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Tunisia is one of the world’s leading producers of phosphate, a fact not lost on Brazilian mining firm Vale do Rio Doce, the world’s second largest mining group, which is looking to meet Brazil’s strong demand for imported fertilizers by increasing the amount already exported to the South American giant.  Brazil’s Minister of Development, Industry and Foreign Trade, Miguel Jorge, announced the company’s intentions this week, underscoring the possibility of transferring technology to Tunisia in the fields of agriculture and food production in general, as well as the generation of up to 20,000 new jobs in the country.  Jorge also noted that Vale is committed to transferring the entire exploration and production technology to the Arab country.  “We, as emerging countries, can no longer accept projects without knowing their content,” he said.  “We must seek a more productive relation between countries. That is what cooperation is about.”

Despite plummeting oil prices and an ever-weakening currency, Nigeria plans to launch its first international Naira-denominated bond within six months.  The Financial Times reports that “the government says the planned 10-year bond will lay the foundation for future bond issues by Nigerian companies and state governments by creating an international benchmark for sub-Saharan Africa’s second biggest capital market.”

The move raised the eyebrows of many analysts who point to falling oil prices, which have lead to a 30% decline in the value of the Naira against the dollar in the past two months and aversely affected government earnings due to diminishing exports, as a reason why the government may struggle to sell the bond at a rate it would find acceptable and which investors would still find appetizing.

While UAE Bank Sarasin-Alpen, a subsidiary of Bank Sarasin & Co. Ltd, a leading Swiss private bank based in Basel, Switzerland, launched an equity fund this week, worth US$100 million to target Gulf Arab bourses which it believes are undervalued, competing funds are still weary.   For instance, according to Sameer al-Ansari, CEO of the government owned Dubai International Capital, asset prices are at very reasonable levels but it is still to early to make big bets on long-term investments as the global financial crisis will get worse.  “There [is] going to be a great opportunity in the next year or two to acquire assets at historically unprecedented levels,” al-Ansari said. “The region has to invest for the long term… choosing assets that represent good value for the region.”  However, he added: “We’re still very nervous about making some big bets. We see the financial crisis getting worse. There’s not going to be a magic wand solution to the problem.”

Now contrast that take with Peter Cooper’s, senior executive officer at Sarasin-Alpen & Partners:  “The region’s real estate and banking sectors had been particularly badly hit by the global downturn.  Inevitably these large sectors are trading at very stressed levels but so are the petrochemical companies, some of which have lost half of the replacement value of their assets,” he said.

Cooper concluded that markets in Saudi Arabia, Kuwait and the UAE would see the sharpest rebound in the short-term, having suffered some of the steepest losses as the financial crisis hit the region’s bourses.  However, on the topic of Egypt, today the country’s Trade and Industry Minister forecasted slowing economic growth in 2009 (less than 4%) due to declines in direct foreign investment and revenue from tourism and the Suez Canal.

MTN Nigeria, the country’s largest cellco by subscribers and part of South Africa’s MTN (which has 70 million customers in 21 countries), will invest at least US$1.5 billion on its network this year in order to boost its carrying capacity and to improve the quality of service on its network, according to its Corporate Service, Wale Goodluck.  MTN Nigeria has invested in building up transmission networks over the past four years in order to make up for the country’s lack of telecoms infrastructure, said Goodluck, who went on to note that the firm’s wireless subscriber base has grown rapidly over the past three years.  In fact, according to TeleGeography’s GlobalComms database, the company had 20.17 million customers in September 2008, up from 14.95 million a year earlier.

Per various reports, Nigeria’s Minister of Information and Communications, Professor Dora Akunyili said earlier this month that in spite of the much talked about telecommunications boom, the industry was still replete with recurring problems, including dropped calls, poor voice signal quality and lack of adequate interconnectivity.  The ministry also cites operational costs to service providers, and vandalism of infrastructure as two glaring problems facing the industry.

According to figures from the Mobile World database, MTN ended last September with just over 20 million mobile phone subscribers – and a market share of 36%. The country itself has a population penetration level of 40%.

Renaissance Capital, which won the “Investment Bank of the Year” award at the 2008 African Banker Awards in Washington D.C., is “broadly negative about the Nigerian equity market’s performance over 2009 — particularly in the first half.”  How bad have things gotten for the oil-dependent, West-African nation?  Per Bloomberg:

Nigeria’s naira has lost more than a fifth of its value since the end of November when the government decided to allow the currency to depreciate rather than drain its foreign- exchange reserves as the price of oil, the country’s main export, plummeted. The Nigeria Stock Exchange’s All Share Index closed at 24,000.09 on Jan. 23, a decrease of 64% from its record 66,371.20 reached on March 5, 2008.

The “most likely” scenario (60%) for 2009 sees the key index continuing its rapid descent in the first-half of the year, followed by a “solid recovery” in the second half for a net loss of 8% (in dollar terms).  However, Renaissance analysts admit that there is a 30% chance the misery mounts and the index finishes the year off 44%.  The firm gives a 10% chance to the event where the index sees a 14% gain, if the global economy improves and commodity prices stabilize.

Dangote Sugar Refinery Plc, Nigeria’s biggest refiner of the sweetener, Diamond Bank Plc and Nigerian Breweries Plc, the nation’s largest beer maker by volume, are some of Renaissance’s top 10 picks in the Nigerian market.

Bloomberg reports that “some euro-region members now pay more to borrow than emerging markets such as Poland and the Czech Republic. The spread between a Czech 10-year sovereign note and the German bund was 78 basis points, less than Italy, Spain, Greece, Portugal, Belgium and Ireland.”  The Czech Republic is rated A at S&P, and Poland A-.

Prices now reflect odds of between 10 percent and 20 percent that the euro-region will disintegrate following a series of credit downgrades from Standard & Poor’s this month, according to BlackRock. The difference in yields, or spreads, between [Greece, Spain and Italy’s] 10-year bonds and those of benchmark German securities was close to the widest today since the euro’s debut in 1999.

The Economist weighs in on Bolivia’s new constitution whose referendum is being voted on today.

Bolivia’s economic outlook is dark.  [President Evo] Morales scared off investment by nationalizing the natural-gas industry, telecoms and parts of mining. That boosted government revenues in the short term, but is now jeopardizing them.  Miners are being laid off because of plunging mineral prices.  The price of gas exports has fallen too, while Brazil (the main market) has cut imports by a third because of a slowing economy and plentiful rainfall for hydroelectricity.  To make matters worse, Bolivian migrants are returning from recession-hit Spain, cutting remittances.  The public finances are set to go into deficit this year.

At heart, the constitutional referendum involves a choice as to whether or not Bolivia should graft on to an imperfect Western liberal democracy a socialist model that owes rather more to the corporatism of Spanish colonial rule (but with Amerindians, rather than conquistadors, in charge) than to Marx.  A less confrontational president than Mr. Morales might find a more harmonious way to blend the two.  As it is, his probable victory risks setting his country on a path of chaotic conflict, government paralysis and continuing economic backwardness.

Financial Times filed a rather dour report recently on the sorry state of the Ivory Coast’s cocoa industry, which accounts for roughly 40% of global supply.  Prices in London rose by nearly 70% last year to reach 23-year highs last month, trading at £1,820 a ton (though that also reflects sterling’s fall).  Prices in New York, denominated in dollars, rose by more than 30%.

Today, the industry’s prospects appear decidedly sickly.  Political turmoil that followed the outbreak of a civil war in 2002 has hindered the investment needed to replace ageing trees. Cocoa-growing, formerly a source of pride, has lost its prestige.  The cloud hanging over Ivory Coast’s cocoa industry has fuelled a gravity defying rally in cocoa prices even as the global slowdown has caused prices for other commodities to slump.

With some care, experts say activity in Ivory Coast’s cocoa belt could rebound. But unless a rescue effort is mounted soon, analysts argue this year’s poor harvest could mark the start of a drawn-out decline that will boost cocoa prices for years to come.  “If the status quo continues, then the cocoa sector is likely to die a slow death,” said Daniel Sellen, lead agricultural economist with the World Bank in Abidjan. “A complete collapse of the sector cannot be ruled out if there is no action.”

With large numbers of cocoa trees on the cusp of the 25-year mark at which productivity falls sharply, some fear Ivory Coast could be on the edge of a structural shift towards years of declining production, leaving the world’s market more dependent on supplies from Ghana, Nigeria and Cameroon, and from Indonesia.

Etihad Atheeb Telecom, one of three firms licensed to operate new fixed-line networks, is seeking to raise SAR 300 million (US$80 million) by February 2nd through the offering of 30 million shares, representing 30% of its capital.  The shares sale is Saudi Arabia’s first IPO since August 2008, when bourse regulators froze fresh listings.  Etihad Atheeb plans to invest US$1 billion over five years in its fixed-line operation and target government and industrial hubs and regions covered insufficiently by Saudi Telecom (STC).  And at least one observer is cautiously optimistic.  “On the fundamental side, telecoms is a growing sector that is counter-cyclical to recession, secondly it is a small IPO,” said John Sfakianakis, SABB bank’s chief economist.

Ethiad Atheeb The company, whose shareholders include Bahrain Telecom (Batelco) and Saudi private investors, will face competition from current fixed-line monopoly STC, as well as by Optical Communications Co, led by America’s Verizon Communications, and by the Al-Mutakamilah Company, which is led by Hong Kong’s PCCW.  STC has about 4.5 million fixed-line subscribers and around 1.3mn Internet users (Saudi Arabia has a population of 24 million).

As inflation fears temper and interest rates decrease, Colombia may begin to sell debt due in 2024 or 2029 by June, according to its head of local debt sales at the Finance Ministry. Citing increased demand from pension funds and insurers for longer maturities, William Ortiz noted that the country’s foreign debt is rated BB+, one level below investment grade, by Standard & Poor’s and Fitch Ratings.  Meanwhile, Moody’s Investors Service rates the nation one grade below investment quality at Ba1.

The Banco de la Republica cut Colombia’s benchmark rate a half percentage point to 9.5% on Dec. 19, marking the first rate cut in three years.  And most analysts expect the central bank to cut the rate again at a Jan. 30 meeting, to 9%.  Reacting to the news, markets pushed benchmark yields to 18-month lows.  The yield on the benchmark bonds due in 2020 fell to 9.71 %, the lowest since July 2007.  “At least until last year, the search for yield and expectations of a weakening dollar led foreigners to have more faith in the value of the peso than locals did,” said Alberto Bernal, head of emerging-market macroeconomic strategy at Bulltick Capital Markets in Miami.

JGW

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