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Bouygues, Movenpick to invest 55 million euros in luxury hotel in Abidjan

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(Reuters) – French company Bouygues and Swiss group Movenpick will team up with Ivorian firm Saprim to invest 55 million euros ($61.56 million) on a luxury hotel in Ivory Coast’s commercial capital, the firms said on Monday.

Work on the new five-star hotel will begin in the next six months and is expected to be ready within 30 months, or by the end of 2018, according to a statement by the three companies.

“The cost of the hotel is around 55 million euros of which most will be financed by Saprim and Bouygues,” said Jean-Gabriel Peres, chief executive officer of Movenpick hotels and resorts.

Four years after the end of a civil war, economic powerhouse Ivory Coast’s coastal city of Abidjan is booming and its hotels are often fully-booked.

The hotel and tourism sector currently accounts for 4.8 percent of Ivorian GDP versus 0.6 percent in 2011.

(By Ange Aboa, Reuters)

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Diamond jewellery sales rise to record in 2014: De Beers

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Diamond miner De Beers said global diamond jewellery sales grew by 3 percent last year to a record of over $80 billion, helped by strong demand in the United States, but warned 2015 will be tough for the industry.

De Beers said sales of polished diamonds rose 7 percent in the United States, while demand in China and India grew by 6 percent and 3 percent in local currency terms, respectively.

“Growth would have been almost five percent had it not been for the strengthening of the U.S. dollar against the currencies of several of the major diamond consumer markets in the latter part of 2014,” De beers said in a report.

The company, a subsidiary of global miner Anglo American, warned growth would be muted in 2015 as the strong dollar and an economic slowdown in China weigh.

De Beers chief executive Philippe Mellier said many industry participants started the year with more inventory than planned due to weak demand for diamond jewellery at the end of 2014.

“This led to a period of ‘indigestion’ in the diamond value chain and as a result we expect 2015 as a whole to be a more challenging year,” Mellier said.

De Beers said global rough diamond production fell by 3 percent in volume terms in 2014 to about 142 million carats, remaining well below the 2005 peak of around 175 million carats.

The company said expected output from expansion projects currently under way in the sector would lift total carat production to levels similar to the mid-2000s.

 

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Sudan’s finance ministry scraps subsidy for wheat imports

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Khartoum (Reuters) – Sudan has scrapped a special U.S. dollar/Sudanese pound exchange rate used for wheat imports, effectively removing a subsidy, the finance ministry said on Monday.

The subsidy removal is part of a government plan to liberalize wheat imports during a time of low global wheat prices, allowing the government to save money on importing wheat while also avoiding politically-sensitive price hikes.

The rate changed from 4 Sudanese pounds to 6, bringing it in line with the official exchange rate.

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Ibe Emmanuel Kachikwu Takes on Corruption at Nigeria’s State Oil Company

Comments (0) Africa, Featured, Latest Updates from Reuters, Politics

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by Enu Afolayan, Contributor

The President of Nigeria, Muhammadu Buhari, is committed to fighting corruption in his country. On June 26th, immediately after being elected, he ordered the dissolution of the board of the Nigerian petroleum company NNPC. Nigeria extracts two million barrels of crude every day, which makes it the largest producer of black gold in Africa. By attacking the petroleum sector, Buhari made a brave attempt to solve the country’s most serious mismanagement and corruption problem.

In 1970s, Buhari was the Minister of Oil and oversaw the birth of the NNPC. Corruption began to spread in the corporation as early as 1978, when it failed to repay the Treasury of Nigeria. Now, the “Father of the NNPC” is determined to put an end to the widespread corruption. He appointed Ibe Kachikwu as the new head of the petroleum corporation to take on this challenge.

Kachikwu arrived at the helm of NNPC right after the publication of an independent analysis by the Resource Governance Institute (NRGI). The analysis unveiled that over $32 billion in oil revenue was lost by Nigeria due to money laundering at the NNPC.

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Ghana’s Cocobod signs $1.8 bil loan for 2015/16 crop purchases

Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana’s cocoa regulator signed a $1.8 billion loan with international banks on Thursday to finance purchases for the 2015/16 season, its spokesman said.

Ghana is the world’s second-biggest producer of cocoa and this year’s syndicated loan, signed in Paris by some 23 lenders, will be used to purchase around 850,000 tonnes, Cocobod spokesman Noah Amenyah said.

Lead arrangers for the facility, the largest soft commodity deal in sub-Saharan Africa, were Barclays Bank, Commerzbank, Deutsche Bank, French investment bank Natixis and Japan’s Sumitomo Mitsui Banking Corporation.

Amenyah said the loan was oversubscribed by 44 percent to $2.6 billion but Cocobod took only $1.8 billion as originally planned at 1.19 percent over eleven months. Cocobod raised $1.7 billion from a similar syndication a year ago.

“Once again, the syndication was oversubscribed and it shows the increasing confidence of the lenders in Cocobod’s management and its operations,” he said.

Inflows from the loan, to be drawn in early October, are expected to help boost the central bank’s reserves in support of the local cedi currency, which is currently down around 26 percent, Amenyah said.

Deputy chief executive James Kutsoati said Cocobod hopes to open the new season on Oct 2 after closing the current season at the end of September.

Ghana is experiencing a poor cocoa harvest this year with output down 23 percent from last year due to harsh weather and poor farming practices.

Purchases hit the 700,000 tonne-mark in late August and it appears the country will miss its revised 750,000 tonne-target as the crop year draws to a close this month.

(By Kwasi Kpodo, Reuters)

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“Don’t panic,” Nigerian central bank head urges banks

Comments (0) Africa, Business, Latest Updates from Reuters, Politics

ABUJA (Reuters) – Nigerian central bank Governor Godwin Emefiele ruled out on Thursday a naira devaluation and told people not to panic about the government shifting its bank accounts to the central bank, a move that would drain billions of dollars from the financial system.

In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following a directive to government departments to move their accounts into a “Treasury Single Account” at the central bank.

The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa’s biggest economy – hammering banks’ liquidity ratios.

Amid confusion over implementation of the policy, overnight interbank lending rates spiked to 200 percent this week, but Emefiele denied the policy had provoked a liquidity crisis.

“There is no shortage of liquidity,” he said, pointing to an oversubscribed sale of treasury bills on Wednesday. “A spike is a momentary action. It’s sentiment,” he said.

Emefiele said less than one trillion naira ($5 billion) would be moved into the single account but did not give details.

Emefiele was also emphatic about maintaining the naira currency – which has dived in the past year due to a collapse in oil revenues – at its current level of 197 to the dollar.

“There will not be a devaluation because right now the currency is appropriately priced,” he said.

In a series of unconventional interventions to protect the naira, the bank has blocked access to foreign currency to import items ranging from soap and toothpicks to cement and private jets.

Emefiele said the list of restricted items could be expanded to encourage local production.

He rejected claims by Nigerian firms about the difficulties of getting hold of dollars and ruled out the possibility of a default by any company with dollar-denominated debt.

(By Julia Payne and Ulf Laessing, Reuters)

 

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Mali’s economy to slow on softening manufacturing: IMF

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DAKAR (Reuters) – Mali’s economic growth is set to slow this year to 4.9 percent, because of weakening manufacturing output, despite a strong harvest, the International Monetary Fund (IMF) said on Wednesday.

The Fund said in a statement following its annual Article 4 consultation on Mali’s economy that inflation would also remain moderate at around 2.4 percent this year, up from 0.9 percent last year.

“After an unusually strong growth performance in 2014, when the real gross domestic product (GDP) grew by 7.2 percent, growth in 2015 is expected to be around 4.9 percent, in line with its historical trend,” said Christian Josz, IMF mission chief, in a statement.

“The harvest is turning out well, but manufacturing output weakened in 2015,” it said.

The IMF signed a $46.2 million Extended Credit Facility with Mali in December 2013, and it said the programme targets for end-June were met thanks to prudent management of government finances.

Mali, a major exporter of gold and cotton, had been embroiled in a conflict between its government and Tuareg separatists in its north. Although a peace deal was signed in June, mediators have struggled to enforce it.

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A decade after write-offs, Africa sliding back into debt trap

Comments (0) Africa, Business, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – With their economies floundering and currencies sinking, African states that have borrowed heavily in dollars may be slipping back into the debt trap – and ultimately default – only a decade after a far-reaching round of debt forgiveness.

Some are looking to issue more Eurobonds to refinance existing foreign currency loans, but with U.S. interest rates set to rise soon, the inevitably higher borrowing costs will do little to alleviate pressure on creaking state budgets.

Top of the list of ‘at risk’ countries, according to experts, is Ghana, the first African sovereign after South Africa to go to the international markets when it launched a debut $750 million Eurobond in 2007.

Since then, Accra has issued two more bonds of $1 billion each, helping pushing total public debt to 71 percent of gross domestic product (GDP), according to data published this week.

This compares to 50 percent in 2005, the year anti-poverty campaigners Bono and Bob Geldof persuaded rich countries to write off billions of dollars owed by Ghana and other African nations.

Ghana’s central bank governor Henry Kofi Wampah dismissed the levels of debt – half of it in dollars – as “not very dangerous” but most analysts disagree, mainly due to the decline in the West African nation’s currency.

When it launched its debut bond in 2007 with an 8.5 percent interest rate, the cedi was virtually at parity with the dollar. It is now around 4, meaning the government is in effect servicing a loan equivalent to $3 billion.

Accra agreed a $918 million, 3-year rescue package with the International Monetary Fund in April, but even if the programme works the Fund admits the government’s interest payments are likely to stabilise at an eye-watering 40 percent of revenues.

And in reality the IMF package – essentially a dollar loan with slightly more favourable interest rates – is merely papering over the cracks.

“It’s a case of using one credit card to pay off another credit card,” said Carmen Altenkirch, an African sovereign debt analyst at Fitch. “Ultimately, the only ways to get your debt levels down are to raise your income or cut your expenditure.”

With growth slowing and a depressed outlook for commodity prices, balancing the books looks unlikely.

“The longer the commodity slump continues, the more countries will enter into crisis – and then you just can’t get out,” said Tim Jones, an economist for the London-based Jubilee Debt Campaign, an anti-poverty group.

 

MORAL HAZARD

Overall, Fitch says African sovereign debt levels have risen to 44 percent of GDP from 34 percent five years ago, with Zambia and Kenya – which are running budget deficits approaching 10 percent of output – looking particularly vulnerable.

Zambian finance minister Alexander Chikwanda told Reuters this week he would prefer not to have to go to the IMF for help – like Ghana, the southern African copper producer faces an election next year – but his options are narrowing.

As with Ghana, domestic yields are as high as 24 percent and since Chinese growth has cooled, leaders from Zimbabwe’s Robert Mugabe to Angola’s Jose Eduardo dos Santos have found Beijing to be an increasingly reluctant lender.

The cost of refinancing through more global bond issuance is also rising, as shown by the hefty 9.375 percent interest rate Zambia had to pay when it sold a $1.25 billion bond in July.

There is also the issue of moral hazard for the IMF, which, in positioning itself as a backstop, can be accused of encouraging reckless behaviour – both by rich-country lenders who know they will be bailed out, and by governments who fail to live within their means or wean their economies off commodities.

Oil producer Angola has told Reuters it plans to borrow $10 billion this year. The IMF expects Angolan public borrowing to hit 57 percent of GDP by end-2015.

“For all the talk of reform, Africa is still a commodity exporter,” said Ravia Bhatia, an Africa credit analyst at Standard and Poor’s. “‘Africa Rising’ masked the story that the fiscal deficits had been rising. Now it’s come home to roost.”

 

IT’S COMPLICATED

Assessments by credit agencies do not suggest defaults are imminent, but the ratings trend is downwards and negative outlooks prevail.

If it comes down to it, default and restructuring is likely to be messier than 2005 due to the presence of so many commercial investors in Africa’s debt mix, as opposed to the bilateral lending that prevailed before then.

“As sub-Saharan African sovereigns are moving away from bilateral and concessional lending and more towards market lending, debt forgiveness is less likely,” said Matt Robinson, an African sovereign ratings analyst at Moody’s.

“It makes it much more complicated.”

(By Ed Cropley, Reuters)

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Tower Resources signs deal for Cameroon offshore oil block

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YAOUNDE (Reuters) – Tower Resources plans to invest at least $43 million over seven years to explore for oil in a shallow-water block in Cameroon’s Rio del Rey basin, the company and Cameroonian officials said on Wednesday.

“Our entry into Cameroon marks a shift in our risk profile from frontier to proven basins and introduces an asset with existing discoveries into the Tower portfolio,” Tower CEO Graeme Thomson said in a statement.

The Africa-focused oil and gas exploration company has a 100 percent interest in the 119 sq km (46 sq mile) Thali block.

Under a production sharing contract signed in Cameroon’s capital Yaounde, an initial exploration phase will last three years with an option to renew for two subsequent two-year phases.

Tower has the option of relinquishing the block at the end of each phase, provided the agreed minimum work has been completed.

The Rio del Rey basin lies in the eastern part of the Niger Delta and has to date produced over 1 billion barrels of oil, with an estimated 1.2 billion barrels of remaining reserves, according to Tower’s website.

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Senegal’s growth to accelerate to 6 pct in 2016: IMF

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ABIDJAN (Reuters) – Senegal’s economic growth will accelerate to 6 percent next year, boosted by a government development plan, increasing trade with neighbouring Mali and lower oil prices, the International Monetary Fund (IMF) forecast.

Senegal, one of West Africa’s most stable democracies, has secured billions of dollars in donor support for a development plan that aims to diversify the economy beyond fishing, agriculture and tourism, and double growth over the next decade.

“The economic outlook remains favourable with a rate of growth of above 5 percent in 2015 and of 6 percent in 2016,” Ali Mansoor, who headed a recent IMF mission to Senegal, said in a statement released late on Tuesday.

Inflation, which stood at 0.6 percent in August, is expected to remain low, and the government has set a 2016 fiscal deficit target at 4.2 percent of GDP, the fund noted.

“The mission emphasized that doubling and sustaining growth rates at 7 or 8 percent … will require maintaining a sound macroeconomic framework in addition to accelerating the reforms required to promote private investment,” the statement said.

 

(Reporting by Joe Bavier; Editing by Jussi Rosendahlm, Reuters)

 

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