China's Africa Push to Boost Shilling, Cedi, Standard Bank Says
By Jake Lee
June 4 (Bloomberg) -- Kenya's shilling and Ghana's cedi will rise as China increases spending on oil fields, roads and telephone networks in Africa to secure raw material supplies, Standard Bank Group Ltd. said.
The shilling may appreciate 3 percent against the dollar by year-end, said Francis Beddington, the London-based head of Eastern Europe, Middle East and Africa research at Standard Bank, Africa's largest by assets. He attended the Tunis-based African Development Bank's annual meeting, held in China for the first time last month to help attract funds to the continent.
``We're bullish on the Kenyan shilling,'' Beddington said in an interview. ``China's growth and demand is particularly important on the commodity side for Africa's oil producers.''
The shilling, Nigeria's naira, the Zambian kwacha and Angola's kwanza have all gained this year as China sought to sustain the world's fastest-expanding major economy by strengthening ties with Africa. Improving African government finances, accelerating growth, and developing bond markets, are also making it more attractive to invest in the continent, said Beddington.
The Kenyan shilling may rise to 65 to the dollar by the end of the year, Beddington forecast, from 66.95 at the close of trade on June 1. Its 3.9 percent gain this year was the fifth- best among the 31 most-active currencies in Europe and Africa.
Kenya in April last year allowed China National Offshore Oil Corp., China's biggest offshore oil producer, to explore for oil, and accepted Chinese government funds for roads, education and food. The economy may expand as much as 6.5 percent this year from 6.1 percent in 2006, Planning Minister Henry Obwocha said May 28.
Scramble for Assets
China's scramble for assets in Africa was highlighted when President Hu Jintao toured the region in February.
The nation's $5 billion investment fund for the continent and its $3 billion provision of loans over the next three years will help Africa expand 5.9 percent this year, from a two-decade high of 5.5 percent last year, the African Development Bank said on May 13. The bank, set up by 77 nations to finance anti- poverty programs in the region, ended its annual general meeting in Shanghai on May 17.
Ghana, the second-largest gold producer on the continent, said on May 24 it plans to sell as much as $750 million in bonds globally to build roads and power plants. The cedi, which fell 0.7 percent this year to 9275.22 per dollar, is due for appreciation as it attracts investment, said Beddington at Johannesburg-based Standard Bank.
ZTE Corp., China's biggest publicly traded telecommunications equipment maker, signed contracts to build telephone networks in Ghana and Kenya in November.
Chinese investment in Africa stood at $11.7 billion by the end of 2006, with the bulk of the funds going to oil producers Angola, Nigeria and Sudan.
Nigerian Naira
Growth in Nigeria's economy, Africa's second-biggest after South Africa, will accelerate to 7 percent in 2007, from 5.3 percent last year, the African Development Bank estimates. Nigeria, a member of the Organization of Petroleum Exporting Countries, has built up $46 billion in foreign exchange reserves.
The naira will ``gradually appreciate,'' said Alex Garrard, emerging-market bond trader in London at UBS AG, Europe's largest bank by assets. ``Nigeria is the obvious entry point for Africa because of its size. China plays a huge role and its investments are a pervasive influence.''
The naira has risen almost 1 percent this year to 127.65 to the dollar. It has gained 4.5 percent over the past three years, according to data compiled by Bloomberg.
The kwanza of Angola, China's second-biggest supplier of oil after Saudi Arabia, has climbed 6.6 percent this year.
Zambian Kwacha
The Zambian kwacha has risen about 9 percent as China's Hu in February pledged $800 million to the nation, Africa's biggest copper producer, over the next three years. The kwacha traded at 3970 to the dollar on June 1. Gains this year add to the 32 percent appreciation in 2006.
South African President Thabo Mbeki in January warned there was a danger of Africa becoming little more than a supplier of raw materials to China and a market for its manufactured goods. China's central bank governor Zhou Xiaochuan tried to allay those concerns at the African Development Bank meeting, saying his nation's investment will help alleviate poverty and improve infrastructure in Africa.
``Capital inflows will lead to appreciation pressure on African currencies,'' said Stuart Culverhouse, chief economist at Exotix, the London-based emerging-market brokerage that deals in African debt. ``There's a growing influence by China and that's partly why sub-Saharan Africa is doing so well.''
By Jake Lee
June 4 (Bloomberg) -- Kenya's shilling and Ghana's cedi will rise as China increases spending on oil fields, roads and telephone networks in Africa to secure raw material supplies, Standard Bank Group Ltd. said.
The shilling may appreciate 3 percent against the dollar by year-end, said Francis Beddington, the London-based head of Eastern Europe, Middle East and Africa research at Standard Bank, Africa's largest by assets. He attended the Tunis-based African Development Bank's annual meeting, held in China for the first time last month to help attract funds to the continent.
``We're bullish on the Kenyan shilling,'' Beddington said in an interview. ``China's growth and demand is particularly important on the commodity side for Africa's oil producers.''
The shilling, Nigeria's naira, the Zambian kwacha and Angola's kwanza have all gained this year as China sought to sustain the world's fastest-expanding major economy by strengthening ties with Africa. Improving African government finances, accelerating growth, and developing bond markets, are also making it more attractive to invest in the continent, said Beddington.
The Kenyan shilling may rise to 65 to the dollar by the end of the year, Beddington forecast, from 66.95 at the close of trade on June 1. Its 3.9 percent gain this year was the fifth- best among the 31 most-active currencies in Europe and Africa.
Kenya in April last year allowed China National Offshore Oil Corp., China's biggest offshore oil producer, to explore for oil, and accepted Chinese government funds for roads, education and food. The economy may expand as much as 6.5 percent this year from 6.1 percent in 2006, Planning Minister Henry Obwocha said May 28.
Scramble for Assets
China's scramble for assets in Africa was highlighted when President Hu Jintao toured the region in February.
The nation's $5 billion investment fund for the continent and its $3 billion provision of loans over the next three years will help Africa expand 5.9 percent this year, from a two-decade high of 5.5 percent last year, the African Development Bank said on May 13. The bank, set up by 77 nations to finance anti- poverty programs in the region, ended its annual general meeting in Shanghai on May 17.
Ghana, the second-largest gold producer on the continent, said on May 24 it plans to sell as much as $750 million in bonds globally to build roads and power plants. The cedi, which fell 0.7 percent this year to 9275.22 per dollar, is due for appreciation as it attracts investment, said Beddington at Johannesburg-based Standard Bank.
ZTE Corp., China's biggest publicly traded telecommunications equipment maker, signed contracts to build telephone networks in Ghana and Kenya in November.
Chinese investment in Africa stood at $11.7 billion by the end of 2006, with the bulk of the funds going to oil producers Angola, Nigeria and Sudan.
Nigerian Naira
Growth in Nigeria's economy, Africa's second-biggest after South Africa, will accelerate to 7 percent in 2007, from 5.3 percent last year, the African Development Bank estimates. Nigeria, a member of the Organization of Petroleum Exporting Countries, has built up $46 billion in foreign exchange reserves.
The naira will ``gradually appreciate,'' said Alex Garrard, emerging-market bond trader in London at UBS AG, Europe's largest bank by assets. ``Nigeria is the obvious entry point for Africa because of its size. China plays a huge role and its investments are a pervasive influence.''
The naira has risen almost 1 percent this year to 127.65 to the dollar. It has gained 4.5 percent over the past three years, according to data compiled by Bloomberg.
The kwanza of Angola, China's second-biggest supplier of oil after Saudi Arabia, has climbed 6.6 percent this year.
Zambian Kwacha
The Zambian kwacha has risen about 9 percent as China's Hu in February pledged $800 million to the nation, Africa's biggest copper producer, over the next three years. The kwacha traded at 3970 to the dollar on June 1. Gains this year add to the 32 percent appreciation in 2006.
South African President Thabo Mbeki in January warned there was a danger of Africa becoming little more than a supplier of raw materials to China and a market for its manufactured goods. China's central bank governor Zhou Xiaochuan tried to allay those concerns at the African Development Bank meeting, saying his nation's investment will help alleviate poverty and improve infrastructure in Africa.
``Capital inflows will lead to appreciation pressure on African currencies,'' said Stuart Culverhouse, chief economist at Exotix, the London-based emerging-market brokerage that deals in African debt. ``There's a growing influence by China and that's partly why sub-Saharan Africa is doing so well.''
**Original Source = Bloomberg.com**
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