14 Jul

Egypt set to receive $1.25 bln IMF loan tranche: MENA

CAIRO (Reuters) – Egypt is to receive a second loan installment worth $1.25 billion from the International Monetary fund on Thursday night or Friday at the latest, state news agency MENA said.

Egypt agreed a three-year, $12 billion IMF loan programme in November that is tied to ambitious economic reforms such as subsidy cuts and tax hikes.

The IMF had said in May that there was a staff-level agreement to disburse the second instalment based on Egypt’s reform progress but that its executive board first had to meet to sign off on it.

[via Reuters Africa]

11 Jul

Investor flight spurs equities’ H1 rally

THE Zimbabwe Stock Exchange (ZSE) witnessed a rally during the first half of the year as investors, fearing loss of value after the introduction of bond notes last November, sought refuge in equities.
The rally on the ZSE is seen continuing during the second half of the year as investors and asset managers seek safety amid growing inflation concerns.
Zimbabwe’s inflation remains on an upward trajectory, rising for the fourth consecutive month in May due to price increases caused largely by worsening foreign currency shortages and an injection of liquidity in the market through Treasury Bills and the real time gross settlement (RTGS), which critics have said is a new form of money printing by President Robert Mugabe’s government.
The US dollar was reportedly attracting a premium of between 15 and 20 percent to either bond notes, a domestic currency introduced by the Reserve Bank of Zimbabwe (RBZ) to deal with cash shortages, or bank transfers, which are denominated in US dollars, but are essentially a phony currency created through the RTGS.
Amid rising inflation concerns, the stock market is becoming a safe haven for individuals, companies and asset managers.
Analysts said increased scepticism over Zimbabwe’s currency crisis would continue to give impetus to a buying spree on the ZSE, which has witnessed its longest upward swing since November last year.
With interest rates now under cap after an RBZ order to lower lending rates last year, investors have also been taking positions in equities.
Falling money market rates and a depressed property market have also fuelled the equity market’s bull run.
The ZSE’s industrial index advanced 35,6 percent during the first half of the year.
It closed the month of June at 195,97 points, while the mining index rose 19,28 percent to 69,79 points.
On a year-on-year basis, the industrial index gained 94 percent while the mining index gained 182,55 percent.
The volume of shares traded on the local bourse increased to 917,6 million shares, from 630,4 million shares recorded in the comparable period last year.
Market capitalisation rose by 104,79 percent year-on-year to $5,7 billion, while in the half year it increased by 42,1 percent.
Total market turnover recorded in the first half increased by 28,84 percent to $115 million from $89,3 million recorded last year.

Read more : Financial Gazzette

10 Jul

African consumer products industry rides out uncertainty

According to Deloitte’s inaugural  African Powers of Consumer Products report, despite a much-discussed slowdown in the African economic growth story, the continent’s consumer products industry is demonstrating a resilient and positive growth path when viewed in local reporting currencies.

The analysis by Deloitte shows that the top 50 African listed consumer product companies are concentrated in 15 countries, with South Africa, Egypt, Nigeria and Morocco accounting for 64% of the companies with just above 80% of their total revenues. This concentration reflects the size of their respective economies, their level of development and economic diversification, but also the low degree of capital market development in other African countries.

While the overall African growth story might have ‘stuttered’ recently (mostly due to the commodities decline), the prospects and opportunities for consumer goods companies still reflect a generally positive growth opportunity. For instance, sub-Saharan Africa’s GDP per capita in purchasing power doubled to US$3,831 between 2000 and 2016. While several oil-producing countries have seen faltering investment, East African economies that are less exposed to commodity markets, are growing at rates of 6% per annum or more.

On average, the year-on-year revenues of the top 50 declined by 7.5% in USD and grew by 4.7% in local reporting currencies. When measured over a five-year period from 2011 to 2015, the average of the top 50 compound annual growth rate (CAGR) in USD was 3.5% and 12.5% in local currencies.

“Although African economies have seen their currencies depreciate sharply against the USD, making imported goods more expensive, companies which produce goods locally and are able to ramp up facilities have an opportunity to grow their market share,” said Andre Dennis, Deloitte Africa consumer products leader.

The report considers the performance of Africa’s Top 50 listed consumer product companies in FY15 (year ending up to and including May 2016), as calculated according to revenue in US dollar terms. It focuses on African domiciled companies which are listed on African stock exchanges, with manufacturing as a core business.

Read More: How we made it in Africa

07 Jul

S.African watchdog defends bid to weaken central bank inflation mandate

South Africa’s main public watchdog stood by its bid to force the central bank to target growth rather than inflation, dismissing a legal challenge that the move was unconstitutional.

The head of the Public Protector Busisiwe Mkhwebane, set off a political row last month when she said the South African Reserve Bank’s mandate should focus on growth rather than inflation and the currency – rattling investors and the rand.

The central bank has filed a court challenge to quash the recommendation, which is also opposed by Finance Minister Malusi Gigaba and parliament.

The Public Protector’s spokeswoman Cleopatra Mosana said Mkhwebane had filed a notice opposing the challenges to her recommendation.

“The Public Protector is empowered, by the constitution, to take appropriate remedial action with regard to any improper conduct in the state affairs or conduct, or conduct in the state affairs which may result in any impropriety or prejudice,” Mosana said.

Gigaba and opponents of the proposal say Mkhwebane was exceeding her mandate in making the recommendation. Critics say that Mkhwebane’s role is to confront maladministration, not make central bank policy.

Analysts say it is unclear what prompted Mkhwebane’s recommendation and that it would be up to the courts to decide whether her mandate extends to the central bank.

The row over the central bank has highlighted divisions in the tripartite political alliance of the ruling ANC, the country’s biggest union, Cosatu, and the South African Communist Party (SACP) over the role of the reserve bank.

Read More: Reuters Africa

06 Jul

Oil slides as OPEC exports rise, prices end 8 days of gains

Oil prices tumbled about 4 percent on Wednesday, ending their longest string of daily gains in more than five years, as climbing OPEC exports and a stronger dollar spurred selling.

Brent crude futures LCOc1 settled down $1.82, or 3.7 percent, at $47.79 a barrel. Prices had climbed for eight straight sessions to Monday.

U.S. West Texas Intermediate crude CLc1 fell $1.94, or 4.12 percent, to settle at $45.13 a barrel.

“It’s a transition from being overbought for a while,” said Tyche Capital Advisors senior research analyst John Macaluso.

“I really don’t think it’s too much fundamentals driving the move today – seems more like a reversal of the trend. Eventually someone comes out of the market and everyone follows and you have to take profits.”

Prices pared losses in post-settlement trade after data from industry group the American Petroleum Institute showed U.S. crude inventories fell 5.8 million barrels in the week to June 30 to 503.7 million barrels, exceeding forecasts for a draw of 2.3 million barrels. [API/S] The API data, normally released Tuesday, was delayed by the U.S. Fourth of July holiday.

Official data from the U.S. Department of Energy is due on Wednesday at 11:00 a.m. EDT (1500 GMT), also delayed a day. [EIA/S]

Oil traders hope vacationing motorists heading for the beach in July will help U.S. gasoline demand heat up along with sweltering summer temperatures, helping drain crude inventories.

Oil exports by the Organization of the Petroleum Exporting Countries climbed for a second month in June, Thomson Reuters Oil Research data showed.

OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.

The rise came despite OPEC’s vow to rein in production until March 2018 and came on the heels of Reuters’ monthly OPEC production survey which found output jumped to a 2017 high last month as Nigeria and Libya continued to pump more. Both OPEC members are exempt from the output cut deal.#

Read More: Reuters Africa


05 Jul

New Tanzania law requires government to have shares in mining firms

Tanzania’s parliament amended mining and tax laws late on Wednesday to make it mandatory for the government to own at least a 16 percent stake in mining projects, the state-run Tanzania Information Services said.

“In any mining operations under a mining license or a special mining license, the government shall have not less than 16 (percent) non-dilutable free-carried interest shares in the capital of a mining company,” read the text of the new law.

Read More: Reuters Africa

04 Jul

Egypt’s non-oil business activity contracts for 21st month in June: PMI

Egyptian non-oil private-sector business activity contracted for the 21st consecutive month in June as output and new orders continued to decline, a survey showed on Tuesday.

The Emirates NBD Egypt Purchasing Managers’ Index (PMI) for the non-oil private sector dipped to 47.2 points in June from 47.3 points the previous month, the report showed, remaining below the 50 mark that separates growth from contraction.

Egypt’s economy has been struggling since a 2011 uprising, but the government hopes recent reforms that are part of a $12 billion International Monetary Fund programme signed last year will help put the country on the right track.

Output continued to decline for the 21st month in a row, falling to 45.3 points in June from 46 points a month earlier as demand remained low. New orders also fell, but at a slower pace.

New export orders continued to rise for the third month in a row, the survey showed, suggesting demand has grown since the central bank’s decision to float the currency in November, as part of the IMF deal.

The value of Egypt’s pound has fallen by half since the flotation, helping Egyptian exports find new international markets.

Read more: Reuters Africa

03 Jul

South Africa to unveil action plan to lift growth: Gigaba

South Africa’s Treasury will unveil an action plan on Friday detailing structural changes and timelines to boost growth to 6 percent in an economy mired in recession, Finance Minister Malusi Gigaba said on Monday.

The plan will be released after a policy conference of the ruling African National Congress (ANC) wraps up, a meeting overshadowed by a power struggle between rivals seeking to succeed President Jacob Zuma.

“We will implement steps to get the economy growing at about 6 percent and more”, Gigaba said at an event marking the launch of the tax-filing season in Africa’s most industrialised economy.

“We want to get everyone focused on boosting the economy … so that the low growth doesn’t become a vicious cycle.”

South Africa’s economy contracted 0.7 percent in the first three months of 2017 after shrinking 0.3 percent in the previous quarter, piling pressure on Zuma whose missteps, including the sacking of Gigaba’s highly-respected predecessor Pravin Gordhan in March, have corroded investor confidence.

Proposals being debated at the ANC’s conference which have unnerved investors include holding a referendum on land reform and a push for the expropriation of land without compensation and greater black ownership of businesses.

But Gigaba pointedly said the action plan would draw on issues raised by investors and ratings agencies.

South Africa’s credit rating was recently downgraded by S&P Global Ratings and Fitch to junk status.

Read more: Reuters