07 May.

Emerging markets drive investment into Africa, says Ernst & Young.

Foreign direct investment (FDI) from emerging markets into Africa outpaced that from developed markets last year, but the number of new FDI projects into the continent fell 12% from the previous year, Ernst & Young said on Monday.

Despite this drop, which came amid a 15.2% decline of FDI project flow globally, Africa’s share of global FDI rose in the past five years to 5.6% last year, reflecting greater investor interest, the financial consultancy said in a report.

Ernst & Young’s 2013 Africa Attractiveness survey said that greenfield investments on the African continent from emerging markets such as China and the United Arab Emirates (UAE) increased last year, while those from developed markets declined.

The US, Britain and France have been the three biggest investors in Africa over the past decade, but only the UK increased its project numbers from 2011 to 2012.

New FDI projects from the US and France in Africa decreased 22% and 39% respectively in the same year-to-year period, while projects from the UAE more than doubled, and those from China grew 28%.

“In the period since 2007, this category of investment from emerging markets into Africa has grown at a healthy compound rate of over 20.7%, in comparison to investment from developed markets, which has grown at only 8.4%,” the report said.

Ernst & Young said Africa’s strong growth — the continent’s economy has more than trebled since 2000 and is expected to grow 4% next year and 4.6% in 2014 — should be attracting higher levels of FDI.

“There is no doubt … the African growth story is real and that the potential over the next 10-20 years is even bigger,” said Ajen Sita, Ernst & Young’s managing partner for Africa.

Reuters

Source: Business Day BDlive

Postbank all set for licensing.

The South African Postbank is expected to receive a banking licence early next year, according to Communications Minister Dina Pule.

Preparations for Postbank to become a corporate entity, which will enable it to become a retail bank, have gained momentum.

The bank plans to serve the unbanked and people underserved by the incumbent banking fraternity.

Postbank will offer simple financial products through the infrastructure of the South African Post Office.

Pule told Business Report last week that the Postbank board would meet this week to put together a process of advertising and appointing a managing director.

She had engaged the National Treasury and the Reserve Bank in November last year to finalise borrowing, lending and investment policies.

“I would have loved to get a licence by December,” she said.

The application for a banking licence was lodged a year ago, during the tenure of the late communications minister Roy Padayachie.

Corporatisation was expected to be completed in 2010, the Postbank’s centenary year.

The South African Postbank Limited Act was promulgated in December 2010 and commenced on July 22 last year.

According to the act, the Postbank will be established as a subsidiary of the Post Office. It previously operated as a division within the post office.

Postbank has also been granted membership of Visa.

Source: Business Report

Further uptick in household mortgage advances growth.

Growth in value of outstanding credit balances in the South African household sector was somewhat higher at 7,7% year-on-year (y/y) in June 2012 from 6,8% y/y in May. The outstanding amount of household credit was R1 229,2 billion at the end of June, up by R9,1 billion, or 0,7%, from R1 220,1 billion in May.

Outstanding private sector mortgage balances, comprising commercial and residential mortgage loans, showed growth of 2,2% y/y in June, impacted by a further slowdown in corporate mortgage balances growth of 1,1% y/y from 1,7% y/y in May. The amount of outstanding mortgage balances in the private sector was up by R3,7 billion, or 0,3%, to R1 080,2 billion in June from May.

In the household sector, growth in the value of outstanding mortgage balances, largely related to residential property, improved somewhat further to 2,6% y/y in June this year from 2,4% y/y in May.

The outstanding amount was R786 billion in June, which translated to an increase of R2,3 billion compared with May. Outstanding household mortgage balances had a share of 63,9% in total household credit balances in June.

Although the mortgage interest rate was cut by 50 basis points to 8,5% in July, mortgage advances growth is forecast to remain in single digits in the rest of 2012, set to be impacted by economic trends, household finances and consumer confidence which will affect the property market. …

Read more at Absa Property Research

Subdued growth in mortgage advances continues.

The value of outstanding credit balances in the South African household sector increased by 6,6% year-on-year (y/y), to a level of R1 197,8 billion in February 2012. The month-onmonth increase in household credit balances was R11,6 billion, or 1%, in February.

The total amount of outstanding private sector mortgage balances, which includes both commercial and residential mortgage loans, increased by 2,3% y/y to R1 072,2 million in February 2012. This resulted in a monthly rise of R3,6 billion, or 0,3%, in February from January.

In the household sector the value of outstanding mortgage balances, mainly related to residential property, was up by 1,6% y/y in January to an amount of R777,5 billion, which came to a share of 64,9% of total household credit balances. Month-on-month growth of R4 billion, or 0,5%, was recorded in household mortgage balances in February compared with January.

The residential property market is in 2012 expected to be influenced by the following macroeconomic and household sector related factors:  Growth in real gross domestic product (GDP), forecast at 2,7% (3,1% in 2011), which will impact levels of employment in the economy.

• Average consumer price inflation of 6,3% (5% in 2011), affecting spending power.
• Interest rates, forecast to remain unchanged until late this year before being hiked on the back of inflationary pressures.
• Household finances (income growth, savings, debt and the cost of servicing debt).
• Consumers’ risk profile, inter alia reflected by the number of credit-active consumers having impaired credit records.
• The affordability of property and the accessibility of mortgage finance.Consumer confidence, impacted by expectations regarding the economy, household finances and the buying of durable goods by households.

Against the background of these factors, nominal house price growth of around 2% is forecast for 2012, with mortgage advances growth projected to remain relatively low. …

Read more at Absa Property Research

Webcast of the Press Conference of the Monetary Policy Committee.

The press conference to announce the decision of the Monetary Policy Committee will be held on Thursday, 29 March 2012. The announcement will be broadcast live on SABC 3, ENews Channel, CNBC Africa and Summit TV from 15:00. Should members of the media wish to attend contact Candice Jeffreys on 012 313 4209/ candice.jeffreys@resbank.co.za or Robertina Mbedzi on 012 313 4586/ robertina.mbedzi@resbank.co.za The South African Reserve Bank will be webcasting the press conference to announce the decision of the Monetary Policy Committee live on the Bank’s website. MPC statements are monitored closely, both domestically and internationally, and webcasting should extend reach to those audiences who cannot view the live broadcasts. Gill Marcus, Governor of the South African Reserve Bank, will begin addressing the media at approximately 15:00, Thursday, 29 March 2012. Visit http://www.reservebank.co.za or alternatively go direct to the link at http://antcast.antfarm.co.za/sarb/mpc_2012/ on the day. Access guidelines, software and system requirements to view the webcast will be detailed on this page. A facility for posting questions will be provided.

Mortgage advances growth remains low in early 2012.

January 2012 saw growth of 6,1% year-on-year (y/y) in the value of outstanding credit balances in the South African household sector, to a level of R1 186,2 billion. On a monthly basis household credit was up by R8,7 billion, or 0,7%, in January from December.

The value of outstanding private sector mortgage balances at monetary institutions, which includes both commercial and residential mortgage loans, increased by 2,4% In January (2,5% in December 2011). The value of total mortgage balances outstanding was unchanged in January from December last year.

In the household sector the value of outstanding mortgage balances was up by 1,6% y/y in January to an amount of R773,5 billion, which came to a share of 65,2% of total household credit balances. Month-on-month growth of R1,1 billion, or 0,1%, was recorded in household mortgage balances in January compared with December.

Real economic growth of 2,8% is expected in 2012 (3,1 % in 2011), consumer price inflation is set to remain above 6% throughout the year, interest rates are to remain stable until late this year, real household disposable income is projected to grow at a slower pace than in 2011, the household debt-to-income ratio is forecast to remain around 75% and many consumers are still struggling with impaired credit records. In view of these expectations the residential property market is forecast to continue to show some subdued growth in 2012, with mortgage advances growth projected to remain well in single digits up the end of the year. …

Read more at Absa Property Research