Monthly Archives: March 2018

28 Mar

Nigeria’s Sahara Revives IPO as It looks to Pump More Oil

Nigerian energy conglomerate Sahara Group Ltd. said it revived plans for a share-sale as it looks to increase oil production four-fold to 100,000 barrels per day.

Lagos-based Sahara mulled an initial public offering in the Nigerian commercial capital and London in 2015, before falling crude prices forced it to backtrack.

“The IPO is now back on the table,” Tonye Cole, Sahara’s executive director and co-founder, said in an interview in Kigali, Rwanda. “After we made the announcement then, the entire market crashed, oil prices went down, and so we put the plans on hold.”

Cole didn’t provide a timeframe or say how much he wanted to raise. In 2015, he said he would look to sell as much as 25 percent of Sahara for $600 million.

Read the full article @Bloomberg

 

22 Mar

Smugglers Cheer as Nigeria Tries to Keep Foreign Rice at Bay

At Nigeria’s normally manic border post of Seme, Lasisi Fanu says business has all but ground to a halt.

He and other customs agents who help clear goods coming into Africa’s biggest economy from its smaller neighbour Benin say the long lines of trucks loaded with rice that used to jam the crossing have eased.

The slowdown is a result of import restrictions and tighter border policing as President Muhammad Buhari seeks to diversify the oil-dependent economy by boosting agriculture, especially rice production.

Two years ago, Buhari set 2018 as a target to end Nigeria’s status as the world’s second-largest importer of the grain after China and become self-sufficient.

He’s since overseen investments of almost $1 billion in farming and milling, virtually banned rice importers from buying foreign exchange, raised tariffs to as high as 60 percent and pushed the central bank to lend to farmers. Confident that his administration is making progress, he told rice growers this month that “our policies are working.”

But the numbers tell a different story: they suggest smuggling is rife because local producers are struggling to meet growing demand in Nigeria, whose 180 million people mix rice with tomatoes and spices to create jollof, practically a national dish.

Nigeria grew 3.7 million metric tons of rice in 2017, a 4 percent increase from a year earlier, according to the U.S. Department of Agriculture. At the same time, imports rose 19 percent to 2.5 million tons, the USDA said.

Most imports are smuggled in from Benin, which despite a population of 11 million — barely 5 percent of Nigeria’s population — is now the world’s biggest buyer of rice from Thailand, the number two exporter globally.

Official shipments to Nigeria plummeted by more than 95 percent in the past four years, while those to Benin have surged, according to the Thai Rice Exporters Association.

“This is Nigeria and people are cutting corners,” said Fanu, the customs agent. “They bring in the rice through the many unofficial border crossings further north. The government knows it. It’s very difficult to police.”

Source: https://www.bloomberg.com/news/articles/2018-03-21/smugglers-run-riot-as-nigeria-tries-to-keep-foreign-rice-at-bay

21 Mar

Mozambique to Face Off With Bondholders as Debt Talks Start

Mozambique is set to meet foreign creditors to discuss almost $2 billion of debt in London Tuesday in what will mark the start of formal restructuring negotiations, more than a year after the southern African nation defaulted.

Investors including Credit Suisse Group AG and UBS Group AG have little idea what will be discussed. Mozambique first missed coupon payments on its $727 million Eurobond due 2023 in January last year and has had almost no contact with the holders since then.

“We don’t really have any set expectations,” said Phillip Blackwood, managing director at EM Quest Ltd., which advises Sydbank A/S on its emerging-market assets, including Mozambican bonds. “There are many possibilities,” from Mozambique saying it can’t restart servicing external debts for several years to it resuming coupon payments, he said.

Blackwood will be among those attending a presentation by officials including Finance Minister Adriano Maleiane from 2 p.m. at the offices of law firm White & Case, which is advising Mozambique, the only country aside from Venezuela currently in default on a Eurobond.

Lazard Freres SAS, an investment bank also advising the government, has only said that creditors will be updated on recent fiscal and macroeconomic developments and will also hear “the key elements of debt-restructuring proposals.”

Despite the default, the bonds have soared, with money managers betting that Mozambique’s commencement of liquefied natural gas exports around 2023 will boost one of the world’s poorest economies.

The securities have made a price return — which excludes coupon payments — of almost 30 percent in the past year, the most among sovereign debt in emerging markets, according to data compiled by Bloomberg.

The Eurobonds fell for a third-day on Tuesday, trading 0.4 percent lower at 84.8 cents on the dollar.

The presentation comes after the International Monetary Fund’s debt sustainability analysis this month, which painted a bleak picture of Mozambique’s economy and finances, suggesting it may not be in a position to start paying investors again until LNG production begins.

To read the full article, click here.

21 Mar

South African Inflation Dips Deeper Below Midpoint of Target Range

South Africa’s inflation rate fell further below the midpoint of the target range in February, giving the central bank another reason to consider easing monetary policy next week.

Inflation slowed to 4 percent, the lowest level in almost three years, from 4.4 percent in January, Pretoria-based Statistics South Africa said Tuesday in a report on its website. The median estimate of 21 economists in a Bloomberg survey was 4.1 percent. Prices rose 0.8 percent in the month.

February’s data marks the eleventh consecutive month of price growth within the Reserve Bank’s target range of 3 percent to 6 percent, the longest run since 2015.

The Monetary Policy Committee, which was increased to seven members last month with the appointment of Fundi Tshazibana to the panel, will announce whether it’s changing its benchmark lending rate next week Wednesday.

An unchanged stance would mark the fourth straight meeting in which the rate is held at 6.75 percent.

“Some of the more hawkish members of the committee are likely to move onto the dovish side next week,” Jeffrey Schultz, a senior economist at BNP Paribas said by phone in Johannesburg. “As a result we think that there is scope for the SARB to cut by 25 basis points.”

The central bank expects inflation to remain within the government’s target band until at least the end of 2019.

South Africa’s rand was one of the most volatile currencies tracked by Bloomberg last year and has gained about 9 percent versus the dollar since Cyril Ramaphosa was elected to lead the ruling African National Congress after President Jacob Zuma’s tenure came to an end in December.

Core inflation, which excludes the prices of food, non-alcoholic beverages, energy and gasoline, was steady at a six-year low of 4.1 percent in February.

Traders are now pricing in a 25 basis point cut at the May MPC meeting. Forward-rate agreements starting in three months dropped two basis points to 6.87 percent, or 26 points below the benchmark Johannesburg Interbank Agreed rate.

To read the full article, click here.

20 Mar

South African Tax Agency Head to Face Hearing After Suspension

South African tax collection agency boss Tom Moyane was suspended and will face disciplinary proceedings as newly elected President Cyril Ramaphosa’s administration moved to restore trust in the institution.

The ouster was Ramaphosa’s latest step to replace Jacob Zuma appointees in the government since taking over the presidency last month after his predecessor was forced to step down by the ruling party.

He’s also removed the board of the state power utility, which is laden with debt and has been implicated in a graft scandal.

Mcebisi Jonas, a former deputy finance minister, is being considered for the post, but it’s unclear whether he would accept it, according to two people familiar with the situation, who spoke on condition of anonymity.

Jonas couldn’t immediately be reached for comment and the National Treasury, which oversees the tax agency, didn’t respond to an emailed request for comment.

The decision to suspend Moyane as commissioner of the South African Revenue Service came on Monday after he refused to resign during a meeting with Ramaphosa, the Presidency said in a statement.

Ramaphosa said in a letter to Moyane that under his leadership there had been a deterioration in public confidence in the agency and that public finances had been “compromised.”

“For the sake of the country and the economy, this situation cannot be allowed to continue, or to worsen,” the president said in the letter.

As the events of the past few days unfolded, Moyane threatened to seek a court interdict to stop plans to remove him from his position, according to two people familiar with the matter.

Mark Kingon has been appointed acting commissioner, the National Treasury said in an emailed statement on Tuesday. Kingon, who has been with SARS since its establishment, was the interim head of the revenue body’s business and individual taxes unit, it said.

To read the full article, click here.

20 Mar

Moti Doubles Zimbabwe Investments as Economy Seen Opening Up

Moti Group is preparing to double its investments in Zimbabwe to $500 million after the removal of Robert Mugabe as president in November saw the government adopt a more open approach to foreign companies.

Emmerson Mnangagwa, 75, who replaced Mugabe after the military briefly took control, has declared that “Zimbabwe is open for business” and has said he will ease the country’s local ownership rules and re-engage lenders such as the International Monetary Fund.

He is faced with an economy that has halved in size since 2000, a cash crisis that limits withdrawals from banks and an inability to pay government workers on time.

In partnership with Sakunda Holdings, a Zimbabwean company whose head Kudakwashe Tagwirei is linked to the ruling party, Johannesburg-based Moti plans to spend $250 million over the next four years in projects ranging from chrome-ore mining to fertilizer, diamond polishing and pharmaceuticals. The group has already invested about $250 million to date, mainly in mining.

The company wants to invest before elections scheduled for later this year after which more investors may come into the country and cause asset prices to rise, Zunaid Moti, the company’s 43-year-old chairman, said in an interview. The plans would make Moti one of the biggest investors in Zimbabwe.

“This is yesterday, that’s tomorrow,” Moti said, as he smoked a cigar in his Johannesburg office and compared mining potential in his home base of South Africa to that of Zimbabwe. “It’s virgin.”

Moti Group has also been approached by private-equity firm Carlyle Group to look at investment opportunities in the southern African country, he said. Carlyle declined to comment.

Moti Group has recently taken on British politician Peter Hain as an adviser to connect the company to “the right people in Europe, and more specifically in the U.K. when needed,” said Moti, who is considering selling as much as 25 percent of his business to selected investors at a later stage.

To read the full article, click here.

19 Mar

Milost Plans $1 Billion Investment in Nigerian Bank

Milost Global Inc. is looking to inject as much as $1 billion to recapitalize Nigeria’s Unity Bank Plc, which is struggling to build buffers after a slowdown in Africa’s biggest economy, according to two people familiar with the matter.

New York-based Milost offered to invest $700 million in equity and $300 million in five-year bonds that can be converted into shares in the Nigerian lender, said one of the people, who asked not to be identified as talks are confidential.

The private-equity firm will get an initial stake of about 30 percent in the Lagos-based bank in exchange for its first equity investment of $250 million, the person said.

The transaction is still subject to a due diligence as well as regulatory approvals, the people said. The first part of the deal may be completed in the second quarter, one of the people said.

The rest of the cash will be drawn down in intervals over a period of four years, provided Unity Bank has sufficient shares to issue to Milost, one of the people said.

Some small- and mid-sized Nigerian lenders are battling to rebuild capital levels after a slump in oil prices triggered a foreign-currency shortage and a contraction in the country’s economy in 2016 made it difficult for businesses to repay loans.

Unity Bank, which was formed out of the merger of nine banks between December 2005 and March 2006, said in April last year that it is in talks to sell its non-performing loans to avoid penalties after missing a deadline set by regulators on its recapitalization plans.

An investment in Unity Bank will be Milost’s third in a publicly traded Nigerian company since it agreed to pump $350 million into oil-services company Japaul Oil & Maritime Services Plc in February and to provide a $250 million financing facility to Resort Savings & Loans Plc. Several calls to the numbers listed on Milost’s website have gone unanswered.

To read the full article, click here.

19 Mar

Congo Tamps Down Miners’ Expectations of Concessions on New Code

Miners operating in the Democratic Republic of Congo won’t secure substantial concessions in talks with the state about changes to the industry code, a senior mining official said.

Mining companies including Glencore Plc and Randgold Resources Ltd. are pressing the government to row back on some of the reforms President Joseph Kabila signed into law this month.

The modifications will raise taxes and other costs for operators in Congo, Africa’s top copper producer and the world’s main source of cobalt.

“There can be no renegotiation on any point once the code has been promulgated,” Albert Yuma, chairman of state-owned mining company Gecamines, said in an emailed response to questions on March 17.

Kabila met top executives from major foreign investors on March 7 to discuss their objections to the new law, which was approved by parliament in January.

The president signed the code March 9, but assured miners that “their worries will be taken into account” in talks with the government. Representatives of Glencore, Randgold, China Molybdenum Co., Ivanhoe Mines Ltd., MMG Ltd., Zijin Mining Group Co. and AngloGold Ashanti Ltd. attended the meeting.

The revised code removed a measure protecting mining-license holders from complying with changes to the fiscal and customs regime for 10 years. That means all mines face higher royalty payments and new taxes.

The new law also introduces a 50 percent tax on so-called super profits and hikes royalty rates on metals including copper, cobalt and gold. It also allows the government to raise royalty payments on cobalt five-fold to 10 percent if it opts to categorize the mineral as a “strategic substance.”

“The taxes and royalties to be paid have been fixed in the code by law,” said Yuma, who participated in the March 7 meeting. “No one can any longer change or remove them, or create new ones.”

The companies that met Kabila sent a team to the Congolese capital, Kinshasa, ahead of the talks with the Mining Ministry, according to a joint statement on March 15.

 

19 Mar

Zuma’s Trial Carries Peril for South Africa’s Ruling Party

Former South African President Jacob Zuma’s prosecution for graft appears at first glance to be a victory for the anti-corruption campaign of the nation’s new leader, Cyril Ramaphosa. Yet it also carries risks for his ruling African National Congress.

Not only will a drawn-out trial be a constant reminder to voters that he was enmeshed in scandal for most of the nine years he led South Africa — it raises uncomfortable questions about why the ANC, parliament and prosecutors failed to take action against him before. The case also threatens to further divide the party.

A wily political fighter, Zuma, 75, may seek to use the case to energize his supporters as payback for the ANC’s decision to force him to resign as the nation’s president last month. And the trial will take place in his home area, KwaZulu-Natal, where the party has its biggest membership and remains badly split a year before general elections.

“He will try by all means to garner support as he goes to court,’’ said Ralph Mathekga, an independent political analyst based in Johannesburg. “Jacob Zuma is a very manipulative leader. It will be very difficult for Ramaphosa to justify the presence of the ANC members who will be supporting Jacob Zuma in court. The ANC could do without this.”

Zuma may also try to delay going to trial as long as possible. His legal team is considering a bid to seek a review of the National Director of Public Prosecutions’ decision to pursue the case, which was dropped nine years ago in what a court ruling described as an “irrational’’ decision.

“In the circumstances, the likely course of action would be to take the announcement of the NDPP on review,’’ his lawyer, Michael Hulley, said in a text message on Saturday. “The decision will, however, only be made after careful consideration and consultation with Mr. Zuma.’’

To read the full article, click here.

16 Mar

What’s Behind the Deadliest Outbreak of Listeriosis

South Africa is struggling to contain a deadly outbreak of listeriosis that’s been declared the world’s worst on record.

More than 900 people were infected over 14 months before the government identified a meat-processing factory owned by Tiger Brands Ltd., the continent’s biggest packaged-food company, as the source.

With at least 183 dead — many of them infants and children — manufacturers have issued mass recalls for ready-to-eat sausages and other meat products singled out by officials as potentially dangerous.

The disease is caused by high numbers of Listeria monocytogenes, a bacterium found in soil, water, plants and animal feces, which usually spreads to humans through contaminated food.

Cooking kills listeria, but it can multiply in the refrigerator. High-risk foods include deli meat, soft cheeses and cold-smoked fish — really, anything that can sit in a refrigerator for a long time and is eaten without further cooking.

Symptoms of listeriosis include fever, muscle pain and a stiff neck. While there are two types of the disease, the one to worry about is invasive listeriosis. It’s treatable if diagnosed early.

Nearly 1,000 cases have been identified since the start of 2017. However, the figures could be higher because health workers weren’t required to report cases until December last year, after the outbreak was confirmed.

According to Health Minister Aaron Motsoaledi, investigations started in earnest after doctors from two hospitals alerted the National Institute of Communicable Diseases to unusually high numbers of babies with listeriosis in July 2017.

The institute spent the following months gathering and analyzing data from across the country. The data showed that the outbreak started in June. A strain of listeria known as sequence-type six, or ST6, was identified as the driver of the outbreak.

The outbreak has been linked to a factory in the northeastern city of Polokwane owned by Tiger Brands’s Enterprise unit, after samples of ST6 were found at the facility. One of the likely culprits is a South African product called polony — a cheap and highly processed meat product that’s popular in lower-income households.

To read the full article, click here.