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The Kenyan shilling
weakened marginally against the dollar on Monday as the greenback held
its ground against major international currencies, while a sell-off by
investors sent stocks lower.

The shilling closed
trade at 1300 GMT at 81.20/30 per dollar, a tad weaker than Friday’s
close of 81.10/20. “It’s an overflow from last week’s demand from power
and oil sector. Once this demand fizzles out, we could see a correction
when (dollar sellers from) tea and horticulture return,” said Kennedy
Butiko, the Deputy Head of treasury at Bank of Africa.

Several traders
expected the shilling to weaken further when substantial market players
returned to trade. A 81.00/81.75 range was likely this week as
corporate demand for dollars picked up, they said. “I expect the
shilling to remain bearish on two accounts: a globally strong dollar
and increased corporate (dollar) demand,” said Peter Njuguna, the Head
of Trading at Commercial Bank of Africa.

At the Nairobi
bourse, the benchmark NSE-20 share index was down 10.74 points to close
at 4,610.92 points, but turnover plummeted 44 percent to 603.5 million
shillings. Andrew Thinguri, investment analyst at Faida Investment
Bank, said the decline in shares resulted from profit-taking by
investors, but that other investors were positioning themselves to buy
shares at this time of the year. Thinguri said the market would pick up
again this week.

The Kenyan stock market has enjoyed a buoyant start to the year with
the benchmark index already up over 4.0 percent on a rosy outlook for
east Africa’s largest economy. Safaricom was the most active stock on
Monday, rising 1.0 percent to 4.75 shillings a share. Equity Bank’s
price ticked up 0.85 percent to 29.75 shillings after it hit an
intra-day high of 30 shillings. A total 1.75 billion shillings worth of
bonds were traded on Monday, from 1.18 billion at the previous session.
A five-year bond issued in November traded at a yield of 6.85 percent
compared with a coupon rate of 6.671 percent.

The Association of
Senior Staff of Bank, Insurance and Financial Institution (ASSBIFI) has
called off the picketing scheduled for today in Intercontinental,
Oceanic, and Unity Banks untill negotiations are finalised.

Sunday Salako, the president, in a telephone interview, said discussions were still on, so picketing cannot hold for now.

“Like I said,
negotiations have already begun. We are done with Intercontinental
Bank; the union is talking with Oceanic Bank at the moment and we would
be discussing with Unity Bank tomorrow. You know these are three
separate institutions and we have to talk with them individually,” he
said.

Mr. Salako, who
said the discussions were going on smoothly, said that the crux of the
matter was not particularly the layoff but the process with which it
was coordinated by the banks.

Fighting for due process

The labour unions
have had issues with banks ever since the series of layoff that have
been rocking the industry since the bank crisis that peaked in 2009.

Banks, both the
rescued and supposedly ‘safe’ ones, have been retrenching in their
hundreds, forcing the labour leaders, at the peak of sackings last
year, to write a letter to the Central Bank governor and the Ministry
of Labour, alerting them of the happenings in the industry.

“We are not going
to fold our arms and watch institutions whose management do not have
regards to laws binding staff and management, or the constitutions of
Federal Republic of Nigeria to have their way,” the Trade Union
Congress said at the peak of layoffs last year.

Banks have been
accused of not following Article 5(b) Part 11 (Section 1) of the
Collective Agreement relating to redundancy and Section 20 of the
Labour Act before initially carrying out their purported sack exercise.

Hassan Adeleke, the
president of National Union of Banks, Insurance and Other Financial
Institutions’ Employees (NUBIFE) in a previous telephone interview
said, “The due process we are talking about is that even if at all you
want to send anybody away, you must call the unions to negotiate an
exit package for our members.”

Mr. Adeleke said
all persons being discharged or relieved of duties on the basis of even
redundancy are entitled to some welfare packages, following due process
and that where trade unions are recognised by employers and are able to
operate openly, they may negotiate with employers over wages and
working conditions.

In a bid to cut
cost and remain in business, almost all the banks in the industry have
laid off since the crisis was highlighted in the industry last year.
First Bank, Stanbic IBTC, Diamond Bank, Access Bank, Wema Bank, Spring
Bank, Intercontinental Bank, Bank PHB, among others, have all laid off
a sizeable number of their manpower.

The Nigeria
Extractive Industries Transparency Initiative (NEITI) said it has met
all the conditions spelt out last October by the Board of the
Extractive Industries Transparency Initiative (EITI) for Nigeria’s
validation as ‘Compliant country’.

Sam Ohabunwa,
alternate chairman of the Task Force of Nigeria’s EITI validation, said
at the end of its meeting at the weekend in Abuja that its final and
comprehensive report on the six EITI board conditions would be
presented to a meeting on Wednesday of the National Stakeholders
Working Group (NSWG), including representatives of the Word Bank and
non governmental organisations.

Mr. Ohabunwa added
that the meeting would consider and approve the 2006-2008 oil and gas
industry audit report, the EITI board charter, and other measures taken
by Nigeria to meet the conditions, ahead of the January 15 deadline to
complete its assignment.

The EITI board had,
at its last meeting, adjudged Nigeria as close to compliant, giving six
conditions which the country must meet to attain full compliant status
on or by April, 2011.

Zainab Ahmed, NEITI
executive secretary, who described Nigeria’s attainment of full EITI
complaint status as strategic to the development of the country’s
extractive sector, said that the 2006-2008 oil and gas industry audits
would be ready this week.

Mrs. Ahmed said
some key NEITI staff in its technical department were drafted to work
with the auditors to ensure that processing and analysis of the data
already collated for the audit report, which is a major condition
required for Nigeria to attain full EITI compliant status, are
completed on or before January 12.

Besides, she said
the simplified version of the 2005 Audit Report, which was the second
condition by EITI, has been presented in a question and answer format
on the NEITI website as well as translated into some of the country’s
major languages for wider dissemination, while a template has been
designed to simplify the report of 2006 – 2008 audits as soon as it is
released.

Other conditions have been met

The other
conditions that have been met include production and adoption of a
Board Charter, which defines the role and powers of the NSWG and its
relationship with NEITI secretariat, with final vetting and approval to
be given during Wednesday’s meeting of the task force, while an
agreement has been developed to ensure comprehensive disclosure of
signature bonuses by oil and gas companies.

“Data on
outstanding signature bonuses for the 2005 Audit have been collected,
while measures have been taken to include same in the 2006 -2008 audit
as required by the global EITI,” she said, adding that steps have been
taken to ensure that all government disclosures are based on audited
accounts to international standards.

She added that
NEITI has collaborated with the office of the Auditor-General of the
Federation to extend the measures to ensure its audit to the
Nigeria-Sao Tome &Principe Joint Development Zone (JDZ), pointing
out that a tripartite committee has been reconstituted to address all
sundry issues raised by the EITI Board on the issue.

Meanwhile, steps
have been taken to reconstitute the Inter-Ministerial Task Team to
address outstanding remediation issues arising from the last audit in
2005.

The World Bank has
expressed concern over the slow pace of implementation of its 185
million dollars Commercial Agriculture Development Programme (CADP) in
Nigeria.

The News Agency of
Nigeria (NAN) reports that five states, Enugu, Cross River, Kano,
Kaduna, and Lagos are currently implementing the programme.

Louis Akapa, the
bank’s team leader in charge of CADP, expressed the bank’s reservation
on Monday in Abuja in an interview with the News Agency of Nigeria
(NAN).

He stressed the need for the five states to adopt “an aggressive” approach in the implementation of the programme.

“The World Bank is
not too happy with the implementation of the programme in the manner it
is being run as a small scale farmer’s project,” he said.

The Nigerian Stock
Exchange said on Monday it expected all eligible non-performing loans
in the banking sector to have been bought by the Asset Management
Corporation of Nigeria (AMCON) in the first quarter. “Additional
purchases of non-performing loans are scheduled for the first quarter
of this year, while it is planned that by March 31 all qualified NPL
from all banks would have been purchased,” the bourse said in an annual
review.

The Exchange also said share purchases by foreign investors rose 48
percent last year to 381 billion naira and that wider trading hours
meant liquidity was continuing to improve adding that wider trading
hours introduced last month had led to a 15.6 percent increase in
traded volumes.

Algeria has
provisionally appointed law firm Shearman & Sterling LLP to advise
it on the nationalisation of Orascom Telecom’s local mobile phone unit,
the finance ministry said.

The firm is
scheduled to complete a valuation of the Djezzy unit (subject of a
long-running dispute between the Algerian government and Orascom
Telecom) within 100 days, the ministry said in a notice in the
government-run Horizons newspaper.

Djezzy has been
Orascom Telecom’s biggest single source of revenue and uncertainty over
its future has confused a planned $6.6 billion deal for Russia’s
Vimpelcom to acquire Orascom Telecom assets.

Chinese direct
investment in Zambia exceeded $1 billion in 2010 and created more than
15,000 jobs, Zambia’s vice president said on Monday.

China has invested
billions of dollars into African states such as Zambia, the continent’s
biggest copper producer, hoping to secure the resources it needs to
fuel its booming economy.

Vice President
George Kunda, who met visiting Chinese Vice Premier Hui Liang Yu, said
he expects Chinese direct investment to top $1 billion again in 2011.

The recent signing
of an agreement with China’s privately owned Zhougui Mining Group will
attract more than $5 billion into Zambia’s mining sector over the next
few years, Mr Kunda said.

Kenya’s central
bank will issue a five-year bond and re-open another 10-year paper for
a total 16 billion shillings this month, a fixed-income dealer said on
Monday.

The bonds will be
auctioned on January 26, said Fred Mueni, director at brokerage Tsavo
Securities after attending a central bank meeting with market players
to determine what bond would be offered for auction.

“They will be
re-opening the 10-year paper at a coupon of 9.307 percent, plus a new
five-year paper, totalling up to 16 billion shillings,” said Mr Mueni.

Initially issued in October 2010, the 10-year bond’s market-determined coupon was 9.307 percent.

The Nigerian Stock
Exchange said on Monday that share purchases by foreign investors rose
88 percent last year to 381 billion naira and that wider trading hours
meant liquidity was continuing to improve.

Africa’s third
biggest stock exchange said falling incomes attributed to rising
unemployment, weaker purchasing power due to inflation, and local
investor apathy had caused a decline in market participation by
Nigerians.

“Some of our
erstwhile foreign investors are returning, while new investors sought
opportunities considering the key attributes of higher returns,” the
stock exchange said at an annual briefing to journalists in Lagos.

The bourse said
wider trading hours introduced last month had led to a 15.6 percent
increase in traded volumes meaning liquidity was improving.

It expected trading
in exchange-traded funds (ETF) to start in 2011. The bourse said in
October it was in talks with South Africa’s Absa Capital about listing
such a fund.

Nigeria’s domestic
debt grew at the fastest pace in 11 years during 2010, with total
public debt of $32.5 billion as at September 2010, according to the
stock exchange.

It said credit to government grew over 50 percent last year while private sector credit grew only 3 percent.

The bourse expects
an increase in money supply this year to provide stability to the stock
market and inject liquidity into the banking system, reviving lending
to the economy.

“Inflationary risk
will remain a threat in the months ahead due to the implementation of
the 64 percent increased minimum wage in the public service, rising
government borrowing and the expected increased political spending up
to the 2011 general elections,” it said in an annual review.

The stock exchange
said it expected all eligible non-performing loans in the banking
sector to have been bought by the Asset Management Corporation of
Nigeria (AMCON), the country’s new “bad bank”, by March 31.

AMCON was established last year to soak up bad loans and get banks lending against after a $4 billion bailout in 2009.

The stock exchange
said it expected a flurry of new issues this year as some bailed out
lenders recapitalise and some manufacturing firms raise funds to beef
up their capital bases.

It also expects to
begin preparations for demutualisation in the first quarter, a process
which will turn the exchange into a listed company, making it more
competitive and giving it a larger incentive to bring in profitable new
products.

Over
70 stockbroking firms have been found to be operating below regulatory
minimum capital base, an inspection of 247 firms has revealed. The
inspection carried out between May 5 and December 23, 2009 by the
Compliance department of the Nigerian Stock Exchange (NSE) was made
public last Friday. It remains unclear whether the affected firms have
regularised their status. The minimum capital for stockbroking firms is
N70 million. Mohammed Momoh, general manager, Compliance and Risk
Management of the NSE who disclosed this at the meeting held on Friday
between chief executive officers of stockbroking firms and the NSE
management, said several firms failed to comply with the rules and
regulations especially on prompt rendition of financial accounts. “The
inspection also uncovered that several firms were illiquid. It was also
discovered that several firms engaged in illegal sale of their clients’
stocks,” Mr Momoh added. Mr Momoh also said that firms which engaged in
the padding of their shareholders’ funds would be penalised after
assets verification based on responses to assets reporting schedule to
be forwarded to stockbroking firms this week. He said firms that have
not separated their current accounts from clients’ account or who are
yet to appoint qualified accountants as chief finance officers or
compliance officers will be sanctioned.

Mixed custodianship

The
NSE also notified stockbrokers that from April 1, it will begin to
operate the mixed custodianship system to safeguard investors’ assets.
By this, clients’ accounts would no longer be accessed by the
stockbroking firm but will be held by a custodian which will be
separate. This is to prevent incidence of firms selling clients holding
without due authorisation. Director General of the Securities and
Exchange Commission (SEC), Arunma Oteh, who was at the meeting,
reiterated the necessity to safeguard investors’ assets in the market
in line with global best practices. Ms Oteh said 85 per cent of
complaints received from investors were on unauthorised sales, hence,
the need to take far reaching measures encapsulated in the adoption of
mixed custodianship approach currently operational in South Africa.
However, the Association of Stockbroking Houses of Nigeria (ASHON) says
that the matter of capitalisation should be considered in the light of
the current market downturn. Chairman of the association, Rasheed
Yussuff, said the issue of under capitalisation was more complex that
it is made out to be. Mr Yussuff said it will not be fair to assess the
capital profile of stockbroking firms at current market value as the
market downturn has affected the value of the asset upon which the
companies were formerly assessed. “It is not that the businesses have
collapsed but that the market has crashed which has affected the value
of the shares held by these companies. It is not an absolute figure.
Until you sell, you have not actually lost money. If tomorrow the
market starts to go up as it is doing now, the companies can value up
to the N70 million required.”