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African Development Bank approves $1.5 billion loan to Egypt

Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – The African Development Bank (AfDB) has approved a $1.5 billion loan to Egypt to be paid out over three years, International Cooperation Minister Sahar Nasr told Reuters on Tuesday.

The first $500 million of the loan will arrive within days, said Nasr, and will go toward the government’s economic development programme and national projects.

“We have a competitive economic reform programme that started more than a year back and based on that we are taking the first tranche,” Nasr, a former World Bank official, told Reuters by telephone.

Egypt expects to receive an additional $1 billion from the World Bank by the end of the year to support the budget and could discuss potential IMF financing once parliament convenes, Nasr told Reuters previously.

“The bank’s approval today is a strong message affirming that the Egyptian economy is moving at a steady pace towards achieving comprehensive development and confirms that the bank is confident in the government’s reform process,” said AfDB representative Leila Mokaddem.

A foreign currency shortage has crippled import activity this year and the country has scrambled to find new sources of dollars as shipments have piled up at ports and manufacturing has slowed.

Foreign currency reserves, which stood at about $36 billion before the 2011 uprising that toppled veteran ruler Hosni Mubarak, were $16.42 billion at the end of November despite billions of dollars in Gulf Arab aid that Egypt has received since mid-2013.

 

(Reporting by Lin Noueihed; Writing by Eric Knecht; Editing by Mark Trevelyan)

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South Africa’s rand, stocks gain after Gordhan named as finance minister

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

JOHANNESBURG (Reuters) – South Africa’s rand strengthened more than 4 percent in early trade on Monday after President Jacob Zuma named widely-respected Pravin Gordhan as finance minister in a bid to draw a line under days of market turmoil.

Zuma gave Gordhan the job late on Sunday, in a dramatic U-turn that gave Africa’s most industrialised economy its third finance minister in a week.

Just four days earlier, the president had sacked Nhlanhla Nene as finance minister and given the job to David van Rooyen, a relatively unknown lawmaker and Zuma loyalist – a move that had triggered a wave of criticism and a sell-off on the markets.

Gordhan, who last held the post from 2009 to 2014, was due to address the media at 1pm local time (1100 GMT), a statement from the Treasury said.

South Africa is gearing up for local elections next year where the ruling African National Congress (ANC), is expected to face stiff competition from the opposition Democratic Alliance in urban areas, including the economic hub of Johannesburg. The countryside remains an ANC stronghold.

Even some supporters of the ANC, Nelson Mandela’s erstwhile liberation movement that has ruled since the end of apartheid in 1994, expressed dismay about Wednesday’s appointment of a Zuma loyalist to the crucial post. They also described his latest appointment as a sign Zuma was losing control.

“It may not be his death knell, but it’s certainly the turning of the tide,” a former senior anti-apartheid activist and ruling ANC legislator Ben Turok.

The currency fell nearly 9 percent last week following the removal of Nene, a civil servant veteran who was keen to rein in government spending.

“The markets will welcome back Gordhan to National Treasury,” Rand Merchant Bank’s currency strategist John Cairns said. “He is a known entity, is his own man and did well when in the post previously. But it is certainly unreasonable to expect all of last week’s losses to be reversed — a huge amount of uncertainty has been created in the past few days.”

By 0716 GMT, the rand had strengthened 4.53 percent against the dollar to 15.1700, recouping some losses suffered last week. The rand had traded at 14.4320 per dollar before Nene was fired.

Yields on government bonds recovered sharply in early trade, with the benchmark paper due in 2026 down 101 basis points at 9.37 percent.

 

MARKETS CHEER GORDHAN

The rally may also be limited if the Federal Reserve, the U.S. central bank, raises interest rates on Wednesday – a move set to put emerging markets like South Africa under strain.

“Markets should rally back very strongly but I would not expect a total retracement with a permanent loss of trust in leadership even if we are in a better place,” said Peter Attard Montalto of Nomura in London.

The removal of Nene also led to a selling frenzy in South African banking stocks, which dropped nearly 20 percent on investor worries that the country’s credit rating would slip into “junk” status.

On the bourse, the banking index shot up 12 percent, having dropped nearly 20 percent after Nene was removed.

The Johannesburg Security Exchange’s broad All-Share index was up 2 percent to 49,051 points by 0734 GMT.

Zuma said the about-face decision was prompted by many calls to rethink his decision.

South Africa’s Beeld newspaper, citing an informed person, said Gordhan’s appointment was preceded by a crisis meeting between Zuma, politicians and representatives of the private sector on Sunday afternoon.

 

(By Tiisetso Motsoeneng and Nqobile Dludla. Additional reporting by James Macharia and Zandi Shabalala; Writing by James Macharia)

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Kenya’s shilling steady, importers cautious about buying dollars

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

NAIROBI (Reuters) – Kenya’s shilling was steady in early trading on Monday, with most importers holding off from dollar purchases to see if the currency would strengthen below the 102 level.

By 0715 GMT, the shilling was quoted at 102.05/25 to the dollar, little changed on Friday’s close of 102.10/102.20.

The shilling had strengthened below 102 last week before demand for dollars from energy importers made it weaken.

“Most other importers are waiting to see if the market will dip again below 102 before they come into the market,” one trader at a commercial bank said.

Investors were also acting cautiously before a rate decision on Wednesday by the U.S. Federal Reserve, when it could raise rates. “That (decision) will probably give the market direction,” the trader said.

 

 

(Writing by Edmund Blair)

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Coastal erosion washes away beaches, threatens tourism in Senegal

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

SALY, Senegal (Reuters) – The European winter is the high season for tourism in Senegal as visitors flock to its sea and sun to escape the cold, yet since last year the doors of the luxury Hotel Espadon have been closed.

Its swimming pool has turned a swampy green. The skeletons of old parasols poke out from the sand and the sea gnaws at the foundations of its pretty beachfront rooms.

The problem is not high prices or mismanagement but coastal erosion that is blighting the West African country’s coast.

The Atlantic has washed away beaches, forcing hotels to make a drastic choice: save their property by building sea walls that block the view or let the water rise and risk losing everything.

“Every day I receive tourists who come to see if it’s true what they say about the Hotel Espadon’s current state,” said Sonore Khadim Tall, the building’s superintendent. “They can’t believe their eyes and some of them even cry.”

As a Paris summit focuses on climate change it is tempting to place the whole blame for Senegal’s erosion on rising sea levels but reckless building on beaches compounds the problem, said Papa Goumbo Lo, head of Senegal’s national institute for scientific research.

The problem arises when builders construct too close to the beach or extract coastal sand for projects, exacerbating erosion and rendering buildings vulnerable to tides.

 

POSTCARD OF BEACH

Tourism accounts for 11 percent of Senegal’s economy, but over time erosion could affect the country as a whole, given that two thirds of the population live in the coastal region around the capital Dakar.

Other countries in the region are affected. Gambia’s 15 coastal hotels are at risk due to erosion. Nigeria’s environment ministry has launched a programme to fight erosion and Ghana, which has 1 million annual visitors, has built a 30-km sea wall.

Around 1 million people also visit Senegal every year and in 2014 the government set itself the goal of tripling that number.

Saly, where the Espadon is located, is one of the country’s biggest tourist hubs but risks missing out. Since 2010, the town 50 km (32 miles) southeast of Dakar has lost 30 metres of beach.

Ousmane Diop, head of environment and client relations at the nearby Filaos Hotel, said visitors who return to the hotel these days are drawn by loyalty to the staff rather than the beach.

Only a postcard of the beach remains and the water is accessible across a ramp beside a sea wall.

“If we hadn’t built the wall, the ocean would have been in the restaurant,” Diop said, pointing at an open-air dining area with a sea view.

 

MAN DESTROYS NATURE

Tourism in West Africa has already been hit by perceptions of insecurity in countries like Mali, where Islamist militants attacked a luxury hotel on Nov. 20, and disease, after Ebola killed thousands in Guinea, Liberia and Sierra Leone.

Senegal tried to offset the problem in May by scrapping visa requirements and halving airfare taxes.

But numbers from the World Travel and Tourism Council show visits have been flat this year compared to last year and tourism employees in Saly say their numbers are down. Many hotels along the coast closed early last season.

Ibou Sakro Thiandoum, president of Saly’s natural resource commission, called for greater central government action, saying, “We are orphans here.”

For his part, Ernest Dione, national coordinator for the Ministry of the Environment, defended government initiatives, pointing to its study on erosion and an emergency action plan.

It is possible to recover lost beaches through the use of wave breakers and other tools but it is expensive, Lo said.

The work has started in Saly, where boulders line the shore to break waves. Some beaches have already been recovered but the process stands incomplete for lack of funds.

These initiatives are inadequate and to solve the problem beach homes responsible for erosion in the town should be torn down, said Ousmane Diouf, an artist at the Filaos hotel.

“As long as man destroys nature, he destroys himself,” he said.

 

(By Makini Brice. Editing by Matthew Mpoke Bigg and Estelle Shirbon)

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African Middle Class to Reach 900 Million by 2040

Comments (0) Africa, Business, Featured

africa middle class

On October 15th, the CFAO – a specialized distribution leader and partner of major international companies – published a new, detailed study on consumption patterns in Africa. The conclusion was that the nature of the middle class is changing as it expands and that it could reach as many as 900 million people by 2040.

In recent years, the media has latched on to the notion of an increasing middle class in Africa despite there being a real lack of research in the area. This idea arose from the strong economic growth being experienced in a number of African countries. This has resulted in the construction of large shopping malls and supermarkets, increased housing ownership and increased access to information and communications technology.

Due to the size of Africa, as well as the cultural differences, religions and varied economies, defining the middle class can be quite difficult. To get around this problem the study was based on data accumulated from five countries, Kenya, Ivory Coast, Nigeria, Cameroon and Morocco.

What is the Future of the African Middle Class?

The African middle class is expected to continue growing rapidly. According to Jean-Michel Huet, one of those responsible for carrying out the survey, in 25 years the population of middle class citizens in Africa could exceed that of China and India combined. This is of huge interest to large Western countries who will see this an opportunity. If they can attain a significant share of such a large market, the revenues and profits earned could potentially be enormous. In a global economy still struggling from the economic downturn following the financial crisis, the continued growth of the African economy represents an important opportunity for Western countries and corporations.

Currently, 62% of the population of Africa is under the age of 25. As the middle class grows and access to private health care increases, it is expected that this will lead to an increased life expectancy. This increase in the average age of the population will result in an increase in the size of the workforce.

The trend in recent years in Africa has been towards urbanization and much of the middle class can be found in the continent’s cities. However, increasing numbers of middle class people can be found in rural areas. Hélène Quénot-Suarez, a doctor of political sciences in Sub-Saharan Africa for the French Institute of International Relations has said that “African rural areas are also gradually experiencing the emergence of a middle class.” This is a trend that is likely to continue into the future.

A study conducted by the consultancy firm Deloitte in 2010 found that as the middle classes in Africa grow, people will have more recreational time. This combined with a better standard and higher level of education will result in people becoming more politically assertive. This presents further opportunities to western countries. Increasing education levels will mean greater access to a skilled workforce. When combined with greater levels of political activity this could lead to stronger democracies and free market economies being formed. This would make it easier for corporations from outside the continent to conduct business.

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South Africa’s stocks extend losses after Nene sacking

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

JOHANNESBURG (Reuters) – South Africa’s main stock index slumped more than 2 percent on Friday as jittery investors continued to pull out of the market after Wednesday’s shock dismissal of the finance minister.

Banks, which are most at risk if South Africa’s credit rating is downgraded in the wake of the removal of Nhlanhla Nene, led the decliners, with Barclays Africa plummeting nearly 20 percent.

 

 

 

(Reporting by Tiisetso Motsoeneng; Editing by James Macharia)

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Zuma’s firing of South African finance minister dismays investors, ANC supporters

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

JOHANNESBURG (Reuters) – South African President Jacob Zuma’s sacking of his respected finance minister in favour of a relative unknown has shocked investors and emboldened critics who say the 73-year-old is driving the economy to ruin.

Even some supporters of the African National Congress (ANC), Nelson Mandela’s erstwhile liberation movement that has ruled since the end of apartheid in 1994, expressed dismay about Wednesday’s appointment of a Zuma loyalist to the crucial post.

Zuma gave no details as to why on Wednesday he dismissed Nhlanhla Nene, who has overseen the Treasury for just under two years, other than to say he had “done well… during a difficult economic climate”.

Markets reacted unambiguously, with the rand plunging to a record low against the dollar, losing just over five percent since Nene was removed. The Johannesburg Stock Exchange’s banking index lost 13.5 percent on Thursday.

New Finance Minister David van Rooyen acknowledged he had taken on “a colossal assignment”.

Local media speculated this week that Nene might be on the chopping block after he rebuked Dudu Myeni, the chairwoman of state-owned South African Airways and a close ally of Zuma, for mismanaging a 1 billion rand ($67 million) deal with Airbus.

Myeni is executive chairwoman of Zuma’s charitable trust, the Jacob Zuma Foundation.

The main opposition party went on the attack. “It is clear that if you stand up to Zuma, you don’t stick around,” Mmusi Maimane, leader of the Democratic Alliance, told Reuters. “Zuma has reached new heights as a leader who puts himself ahead of his country and the economy.”

Zuma’s office did not respond to Reuters requests for comment. The ANC said in a statement it “notes and respects” the president’s decision.

 

“TOO MUCH CORRUPTION”

The sacking and the financial fallout hit a raw nerve with some ordinary South Africans. “With the rand getting battered like this, firing Nene is not the right move,” said Dominic Ratau, a 74-year-old pensioner and lifelong ANC loyalist, expressing his dissatisfaction with Zuma.

“I’ve been an ANC supporter because of the older generation who were running the party. But this guy is leading the country to disaster. He’s allowed too much corruption.”

Nene’s reluctance to rubber-stamp an ambitious plan to build a number of nuclear power stations to ease severe electricity shortages, a project that might cost as much as $100 billion, is also seen as contributing to his downfall.

His successor van Rooyen is an ANC lawmaker who sits on parliament’s finance committee.

Van Rooyen said he would implement policies aimed at creating favourable investment conditions after he was sworn in. “Mine is a colossal assignment coming at a time when the global economic outlook is not favourable, more especially for emerging markets,” van Rooyen said.

Many economists have questioned van Rooyen’s ability to steady an economy being hammered by the collapse in prices of South Africa’s commodity exports that range from coal to gold, and raised concerns that public spending could spiral out of control.

Credit agency Fitch downgraded South Africa last Friday, leaving the continent’s most sophisticated economy just one notch about “junk” status, and said on Thursday Nene’s firing “raised more negative than positive questions”.

A Reuters poll on Wednesday showed analysts expect the economy to grow just 1.4 percent this year and 1.6 percent next, 0.1 percentage points lower than last month’s forecasts.

 

WHO’S NEXT?

Nene’s removal has raised speculation about more casualties within Zuma’s team, after the axing in September of mining minister Ngoako Ramatlhodi, who investors said had done a decent job in a tough but crucial portfolio.

South Africa is gearing up for important local elections next year where the ANC is expected to be run close by the Democratic Alliance in urban areas, including the economic hub of Johannesburg. The countryside remains an ANC stronghold.

Significant erosion of ANC control in metropolitan powerbases could strengthen Zuma’s opponents, especially if South Africans blame him for the floundering economy.

“Zuma’s power is becoming more brittle and his lines of support stretched thinner and thinner,” said political analyst Nic Borain. “He is engaging in actions that parts of his party find repulsive and there is a point beyond which a system under stress can quickly unravel as the connections snap.”

A #ZumaMustFall Twitter campaign kicked off within hours of Zuma’s announcement, echoing one earlier this year calling for the removal of colonial-era statues.

 

SCANDAL

Zuma, a polygamous Zulu traditionalist with little formal schooling, has been beset by scandal throughout his career. In 2005 he was charged with raping a woman he knew to HIV-positive, but was found not guilty when the court ruled the sex was consensual.

Last year, the Public Protector, the top anti-corruption watchdog, ruled that he had “benefited unduly” from a 246 million rand state-funded security upgrade to his private home that included a swimming pool and amphitheatre.

Despite this, he has maintained his authority and standing in the ANC. His presidential term ends in 2019. Were he to be forced out early, his ex-wife and African Union head Nkosazana Dlamini-Zuma, and deputy president Cyril Ramaphosa, are the front-runners to succeed him.

 

(By Joe Brock and Ed Cropley. Additional reporting by Nqobile Dludla and Mfuneko Toyana; Writing by Joe Brock; Editing by James Macharia and David Stamp)

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Rising food prices push up Egypt’s inflation

Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s urban consumer inflation jumped to its highest level since June, data from the state statistics agency showed on Thursday, propelled by the rising cost of food even as the state takes new measures to keep prices in check.

The figure rose to 11.1 percent in November from 9.7 percent in October, CAPMAS said, compared with 11.4 percent in June.

Egypt said in November it would control the prices of ten essential commodities and use its state grain buying agency to import a broader array of goods in an effort to curb inflation.

However, November core inflation, which excludes volatile items such as fruits and vegetables, rose to 7.44 percent from 6.26 percent in October, the central bank said.

The higher inflation figures might influence the central bank’s decision on interest rates at a monetary policy committee meeting scheduled for next week, Capital Economics said in a research note on Thursday.

“For now, with the domestic economy struggling, we suspect that interest rates will be left on hold next week. But today’s figures … mean that there is a growing risk that the (central bank) will be spooked and decide to hike rates,” the note said.

 

(Reporting by Eric Knecht; Editing by Louise Ireland)

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Nigeria to make $2.1 billion payment to cover fuel subsidy – finance ministry

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

ABUJA (Reuters) – Nigeria’s government has agreed the immediate payment of 407 billion naira ($2.1 billion) owed to fuel importers under a subsidy scheme, the finance ministry said on Wednesday.

Africa’s biggest oil producer imports most of its gasoline requirement because of its dilapidated refining system, which President Muhammadu Buhari is keen to revive.

Firms bringing in subsidised imports have struggled to finance their purchases with low dollar availability and shrinking credit lines.

Finance Minister Kemi Adeosun has approved the payment of 407 billion naira for “subsidy claims to oil marketers”, said Marshall Gundu, a spokesman for her ministry.

“The president has directed that payments be made immediately in order to bring to a quick end the lingering fuel crisis,” said Gundu.

Fears of a fuel scarcity prompted Nigerians to resort to panic-buying in the last few weeks, forming long queues at petrol stations in major cities.

Some of the money to be paid to importers dates back to 2014 and this is the first significant payment since Buhari came to power in May.

A severe fuel crisis crippled the country in May because of a standoff between importers and the outgoing administration led by Buhari’s predecessor, Goodluck Jonathan, over whether their debts would be honoured.

Buhari, who kept the petroleum portfolio for himself, does not want to phase out the costly and fraud-ridden subsidy scheme just yet, putting him at variance with members of his own party, the All Progressives Congress, and his minister of state for oil.

($1 = 198.9700 naira)

 

(Reporting by Camillus Eboh; Writing by Alexis Akwagyiram; Editing by Gareth Jones)

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Early, intense Harmattan winds worry Ivory Coast’s cocoa exporters

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

SAN PEDRO, Ivory Coast (Reuters) – The early arrival of intense seasonal Harmattan winds in Ivory Coast’s cocoa growing regions have raised concerns among exporters, who were already harbouring doubts over the size and quality of this season’s main crop in the world’s top producer.

The Harmattan’s dry, dusty winds blow down from the Sahara each year and can, when strong, lead to reduced bean size. The prolonged overcast conditions they create also make it difficult for farmers to properly dry and ferment harvested cocoa, reducing quality.

Farmers reported the arrival of the seasonal phenomenon in Ivory Coast’s growing regions in early December, weeks earlier than expected.

“Output was already down. We already knew that. But the fact the Harmattan has arrived so early and is so strong is really going to complicate the overall picture for the harvest,” said the director of an Abidjan-based export company.

Following a strong start to the 2015/16 season, arrivals to ports in Abidjan and San Pedro have declined gradually in recent weeks and fell behind last year’s levels according to exporters’ most recent estimates.

In San Pedro, Ivory Coast’s main export hub for cocoa, exporter warehouses visited by Reuters were half-full.

“Arrivals will increase a bit but will remain below last year’s volumes. We’ll have 50,000 to 60,000 tonnes per week until January and around 30,000 tonnes in January,” said a San Pedro-based purchases manager.

Ivory Coast brought in a record harvest of around 1.8 million tonnes last season. However, the International Cocoa Organization (ICCO) already predicted in October a global supply deficit of around 96,000 tonnes this season, partly on the back of a significant drop in Ivorian production.

Exporters said that if the currently harsh Harmattan conditions persist, or even worsen, that deficit could grow.

“If this carries on, we risk an even greater impact on the harvest, but on quality as well,” said a second exporter.

The bulk of Ivory Coast’s cocoa is produced during the October-to-March main crop, with the most intense harvesting typically taking place in November and December.

“The Harmattan’s effects will be harsh from December until the end of January and that will clearly have an impact on bean quality. We worry about high (free fatty acid) content and poor fermentation during that period,” a third exporter said.

 

 

(By Ange Aboa. Editing by Joe Bavier; Editing by Elaine Hardcastle)

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