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Senegal & Chad: The Future of Accountability In Africa.

Senegal & Chad: The Future of Accountability In Africa.

The former dictator of Chad, Hissène Habré, is currently on trial in Senegal on charges of crimes against humanity, torture and war crimes.

Habré’s trial will be the first in the world in which the courts of one country prosecute the former ruler of another for alleged human rights crimes. It will also be the first universal jurisdiction case to proceed to trial in Africa. Universal jurisdiction is a concept under international law that allows national courts to prosecute the most serious crimes even when committed abroad, by a foreigner and against foreign victims. A most recent example of this has been attempts by Spain to extradite the Rwandan security chief.

Habré was president of of Chad from 1982 until he was deposed in 1990 by Idriss Déby Itno, the current president. Habré has been living in exile in Senegal ever since.

This was all made possible by the establishment in Senegal of a purpose built court system called the Extraordinary Africa Chambers. A third of the funding has come from Chad (no doubt incentivised to ensure his imprisonment) and the remainder from Western nations.

Although, Habre will be tried within the Senegalese court system, the trial will have a distinctly international character with the judges appointed by the African Union.

The trial is not only a milestone in African human rights law but is likely to lay down a marker for the dwindling number of African dictators, as to the direction the winds of change on the continent are blowing. However, for those who have concerns on the reach of countries exercising laws of universality. There is some crumbs of comfort for those concerned that universal jurisdiction in Africa could give rise to a worrying trend. In London recently, the courts dismissed the extradition request by the Spanish judiciary to extradite the Rwandan Security Chief for crimes against humanity committed after 1994. His legal team supported by Cherie Blaire, the wife of the former UK Prime Minister, convinced the court that universal jurisdiction should not apply under UK law, and therefore their client should not be extradited.

For those considering investing in the region juridical accountability is likely tobe positive news. Sustained economic growth and good governance are not mutually exclusive but complimentary, despite arguments to the contrary from some quarters.

Kenya: Worrying Cold Headwinds

Kenya: Worrying Cold Headwinds

Fitch announced it had put Kenya’s credit rating on a negative outlook from stable, signalling a possible downgrade over the next one to two years if the debt situation deteriorates.

Kenyan bonds, which broke records in June 2014 by being the largest début by an African country when it raised US$2.75 billion from international investors, have lost more money for dollar investors than any other emerging market sovereign bond. In the first quarter of this year the economy grew by 4.9 per cent, below expectations for the country.

Fitch Ratings has revised the outlook on Kenya’s long-term foreign and local currency issuer default ratings (IDR) to negative from stable and affirmed them at ‘B+’ and ‘BB-’, respectively.

Kenya’s public finances have been on a steadily deteriorating trend since 2008, reflecting weak revenue performance, increasing infrastructure spending, and persistently high current expenditure.

The government last year raised $2.75 billion (Sh280 billion) by selling dollar-denominated sovereign bonds to global investors and looks to go back to the international debt market to finance a growing budget deficit. Exports are struggling, the tourism industry is weak, concerns over insecurity seems likely to stymie economic activity for many years, and imports show no sign of slowing down at a time when the shilling is in trouble. If that was not enough corruption real and perceived continues to plague the country.

Work and establishment mobility in sub-Saharan Africa


With the rise of neo Afro nationalism, a question that is seldom raised but key to this continent’s economic development is the status of work and establishment mobility in sub-Saharan Africa – a region with a drastic skills deficit?

The Ghanaian authorities have recently confirmed the continued closure of foreign owned shops and the expulsion of the owners, the majority of whom are Nigerian. This order follows the passing of the controversial Ghana Investment Promotion Act that excludes foreigners from certain small-scale businesses in Ghana in contravention of the ECOWAS treaty.

In what has been the largest deportation of people from the country since the mass expulsion of Ghanaians in the 1980s; the Nigerian government meanwhile has quietly been deporting tens of thousands of citizens from Cameroon, Niger and Chad for what it argues are security concerns in support of its fight against Boko Haram.

Citing concerns over security and crime, the Kenyan authorities have arrested scores of migrants mainly from the West and Horn of Africa. However, affected foreigners have complained that the Kenyan police are merely using security concerns as a pretext for beatings and deportation which have increased in light of the Westgate shopping mall attack in 2013.

South Africa meanwhile has introduced new immigration measures for Zimbabweans, which could potentially mean many may be forced to leave either at the end of the year or upon the expiry of the new dispensation irrespective of how long they have been in the country.

Although the Southern African Development Community has been handicapped by a lack of interest from its member states, mainly South Africa, other regional blocks have gone some way to attempting to implementing free movement of persons.

Citizens of ECOWAS enjoy visa free travel within the region for up to 3 months, after which a permit is required. The East African Community has gone further and introduced the EAC passport, which proffers similar rights for up to 6 months. Citizens of certain countries in the EAC can even move without a passport and are treated as domestic students when studying in another member state country.

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Exchange Traded Products in Africa

e-Ghana-Stock-Exchange-in-Accra-Ghana-June-15-2006.-Photo-Jonathan-Ernst-World-Bank-Photo-ID-JE-GH060615_30020-World-BankWorldwide assets held in exchange traded funds (ETF) have reached US$2 trillion. This milestone should be seen within the context that the US$1 trillion milestone was obtained in 2009 after almost 19 years. Notwithstanding the growth in the ETF industry, the relative low barriers to entry have given rise to significant competition. ETF fees have been reduced (the average fee is 30-40 bps in Europe) and there have been an increase in delisted or merged ETF.

As a further illustration, 1,200 exchange traded products (“ETP”) in Europe have assets of less than US$50 million. Blackrock’s recent purchase of Credit Suisse’s ETF arm is thought to be the beginning of significant consolidation in Europe which could give rise to a reduction of 30% of ETP providers. The economic rationale for the industry and their products is sound and universal but US and particularly European ETFs require new investors.

Africa with its unprecedented growth provides wonderful opportunities for ETFs. Many African countries are experiencing growth not seen since the first years of independence. Average GDP growth in Africa is expected to exceed 5.8% with some economies witnessing double-digit growth. The economy of Nigeria is due to be the largest in Africa by 2016. Africa is therefore at the point where institutional and high net worth investors need, and are interested in, opportunities beyond the current narrow categories of government bonds, real estate and local equities, which have an inverse correlation with the risks from local infrastructure fund investments.

Exchange traded products (“ETPs”) provide a transparent, flexible and arguably efficient exposure to different asset classes. They are therefore suitable for local money managers in Africa, which wish to reduce credit risk, obtain liquidity, portfolio diversification and exposure, which cannot be obtained locally. Several exchanges have already expressed a genuine interest in listing ETPs such as ETFs, commodities (“ETC”) and currencies (“Currencies”).

This presents a significant expansion opportunity for large ETP providers willing to invest in what is still a relatively nascent financial market. The benefits are obvious. It would: (1) increase assets under management (“AUM”) from a non-industrialised world correlated market and (2) enhance brand recognition where a first to market premium is still available.

Due to liquidity problems many large investors are keen on reducing exposure to local equities and consider plans to develop an equity futures market too limiting. High domestic inflation and currency pressures also dilute values in local currency denominated on shore investments, such as bonds. Unfortunately, there are few local currency denominated opportunities for institutional investors seeking liquid, strategic and tactical opportunities to invest in equities/fixed income or commodities within their own jurisdictions as well as obtaining underlying exposure to other jurisdictions in Africa, US, Europe or Asia etc.

Current estimates indicate that Nigerian pension funds, which are limited to poor performing equities and government bonds, would invest hundreds of millions of USD into first generation ETFs. With the exception of South Africa, Botswana, Nigeria Ghana and Egypt there are no equity ETFs in Africa.

Many African pensions are cautious about investing on overseas exchanges due to low offshore exposure caps . Moreover the listing process in many exchanges in sub-Sahara is slow and convoluted. South Africa which has a relatively efficient listing process has currency control restrictions which mitigate against offshore ETFs listing and currently has very few ETPs, the major diversity being brought by exchange tradable bank issued debt securities which carry issuer risk. Moreover, a lack of technology in all exchanges in sub-Saharan African with the exception of the JSE, make it difficult for market makers to trade in real time to satisfy local exchange demand.

What is required is an opportunity for ETP providers to reach a new market, using technology which would enable real time trading through local exchanges in domestic currencies.

Download the full report of Exchange Traded Products in Africa