Well hello there guys and girls! Your favorite weekly publication is back with the biggest and most intriguing economic stories from around the world. I hope you are excited as I am. Before we get started, you might have heard, there’s a new chief in town. I am delighted to take on this new role and super-thrilled to continue the journey to economic enlightenment with you. A great foundation was laid by the former boss (to whom I am entirely thankful), so expect nothing but bigger , more interesting and of course more insightful news from Africa and beyond. So, without wasting any more time, shall we begin?

A WORD FROM THE EDITOR

Strathmore Centre for Value Investing (SCVI) is a research centre under the Strathmore Institute of Mathematical Sciences (SIMS) - formerly SFAE - based in Strathmore University.Started in 2014 under the leadership of our Director, Ishmael Maina (CFA), the centre is growing by leaps and bounds with the goal of being the foremost undergraduate research institute in Quantitative Finance and Economics with a bias towards Value Investing. SCVI Insight is the publications and corporate communications arm of the Centre. It currently produces The Weekly Digest, one of 3 planned publications by SCVI Insight. The other two will be called The Monthly Report and the The Quarterly Review.Our vision is to become the foremost platform for young undergraduate researchers and writers in Strathmore University. We believe in the value of ‘learning by doing’ -emphasized and highlighted in our publications and projects.Thank you for being a part of our story - which is just beginning!

WHO ARE WE AGAIN?

THE WEEKLY DIGEST

ISSUE 0064th- 11th September 2016]

EST. 2016

The European Union (EUs) Economic Partnership Agreement (EPA) extended to the East Africa Community (EAC) has brought a lot of sugar and spice in the bloc. The solidarity of the bloc is at stake as member states take opposite stands on the deal. Kenya and Rwanda threw the rule book out while on the other hand Burundi and Tanzania slammed have been slammed for a being a too slow for comfort. Will the EAC stand this test of time?

Deal, Or No Deal?-EAC’s Rocky Relationship

‘Three…two…one…’ , the countdown is on with only three months to usher in the new year. These three months to 2017 also pose a great deal of turmoil for most foreign retailers in Uganda. The retailers have been issued with a three-month ultimatum to either invest in big businesses or peacefully leave the playing field. This is a reaction to the foul cry by local retailers who are being driven out of the market by the competitive and lower foreign retailers’ prices.

Go Big Or Go Home

‘Msiniharakishe’- Tanzania’s Slow Pace‘Haraka haraka haina baraka; pole pole ndio mwendo’ loosely translated to ‘hurry hurry has no blessing; move slowly’ is the mantra Tanzania holds with respect to signing the Economic Partnership Agreement (EPA). The country has decided to tread slowly as far as the EPA is concerned despite the looming deadline. Loopholes need to be considered, uncertatinities certained before the deal sealed.

Ending World HungerThe ‘Avengers’ are in town and they are here to save the day. The new superheroes ranging from developing country leaders, private sector companies, local and international donors, NGOs and foundations are all on the move in transforming Africa’s agriculture and food systems. The peak of this move being the African Green Revolution Forum to be held in Nairobi where global hunger will be put on trial and sentences to history.

Goodbye East Africa-Oil Investors Search for Greener Pasture.Companies interested in East Africa’s hydrocarbons are now resorting to other countries which they term as having proven resources and good fiscal terms. This is mainly due to the low prices environment in East Africa. To woo back its investors, East Africa will have to do more than just a serenade. The countries will have to reform their regulations, fiscal and licensing systems which will in turn create an attractive environment for the investors.

Away with the Trade Barriers!-Integrating Africa’s Trade BlocsHark, the sound of the new treaties and of better days. The reality of the proposed Tripartite Free Trade Area (TFTA) between East Africa Community (EAC), Common Market for Eastern and Southern Africa (COMESA) and Southern Africa Development Community (SADC) is just about to be seen. This agreement if settled, will see an elimination of barriers and boost inter-regional trade by at least thirty per cent.

THE REGIONAL BEAT Tim Avedi & Elizabeth Kalu

Solidarity Forever!-Strengthening the EACThe Economic Partnership Agreement (EPA) is at it again, stirring the mired East African community (EAC) bloc. This time round, the bloc has however come out ever strong seeking a three month extension on the October 1, 2016 deadline of signing the EPA. The request for a time extension is to allow for the bloc to further deliberate, just like any family does, and come up with a collective response to replace the fragmented ones already made by some member states.

The Interest Rate Cap:Kenya’s Crafty BankersThe new interest rate law in Kenya is sweetening up for some financial institutions who are banking on its grey areas to protect their interest income. The law doesn’t explicitly explain which base lending rate should be used; whether the Central Bank Rate (CBR) or the Kenya Banks Reference Rate (KBRR), which has always used to price loans. Until the Central Bank of Kenya offers clarity, some banks have persisted with their higher rates.

Uganda’s Bruised BourseThe Uganda Stock Exchange (USE) no longer serves ‘tasty food’. The high interest rates on the treasury bills and bonds have caused a very low appetite for shares. As a result, stockbrokers’ commission incomes have significantly dropped by around USH 100 million since December last year, with the USE total turnover falling to USH 3.3 million. This is attributed largely to volatile trading patterns and low institutional activity at the bourse.

NORTH AMERICASOUTH AMERICA

Brazil’s parliament seems to be getting creative when it comes to new sources of government revenue. Both the lower house and senate are debating on bills aimed to legalize gambling in South America’s largest economy. Their president has already shown his support, and their minister for tourism has projected that gambling could generate up to $6.1 billion in annually in tax revenue, given the devotion Brazil has to its national sport, football.

Brazil’s Bet on the Economy..

This week, a delegation of Uruguayan tourism and port officials held a meeting in Argentina to discuss how the two countries can work together to boost the cruise industry in both countries. Uruguay was concerned that some of the charges imposed on them by Buenos Aires port authorities were making it difficult to keep up with the sustained annual growth. While Argentina was not too keen on sharing what went down in the meeting, the Uruguay delegation said that it went “better than expected”.

Argentina-Uruguay Relations...

South America seemed to have found a new economic suitor in the form of India. This week, the government of India signed an agreement with Chile to expand their bilateral Preferential Trade Agreement (PTA), representing a ten-fold increase in the number of products to be traded on concessional duty rates. The move is seen as the first step in a series of moves to attract the Latin America and Caribbean Nations (LAC) market, and India seems to have already identified its next target: Peru.

Cheers to New Partnerships!

The release of the Iphone 7 was live-streamed across the world, much to the excitement of Apple fans. The Tech giant brought to the world a sleek phone that is water-resistant , has wireless earphones , better camera (that will enhance your acne),longer battery life and most importantly, will make you look richer. Critics (jealous android users) have slammed Apple for not being innovative enough and just replicating technology. US citizens can buy the premium Smartphone starting September 16th. Iphone sales will provide a good estimate of Apples market share in the Smartphone market

The Iphone 7 is finally here!

The Fed is not playing around in hunting down Wall Street’s big boys. The days of investment banks to investing in other companies (or ‘merchant banking’ if you want to sound smart) may be coming to an end. The Fed is also pushing for limits on the ownership of physical assets by investment banks, citing unfair advantages by these banks in metal and energy markets, it’s now up to the law-makers to approve the recommendations and make them law. Your move, congress. This may have an huge impact on the banks revenues and market share in some industries.

Taming Big Banks

As the US inches closer towards the election, businesses seem to be getting cold feet as no sign of a surge in economic activity has been seen in the second half of 2016(Maybe they’re just scared of Trump). There was only modest growth in the real estate in several city states,and the manufacturing sector showed almost no growth. Yikes! Lets home that the US economic machine will be up and running soon.Slow growth may make the Fed delay the increase interest rates.

Proceed with Caution...

Faith Muthoni Ronald Wakhu

NEWS FROM AROUND THE WORLD

AFRICA AT LARGE

Booming tourism and political stability are just but a few perks that makes Mauritius the envy of every other country in Africa. Wait a minute; they just launched themselves as an International Finance Centre. This means that any outsiders who would want to invest in Africa would run to Mauritius first. It seems it’s only up, up, up for the island of sugar plantations. It is estimative that FDI in Mauritius will increase and the trickle-down effects to various sectors of its economy such as manufacturing and tourism will boost economic growth.

Is Mauritius Africa’s Singapore?

Rebels in Central African Republic, terrorism in Nigeria and coups in Benin. It almost seems as if the witchcraft showcased in Afrosinema might not just be acting. With a recorded 66% of debt accumulated under the rule of Presi-dent John Mahama and interest payments in the tune of billions, one tends to wonder what else could go wrong in Ghana. Well, there is the double digit inflation that the country is currently dealing with. Let’s give a moment of silence for Ghana. Government bonds have to pay high interest rates due to the risk that investors attach to investing in them. These interest rates coupled with debt accumulation may put Ghana’s economy on its knees

Who cursed West Africa? - Ghana’s story

Botswana thinks it’s about time it joined the big boys. Their stock exchange has been relatively small without a lot to offer to investors. Now, a major conference will be held to revamp the bourse and its bond market. This is a great move towards enhancing Botswana’s financial sector seeing as it has defeated all odds to grow its economy. A developed financial system is a precursor for economic growth in an economy. This facilitates FDI because investors have faith that their money is safe and will be channeled towards viable sectors of the economy.

Refreshing Botswana’s Stock Exchange

EUROPE

Sarah Carlson, Senior Vice-President at Moody’s Investors Service, a leading provider of research and risk analysis, said on Monday that Spain’s prolonged political impasse will have a negative effect on the country’s economy. Moody’s expects weakening growth heading into 2017 though Spain is one of the euro zone’s most robust economies at the moment, with a GDP expanding 0.7% this year. The continued absence of a government undermines Spain’s ability to meet its fiscal targets and address the structural weaknesses of public finances.

Weakened Growth

The ECB, in an attempt to kick start the euro zone’s economy in the wake of Brexit has been trying to push inflation back to its goal of below 2% with measures ranging from negative deposit rates to spur lending, but without a breakthrough success. The euro zone economy slowed slightly in August as Germany’s services sector faltered. ECB’s projections, however, indicated 1.6% GDP growth for 2016 and 1.7% for 2017 with a high chance that inflation will see a slight downward correction.

Inflation Frustrations

Europe stocks were expected to open higher on Tuesday with oil prices holding firm following gains in the previous session. The London FTSE index was expected to open 6 points higher at 6,885, the German DAX up 15 points at 10,687 and the French CAC up 7 points at 4,548.Oil prices rallied up in Europe by up to 5% ahead of Saudi Arabia and Russia signing a joint statement, which however failed to promise the much-touted-but-never-delivered freeze to crude production.

Shock on Stock

Koki Gachui Valentine Chweya

INDIA, RUSSIA & CHINASOUTH EAST ASIA

Discord arose during a gathering of the ten member countries of the Association of Southeast Asian Countries. The consensus-based meetings reached a deadlock after some opposing participants brought talks to a halt. A major contentious issue was economic integration. The failure of the consensus-based system has been attributed to varying political models and economic stages of members; thus, experts suggest a change to a majority-based decision-making system to overcome the deadlock.Given friction in the meetings, the process of economic policy making thus implementation is slowed down.

Con-sensus?

CIMB Bank, a subsidiary of Malaysia’s second-largest lender by assets has been granted access to the Vietnamese banking sector. The branch is to open by the end of the year. This move seeks to reinforce the firm’s strength in the region; it has 992 retail branches and more than 40,000 employees in 17 countries. CIMB will be the seventh wholly owned foreign bank operating within .Opening of a new branch will lead to benefits such as job creation.

Spread and Conquer

Banks and other financial services providers have been brought under fire for providing loans to expand industries such as palm oil, paper and timber which have caused the recently witnessed forest fires. This firms have however not been held accountable for the devastation they’ve indirectly caused. This kind of financing can be regulated by setting binding standards. Hopefully in the wake of such tragedy, South East Asia will consider green growth as a catalyst for economic growth.

Banking on Deforestation

A high opening in the domestic equity market has boosted the rupee value against the dollar resulting to the rupee selling like hot cake as it surges by 31 paise (coins) to 66.51 against the dollar. The rupee has continued its stellar performance against the USD for the fourth month where it traded higher by 13 paise at 66.82 on the heavy dollar. But is this really good for India?A strong rupee is a double edged sword. With the rupee strengthening over the past few months, American consumers have benefited from cheaper imports and less expensive foreign travel. At the same time, Indian companies that export or rely on global markets for the bulk of its sales have been hurt

Rupee Trumps Dollar

Apple Inc is having facing a downward spiral in China as the Chinese seem to be suffering from ‘Iphone fatigue’. This is due to fierce competition from Huawei and also strict curbs on online publishing which discourage buying of these expensive gadgets. It will really be interesting to see how Apple will weather this storm.This is a typical example of monopolistic competition with many buyers and sellers in the market. The high levels of competition accelerate levels of innovations which in turn increase production of quality output hence skyrocketing of economic growth rates.

Apple Falls in China

Gloria Kendi Ivy Mwende

Russia’s economy has stabilized, Russian President Vladimir Putin said at the opening session of the G20 summit in Hangzhou .They have secured the reserves, reduced the outflow of money, reduced inflation and lowered the budget deficit compared to last year. Putin also noted that Russia has been showing a small but steady growth in industrial production and other spheres.Reduced over dependence on oil and venturing into other sectors may be good for Russia since diversification of the economy will reduce the risk of another recession in Russia.

HOPE AT LAST! Russia’s economy turns a new leaf

Editor-in chief: Tim Avedi

Editor (Digest): Ronald Wakhu

Sub-Editor (Digest): Julie Songok

The Regional Beat: Elizabeth Kalu – Lead Correspondent Milka Alubokho Maurine Jebichii

South East Asia: Gloria Kendi – Lead Correspondent Micere Murimi Joel Ndege

India, Russia & China Ivy Mwende – Lead Correspondent Patsy Mugabi Millicent Menya

South America Julie Songok – Lead Correspondent Faith Muthoni Beatrice Muiruri

North America Ronald Wakhu – Lead Correspondent Mwende Muna Africa at large Koki Gachui - Lead Correspondent Pauline Odhiambo

Europe Val Chweya – Lead Correspondent Cathy Nabatanzi

Team Manager: Rose Kagumba

Design: Adrian Myall

THE TEAM

TOP GAINERS

TOP GAINERS PRICE(KES) CHANGE(%)PAFR (Pan Africa Insurance Holdings Ltd) 33.00 +10.00TCL (Trans-Century) 9.75 +8.94UCHM (Uchumi Supermarket Ltd) 3.80 +8.57ICDC (Centum Investment Co Ltd) 43.75 +8.02CABL (E.A.Cables Ltd) 7.50 +7.91

LOSERS

LOSERS PRICE(KES) CHANGE(%)BOC (B.O.C Kenya) 83.50 -7.22BBK (Barclays Bank of Kenya Ltd) 8.75 -2.23FAHR (STANLIB FAHARI I-REIT.) 11.00 -1.79BRIT (Britam Holdings ltd) 10.35 -1.43TOTL (Total Kenya Ltd) 17.50 -1.13

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