February 2018 - African Financial & Economic Data

28 Feb

Namibia to Ready Black-Ownership Law by Year-End, President Says

Namibia will table laws to better distribute wealth among its citizens, most of whom are black, by the end of the year, despite resistance from businesses.

The government of the southwest African nation that’s among the world’s most economically unequal is in the final leg of consultations on the National Equitable Economic Empowerment Framework that will make it mandatory for white-owned businesses to sell a 25 percent stake to blacks, President Hage Geingob told reporters Tuesday in the capital, Windhoek.

“We have to address the underlying structural impediments which make it difficult, if not impossible, for Namibians to effectively participate in the economy,” Geingob said.

The bill outlines six areas to increase black citizens’ participation in business, including developing people’s skills and providing financing for those disadvantaged by inequality to buy stakes in companies.

While only about 6 percent of Namibia’s 2.5 million citizens are white, they own most enterprises. That’s a legacy of white-minority rule South Africa imposed when it controlled Namibia from World War I to 1990, with black people being disenfranchised and displaced.

The Namibia Chamber of Commerce and Industry wants the focus on economic ownership scrapped, saying it will result in capital flight.

South Africa has a similar policy; critics say it has failed to redress inequalities because it focuses on increasing black ownership of companies rather than raising education standards to match a skills shortage.

Namibia will draw comparative experiences from South Africa, but its legislation will be unique, Geingob said.

Source: https://www.bloomberg.com/news/articles/2018-02-27/namibia-to-ready-black-ownership-law-by-year-end-president-says

28 Feb

Ivory Coast Lost 125,000 Tons of Cocoa to Smuggling

Ivory Coast lost an estimated 125,000 metric tons of cocoa this season through the smuggling of beans to neighbouring countries where farmers and traders are paid better prices, according to two people familiar with the matter.

The industry regulator of the world’s biggest cocoa producer estimates that the country lost as much as 100,000 tons through its eastern border with Ghana and another 25,000 tons through the western boundary with Liberia and Guinea, said one of the people, who asked not to be identified because the information isn’t public.

One of the biggest cocoa buyers in the country made a similar forecast, said a second person.

The estimates were calculated by subtracting the border regions’ port deliveries from the average of previous harvests.

The total is the equivalent of 9.2 percent of arrivals since the beginning of the season in October through Feb. 25, according to government data.

Mariam Dagnogo, a spokeswoman for Le Conseil du Cafe-Cacao, the regulator, didn’t answer calls seeking comment.

Ivory Coast is struggling to contain cocoa smuggling this season after the country lowered the minimum price for farmers by more than a third to the equivalent of $1,314 per ton as international contract prices declined.

The change opened an unusual payment gap with Ghana, the second largest cocoa producer, which left its minimum producer price unchanged at the equivalent of $1,700 per ton.

The government and regulator will review border security ahead of the smaller
of the two annual harvests which begin in April, said one of the people.

Source: https://www.bloomberg.com/news/articles/2018-02-27/ivory-coast-is-said-to-lose-125-000-tons-of-cocoa-to-smuggling

27 Feb

Congo Forces Kill Two Protesters in Anti-Kabila March

A group of Catholic activists, the Lay Coordination Committee, organized the protest against President Joseph Kabila’s continuing rule of the central African nation. It was the third rally they’ve organized since Dec. 31, and all have turned deadly.

On Sunday, police and soldiers surrounded places of worship, discouraging attendance and preventing protesters from marching from their churches after services.

Security forces killed one person in the capital, Kinshasa, and another in the western city of Mbandaka, according to the UN statement, while more than 100 were arrested nationwide. Police spokesman Pierrot Mwanamputu told the state-owned television station no one was killed.

Activist and university professor Rossy Mukendi was shot dead in Kinshasa, according to Ida Sawyer, Central Africa director for Human Rights Watch.

“Security forces shot him in the thorax just outside Saint Benoit church in Kinshasa’s Lembe neighborhood, as protesters were ready to start the march after Sunday mass,” she said. Two others received gun wounds in the Masina district, while two more were badly beaten in the Kingasani district, Sawyer said.

Kabila, who has led Africa’s biggest copper producer since 2001, was to step down at the end of his second term in December 2016 after an election to find his successor.

That vote was delayed and Kabila remained in office, sparking protests in which dozens of people were killed by security forces. Congo, which gained independence from Belgium almost six decades ago, has never had a peaceful transfer of power.

In November, the electoral commission published a plan for presidential and parliamentary polls on Dec. 23, 2018, but opposition parties, which back the marches, are split on whether to support or reject the calendar.

To read the full article, click here.

27 Feb

Ivory Coast Cocoa Farmers Get Relief as Rains Return Early

Cocoa farmers in Ivory Coast, the world’s top producer, got some welcome relief in the past week with higher-than-normal rainfall across the main growing regions.

It rained heavily on Wednesday night for more than six hours, said Robert Glaou, a farmer in the western town of Bangolo. Harmattan conditions have ended, he said, referring to winds from the Sahara that bring dry weather and coolness to West Africa from December to February.

“The weather is currently very good,” said Narcisse Konan, the head of a cooperative in southwest Ivory Coast. “There were small pods on the trees and we needed some rain to make them stronger.” The Harmattan overall was very mild this year, he said.

Ivory Coast is nearing the end of its main crop, the larger of two cocoa harvests that runs from October to March. The rain will help development of the smaller mid-crop, although wet weather tends to slow harvesting.

Satellite imagery from the U.S. Climate Prediction Center for Feb. 18 to 24 suggests well-above-average rainfall across Ivory Coast, as well as the biggest-producing regions of neighboring Ghana, the No. 2 grower.

“It has been raining in the area for several days,” said Jeannot Assi, a farmer in the southern town of Alepe, in Ivory Coast. “We are now seeing flowers and small pods” on the trees.

There has also been heavy rain in Tiebissou, in the center of Ivory Coast, that will allow the trees to bloom, said farmer Moussa Kouassi. Growers have begun maintenance work for the mid-crop harvest, he said.

While the weather has improved, harvesting volumes have decreased as the main crop peters out and farmers in the west and southwest said they’ve seen bean size and quality deteriorate.

“The beans are small,” said Vincent Zadi, a farmer in Grand Zatry, in the southwest. More rains are needed to help the cocoa trees to bloom and produce small pods, he said.

To read the full article, click here.

27 Feb

Nhlanhla Nene Makes Comeback as South African Finance Chief

South Africa’s new president, Cyril Ramaphosa, made sweeping changes to the cabinet, bringing Nhlanhla Nene back as finance minister more than two years after his late-night firing rocked the rand.

The reshuffle announced Monday by Ramaphosa in the capital, Pretoria, marked a dramatic comeback for Nene, who was dismissed by former President Jacob Zuma in December 2015. David Mabuza, the deputy leader of the African National Congress, will become deputy president.

The shakeup came 11 days after Ramaphosa was elected president in place of Zuma, who was forced to resign under pressure from the ANC.

“These changes are intended to ensure that national government is better equipped to implement the mandate of this administration,” Ramaphosa said. “I have been conscious of the need to balance continuity and stability with the need for renewal, economic recovery and accelerated transformation.”

Nene served as deputy finance minister before taking over the post of finance chief from Pravin Gordhan in 2014 and won the respect of investors before his firing. Since then he’s taken up a position on the board of fund manager Allan Gray, become an adviser to Thebe Investment and served as temporary head of the University of Witwatersrand’s Business School.

Nene will spearhead efforts to revive an economy that only grew about 1 percent last year, drive down a 27 percent unemployment rate and rebuild investor confidence that was badly damaged during Zuma’s scandal-marred nine-year tenure.

“It’s quite a tall order,” Nene said by phone after the announcement. “I feel it’s time we all rolled up our sleeves, and I trust that the collective is going to give one the required support.”

The rand gained as much as 0.8 percent against the dollar on reports Nene was to be appointed, before trimming its advance. It was little changed at 11.5670 per dollar by 9:50 a.m. in Johannesburg on Tuesday. Yields on rand government bonds due in 2026 rose one basis point to 8.03 percent.

To read the full article, click here.

26 Feb

Deal Wizard of South African Gold Mining Is Scaring Investors

Investors might be running out of patience with Sibanye Gold Ltd.’s colorful chief executive, Neal Froneman.

The South African miner’s stock plunged by a record 16 percent Thursday after the company warned it may consider selling assets, metals streams and — only as a last resort — new shares, if the recent strength in the rand persists.

Sibanye is under pressure to reduce debt after a rapid-fire series of deals that transformed the company from a staid and steady gold producer to a diversified precious-metals miner with both southern African and U.S. assets.

The company’s net debt is 2.6 times underlying earnings and almost as high as its current market value.

So far, investors have given Froneman, an industry veteran who earned himself the the nickname ‘Mr Fix-It’ for turnaround successes in the 1990s, the benefit of the doubt. But Thursday’s plunge suggests that might not continue forever.

“The biggest issue here is there is too much debt,” said Arnold van Graan, an analyst at Nedcor Securities. “We are seeing a lot of balance sheet risk building up if the rand-gold price stays where it is.”

South Africa’s rand has gained about 20 percent versus the dollar in the past three months, as investor optimism builds following leadership changes in the ruling party and President Cyril Ramaphosa’s appointment. Gold priced in rand has declined by about 14 percent in the same period.

Gold and platinum-group metals are sold in U.S. dollars, and while the majority of Sibanye’s gold and a substantial amount of the group’s costs are denominated in rand, its results and financial condition are affected if there is a material change in the value of the rand.

Sibanye gained 1 percent in Johannesburg Friday. The plunge in the company’s share price was overdone and it is still generating free cash flow, Morgan Stanley analysts said in a note. But the company’s debt level could present a challenge if the rand keeps strengthening.

To read the full article, click here.

26 Feb

‘It’s Like 1994 Again’: South African CEOs Hail Ramaphosa Win

South African company heads cheered the start of Cyril Ramaphosa’s presidency, saying that business and consumer confidence were sure to improve following the departure of scandal-hit Jacob Zuma.

The result should be economic growth and even job creation, while various stagnating business-friendly policy initiatives could be revived. Further downgrades to the country’s debt may also be avoided.

Below is a selection of quotes taken from interviews with chief executive officers as their companies reported full- or half-year financial results.

South Africa’s largest clothing and food retailer caters for customers in the higher income bracket in its home market and in Australia.

“We’ve gone from looking down to looking up. It’s incredibly positive. It will make a big difference in terms of consumer sentiment. We’re talking about greater GDP growth, we’re talking about fiscal responsibility, we’re talking about corruption being under control. It’s all the right things. It’s everything we wanted and I think our customer is going to respond well.”

Referring to last week’s Budget, which included the first rise in VAT since the end of apartheid:

“Yes, VAT has increased and it was a tough budget. But the good thing was that it was a fiscally responsible budget. Our customers are going to feel better about a fiscally responsible budget and the lower threat of credit downgrades coming back than they are about an increase of 1 percent on VAT.” Mark Lamberti, Imperial Holdings Ltd.

South Africa’s sixth-largest company by sales has a global transportation operation and is planning to spin off its African car rental and retail business later this year.

“If the President delivers on the kinds of things he spoke about in the state of nation address — and I have no reason to believe he won’t over time — I think you will see a level of regulatory certainty that we never had before, which makes it easier to make an investment decision.

To read the full article, click here.

23 Feb

South Africa Minister Brown `Inadvertently’ Misled Lawmakers

South Africa’s anti-graft ombudsman has found Public Enterprises Minister Lynne Brown inadvertently misled parliament about contracts that existed between the state-owned power utility and a company linked to the Gupta family, and has given President Cyril Ramaphosa 14 days to take action.

“By inadvertently misleading parliament, Minister Brown violated” the executive ethics code, Public Protector Busisiwe Mkhwebane said in a report posted online.

In June last year, the anti-graft ombudsman started a probe into Brown after website amaBhungane reported power producer Eskom Holdings SOC Ltd. paid Trillian Capital Partners Pty Ltd. 266 million rand ($22 million) in fees even though the existence of a contract had been denied.

Trillian, a financial-services firm, is linked to the Gupta family through business associate Salim Essa, who was its principal shareholder until he sold out in July.

According to the information the minister received from Eskom, no payments were made, “but it subsequently emerged that Eskom had indeed made payments to Trillian,” the Department of Public Enterprises said in a statement on Thursday.

“When I became aware that senior Eskom officials deliberately misled me, I immediately informed parliament’s ethics committee and the Public Protector of the false information,” Brown said in the statement.

“I instructed Eskom’s board to take disciplinary action against those who conspired to mislead me, parliament and the country,” she said. “After the Eskom, Trillian incident I instructed the department to strengthen oversight mechanisms to avoid a repeat,” said Brown.

Ajay, Atul and Rajesh Gupta have been accused of using a friendship with former President Jacob Zuma and a business relationship with his son Duduzane to try and influence cabinet appointments and secure lucrative state contracts.

None of the siblings appears to be in South Africa and while the state has moved to prosecute Gupta associates in the days since Zuma was ousted, it’s unclear how the country will recover the billions of rand that are allegedly missing. Zuma and the Guptas have denied wrongdoing.

Source: https://www.bloomberg.com/news/articles/2018-02-23/s-african-minister-lynne-brown-accused-of-misleading-lawmakers

23 Feb

Congo Bribery Probe Puts Israeli Billionaire’s Future on Hold

A 20-year friendship that helped turn Dan Gertler into a billionaire has left the Israeli businessman with a lot fewer places to go.

The U.S. government accused Gertler of corrupt mining and oil deals in the Democratic Republic of Congo and said he acted as a middle-man to enrich his longtime buddy, President Joseph Kabila.

The two have been close since Gertler arrived as a young diamond merchant during a civil war in 1997, and Congo — one of Africa’s poorest countries — is the main source of his wealth.

“Most of my business is in the Congo and my faith is in the Congo,” Gertler, 44, said in a rare interview on Dec. 21, just hours before the U.S. government imposed economic sanctions against him.

At the time, he remained defiantly optimistic about his businesses even as he was being singled out by American and British investigators conducting prolonged bribery and corruption probes related to some of his Congo deals.

“I am a strong believer in the future of the Congo,” he said. But doing anything inside and out of Africa has gotten a lot harder for him in the past two months.

Sanctions have shut Gertler out of the American financial system, halting access to the dollars that are the main currency used in Congo and in global raw-material deals. U.S. companies are banned from doing business with him. Former partners are distancing themselves.

“All our payments have ceased forthwith,” said Mark Bristow, the chief executive officer of Randgold Resources Ltd., which has a gold exploration project with Gertler’s Fleurette Group in northeast Congo. “We’ve got U.S. directors, and we are listed on the Nasdaq. We cannot entertain doing business and transacting in any form.”

To be sure, Congo’s government stands by Gertler, who still holds mineral and oil rights in the country and funds education and health centers.

To read the full article, click here.

23 Feb

Ghana Risks the Anger of 800,000 Cocoa Farmers

The government of President Nana Akufo-Addo in Ghana will struggle to sidestep one of its most difficult decisions since coming to power a year ago: telling a crucial constituency to accept a pay cut.

The New Patriotic Party-led government has little choice but to end subsidies for its 800,000 farmers that will likely cost almost $450 million this season.

Ghana Cocoa Board, the industry regulator in the world’s second-biggest producer, is running out of cash with few options for funding left other than to sell short-term debt to local investors at rates as high as 22 percent.

Justifying a decision to end the support will be tricky. The NPP swept to power in the December 2016 polls after pledging to invest in farms and increase prices.

Farmers are unimpressed with the prospect of the government going back on its promises even though international prices have slumped by more than a third since the middle of 2016.

“If the government cannot afford to pay for its own loose talking, then it must borrow,” said Michael Acheampong, 37, a cocoa farmer in Kwabeng, about 120 kilometers (75 miles) northwest of the capital, Accra. “To announce a cut after promising to help us is a sacrilegious crime. We will not accept that.”

Ghana has little room to support prices even if rising output from new oil fields are supporting an economic revival.

While the World Bank forecasts that the economy will expand by 8.3 percent in 2018, the fastest rate in Africa, the country remains bound by conditions for disciplined spending that are attached to an almost $1 billion bailout from the International Monetary Fund, agreed to in April 2015.

Ghana Cocoa Board is losing the equivalent of about $600 for every metric ton of the 850,000 tons that it plans to purchase this season until September, the regulator said earlier this month.

To read the full article, click here.