influx of young people into the labour force, this will have increasingly important implications for both economic competitiveness and political security. The profitability of Africa is not merely a theory. Eastern players from China, India and others have been expanding their operations on the continent for years. The involvement of some of these nations, particularly China, a so-called command economy, was a source of discomfort for some attendees, who felt that it was at odds with African democratic objectives. Nevertheless, many African governments have embraced a closer relationship with the Asian giant as a way to harness their nations potential, particularly when and where Western investment lags behind. Lord Boateng stressed that the West has been slow to react to changes in Africa, foregoing business opportunities as well as influence in global politics.

2011 Business Monitor International. All rights reserved.

All information, analysis, forecasts and data provided by Business Monitor International Ltd is for the exclusive use of subscribing persons or organisations (including those using the service on a trial basis). All such content is copyrighted in the name of Business Monitor International, and as such no part of this content may be reproduced, repackaged, copied or redistributed without the express consent of Business Monitor International Ltd. All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.

www.meamonitor.com
Analysts: L Lewin, M Searle, G Anderson, M Clancy Editor: Matt Searle Sub-Editor: Delaina Haslam Subscriptions Manager: Yen Li Marketing Manager: Julia Consuegra +44 (0)20 7246 5131 Production: Lisa Church/Chuoc Lam Publishers: Richard Londesborough/Jonathan Feroze