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 

05 Dec

Sierra Leone ‘Peace Diamond’ Undersells for Over $6 Million At Auction

A Christian pastor had given away the more than 709-carat diamond so the government could fund local development projects. Officials hope its sale will also help combat illicit smuggling in the modern industry.

Sierra Leone sold one of the world’s largest diamonds at an auction in New York on Monday, fetching a lower-than-expected price of $6.5 million (€5.5 million).

The egg-sized, 709-carat “Peace Diamond” is one of the largest ever discovered in Sierra Leone and between the 10th and 15th largest ever found.

The international diamond trading network that handled the auction, the Rapaport Group, said the stone had gone to British billionaire and jeweler, Laurence Graff.

Diamond for peace

The stone was dubbed “Peace Diamond” after the Christian pastor who found it gave it away in the hope it would allow the government of Sierra Leone to raise money for local development projects.

The government said Monday it will use the $3.9 million in tax revenue from the sale to fund clean water, electricity, schools, health centers and roads.

Officials said they also hoped the sale will help combat the West African country’s illicit diamond trade.

“Peace diamond” plays on the term “blood diamond,” which were diamonds rebel groups sold during Sierra Leone’s brutal civil war in the 1990s to buy arms and ammunition. In many cases, groups used slave labor to mine the stones.

The UN enacted a ban on all diamond exports from the country until 2003, but illicit smuggling continues to mark the modern diamond trade.

‘New day in Sierra Leone’

The government had expected the stone, the first ever to be sold at a public auction, to fetch $7 million.

Senior officials were nonetheless optimistic about the sale’s effects on the illicit diamond trade in Sierra Leone.

“It will encourage all the diggers back home,” said Chief Paul Ngaba Saquee, head of Sierra Leone’s eastern Kono district where the diamond was found.

“Instead of being ripped off in some dark corners when they find their diamonds, that they will bring it and put it on the table in front of the government,” he said, adding: “Maybe this is going to be the beginning of a new day in Sierra Leone.”

Source: http://allafrica.com/stories/201712050002.html

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

Africa Seeks Investment to Stem Migration as EU Summit Begins

European and African leaders gathering in Ivory Coast have an opportunity to confront one of the biggest sore points between the two continents: migration.

The two-day African Union-European Union summit begins Wednesday as Europe is grappling to stem the biggest wave of asylum seekers since World War II, with more people arriving by sea from African countries this year than from war-torn Syria. Anxiety over migration has stoked populism in Europe and driven electoral gains by far-right parties from France to Hungary.

“For the Europeans, it’s a priority because it’s also a domestic political issue and their electorate is very sensitive to this question,” said Gilles Yabi, head of policy group Wathi in Senegal’s capital, Dakar.

Yet few African leaders want to be seen as curbing migration in a region where going overseas is often considered a rite of passage and remittances are vital for economic survival. That’s why African Union member states favor talks that touch on broader issues such as economic development, security and trade relations, according to Yabi.

‘Concrete Projects’

French President Emmanuel Macron and German Chancellor Angela Merkel are expected to attend the summit in Abidjan. Among African leaders to join the talks are Nigeria’s Muhammadu Buhari and South African President Jacob Zuma.

Africa will only persuade its young people to stay if there are prospects for economic development on the continent, Moussa Faki Mahamat, president of the African Union Commission, told Radio France Internationale last week.

“We have to start at the root of the problem, with development, with concrete projects,” Mahamat said.

The views of African and European leaders on migration are fundamentally at odds, the International Crisis Group said in a report last month. “The European Union is doggedly focused on trying to prevent irregular migration, whereas the African Union is looking for ways to increase legal flows,” the Brussels-based research group said.

To read the full article, click here.

28 Nov

Kenya Is Said to Seek Proposals for $2 Billion Eurobond Sale

Kenya’s government is seeking proposals from banks about a possible $2 billion Eurobond offering in the first quarter of 2018, according to two people familiar with the matter.

The East African nation’s Treasury asked banks for pitches on how to structure the sale, said the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter. The deadline for proposals is Nov. 29, they said.

Kenya’s return to international capital markets would mark its first sale of foreign debt since a debut Eurobond in 2014. The Treasury is seeking to plug a budget deficit that’s forecast to narrow to 6.4 percent of gross domestic product in the fiscal year through June from 8.5 percent last year.

The government plans to re-enter the Eurobond market before the end of the current budget year, though a placement is likely from February onward as funds are required for spending purposes, the people said.

Proposals from banks must outline the costs of either a five- to 10-year issue to be repaid in bullet form, or 12- to 15-year securities amortizing in the final three years, the people said. A government roadshow is expected to start in January, said one of the people.

Treasury Principal Secretary Kamau Thugge didn’t respond to two text messages and four calls to his mobile phone seeking comment.

To read the full article, click here.

27 Nov

Mugabe Quit Over Fear of Being Zimbabwe’s Qaddafi

An emotional Robert Mugabe finally agreed to end his 37-rule in Zimbabwe when army generals who’d seized power told him they wouldn’t prevent protesters from storming his home unless he relented, three people familiar with the talks said.

The peril from the protesters was real. Three days before they’d approached the gates of his mansion, known as “the blue roof,” in the affluent northern Harare suburb of Borrowdale. Chris Mutsvanga, a leader of veterans of the liberation war against white-ruled Rhodesia in the 1970s, threatened to unleash a fresh wave of protests when Mugabe, confused and tearful during his final days in power, didn’t immediately resign after thousands poured into the streets on Nov. 18.

For Mugabe, an almost president-for-life figure, the scenes were difficult to believe. He’d always been accompanied by a motorcade of heavily armed troops, decoy cars, police vehicles, motorcycle outriders and a fully-equipped military ambulance. But in recent years, the fate of figures such as Saddam Hussein and Muammar Qaddafi, both of whom died or were captured after going on the run, had weighed on him, according to the officials who spoke on the condition of anonymity.

Ailing health and frequent confusion hobbled Mugabe during the talks. He wept often and called out for his deceased first wife Sally, and Nhamodzenyika, his son who died of cerebral malaria as an infant, the officials said. His friend Father Fidelis Mukonori, a Catholic priest who was mediating talks with the military, consoled him and begged him to eat and bathe.

Mugabe’s decision to step down and end a week-long standoff with the military came as his ruling Zimbabwe African National Union-Patriotic Front was preparing to impeach him in parliament. It marked an anguished end to the career of Africa’s second-longest serving leader who had led Zimbabwe to independence in 1980 and dominated its political scene ever since.

To read the full article, click here