Monthly Archives: January 2018

31 Jan

Steinhoff Reports Ex-CEO Jooste to South African Police Unit

Steinhoff International Holdings NV reported former Chief Executive Officer Markus Jooste to South Africa’s anti-graft police unit for suspected corruption offences as the global retailer battles to recover from an accounting scandal.

The owner of Mattress Firm in the U.S. and Conforama in France alerted the division known as the Hawks as part of an investigation into financial irregularities at the company, acting Chairman Heather Sonn told lawmakers in Cape Town on Wednesday.

Steinhoff still doesn’t know the origin of the crisis and is conducting its probe as quickly as possible, she said.

Sonn is appearing at a hearing called by three parliamentary sub-committees to deepen their understanding of the crisis and subsequent investigations.

Ex-chairman and biggest shareholder Christo Wiese also gave evidence, the billionaire’s first public outing since the start of the crisis. He described news of the wrongdoing as a “bolt from the blue.”

Jooste, who quit when Steinhoff said it uncovered accounting irregularities on Dec. 5, and former Chief Financial Officer Ben La Grange are not attending the hearing.

Neither Jooste nor Wiese have previously commented on the origins of the crisis, which has wiped 85 percent off the value of the company.

Wiese’s net worth has plummeted to about $2.3 billion from more than $5 billion in the wake of the accounting scandal, according to the Bloomberg Billionaires Index. He’s became Steinhoff’s biggest shareholder when he agreed to sell Pepkor, Africa’s biggest clothing chain, to the company in 2014.

The Public Investment Corp., which manages South African government worker pensions, is another major Steinhoff shareholder and its stake has lost more than $1 billion in value. The PIC will also appear at the hearing.

Source: https://www.bloomberg.com/news/articles/2018-01-31/steinhoff-ex-chairman-wiese-to-face-south-african-lawmakers

31 Jan

South Africa Boutique Investor Joins Viceroy in Questioning Capitec

Benguela Global Fund Managers (Pty) Ltd. wrote to Capitec Bank Holdings Ltd. earlier this month questioning its loan practices, even before a short seller alleged the South African lender was concealing write-offs.

Benguela, which manages 3.6 billion rand ($301 million), raised concerns about Capitec’s “aggressive practice of rescheduling arrear loans and advances,” according to a letter dated Jan. 19.

In a separate letter to its investors, Benguela said it had “serious reservations” about Viceroy Research’s approach and its assertion that Capitec should be put under administration was “shocking and irresponsible,” after the short seller released a report about the allegations.

Capitec, which makes unsecured loans mainly to low- and middle-income households, posted its biggest-ever intraday share drop on Tuesday after Viceroy alleged it was hiding write-offs by refinancing defaulted loans with new debt.

It then recovered most of those losses after South Africa’s central bank said it has no evidence to suggest the lender’s stability is in question.

“Benguela totally condemns the Viceroy approach to raising governance issues and it appears to be motivated by pure greed than actual interest in the company,” Chief Investment Officer Zwelakhe Mnguni said in his letter on Tuesday.

Full Disclosure

Speaking at a press conference in Cape Town late Tuesday, Capitec Chief Executive Officer Gerrie Fourie declined to answer questions about whether it had received a letter from Benguela and said he would respond next month. Fourie also denied the allegations made by Viceroy and said the report was full of inaccuracies.

A spokesman for Capitec said on Wednesday that the lender is busy with its response to Benguela. Viceroy didn’t immediately respond to an emailed request for comment.

Capitec discloses “all our figures of rescheduling in a transparent way,” Chief Financial Officer Andre du Plessis said in an email on Tuesday. The company has “absolutely” no plans to take any additional writedowns because it already does a detailed analysis of its book at a weekly credit committee, he said.

To read the full article, click here.

30 Jan

Ethiopia Oil Refinery Planned as Blackstone Pipeline Shelved

Ethiopia’s fast-growing economy has Asian investors lining up to build a new $4 billion oil refinery, even as a Blackstone Group LP-backed fuel pipeline project is shelved.

The proposed 120,000 barrels-a-day plant has generated interest from Japanese, South Korean and Indian investors, said Zemedeneh Negatu, chairman of U.S.-based Fairfax Africa Fund. The refinery in Awash, east of the capital Addis Ababa, would import crude through neighbouring Djibouti and along a railway recently completed by Chinese state enterprises, he said.

The Asians are “very excited,” said Zemedeneh, declining to name the potential investors who have signed memorandums of understanding. “Some are big commodity trading houses.”

Half of the refinery’s output would be directed to the Ethiopian market, with the remainder exported to neighbouring countries in East Africa, according to Zemedeneh. Fairfax Africa has plans to eventually double the plant’s capacity amid industrial expansion and increased demand for motor vehicles.

Ethiopia recorded annual average economic growth of about 10 percent over the past decade, and the International Monetary Fund estimates expansion at 8.5 percent in the current fiscal year.

There has also been interest from a U.S. financial firm in a project in which the Ethiopian government would be the sole fuel distributor, Zemedeneh said.

Pipeline On Hold

In 2015, Ethiopia and Djibouti signed framework agreements for the construction of a 550-kilometer (340-mile) pipeline to transport diesel, gasoline and jet fuel to Awash from a port on the Gulf of Aden. The work on that $1.6 billion Blackstone-backed fuel pipeline was put on hold “early last year,” Black Rhino Chief Executive Officer Brian Herlihy said in an emailed response to questions.

Minister of Mines, Petroleum and Natural Gas Motuma Mekassa didn’t respond to requests for comment. The proposed Fairfax Africa refinery faces competition.

In Ethiopia, the Oromia region’s government has been planning a petroleum company to import oil via Djibouti and process it at a planned refinery linked to the new railway. The company is targeting a 21 percent share of Ethiopia’s fuel market within five years, according to a feasibility study.

Neighboring South Sudan expects operations to begin in 2020 on a 120,000-barrel-a-day refinery with more facilities to follow. To the south, Uganda is moving ahead with a 60,000 barrels-a-day plant that will be supplied with crude from fields being developed by Total SA, Tullow Oil Plc and China’s Cnooc Ltd.

Source: https://www.bloomberg.com/news/articles/2018-01-29/ethiopia-oil-refinery-proposed-as-blackstone-backed-line-shelved

30 Jan

Nigeria to Start Building $5.8 Billion Power Plant in 2018

Nigeria plans to start building a $5.8 billion hydro-power plant in the eastern Mambila region this year after it agrees on loan terms with China’s Export-Import Bank.

“We hope to break ground this year if we can conclude the financing,” Power, Works and Housing Minister Babatunde Fashola said in a Jan. 23 interviews in the capital, Abuja. “Contracts are in place. We are good to go.”

Fashola told reporters in August that the Chinese lender would finance 85 percent of the cost, and the Nigerian government the rest. China Civil Engineering Corp. will build the 3,050-megawatt power plant over five years, and the facility will include four dams measuring 50 meters (164 feet) to 150 meters high, and 700 kilometers (435 miles) of transmission lines, he said.

Nigeria, a country of 180 million people living with daily power cuts, is seeking to expand electricity generation to drive growth after the economy contracted in 2016 for the first time in 25 years. Fashola, a former governor of Lagos State, the nation’s bustling commercial hub, was appointed in 2015 by President Muhammadu Buhari to take charge of the troubled power sector.

The government expects power-production capacity to increase to 8,600 megawatts in a year from 7,000 megawatts currently, Fashola said in the interview. In comparison, South Africa, with a third of Nigeria’s population, has an electricity-generating capacity of more than 40,000 megawatts.

Distribution Capacity

Nigeria also plans to improve distribution capacity, currently at about 5,000 megawatts. Since the country is able to produce more electricity than it can distribute, some production capacity will remain idle until the government expands the network.

The government is looking to partner with private companies to invest in mini-grid projects and generate an additional 3,000 megawatts of electricity over five years, Fashola said. Investors are showing interest, he said, without further details.

A number of planned solar power projects have failed to secure funding and should be reassessed, according to the minister.

To read the full article, click here.

30 Jan

The Clock Is Ticking on the Zuma Era in South Africa

The clock is ticking on South African President Jacob Zuma’s scandal-ridden administration as his deputy, Cyril Ramaphosa, flexes his political muscles and shows he’s increasingly wielding state power to stamp out corruption and revive the economy.

While the ruling African National Congress’s top leadership has decided that Zuma, 75, must leave office — to win back voters and stoke investor confidence in the stagnant economy — without setting a deadline, newly elected party leader Ramaphosa and his supporters have moved decisively on two other fronts.

His office and the Ministry of Public Enterprises announced sweeping changes to the board and management of struggling state-power utility Eskom Holdings SOC Ltd. As well as deciding on Friday that Zuma must step down, the ANC National Executive Committee suspended the party’s pro-Zuma provincial executive committees in the provinces of KwaZulu-Natal and Free State that the courts said weren’t properly elected.

“It is as if Cyril is confirming that he has taken over the reins,” said Susan Booysen, a political science professor at the University of Witwatersrand’s School of Governance. “I would say Zuma will be gone in anything between 10 and 30 days maximum.”

Zuma’s exit would catapult Ramaphosa, 65, into the presidency and allow him to begin to repair an economy that suffered its second recession in almost a decade in 2017 and has struggled to mount a strong recovery. He’s also vowed to fight the graft that has marred Zuma’s administration.

An open question remains whether Zuma will step aside before Feb. 8 so that Ramaphosa can deliver the annual state-of-the-nation address. Zuma’s diary, released by the Presidency on Monday, shows he is still scheduled to present the speech and respond to a debate a week later.

Zuma announced on Sunday that Water Minister Nomvula Mokonyane will represent him at the inauguration of Liberian President George Weah. Ramaphosa is leading South Africa’s delegation to the World Economic Forum gathering in Davos this week.

To read the full article, click here.

29 Jan

Zimbabwe: Fresh Moves to Arrest Grace Mugabe

The declaration by President Emmerson Mnangagwa last week that former first lady Grace Mugabe is no longer immune to prosecution appears to have left Mugabe’s garrulous wife vulnerable to arrest as vultures circle above her, bracing for a kill.

Grace made a lot of enemies during her time as first lady and Mnangagwa’s pronouncement has opened floodgates of legal trouble for the once most feared woman in Zimbabwe.

In an interview with BBC’s Mishal Husain during the World Economic Forum (WEF) annual meeting in Davos, Switzerland, Mnangagwa said Grace enjoyed no immunity and could be arrested and taken to court on any charges.

South African model Gabriella Engels, who was walloped with an electric cord by Grace and was left nursing a deep cut on the head and other injuries, has rekindled her fight for justice and is planning to have Mugabe’s wife dragged to South Africa to face the music.

“If I had the opportunity to meet the new Zimbabwean president, I would ask him to do the right thing and handover Grace for prosecution,” Engels told The Standard yesterday.

Engels’ lawyers were working hard to bring Grace to justice in South Africa so that she can answer to the case of assault.

“We are aware that she is no longer a person of power, that her husband was ousted from office and that the government of Zimbabwe said she does not enjoy any immunity anymore,” Engels’ mother said.

“In light of the latest developments, our lawyers are working on that case to secure justice for my child.”

Engels said her family was grateful and happy that Zimbabweans ousted the Mugabes because they were now abusing power to put fear into her family.

“Most definitely, I am happy, we are free and we will continue to fight until we get justice,” she said.

To read the full article, click here. 

29 Jan

Gas Flaring Law Error Cost Nigeria Billions of Dollars

Africa’s top oil producer plans to make gas flaring more costly for companies that have escaped the payment of billions of dollars despite being fined, Nigerian Finance Minister Kemi Adeosun said.

In the “legal framework for the gas-flaring penalty, it was drafted as a charge. A charge is tax deductible,” Adeosun said in a Jan. 23 interview. “So, what do the international oil companies do? They flare, they pay the charge on which they get tax relief. That’s just bad drafting.”

The government is approaching lawmakers to amend the law and have the word ‘penalty’ replace ‘charge,’ the minister said in her office in the capital, Abuja. “Just that one word has potentially cost us billions of dollars.”

Oil companies flare natural gas that is produced along with crude instead of harnessing it because that can be costly or difficult for security reasons. Nigeria has sought to limit the practice over the years as it pollutes the environment and contributes to global warming.

Seeking Revenue

The West African nation is recovering from a contraction of its economy in 2016, the first in 25 years, and is seeking revenue sources to plug a $25 billion infrastructure gap and fund a record 2018 budget presented in December by President Muhammadu Buhari.

The government is also updating the tax law and going after defaulters, with the intention to boost collection and raise the country’s tax-to-GDP ratio, currently at 6 percent and among the lowest in the world.

Nigeria in the past never focused much on tax revenue because of its reliance on oil income that funds most of the government spending, Adeosun said. The OPEC member produced 1.8 million barrels per day in December, according to data compiled by Bloomberg.

Source: https://www.bloomberg.com/news/articles/2018-01-29/gas-flaring-law-error-cost-nigeria-billions-of-dollars

26 Jan

Ramaphosa vows to help “bring water to Cape Town”

While the World Economic Forum comes to an end today, ANC President Cyril Ramaphosa has already left Davos and returned home.

Ramaphosa and team South Africa have been talking to global investors, politicians and the world’s media. While rooting out corruption was the main question, there were also plenty about the situation in Cape Town.

Minister in the Presidency Responsible for Planning, Monitoring and Evaluation, Jeff Radebe said, said one of the government’s key priorities will be infrastructure maintenance regarding water systems in Cape Town.

With day zero now scheduled for April 12, Radebe committed that national government will assist the province and local spheres of government in dealing with the crisis.

“Especially its maintenance, because we have spent a lot of money as the South African government in the past few years, but on the maintenance, there are major challenges which explains why we are having some of the challenges of water in the Western Cape.”

As the current Deputy President of South Africa, Ramaphosa made the international media rounds on Thursday evening. In his interview with CNN’s Christiane Amanpour, he also promised to help Cape Town in every way possible.

“Climate change is the reality… we in South Africa regarding Cape Town are now seeing the real effects of climate change. We’re facing a real, total disaster in Cape Town that will affect four million people. “

“I’m going back home and I’m going to get as many people as possible to put our heads together and see exactly what we should be doing, in the immediate and long-term. But in the immediate term, we have to make sure we bring water to the people of Cape Town without any fail.”

The statement from Ramaphosa comes less than a week after the Department of Water and Sanitation vowed to provide specialist equipment to gain access to the last 10% in the dams, water normally impossible to extract.

Source: https://www.thesouthafrican.com/ramaphosa-water-cape-town/

26 Jan

Central Bank in Africa’s Top Bitcoin Market Warns of ‘Gamble’

The central-bank governor of Nigeria, where bitcoin trading grew the most in Africa last year, said investing in the cryptocurrency is a “gamble” and hinted it may have to be regulated.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Central Bank of Nigeria Governor Godwin Emefiele said in an interview on Wednesday at his office in the capital, Abuja. “We cannot as a central bank give support to situations” where people risk savings to “gamble,” he said.

Emefiele is the latest among regulators globally to express concern about bitcoin, one of the most popular cryptocurrencies, because of high volatility and a perception that it facilitates crime.

In January 2017, the central bank released a circular to lenders asking them not to use, hold, or trade virtual currencies pending “substantive regulation and or decision by the CBN.”

Still, demand for the digital currency is surging in West Africa’s biggest economy, with peer-to-peer transactions rising almost 1,500 percent this year, second only to China, according to data from LocalBitcoins.

A bitcoin wipe-out would generate the biggest losses in Russia, followed by New Zealand and Nigeria, according to a report published by Citigroup Inc. in December.

Bitcoin was little changed at $11,254 by 7:12 a.m in London compared with an intraday high of $19,511 on December 18, according to a composite of prices compiled by Bloomberg.

U.K. Prime Minister Theresa May on Thursday promised to consider clamping down on the cryptocurrency. Central banks in China and Russia have stopped local-exchange trading of bitcoin.

“I have asked my colleagues in the research and monetary-policy department to study the market and get to know what the issues are,” Emefiele said. The central bank may in future “make some very concrete pronouncements as to the direction,” he said, without giving details.

Source: https://www.bloomberg.com/news/articles/2018-01-25/central-bank-in-africa-s-top-bitcoin-market-warns-of-gamble
26 Jan

Zuma- Gupta Ties Under Spotlight in South African Graft Probe

A South African commission of inquiry will investigate whether President Jacob Zuma played any role in the Gupta family’s alleged offer of cabinet posts to people including former Deputy Finance Minister Mcebisi Jonas and other claims that they influenced state decisions.

The inquiry will be guided by the report of the nation’s former Public Protector Thuli Madonsela, according to its terms of reference published in the Government Gazette on Thursday.

She ordered the inquiry into allegations that the Guptas may have influenced cabinet appointments and received special treatment for a coal business linked to the family and one of the president’s sons. Zuma and the Guptas have denied wrongdoing.

Jonas said the Gupta family offered him the position of finance minister, two months before Nhlanhla Nene was removed from the post, sparking a drop in the rand and the nation’s bonds.

Last month, Deputy President Cyril Ramaphosa succeeded Zuma as head of the African National Congress and has pledged to clamp down on corruption in a bid to revive the ruling party’s flagging public support before general elections next year and boost investor confidence in the economy.

Some senior members of the ANC have called for the commission to probe allegations of undue influence over state decisions going back as far as 1994 and beyond, under the former all-white government. The terms of reference may be expanded or amended, according to the proclamation.

Madonsela said in November 2016 that Chief Justice Mogoeng Mogoeng should appoint the head of the inquiry because the president had a conflict of interest.

Zuma said earlier this month he would appoint the commission and abide by a court ruling that Mogoeng must select its leader.

This was after the High Court in December rejected Zuma’s arguments that he alone can set up the commission and ordered him to pay the cost of the case. Zuma accepted Mogoeng’s recommendation that his deputy, Raymond Zondo, head the commission.

The commission must submit its report and recommendations to the president within 180 days of its commencement, according to the gazette.

Source: https://www.bloomberg.com/news/articles/2018-01-25/zuma-gupta-ties-under-spotlight-in-south-african-graft-probe