News & Publications

Africa Market and Lombard Fund News

Monthly Report- January 2019

27 Feb 2019

Dear Investors

Welcome to 2019. Once again Africa is presenting us with an exciting opportunity – wealth has started to increase and improvements are being made with regulatory frameworks, which is supportive of foreign investment. To outline our strategy for the year, please find our observations and predictions for the major African markets in which we participate.

South Africa

SA is the most mature financial market in Africa. Last years ZAR depreciation has boosted exports, which has stabilised GDP growth and removed the economy from its recession. SA’s recover remains tentative with high levels of corruption and a pending election in May. Our SA exposure remains limited to the international gaming and entertainment company Naspers and British American Tobacco. Both companies are strong rand hedge and have stable earnings through their global businesses.


Morocco is a relatively stable political landscape which positively affects its economic growth. GDP growth is estimated to reach 5.4% this making it one of the fasted growing of the advanced African economies. Morocco continues to invest in the diversification of its economy and supports sustainable growth and development of strategic sectors such as mining and engineering. Our exposure to Manage is providing the fund with great exposure to these government supported industries.


  1. interest rates remain steady at 9.0 percent as inflation expectations remain well anchored as food, fuel and electricity prices continue to fall. We believe that the economy is operating close to its potential.

We are optimistic for stronger growth this year than in 2018 due to a better investment climate, continued infrastructure development and implementation of President Uhuru Kenyatta's Big 4 projects to improve manufacturing, universal healthcare, affordable housing and food security. Last year GDP rose 6% in the third quarter and we expect the fourth quarter to show similar growth.

Finally, Kenya is back in the international debt markets. According to a Reuters, the National Treasury is seeking a third Eurobond worth $2.5 billion.

Our core holding in Kenya allows us access directly into a strong economy. Safaricom has excellent market penetration and is supported in Kenya and it neighbours through its strong brand and reputation. Also our holding in the strongest of the banks, allows us access to future economic growth while giving strong upside potential when the government reduces interest rate regulations.


Nigeria has also kept their interest rates steady and we expect that that will continue for the foreseeable future. While Nigeria’s economic recover remains fragile, we expect positive GDP growth during 2019 of around 2%. We have exposure to this economy through the local brewer, Nigerian Breweries. The business is show signs of a much better 2019. Further as oil prices have stabilised, exposure to Seplat, which trades on a large discount to comparable global companies will offer great yields.

Looking forward to our next communication.

Constant Capital

Next »