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

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.

02 Jan

From Angola to Zimbabwe: Guide to Key Africa Markets in 2018

For bond investors, Africa was a happy hunting ground last year. Its local-currency and dollar securities easily outperformed those of emerging markets overall as investors piled into a continent offering high yields and starting to recover from the commodity bust of three years ago.

Africa Outperformed

African bonds returned more than the emerging-market average last year but risks abound, among them policy tightening in advanced economies, local and global politics, weakening currencies and another fall in oil prices. And then there is credit risk.

Mozambique and Republic of Congo missed Eurobond payments in 2017, while countries including Cameroon and Zambia agreed or began talks on bailouts with the International Monetary Fund. And since Namibia and South Africa were downgraded to junk, the continent has been left without any investment-grade foreign-currency issuers.

Christine Lagarde, for one, thinks Africa’s debt problems “could very well” worsen in 2018 as the dollar appreciates and the U.S. raises interest rates, according to an interview with Quartz magazine in December. The IMF’s managing director said yield-hungry bond investors “were so eager to lend that I don’t think they were very serious about assessing the risks.”

Africa’s debt is already less attractive on a relative basis. U.S. 10-year yields rose to their highest in nine months two weeks ago, which narrowed African dollar-spreads to 352 basis points, around the lowest in three years, according to Standard Bank Group Ltd.

Read the full article here: From Angola to Zimbabwe: Guide to Key Africa Markets in 2018

 

 

27 Dec

Africa: Prince Harry Appointed African Parks President

Popular member of the United Kingdom royal family, Prince Henry of Wales also known as Prince Harry, has been appointed as new President of African Parks, the organization that manages Akagera National Park among other facilities on the continent.

The news that was announced on Wednesday, indicate that in this position, Prince Harry will be working with African Parks in various capacities to advance wildlife conservation across Africa and around the globe. The announcement was made during this morning’s BBC Radio 4 Today programme, which Prince Harry guest-edited.

African Parks is a conservation NGO, founded in 2000, that manages national parks and protected areas on behalf of governments and in collaboration with local communities across Africa. With 13 parks under management, they have the largest area under conservation for any one NGO on the African continent.
African Parks are the managers of Rwanda’s Akagera National Park, the only savanna park with the central Africa’s largest protected wetland. According to a statement Kensington Palace, on leaving the Army in 2015, Prince Harry has taken a deep personal interest in frontline conservation projects that work to protect Africa’s natural heritage and support both wildlife and local communities.
The statement says that Harry spent three months working on number of such projects in Namibia, Tanzania, South Africa and Botswana. “Prince Harry will be working with African Parks in various capacities to further our mission in managing national parks on behalf of governments, and to advance wildlife conservation across Africa and around the globe,” a statement from African Parks reads in part.
To read the full article, click here. 
19 Dec

South African Stocks Rally as Ramaphosa Seen as Watershed

South Africa’s benchmark stocks index had their biggest rally since March following the ascent of the business and investor-friendly Cyril Ramaphosa to leader of the ruling African National Congress, removing an overhang that had weighed on market sentiment.

The FTSE/JSE Africa All Share Index rose as much as 1.6 percent and was 1.5 percent higher as of 10:45 a.m. in Johannesburg. Household goods shares, banks, insurers, retailers and other domestically focused companies led gains on the gauge. The FTSE/JSE Africa Banks Index jumped 7.2 percent to a record, the FTSE/JSE Life Insurance Index climbed to the highest level since August 2015 and the FTSE/JSE Africa General Retailers Index advanced the most in two years.

“The removal of a degree of political uncertainty is a significant potential catalyst for relative recovery in South African performance and for a better-than-expected earnings outcome for the domestic earners in 2018,” Morgan Stanley analysts including Mary Curtis and Andrea Masia wrote in a note.

“Valuations still look cheap enough on an absolute and a relative basis for the JSE to continue to rally,” they said. “The best relative value shows up in South African banks and retailers, while multiples for South African industrials and the South African property sector look less appealing compared to cross-border peers.”

While Ramaphosa’s election may be a watershed for South Africa, considerable uncertainty remains, according to John Orford, portfolio manager at Old Mutual Investment Group.

“Firstly, because Cyril Ramaphosa will not be president of the country until Jacob Zuma steps down or until the next general election in 2019, his immediate ability to influence policy is uncertain,” Orford said. Moody’s Investors Service could also still downgrade South Africa’s credit ratings to junk, he said. “If this happens, it could trigger an outflow of capital from the country’s bond market, putting pressure on the rand and bond yields.”

Source: https://www.bloomberg.com/news/articles/2017-12-19/south-african-stocks-rally-as-ramaphosa-seen-as-watershed

18 Dec

South African Rand Near 3-Month High on Ramaphosa Vote Optimism

South Africa’s rand fluctuated near a three-month high against the dollar and bond yields fell as traders bet Cyril Ramaphosa is poised to become the next leader of the ruling African National Congress.

Ramaphosa, one of the wealthiest black South Africans, has pledged to revive the struggling economy and stamp out corruption. His opponent, Nkosazana Dlamini-Zuma, has echoed President Jacob Zuma’s call for “radical economic transformation” to redistribute wealth to the black majority, a shift investors fear may blow out the budget deficit and spark rating downgrades.

The South African currency gained as much as 1.5 percent before trading 0.3 percent weaker at 13.1337 per dollar as of 10:04 a.m. in Johannesburg, according to data compiled by Bloomberg. Overnight implied volatility soared to a record 73 percent, suggesting traders are hedging for a large swing after the result, which may be announced Monday.

“Our base case of a win for Ramaphosa appears still to be on track, though there remains sufficient uncertainty in the process for caution to be exercised,” Zaakirah Ismail, a strategist at Standard Bank Group Ltd. in Johannesburg, wrote in a client note. “Volatility is also still at multi-year highs, implying that the currency is geared up for a sharp move after the winner is announced.”

Yields on benchmark government bonds due December 2026 dropped 14 basis points, the most since October, to 9.02 percent.

Long-Term Risks

The rand’s 4.1 percent gain over the past five days will probably not be sustained even in the event of a Ramaphosa victory as the country’s economic challenges won’t disappear, said Tsutomu Soma, general manager of the IFA department at SBI Securities in Tokyo.

“This isn’t likely to be a long-term strong rand trend,” Soma said. “Ramaphosa’s victory is seen as better than Nkosazana Dlamini-Zuma, but it will probably not improve the nation’s problems drastically, including fiscal positions. In the long run, the rand doesn’t look so attractive.”

Traders added bearish bets on the currency over the next three month, with the premium of options to sell the rand over those to buy it rising eight basis points to 2.83 percentage points in the past week.

Source: https://www.bloomberg.com/news/articles/2017-12-17/south-africa-s-rand-reaches-3-month-high-as-anc-prepares-to-vote

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.

15 Dec

Nigeria Takes $1 Billion From Oil Savings to Fight Militants

Nigeria will take $1 billion from a special account for oil-revenue savings to boost its war against Boko Haram Islamist militants in the country’s northeast.

Governors of the country’s 36 states met with the federal government as the National Economic Council to deliberate on the expenditure, according to Godwin Obaseki, governor of southern Edo state.

“The governors have given permission to the federal government to spend the sum of $1 billion in the fight against the insurgency,” he told reporters in Abuja after the meeting on Thursday. That will leave $1.32 billion remaining in the excess crude account, where oil income above budgeted estimates are saved, according to figures provided by the government.

Boko Haram militants, who are opposed to Western education and seek to impose their version of Islamic law in Nigeria, are in the eighth year of an insurgency that has left at least 20,000 people dead, according to the government. President Muhammadu Buhari won elections in 2015 with the defeat of the group among his key campaign pledges.

“We are getting closer to the elections and defeating Boko Haram was a major campaign promise; going in these elections without delivering on that promise will be tough,” said Freedom Onuoha, a senior political science lecturer at the University of Nigeria, in the southeastern town of Nsukka.

With a new vote approaching, some of these funds for security may find their way into the election campaign, Onuoha said. “The details of spending aren’t usually made public. That creates an opportunity, a smokescreen, that can be used to fund elections and other hidden spending,” he said.

Ambushing Troops

Concerns the government may misuse the money are misplaced, according Laolu Akande, a spokesman for Vice President Yemi Osinbajo, who represented the federal side at the meeting with governors. “Nigerians have come to appreciate that the Buhari administration is as one that is judicious with the management of the country’s resources and actively fighting corruption,” he said.

To read the full article, click here.

13 Dec

Africa’s Biggest Company Is Ready to Fix Its Tencent Problem

Naspers Ltd. Chief Executive Officer Bob Van Dijk said Africa’s largest company will consider “structural options” if the value gap with its stake in Tencent Holdings Ltd. persists.

Naspers has a 33 percent stake in Shenzhen, China-based internet giant Tencent, valued at about $158 billion, while Naspers itself has a market value of about $112 billion. The discount is “too high,” and has been accelerating in the past 20 months, Van Dijk said Tuesday in New York. Leaving aside Tencent, analysts place Naspers’ asset value at more than $180 billion, said Chief Financial Officer Basil Sgourdos.

Africa’s largest company by market value is considering using tools such as depositary receipts to access new pools of capital that are otherwise restricted to trade on the Johannesburg Stock Exchange, Sgourdos at the investor presentation. Naspers will also consider listing some underlying businesses to unlock further value, he said.

In October, veteran emerging-markets investor Mark Mobius said it should buy back Naspers stock. While repurchases could make sense when the company has more financial flexibility, right now it is focused on spending on expanding its businesses and on acquisitions, Sgourdos said.

Capital Outflows

The value gap with Tencent has widened in line with capital outflows from South Africa, where Naspers has its primary listing, Van Dijk said. It will be close to “impossible” for Naspers to move its listing from the Johannesburg Stock Exchange, which has also been protecting the company from hostile takeovers, he said.

Van Dijk has resisted pressure to sell Naspers’ holding in Tencent, a suggestion that has surfaced over the years.

The Cape Town-based company, which also owns Africa’s largest pay-TV business and newspapers, has been focusing on e-commerce and is now among the world’s largest investors in the space, backing ventures from Mail.Ru Group Ltd. in Russia to iFood in Brazil.

Naspers plans to accelerate the “path to profitability” of its e-commerce businesses and sees potential for initial public offerings of companies in its portfolio, Van Dijk said.

To read the full article, click here.

06 Dec

Angola Gem Firm Distances Itself From Former President’s Family

An Angolan state-owned diamond company is pulling out of an investment in a Swiss firm controlled by the husband of the billionaire daughter of the former president, as the country’s new leader untangles it from the business interests of his predecessor’s family.

Sodiam will divest a stake in Geneva-based jewelry maker De Grisogono for “reasons of public interest and legality,” it said in a statement after a board meeting on Dec. 1, without giving details of how the transaction would be completed.

The company is controlled by Sindika Dokolo, the husband of Isabel dos Santos, the eldest daughter of former Angolan President Jose Eduardo dos Santos, according to Ana Gomes, a Portuguese member of the European Parliament who has done research on the business interests of Africa’s richest woman.

The move comes as President Joao Lourenco seeks to distance the oil-rich country from the influence of Dos Santos and his family. He’s fired Isabel from her position as chairman of state-owned oil company Sonangol, and last week announced plans to auction a new telecoms license to compete with Unitel SA, which she controls. Lourenco, known as J-Lo in Angola, replaced dos Santos, who has nevertheless remained head of the ruling MPLA party.

Tribune de Geneve reported earlier Tuesday about Sodiam’s exit from De Grisogono. The company lost money on the investment, it said. A call to the offices of De Grisogono wasn’t answered.

Sodiam is a former unit of Endiama, another state-owned diamond company in Africa’s biggest producer of the precious gems.

Source: https://www.bloomberg.com/news/articles/2017-12-05/angola-gem-firm-distances-itself-from-former-presidents-family 

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