15 Dec

Africa Needs a Commodity-Price Surge to Avert Debt Crunch

Sub-Saharan Africa faces a potential debt crunch unless commodity prices improve and boost the pace of economic growth.

 The region’s median government debt level will probably exceed 50 percent of gross domestic product this year from 34 percent in 2013, while the cost of servicing the liabilities will average almost 10 percent compared with half that four years ago, the International Monetary Fund said. There are no investment-grade dollar-debt issuers in sub-Saharan Africa after Moody’s Investors Service and Fitch Ratings Ltd. cut Namibia to junk this year.
Commodity returns have dropped in six of the past seven years and expectations for slower growth in China, the biggest consumer, don’t bode well for African nations that depend on mining, crops and oil for the bulk of their income. The region’s growth may average 2.6 percent this year, almost double 2016’s level but barely above population expansion, with delays in making policy changes risking this, the IMF said in October.
“Rising debt levels present a major risk to progress in sub-Saharan Africa, especially if there is another major shock in the global commodity market and if African markets are still in a recovery stage in the economic cycle,” Gaimin Nonyane, London-based economic-research head at Ecobank Transnational Inc., said by email.
More Planned

Nigerian debt-sale plans will more than double its outstanding U.S.-currency bonds to about $9 billion. That will add to issuances by South Africa, Ghana, Senegal, Ivory Coast and Gabon.

Policy uncertainty in South Africa and Nigeria, the region’s biggest economies, are restraining growth, with the IMF reducing their 2017 expansion forecasts to below 1 percent for the two nations.

In Kenya, the central bank said the nation can’t continue its current debt build-uppath if it’s to remain sustainable. Authorities are also negotiating with the IMF to rollover a standby facility of $1.5 billion.

The number of sub-Saharan African countries in or at risk of debt distress almost doubled to 12 over the past four years, while Mozambique — which defaulted this year — is among those engaging creditors to restructure debt.

To read the full article, click here.

13 Dec

Fatal Congo Attack Adds to U.S. Pressure on UN Peacekeeping Boss

A day after 15 United Nations troops were killed by militants in eastern Congo, the organization’s chief of peacekeeping operations described the deadliest assault on UN forces in a quarter-century as retaliation for the mission’s aggressive approach.

The attack came because of the “increasingly robust posture” the UN’s “blue helmets” maintain in the troubled country, Jean-Pierre Lacroix, a former French diplomat who’s the UN’s undersecretary general for peacekeeping operations, told reporters. “We are disturbing them,” he said of the armed groups suspected of being behind the Dec. 7 assault. “They do not like it.”

The battles peacekeepers face in the field come on top of the political and budgetary pressures Lacroix has to manage from the U.S., the UN’s biggest donor nation, as President Donald Trump’s administration continues pressing the global body to rein in costs and end ineffective missions.

After taking office in January, U.S. Ambassador to the UN Nikki Haley led an effort to trim about $600 million from the UN’s $7.3 billion peacekeeping budget for the fiscal year ending in June 2018. The U.S. — which pays 28.5 percent of the peacekeeping budget — had initially demanded $1 billion in savings, citing the high cost of the operations and deployments that were too long. Repeated allegations of sexual abuse by UN forces against civilians further damaged the reputation of the peacekeepers.

‘Be Prudent’

“We have to be extremely thoughtful in how we allocate our resources,” Lacroix said in an interview in his office on the 35th floor of the UN’s headquarters in New York. “There is an expectation that we be prudent and use our resources in the most cost-effective way we can.”

Lacroix, who assumed his post in April, is the fifth consecutive French head of the peacekeeping department. In that role he oversees 106,000 blue-helmeted troops across 15 missions. The peacekeeping effort in Congo is the largest and most expensive, encompassing more than 18,000 troops and about 3000 civilians, with a budget of $1.1 billion.

To read the full article, click here.

06 Dec

Why South Africa’s Leadership Race Is Wide Open

The race to lead South Africa’s ruling African National Congress is in overdrive. While current nomination tallies from the ANC’s branches indicate that Deputy President Cyril Ramaphosa has the edge ahead of the party’s national elective conference that starts Dec. 16, its voting structure and procedures mean his main rival Nkosazana Dlamini-Zuma could still win. The victor is likely to become the country’s next president.

1. What’s at stake?

The ANC holds a national conference every five years to pick its top leadership. Because the ANC has held power in South Africa since apartheid ended in 1994, the winning candidates typically go on to top positions in the government. Jacob Zuma, the nation’s current president, won control of the ANC from Thabo Mbeki in December 2007 and took office in May 2009.

2. Why isn’t Zuma running again?

While the ANC’s rules don’t explicitly ban Zuma from running for a third term, they specify that the party’s leader must be its presidential candidate in national elections. The constitution limits the nation’s president to serving a maximum of two five-year terms, and Zuma’s time will be up in 2019. The party will probably be loath to bend the rules to keep Zuma on — his immersion in a succession of scandals has eroded its support and cost the ANC control of Johannesburg, the economic hub, and Pretoria, the capital, in last year’s municipal elections.

3. Who decides the ANC’s leadership race?

The 5,240 voting delegates who will attend the conference.The ANC’s branches will be represented 4,731 delegates. The incumbent leadership structures in the nine provinces will send 27 delegates each, the party’s national executive committee has 86 delegates and three leagues representing the youth, women and veterans have 60 delegates each. While the party has previously elected a president, deputy president, secretary-general, deputy secretary-general, chairperson, treasurer-general, it is considering proposals to enlarge its leadership structure, which would enable it to accommodate more members of competing factions.

To read the full article, click here. 

04 Dec

Uganda: When Women in Power Are Battered

High profile women to suffer gender-based violence. The majority, however, remain mute because of their position in society. Some, however, have gotten the courage to break the silence and are now points of reference to other women facing similar ordeals.

One of such women is Judith Babirye, the Buikwe Woman MP who is also a gospel singer. The lawmaker has never been shy to speak about how she suffered domestic violence in her previous marriage.

“Yes, I was once a victim and was able to pick myself up and move on with my life. I am now strong,” Babirye said in a recent phone interview. The mother of one says she picked up the pieces by seeking counselling from different people.

“They guided and gave me wise counsel but emphasised that the final decision had to come from me and not anyone else,” she says. Babirye, who is known for her strong Christian faith also prayed, fasted and sought divine intervention.

“It is on my knees that God gave me strength to stand and hold my head high,” she says. At one point, she had to cease focusing on herself and make her daughter a priority.

“I did not want the violence to compromise my little girl’s future, therefore, I shifted my energy to raising her,” she says. Babirye married Samuel Niiwo in 2005, and filed for divorce years later.

Another notable woman is Beatrice Kiraso, the former Woman MP for Kabarole who wrote the book, Making a Difference which casts a light on her past life as a victim of domestic violence abuse by her husband who she later divorced.

Beaten because of work

A female MP who preferred to speak on condition of anonymity says she previously faced the wrath of her husband because of the nature of her work.

To read the full article, click here.

29 Nov

Paralysis Grips South Africa Government With ANC Facing Election

An acrimonious battle for control of South Africa’s ruling African National Congress has paralyzed several government departments, as ruling party leaders focus on electioneering and officials delay taking decisions until they learn who their new political masters will be.

The front-runners to replace Jacob Zuma as ANC leader next month are his deputy Cyril Ramaphosa and Nkosazana Dlamini-Zuma, the former chairwoman of the African Union Commission and Zuma’s ex-wife. The victor will probably also succeed Zuma as president in 2019, or even earlier if the party decides to replace him before his second term ends. Ramaphosa has stressed the need to reignite growth and restore investor confidence, while Dlamini-Zuma has called for the nation’s wealth to be more equitably distributed.

These are some of the key issues that are likely to remain in abeyance until after the ANC’s Dec. 16-20 elective conference:

1. Resolving a standoff over black mine-ownership laws

The government and mining companies have been locked in dispute for months over a new Mining Charter, which seeks to compel companies to maintain a minimum 30 percent black shareholding. The industry argues that the previous threshold of 26 percent should be retained and sales of stakes to black investors who subsequently divested should be taken into account when assessing their compliance. Court hearings on the dispute are due to resume Feb. 19. Ramaphosa has called for the standoff to be amicably resolved.

2. Allocating new broadband spectrum to mobile-phone companies

While mobile phone companies have been clamoring for additional spectrum, the telecommunications minister sued the industry regulator last year to prevent it from holding a planned auction, arguing that the sale was premature and proper regulatory procedures weren’t followed. The case remains unsettled. Telecommunication laws are meanwhile being amended to give the government greater control over spectrum allocation.

To read the full article, click here. 

24 Nov

Global Chocolate Binge Has Olam Predicting Smaller Cocoa Surplus

The world just can’t get enough chocolate.

With “tremendous” demand in emerging markets looking set to continue this season, the world’s third-largest cocoa processor is projecting a sharply smaller global surplus. Excess cocoa supplies that reached a record last season will probably drop to about 50,000 metric tons, said Gerry Manley, head of cocoa at Olam International Ltd.

Demand has picked up in Asia particularly, where countries including the Philippines, Indonesia, India and China are consuming more cocoa powder used in products like cookies and ice-cream, Manley said. And while West African growers may reap a second year of bumper crops, top producer Ivory Coast is unlikely to repeat last season’s record harvest.

“We are very positive on demand,” Manley said in an interview at the company’s London offices Thursday. “We are seeing good demand for cocoa powder across the world, but mainly emerging markets are in a leading position there.”

Benchmark cocoa futures traded in London tumbled 23 percent last year, the biggest decline since 2011, as output climbed to a record in Ivory Coast, while Ghana, the No. 2 grower, also reaped a big crop. The large African harvests helped push the global surplus to 371,000 tons, according to estimates from the Abidjan-based International Cocoa Organisation.

This season, global cocoa processing will probably rise by more than 3 percent, Manley said, adding that the forecast is conservative. Processing exceeded 5 percent growth in 2016-17. About 8,000 new products were launched in the confectionery market last year, Manley said.

Lower costs are boosting demand, with the global chocolate confectionery market expanding 2.3 percent in the three months to June and 2.2 percent the following quarter, the world’s top cocoa processor Barry Callebaut AG said earlier this month, citing data from analytics firm Nielsen. The rebound came after at least six consecutive quarters of contractions.

Underestimating Growth

Changing consumer habits mean some traders may be underestimating growth. Trends including online shopping as well as the rise of artisan shops and bakeries are often missed by traditional data sources, Manley said.

Global cocoa powder demand is forecast to grow at 5 percent and Olam is looking to capitalize on that. The Singapore-based company is investing to increase its capacity to mill cocoa cake into powder in Asia and is also planning a new milling facility just outside Chicago, Manley said. The factory should be commissioned later this month.

Demand for cocoa butter and cocoa liquor, used to make chocolate bars, is also growing and the market is tight despite last season’s record surplus, Manley said. That has helped boost cocoa-processing margins, with the so-called combined ratio — the price of cocoa products relative to beans — reaching the highest in more than a decade this year, according to KnowledgeCharts.

To read the full article, click here. 

15 Nov

Kenya’s Economy Could Face a Bleak 2018

Kenya is facing an economic storm in 2018 in the aftermath of two disputed elections. Saddled with the triple threat of austerity measures to pay for those votes, slowing credit growth and new accounting rules for banks, Kenya now risks missing the government’s forecast for 6 percent economic growth next year, according to lenders including Nairobi-based Stanbic Bank Kenya Ltd. Investec Bank Ltd. strategist Chris Becker says expansion could slow to as little as 1 percent.

“With growing headwinds, there is no longer any room for complacency,” said Ronak Gopaldas, an independent analyst, formerly at FirstRand Ltd.’s investment banking unit in Johannesburg. The new administration should “refocus its attention to the economy, which has been on the back-burner for the better part of the year,” he said.
The country’s Treasury has already cut this year’s growth target to 5 percent from 5.9 percent as the protracted election furor damped investment and a drought curbed farm output.
Now key indicators for East Africa’s largest economy, the regional hub for multinationals including IBM Corp. and Toyota Motor Corp., are flashing warnings signs, with the latest Purchasing Managers’ Index, a measure of private-sector activity, falling to a record low and bank loans growing the slowest in more than a decade.

After a court annulled an Aug. 8 election, Kenya held a rerun of the vote on Oct. 26, that was boycotted by the main opposition coalition. President Uhuru Kenyatta’s Jubilee Party also won the second ballot, which is now being challenged in the Supreme Court.

The nation’s 2.6 trillion-shilling ($25.1 billion) budget was amended to include “austerity measures” for the current fiscal year to accommodate unplanned expenditures such as the rerun of the election, Treasury Secretary Henry Rotich said in September. The Treasury has revised its 2017-18 budget deficit forecast to 8.5 percent of gross domestic product from 6.8 percent. The government recorded a 9.2 percent shortfall in year through June 2017.

Read more: Kenya’s Economy Could Face a Bleak 2018

10 Nov

Exporting to Nigeria: Tips and insights

Nigeria is still, by a slim margin, the biggest economy in Africa, despite the economic woes of the past two years. A population of anything between 180 million to 200 million people makes its consumer market in particular of great interest to investors, manufacturers and exporters around the world. The country manufactures relatively few of the products it consumes and despite efforts to increase local industry, it remains largely import dependent.

However, despite the multitude of opportunities that Nigeria presents to exporters, getting a product into the market can be a challenging exercise.

Nigeria’s main port complex is in the commercial capital of Lagos, a city of an estimated 20 million people – a major market in itself – but also the shipping gateway for imports and exports for the whole nation.

The facility, comprising the Lagos Port Complex and Tin Can Island Port in the Apapa area of Lagos city, is one of the busiest in Africa. It is also by far the main portal for trade into and out of this large country, processing 97% of containers. The only other port of size, Onne, is focused on the oil and gas industry around Port Harcourt, and there are a few other, smaller, ports.

As a result, there is usually serious congestion at Lagos. The high volumes are just part of the problem. Other challenges include poor infrastructure, inadequate and often poorly functioning equipment, the demands of different agencies located there, onerous bureaucracy and general issues related to officialdom.

Clearance time in Lagos port is between seven and 14 days. Once clearance is complete, it takes, in a best-case scenario, 48 hours to get the product out of the port. However, this can take longer depending on other factors, as currently being experienced with the rebuilding of the access road to the port, and any problems in the manifest or other documents.

Having a competent cargo clearing and forwarding company is vital to navigate the process. Exporting to Nigeria requires detailed knowledge of requirements. A simple mistake in documentation or process can lead to cargo sitting in port for weeks or even months, with hefty demurrage charges.

It is important for an exporter to be on top of any changes in documentation and import requirements. Do not wait for the importer in Nigeria to alert you to what is needed; rather do your own homework.

Read more: Exporting to Nigeria

09 Nov

Aviation as a catalyst for growth in Africa

While Africa has one of the biggest populations in the world, its aviation industry is still small, representing only 2% of the global market. Despite all the major challenges ahead, this is an industry that has very big potential for future growth in Africa.

One of the reasons why African countries seem unable to attract a large amount of foreign investments, is that there is no direct airline connection to reach them. As a result, business travel and costs of doing business become prohibitive. Foreign investors are less likely to travel to distant and not easily accessible places, even if there are great opportunities. As a result, aviation in Africa should be considered a priority sector by the respective African governments so that it can boost the economic development of their countries.

Aviation as a pillar for economic growth 

Being the biggest pan-African airline, Ethiopian Airlines has greatly contributed in making the Addis Ababa Bole Airport an aviation hub and a gateway to Africa. Similarly, for Kenya Airways, the Jomo Kenyatta International Airport in Nairobi is a springboard to access not only the east African region, but also the central and western part of Africa. As for South African Airways, from its Johannesburg base at OR Tambo International Airport, it covers most of the southern African region. Except for South Africa, where its economic growth stagnated in 2016 and eventually fell into recession in the first quarter of 2017, Ethiopia and Kenya grew at a very fast rate of 7.5% and 5.8% in 2016
respectively. In the north, Casablanca, Algiers and Tunis are the major gateways for Europe to access both the Maghreb region and the western African region.

As for the Middle East countries, Cairo is the major gateway to access the major African cities in the northern, eastern and western regions. All these aviation hubs in Morocco, Algeria, Tunisia and Egypt have contributed to the high growth rate of passenger traffic, increasing by 94%, 95%, 75% and 108% respectively from 2005 until 2015, according to data from the World Bank. Aviation is the critical link that not only connects Africa to the world, but also builds bridges among the various African countries. It is only when there are better airline connections, enabling the movement of goods and people, that business activities can flourish. With lower business travel costs, countries can then better attract foreign investors and create better business opportunities.

According to the United Nations Conference on Trade and Development (UNCTAD), the top-five African countries that had the biggest stock of foreign direct investment (FDI) in 2016, are South Africa, Egypt, Nigeria, Morocco and Angola, with US$136.8bn, $102.3bn, $94.2bn, $54.8bn and $49.5bn respectively. Of the five countries, only South Africa, Egypt and Morocco have a major national carrier.

Read more: Aviation as a catalyst for growth in Africa

25 Oct

Retail: Supermarket Surge on the cards for Côte d’Ivoire

Despite Côte d’Ivoire still being dominated by a traditional trade retail base, the Nielsen Shopper World Conference held in the capital Abidjan, has found that the country’s modern trade arena has seen the greatest evolution in the last two years and therefore holds the most potential for growth.

This has been spurred on by the expansion of brands such as Carrefour and Bonprix and a growing consumer appetite for more organised retail outlets, which offer a broader assortment of ranges as well as competitive pricing and enhanced promotional activities. This in comparison to small independent stores that utilise bargaining opportunities, as a form of promotional activity.

Speaking at the event, Nielsen Francophone Africa lead Yannick Nkembe commented: “Traditional trade is still very strong in the minds of shoppers in Côte d’Ivoire, who value the bargaining option they have in open markets and the availability of all the products they want in one place. However, the current development of modern trade and a growing middle class is creating a shift towards more formalised shopping experiences.

“In addition, the activities supermarkets put in to align their offers with those found in open markets, e.g. fresh products and convenience, is boosting the appeal of modern trade outlets. It’s therefore clear that to win, good execution is needed independent of store types.”

A promising economy

Looking at the bigger picture, Côte d’Ivoire’s rapidly developing retail sector is no surprise, considering its ongoing strong performance in Nielsen’s Africa Prospects Indicator (API) where it has retained consecutive top positions ahead of some of its larger peers. The conference also included a presentation on shopper trends in Côte d’Ivoire which found that this is due to its outstanding improvements in terms of ease of doing business. It has also recorded strong GDP growth, several new IPOs, a doubling of the banking sector, low inflation, a stable currency and solid infrastructure.

Read more: Supermarket surge on the cards for Côte d’Ivoire

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