19 Jan

South Africa Holds Rate as Rand, Inflation Risks Persist

The South African Reserve Bank kept its benchmark lending rate unchanged for a third consecutive meeting as the risks of a credit-rating downgrade persist, muddying the outlook for the rand and inflation.

The central bank’s Monetary Policy Committee maintained the repurchase rate at 6.75 percent Thursday, in line with the estimates by all but seven of the 20 economists surveyed by Bloomberg.

The bank cut the rate for the first time in five years in July to support an economy that entered its second recession in almost a decade in the first quarter of 2017 and has struggled to mount a strong recovery.

Inflation has been inside the target band for eight months and the rand — among the world’s most-volatile currencies — has strengthened since the ruling party elected Deputy President Cyril Ramaphosa as its new leader in December, spurring hope that policy uncertainty and political turbulence will dissipate.

“We do see an improved inflation and growth outlook thanks to a stronger performance in the currency but a lot of risk factors still exist, both on the political front as well as on the credit-ratings front,” said Jeffrey Schultz, BNP Paribas’s senior economist.

S&P Global Ratings and Fitch Ratings Ltd. cut the country’s debt to junk in 2017, and a reduction of rand bonds by Moody’s Investors Service could trigger an exclusion of the country’s rand debt from Citigroup Inc.’s World Government Bond Index.

The effect of this on rand bond yields “could be significant, but the extent to which a universal downgrade is already priced in remains unclear,” Governor Lesetja Kganyago told reporters in the capital, Pretoria. The government’s challenge is to “find ways to finance the deficit in a growth-positive manner, and at the same time convey a credible commitment to structural reforms.”

The bank expects inflation to remain within the target band of 3 percent to 6 percent until at least the end of 2019, reaching a low of 4.4 percent in the first quarter of this year.

To read the full article, click here.

19 Jan

Nigeria Moves Closer to Energy Overhaul With New Oil Bill

Nigeria’s House of Representatives passed a bill governing the country’s energy sector after the Senate did so in May, taking Africa’s top oil producer one step closer to a much-awaited overhaul of the key industry.

The Petroleum Industry Governance Bill now awaits President Muhammadu Buhari’s signing to become law.

The bill will “promote openness and transparency in the industry by clarifying the rules, processes, and procedures that govern the oil and gas sector,” Senate President Bukola Saraki said in a statement Thursday.

“After nearly two decades of back-and-forth, near-misses and ‘near-passages’, the 8th National Assembly finally reached a milestone.”

Delays in passing the new laws created a climate of uncertainty that has cost the country as much as $15 billion a year in lost investment, the Petroleum Ministry has said.

Lawmakers still need to pass two more pieces of legislation to complete an overhaul that will replace current laws. One focuses on new oil taxes and the other seeks to address longstanding grievances by oil-producing communities in the Niger River delta.

Saraki promised to pass those “very soon.” He said in June that the two related bills would be enacted by last month.

Nigeria holds an average 55 percent stake in joint ventures run by Royal Dutch Shell Plc, Exxon Mobil Corp, Chevron Corp., Total SA and Eni SpA. These account for more than 80 percent of total oil production, which generates at least two-thirds of government revenue.

The West African country pumped 1.68 million barrels of crude per day in December, according to its oil ministry, and is yet to reach full capacity of 2.2 million daily following disruptions caused by militant attacks from 2016.

Source: https://www.bloomberg.com/news/articles/2018-01-18/south-africa-holds-rate-as-downgrade-inflation-risks-persist

18 Jan

Lourenco Proves He’s No One’s Puppet in Angola

Shortly after becoming president of Angola in September, Joao Lourenco did something completely unexpected: he stopped at a red light.

The incident prompted thousands of social-media users to praise the 63-year-old former army general for abiding by the law.

In October, Lourenco waited in line at a KFC restaurant to buy a burger, and then this month, photos surfaced of him and his wife Ana Dias strolling on a beach in the capital, Luanda.

Few predicted the sharp contrast in leadership style with his predecessor, Jose Eduardo dos Santos, who rarely left the pink presidential palace from where he ruled Africa’s second-biggest oil producer for almost four decades.

When he did emerge, hundreds of soldiers swarmed the city center to allow his convoy to move swiftly through the pot-holed streets, leaving traffic paralyzed for hours.

“He’s been a very positive surprise,” said Soren Kirk Jensen, an independent Angola expert. “There’s been a profound change of style, from a completely closed style to a completely open one.

More importantly, he’s initiated much-needed economic reforms by addressing dysfunctionalities in the way the market works due to unnatural monopolies that happened to be controlled by certain families.”

When Lourenco won nomination as the candidate of the ruling Popular Movement for the Liberation of Angola last year, analysts discounted a policy shift, saying his power would be limited by the party and the Dos Santos family and its allies.

Lourenco’s decision to reappoint 13 out of 18 provincial governors he had inherited from Dos Santos just two days into his new job seemed to confirm that suspicion.

Corruption Fight

But in a state of the union speech on Oct. 16, Lourenco stressed that he was serious about campaign promises to fight corruption and end state-run monopolies in a country that ranks among the world’s 20 most corrupt, according to Berlin-based Transparency International.

The first high-profile official to be removed was central bank Governor Valter Filipe, a lawyer Dos Santos appointed the previous year.

To read the full article, click here.

17 Jan

Cape Town’s day zero moves forward again, less than 100 days until taps shut off

Patricia de Lille confirmed that day zero will now happen earlier than predicted, on April 21 2018. This means that just 95 days remain until the taps are shut off.

The news comes after a spike in water usage hit the municipality. After a positive week previously, consumption has jumped from an average of 578 million litres per day to 618 million litres per day.

A heatwave doesn’t exactly help the situation (nor does fighting with your own government), but de Lille also pointed out that less residents are meeting the usage targets of 87 litres per day, per person. Just 39% of citizens kept within their limits, a slump of 15% from seven days ago.

The Mayor issued a rallying call for the City, and assured inhabitants that everything possible is being to help avert the taps being turned off. However, Capetonians must keep saving water:

“Today I want to call on all Capetonians to do more to save water. There are only 95 days left before we reach Day Zero.”

“Day Zero has moved a day closer this week to 21 April 2018. Day Zero is when the City will be forced to turn off most of the taps and every resident will have to queue for 25 litres of water per day.”

The only way Cape Town can avoid Day Zero is if every single resident saves water. But this is not the case. For each day that Cape Town uses more than 500 million litres, the city moves closer to Day Zero.

The only way Cape Town can avoid Day Zero is if every single resident saves water. But this is not the case. For each day that Cape Town uses more than 500 million litres, the city moves closer to Day Zero.

“Dam levels have dipped to 28,7% percent this past week – down by one percentage point. Only about 18,7% of this water is usable as the last 10% is difficult to abstract from the dams.”

“The City has ramped up pressure management to drive down consumption – aiming to stretch our water supply past the winter rainy season.”

To read the full article, click here.

17 Jan

Mauritius Battens Down as Cyclone Heads for Island Nation

Mauritius closed its main airport and stock exchange as the Indian Ocean island nation braced for the arrival of a cyclone packing winds of up to 120 kilometers per hour.

Tropical cyclone Berguitta is situated about 300 kilometer (186 miles) northeast of Mauritius and heading toward it at a speed of about 7 kilometers per hour, the country’s meteorological services said in a statement on its website.

The storm is forecast to make landfall overnight, it said. “Berguitta represents a direct threat to Mauritius,” the service said.

The tropical cyclone is the third this month to form in the south-west Indian Ocean. Tropical Cyclone Ava battered the island of Madagascar on Jan. 5, leaving at least 42 people dead and 150,000 others displaced, according to country’s disaster-management office.

The Red Cross activated its disaster response team for Mauritius and La Reunion, a French-administered island 227 kilometers southwest of Mauritius that is also threatened by the storm.

“This dangerous cyclone puts at risk hundreds of lives in Mauritius and La Reunion,” it said. “Our teams in both countries are prepositioning relief items to support communities who may need food, shelter and first aid services.”

Mauritius’s Sir Seewoosagur Ramgoolam International Airport was shuttered from 7 a.m., state-owned Airports of Mauritius said Wednesday in an emailed statement.

The Stock Exchange of Mauritius said Tuesday it would remain closed Wednesday if the storm warning was upgraded to Class III.

SBM Holdings Ltd., owner of Mauritius’ second-biggest lender, switched off automated teller machines from 8 p.m. on Tuesday, citing the weather.

Source: https://www.bloomberg.com/news/articles/2018-01-17/mauritius-shuts-down-as-cyclone-warning-upgraded-to-class-3

16 Jan

Miraa exporters to Mogadishu boycott trade over high prices

Miraa exporters serving the Mogadishu market have started a boycott on the trade citing high farm gate prices. Nyambene Miraa Traders Association (Nyamita) Chairman Kimathi Munjuri said the traders resolved to boycott buying the twigs to force farmers to lower the prices.

According to Mr Munjuri, a 100kg sack of miraa is now selling at Sh160,000, up from at least Sh20,000 during the rainy season. This means a 1kg bundle (bunda) of the medium quality miraa is selling at Sh1,600.

The high prices are due to low supply caused by the dry spell that started early December.“Only traders serving other parts of Somalia shipped their commodity on Monday night. Traders who export to Mogadishu feel that it is not sustainable to buy 100kgs at Sh160,000 because buyers cannot afford it.

TRADERS MEET

He said the traders met in Eastleigh on Sunday and resolved that they would not buy miraa from farmers. “This means about 30 tonnes of miraa has not been delivered to Mogadishu,” Mr Munjuri said.

Mr Joseph Muturia, a member of the Miraa report implementation committee, said the premium quality miraa known as ‘Mbaine’ is selling at Sh6,000 a kilo while ‘kisa’ is retailing at Sh4,000.

“I currently sell miraa locally because residents understand the quality of this type of miraa,” Mr Muturia said. Mr Josiah Mugo, a miraa consumer, said he could no longer afford to chew daily after prices spiked from mid-December.

“A small bundle (surba) of the best quality khat is now retailing at more than Sh400 from Sh150 last month. I am considering shifting to muguka but its quality is not good. I am now chewing occasionally so as not to stretch my budget,” Mr Mugo said.

BOYCOTT FUTILE

However, Nyamita termed the move by the traders as futile saying the miraa prices are determined by market forces.

To read the full article, click here. 

15 Jan

Glencore Shrinks Job of Billionaire Copper Head Amid Congo Probe

Glencore Plc reduced the role of its billionaire head of copper, Aristotelis Mistakidis, shaking up the business after a review in the Democratic Republic of Congo raised questions about accounting and management.

Mistakidis, one of Glencore’s largest shareholders and a key lieutenant of Chief Executive Officer Ivan Glasenberg for more than a decade, will lose control of industrial copper operations including mines and focus on the trading side of the business, according to people familiar with the plans.

Responsibility for Glencore’s copper assets will move to Mike Ciricillo, who now oversees copper smelting and refining, the people said, declining to be identified as the appointment isn’t yet public.

The shake-up reduces Mistakidis’s responsibilities after he and two other executives resigned from the board of Glencore’s Katanga Mining Ltd. in Congo in November. A review by Katanga led to a restatement of its financial reporting, and a commitment from Glencore to restructure the management of its own copper business.

Close Relationship

Mistakidis, whose holding in the company is valued at about $2.5 billion, is a key part of Glencore. He’s the third-biggest shareholder among management and helped lead the company’s ascent from a scrappy trader to a diversified commodities giant and the world’s third-biggest copper miner.

For years Mistakidis, better known as “Telis,” had run both the marketing and producing sides of the copper business, a testament to his record as a trader and close relationship with Glasenberg.

Ciricillo, who ran Freeport-McMoRan Inc.’s copper operations in Congo prior to joining Glencore in 2014, takes on the new role at a critical time for the Swiss commodity giant. Glencore plans to grow global copper production by about 25 percent to 1.64 million metric tons by 2020, largely through the resumption of operations at Katanga.

To read the full article, click here.

15 Jan

H&M Condemns Racism After ‘Monkey’ Ad Sparks Protests in Africa

Hennes & Mauritz AB went into damage-control mode over the weekend after a controversial advertisement sparked protests in South Africa.

The Swedish clothes retailer closed its South African shops after some outlets were trashed in an anti-racism protest against an online ad by H&M, featuring a black child modeling a hoodie with the text “coolest monkey in the jungle.”

“H&M is aware of the recent events inside several of our South African stores,” the company said in a statement on its website. “What matters most to us is the safety of our employees and customers” and “we have temporarily closed our stores in South Africa.”

Read More: H&M Caught in Controversy Over Black Child in ‘Monkey’ Hoodie Ad

 H&M was last week forced to apologize for the image after it caused a social-media storm and prompted Canadian artist The Weeknd to end his collaboration with the Stockholm-based company. H&M, which said it agreed with those who were upset by the image, pulled the garment in question from its stores. Over the weekend, the company took further steps to reject all forms of racial slander.
“We strongly believe that racism and bias in any shape or form, deliberate or accidental, are simply unacceptable,” H&M said. “We stress that our wonderful store staff had nothing to do with our poorly judged product and image.”
To read the full article, click here. 
12 Jan

South African Steinhoff Unit Mulls Early Redemption of Bonds

Steinhoff International Holdings NV said one of its South African units is considering an early redemption of all notes in issue as the global retailer struggles to stay afloat amid an accounting scandal.

Steinhoff Services Ltd.’s redemption of securities issued under a 15 billion-rand ($1.2 billion) bond program will require pricing supplements to be amended and restated, the Frankfurt- and Johannesburg-listed company said in a statement after the market closed on Thursday. The necessary approvals will have to be obtained, Steinhoff said, without giving more detail.

The parent company’s woes began on Dec. 5 when it said it had uncovered accounting irregularities and that Chief Executive Officer Markus Jooste was resigning. Thereafter its bond yields spiked and its share price lost most of its value. Banks started to withdraw lines of credit and regulators from South Africa to Europe began to investigate. The stock fell 3.7 percent to 6.50 rand as of 9:36 a.m. in Johannesburg, extending its decline this week to 26 percent.

To raise liquidity the retailer has started parting with some assets it built up in a two-decade acquisition drive. French retailer Carrefour on Thursday said it acquired a 17 percent stake in Showroomprive from Steinhoff’s Conforama for 79 million euros ($95 million), while last week Steinhoff’s Austrian unit, Leiner Immobilien, sold its flagship store in Vienna for 60 million euros. Other measures to shore up finances include Steinhoff selling its Gulfstream 550 jet, while Jooste has been auctioning his racehorses.

With Steinhoff also having issued debt internationally, the European Central Banksaid earlier this week it had disposed of the company’s securities after they were downgraded to junk.

Pending Lawsuits

Steinhoff Services, the vehicle the retailer uses to sell listed bonds on the Johannesburg Stock Exchange, has 12 notes in issue, according to data compiled by Bloomberg. Those securities amount to a total of 7.6 billion rand in debt. More than half of those sales took place last year with Steinhoff Services having sold 4.83 billion rand of bonds in 2017. It has three notes valued at a total of 1.4 billion rand maturing in 2018.

To read the full article, click here.

11 Jan

Boiling a frog: Ramaphosa’s patient battle for the soul of the ANC

Cyril Ramaphosa’s dramatic election as president of the African National Congress (ANC) last month has raised as many questions as it has answered. Since he defeated rival Nkosazana Dlamini-Zuma at the 18 December party conference, South Africa has effectively had two centres of power: Ramaphosa as ANC president, Jacob Zuma as state president.

There are rumours some members are pushing for President Zuma’s departure before the 2019 elections when he will have to retire. This would pave the way for Ramaphosa to become state president. From there, he could enact reforms, take control of policy matters, and put his stamp on government.

However, with the party so finely balanced between pro-Ramaphosa and pro-Zuma factions, this possibility cannot be counted on and would have to be handled very delicately. The National Executive Committee’s (NEC) top six positions, for instance, are evenly split. Ramaphosa has only a slender majority in the broader NEC and other sub-bodies.

This means that although Ramaphosa has succeeded in the tough feat of becoming ANC president, for now, he will still have to engage in numerous trade-offs with Zuma allies going forward. At the same time, he will also have to manage some surprise policies imposed by the state president ahead of the conference, such as the promise to provide free higher education for the poor.

Also on his plate are a set of radical policies championed by Zuma allies and adopted at the conference. These include increasing the government’s shareholding in the Reserve Bank to 100% and expropriating land without compensation.

This will all add to the already tough challenges of ensuring economic stability, restoring credibility, and overhauling state-owned enterprises. The upcoming 2019 elections add a further sense of urgency.

For the moment, Ramaphosa will have to navigate these hurdles dragged down by almost half the party. However, President Zuma has notably had some of his authority stifled by recent rulings.

To read the full article, click here.

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