West Africa in Focus /

Ghana's finance minister goes on the offensive to repair battered reputation

  • Ghana downgraded again; finance minister goes on the offensive, but we retain our Hold recommendation on dollar bonds

  • African telcos are reducing their carbon footprint. Good for ESG, but Africa contributes little to global CO2 emission

  • IOC exit from Nigeria is in full swing. Indigenous upstream players stand to be beneficiaries

Ghana's finance minister goes on the offensive to repair battered reputation
Stuart Culverhouse
Busola Jeje
Janet Ogabi
Tellimer Research
10 February 2022
Published byTellimer Research

Ghana's debt situation has been in the spotlight recently, with dramatic pushback from the country's finance minister – we separate the facts from the rhetoric.

Also this week, Africa's telcos and tower companies are making moves towards net-zero emissions, we explain what reality TV shows tell us about the booming fintech landscape in Nigeria, and IOC exits as well as an oil facility explosion draw attention to the terrible state of Nigeria's oil production.

Looking ahead, we expect a slight decline in Nigeria inflation, but it is nothing to celebrate as it will remain in double-digits for the rest of 2022.

Ghana's fiscal position is in the spotlight again, after Moody's downgrade

Moody's downgraded Ghana's long-term issuer rating to Caa1 from B3 on 4 February, which comes not long after Fitch dropped the issuer's rating from B to B-. The country's dangerous debt levels (with debt/GDP at 80%), difficulty in assessing international markets, and weak revenue generation were major reasons cited for the downgrade.

However, Moody's action was met with pushback from Ghana's Finance Minister, who claimed that there is an institutional bias against African economies by credit agencies, questioned the experience of Moody's lead analyst for Ghana, and asserted that critical data was omitted in the analysis.

Ghana's bonds have weakened this week (-1.5pts on the '32s, with the yield rising to 12.8%), although that might reflect higher US bond yields after having enjoyed a modest recovery in recent weeks from their falls earlier this year. We retain our Hold on Ghana's dollar bonds, as Ghana has alternative funding options in the near term, especially multilateral and bilateral loans, and a liquidity crisis does not appear imminent.

Debt service schedule on Ghana's US$ bonds (US$ mn)

Africa's telcos and tower companies are going green

Pan African Towers, a Nigerian tower company with over 1,600 sites, recently issued an NGN10bn bond, which was oversubscribed by 127%. The bond's proceeds will be used to finance the rollout of new environmentally friendly tower sites and reduce carbon footprints by swapping out diesel generators with renewable energy sources.  

Although carbon emissions from Africa are lower than in other regions, many African telcos are actively reducing their carbon emissions. Most recently, Mobile network operator Orange and Energy Service company Engie teamed up to convert Orange's primary data centre in Africa to solar power in Côte d'Ivoire, and Vodacom South Africa installed solar-powered sites in a few locations.

We believe these efforts are positive and will draw the attention of ESG investors, particularly if climate-based investing becomes the default ethical choice.

Sub Sahara Africa contributes very little to global carbon emission

IOC exit in full swing: Local players bid for Shell's assets

Four Nigerian upstream players – Seplat Energy, Sahara Group, Heirs Oil and Gas, and ND Western – have been reported to be the major frontrunners in the bid to acquire Shell's 30% operating interest in a JV asset. As we highlighted in our previous report, indigenous upstream players stand to be benefactors as oil majors seek to exit oil assets in Nigeria. Shell’s exit is significant as it is responsible for c40% of Nigeria’s total output.

Shell's 30% working interest in the JV (the largest JV in Nigeria producing around 629kbpd as of 2009) is reported to be worth US$4.0bn, up from the US$2.3bn estimated by Wood Mackenzie Limited in August 2021 on a US$50 oil price assumption.

Oil majors are the key players in Nigeria at present. And in our view, the transition to local players in Nigeria is likely to impact oil and gas investment and output in the medium term. We are already seeing this play out in Nigeria's low oil output (see last week's West Africa in Focus), which is below OPEC-stipulated quotas. 

Nigeria oil spill and oil production

Nigerian Idol season 7: Fintech sponsors and reality TV

The seventh season of the reality TV show Nigerian Idol just started, and we can't help but notice that the co-headline sponsor is a crypto trading platform, Binance.

This is not too surprising if one pays attention to popular reality TV shows in Nigeria. Last year, Multichoice’s Big Brother Naija was sponsored by fintech startup Abeg app (owned by Piggyvest) and crypto startup, Patricia.

The actual cost of these sponsorships is unclear, but they typically run into hundreds of millions of Naira. However, we think the most important takeaway is what it tells us about the booming sectors in Nigeria. It used to be telcos and FMCGs that tended to sponsor big events or shows. Now tech companies, particularly fintechs, are spending big in a bid to promote brand awareness and acquire customers.

Explosion at offshore facility due to poor maintenance, worsens ESG case for Nigeria oil

There was an explosion earlier this week at an offshore floating production, storage and offloading (FPSO) facility called the Trinity Spirit FPSO. The FPSO asset is owned by an indigenous upstream player, Shebah Exploration and Production Company Ltd (SEPCOL).

The facility has a production capacity of 22,000 barrels/day and storage capacity of 2mn barrels of oil. While the cause of the explosion is yet to be fully ascertained as investigations are still ongoing, the 46-year-old asset was in its final days and was receiving little maintenance.

The asset is reported to have been operating well below capacity at the time of the explosion, storing only 50-60,000 barrels and with no production since 2019. As a result, this is unlikely to dent Nigeria's oil production, which has been declining recently due to lack of investment. However, it is terrible news for SEPCOL, which is currently in receivership. The biggest loser, however, is the Niger Delta community, with heavy pollution from the incident worsening Nigeria's environmental case for more fossil fuel investment as investors look to steer clear of environmentally unfriendly oil assets.

Nigeria: IOCs account for bulk of Nigeria's crude oil production (1,000 bbl/day)

Our latest West Africa research

  • Nigeria's GTCO acquired Investment One's pension and asset management businesses. We still expect banking to be the major driver of earnings in the short term.

  • Our annual macro overview for Nigeria shows that the song remains the same. The growth outlook remains weak, absent structural reforms and currency flexibility, which look unlikely heading into an election year.

  • MTN Nigeria released its FY 21 results, with the telco giant recording outstanding revenue and profitability growth, which beat expectations.

  • The outlook for Nigeria Banks in 2022 is lukewarm, given the CBN's continued use of CRR debits as its primary monetary policy tool to the detriment of bank interest margins.

  • Airtel Africa has joined the FTSE 100. We believe Airtel Africa has a strong growth story, and FTSE 100 inclusion may facilitate fair value realisation.

  • Ghana's bonds are under pressure for a few reasons, including the recent downgrade, but we don't think a crisis is imminent.

Upcoming events

Nigeria inflation – 15 February

Nigeria is set to announce its inflation figure for January next week. December's figure came in at 15.6% vs 15.2% in November, the first increase in eight months. We expect inflation to decline, as December's figures were impacted by strong holiday demand. However, Nigeria's inflation rate is expected to remain in double digits for the rest of 2022, on the back of rising energy prices, insecurity in the food-producing states and election spending.

MTN Ghana FY 2021 results – 28 February

MTN Ghana (Scancom) was one of the best-performing stocks in Africa in 2021. One supporting factor was the general improvement in market sentiment as the economy bounced back from 2020's Covid-induced plunge. But in our view, the main reason is MTN Ghana's solid fundamentals and strong growth prospects, driven by data and fintech revenue growth. The result is one to look out for.


Nigeria’s all-share index gained 0.5% wow, taking the total ytd return to 10.4%. This week’s performance has been driven by gains in a few large-cap and mid cap stocks such as FLOURMILL (+8%), DANGCEM (+5%), GUINESS (+3%), UBA (+2%). Banking stocks also continue to see high volumes of trades and slight increases in price, in anticipation of FY21 results and dividend announcements.

Foreign investors are still using SEPLAT and Airtel as a gateway, but that may soon stop given that the effective exchange rate is now close to a 25% premium over the parallel market rate. We still expect the market to react positively to good results and dividend announcements, but downside risks to equities remain clear in the near term, given the outlook for higher yields in the local fixed income market and foreign investors' disinterest in the Nigerian market.

Tellimer's West Africa Equities Coverage

Market indicators

Nigeria's yield curve (%)

Ghana's yield curve (%)