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IMF will not see new Zimbabwe loans in at least three years

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HARARE (Reuters) – The International Monetary Fund said on Thursday it would be at least three years before Zimbabwe can start accessing loans from international lenders and needs to deepen economic reforms in the medium term to strengthen its ability to repay debt.

Domenico Fanizza, head of a visiting IMF mission said there were no quick and easy fixes to Zimbabwe’s recovery, adding that what was needed in Zimbabwe were costly reforms that would take time to be felt by ordinary citizens.

The once promising southern African nation owes foreign creditors $9 billion and has been struggling for five years to recover from a catastrophic recession that send hyperinflation into billions amid widespread food shortages.

 

(Reporting by MacDonald Dzirutwe; Editing by James Macharia, Reuters)

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Room to Breathe: Balancing Climate Change with Development

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

seyni nafo

By Sheldon Mayer, Managing Editor

In preparation for the 21st United Nations Climate Change Conference (COP21) to be held in Paris in early December, the African Group representative, Seyni Nafo, is readying the hard line he will take with the need to balance Africa’s development and to reduce the horrific impacts of climate change upon the continent.

Mr. Nafo, of Mali, will be representing the 54-country continent in UN negotiations in the UN Framework on Convention on Climate Change (UNFCCC), a multilateral treaty signed  in 1992. The 34-year-old Nafo has said that “it’s a positive agenda. It will bring concrete initiatives, not just statements but ambitious initiatives,” an issue that is always of concern in UN treaties due the unenforceable nature of most documents.

Seyni Nafo: There and Back Again

A position of influence is not new to Nafo, the son of an international banker who held lofty positions, including with the African Development Bank. Even with four siblings including a twin, Nafo’s voice was always heard. As Nafo and his family dutifully followed his father, Nafo rubbed shoulders with the elite, particularly during his time at Lycée Saint-Martin-de-France in Pontoise. Run by the Congregation of the Oratory, Nafo said that the Lycée Saint Martin was “not necessarily a school of excellence, but a school of bourgeois or aristocrats,” which built his character and formed the foundation for the strong leader he is today.

Representing nearly 1 billion people in Africa’s struggle to maintain development in the face of carbon emission reductions takes a certain kind of leader: according to Alix Mazounie of the Climate Action Network, Nafo has the necessary “x-factor.” “[Nafo] has a real ability to negotiate with developed countries, and encourage them to do more for Africa…he prefers realistic commitments rather than aberrant figures,” both of which are integral qualities when dealing with the at times glacial UN body.

Before he arrived at the peak of African climate negotiations, Nafo spent a great deal of time abroad. After completing his studies, he worked as a trader in Chicago and learned the ropes of high-powered finance in the world’s carbon emission leader. After returning to Mali 27 years ago, Nafo’s view on climate change sharply focused—“we have no choice,” he said, but to turn to renewables.

A Breath of Fresh Air

While he continues to work as a trader in the African market, he is acutely conscious of the vast differences in his current (albeit officially unknown) income and his potential income were he a hedge fund manager in the United States. The fact that he knows the opportunities available to him and yet remains in his current position as Africa’s climate change forerunner shows his true character. By using his knowledge of international markets, he has embraced the challenges of representing a continent that has relatively little sway in terms of negotiating climate deals but that bears the brunt of the negative effects of climate change.

Nafo’s comments are usually population-centric, and mean to bring attention to Africa’s particularly difficult position. During a 2012 conference, Nafo issued a firm response to US climate envoy Todd Stern, saying that “Africa is at the forefront of climate impacts; science shows that temperatures [have risen] approximately 150% more than the global average…that means the destruction of crops on a huge scale…crops [that] belong to subsistence farmers and the result is devastation and famine. This is not a game with numbers; it’s a question of people’s lives.” 

Keeping Development Alive In Hostile Climate

Nafo knows that sacrificing development in order to reduceAfrica’s relatively low emissions would have would have catastrophic implications. He is a strong proponent of clean energy because it provides an opportunity to maintain development while lowering emissions. “Not only Africa is the region that has the least amount of greenhouse gas emissions and which is the most vulnerable,” says Nafo, “but it is also the region with the greatest potential for renewable energy and the one with the lowest rate of current energy access.” For Nafo, clean energy is the safest, fastest and surest way to develop the continent. While his commitment to clean energy is not purely a commitment to bluer waters and cleaner skies, it shows a deep understanding of Africa’s bargaining power.

A Fair Shot

For Africa, reducing the impacts of climate change is anything but a game. The summit provides an ideal platform to push their development plans as climate-friendly: Africa has borne the brunt of climate change’s negative impacts despite contributing only 3% of the world’s carbon emissions, according to Nafo. The African continent has been crippled by drought and famine, plagued by seemingly endless civil war, and is now at the mercy of the world’s largest emission offenders.

Africa has not had the same pattern of development as the majority of the world: crippled by Western imperialism and colonialism, as well as today’s mismanagement of assets, internal struggles and external pressures, Africa needs a chance to develop before its industry can be curtailed. A continent with nearly 1/7th of the world’s population and only 3% of its global emissions should not be held responsible for change. It is irresponsible of global leaders to suggest that Africa limit itself in the same way as China or the United States. A realistic (meaning enforceable) plan should be developed that promotes sustainable energy sources without decimating Africa’s burgeoning industrial sector.

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JP Morgan to remove Nigeria from government bond index

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

LAGOS (Reuters) – JP Morgan will remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, the bank said on Tuesday, after warning the government of Africa’s biggest economy that currency controls were making transactions too complicated.

The removal will force funds to sell Nigerian bonds, triggering potentially significant capital outflows and raising borrowing costs for the government.

Struggling with a plunge in vital oil revenue, Nigeria had imposed currency restrictions to defend the naira after the burning of dollar reserves failed to halt a slide.

The JP Morgan index tracks around $210 billion in assets under management.

Some bonds will be removed from the index by the end of September and the rest by the end of October, JP Morgan said.

The bank had warned Nigeria that to stay in the index, it would have to restore liquidity to its currency market in a way that allowed foreign investors tracking the index to conduct transactions with minimal hurdles.

Nigeria became the second African country after South Africa to be listed in JP Morgan’s emerging government bond index, in October 2012, after the central bank removed a requirement that foreign investors hold government bonds for a minimum of one year before exiting.

The index added Nigeria’s 2014, 2019, 2022 and 2024 bonds, giving Africa’s biggest economy a weight of 1.8 percent in the index.

“Foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency,” the bank said in a note.

The central bank had to devalue the naira and pegged it at a fixed rate against the dollar, turning trading into a one-way quote currency market whose lack of transparency upset investors and businesses.

The index provider said Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months. To get back in, it would have to establish a consistent record of satisfying the index inclusion criteria, such as a liquid currency market.

Nigeria’s Finance Ministry, central bank and Debt Management Office said in a statement they “strongly” disagreed with the index expulsion, saying that market liquidity was improving.

“While we would continue to ensure that there is liquidity and transparency in the market, we would like to note that the market for (government) bonds remains strong and active due … to diversity of the domestic investor base,” the statement said.

Traders told Reuters on Tuesday the central bank started rationing dollars to foreign investors last week.

Nigeria’s foreign reserves stood at $31 billion as of Sept. 7, down more than 21 percent from a year earlier, when they were $39.6 billion, the central bank said.

“Nigeria’s inclusion in the GBI-EM index was generally seen as a big step forward in its integration into global financial markets, opening the market to new investment and raising its profile worldwide. That will now be reversed,” said Alan Cameron, an economist at Exotix.

With Nigeria’s removal, countries such as Malaysia, Indonesia and Thailand have increased their weight by more 25 basis points as of Aug. 31, JP Morgan said in the note.

Foreign holdings of Nigerian government bonds stood below $2.75 billion, said Samir Gadio, the head of Africa strategy at Standard Chartered Bank. They had been around $8 billion in September 2014.

“This will initially trigger excess volatility in the market as exiting offshore accounts and onshore investors may push yields higher,” Gadio said. “A potential exclusion from the GBI-EM indices would make it more difficult to attract foreign portfolio flows in the future as Nigeria will need to rebuild its market credentials.”

By Chijioke Ohuocha (Reuters)

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Electricity shortage, low copper prices hit Zambian mines

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LUSAKA (Reuters) – An electricity shortage and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in Africa’s No. 2 producer of the metal.

The power problems and copper price slide have driven the kwacha currency to record lows amid a selloff in commodity-linked currencies as key consumer China’s economy has slowed, renewing pressure on Zambia to diversify its economy.

Glencore, Vedanta Resources Plc and China’s NFC Africa and CNMC Luanshya Copper Mine have said they will shut down some operations due to the harsh business environment.

“This is serious, it could bring our economy to its knees,” independent analyst Maambo Hamaundu said.

Zambia’s power generation capacity stands at 2,200 megawatts (MW), with most of the electricity produced from hydropower, but supply is often erratic.

State power utility Zesco Ltd, which generates the bulk of the electricity, said last week it would deepen power cuts after water levels at its largest hydropower station dropped following a drought.

President Edgar Lungu said on Friday that Zambia should reduce its overall imports of goods to tackle the country’s trade imbalance, but it should import more power to address the shortages.

The Zambian government on Tuesday started importing 148 MW of power from a ship docked off the coast of Mozambique.

“CEC (Copperbelt Energy Corporation) has communicated to the mines, the need for them to begin accessing imported power,” Chama Nsabika-Kalima, spokesperson for CEC, the largest supplier of power to Zambia’s copper mines, said.

Zambia is the world’s No. 8 copper producer. The closure of mines and smelters is likely to hit its output, which was projected to increase to 916,767 tonnes by 2018 from 741,916 tonnes in 2015, largely on account of increased output at the Kansanshi mine owned by Canada’s First Quantum Minerals, according to government data.

The slide in global copper prices, to six-year lows last month, has already prompted the government to slash its economic growth forecast for this year to 5 percent, from an initial 7 percent, and the deepening power crisis and curbs to copper production risk a further slowdown, analysts say.

Copper production accounts for 11 percent of Zambia’s gross domestic product.

Labour unions are worried about the impending job cuts, while the government has asked mining companies to consult with the ministry of labour before shutting down operations.

“We started importing electricity and they have the option to buy that power and continue with the operations,” the chief government spokesman, Chishimba Kambwili, said.

The Zambia Chamber of Mines, an industry body, said it was talking to the government over the problems facing the industry.

“We understand the severity of the situation. We want to work with the government to find a long-term solution to this problem,” the chamber’s chief executive, Maureen Dlamini, told Reuters.

By Chris Mfula (Reuters)

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South Africa’s Zuma says urgent intervention needed to save mining sector

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PRETORIA (Reuters) – Consistently low commodity prices and the risk of job losses have forced the government to call an urgent meeting with labour and business leaders in South Africa’s mining sector, President Jacob Zuma said on Tuesday.

The mining industry, which contributes around 7 percent to Africa’s most developed economy, is struggling with sinking commodity prices, rising costs and labour unrest, forcing a number of companies into mine closures and layoffs.

“We meet under difficult conditions. The global economy is experiencing a downturn which is posing a challenge for South Africa’s economy, which is a net exporter of key mineral commodities,” Zuma said in opening remarks at the Mining Sector National Consultative Forum in the capital Pretoria.

The meeting comes after a 10-point plan was signed by the mines ministry, labour and industry to stem a wave of job cuts triggered by falling prices and rising costs.

Zuma’s ruling ANC party is facing increasing pressure from the left-leaning parties who accuse him of neglecting the working class ahead of local elections next year.

Mines Minister Ngoako Ramatlhodi told reporters he wanted to save mines while also conserving jobs and that the meeting with Zuma would hopefully yield solutions to the job losses.

“It is crucial, it is important and we have elevated it to the president’s level and that tells you the importance we have attached to this gathering,” he said.

Ramatlhodi has previously said almost 12,000 mining jobs were on the line in South Africa, which has an unemployment rate of around 25 percent and glaring income disparities.

South Africa sits on close to 80 percent of the world’s known reserves of platinum, a metal used in emissions-capping catalytic converters which is facing depressed demand.

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Smile Telecoms raises $365m to fund Africa expansion

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Smile Telecoms

JOHANNESBURG (Reuters) – African mobile internet firm Smile Telecoms has raised $365 million to fund the expansion of high-speed broadband networks, it said on Tuesday, the latest firm to jockey for a position in the continent’s fast-growing mobile consumer market.

Telecoms and Internet companies are expanding in Africa to take advantage of the growing demand for data heavy services as more affordable smartphones encourage consumers to browse the internet, stream videos and download applications.

Mauritius-based Smile Telecoms said it would use the funds to extend its existing 4G LTE mobile broadband network in Nigeria, Tanzania and Uganda and also launch the network in the Democratic Republic of Congo in 2016.

The money was raised through a $50 million equity sale to Public Investment Corporation, a South African state-owned firm that manages more than 1.6 trillion rand on behalf of civil servants.

The rest of the funding was raised via debt from a group of investors that included Egypt’s African Export-Import Bank, Development Bank of Southern Africa, Diamond Bank plc and Standard Chartered Bank.

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Glencore reins in debt as commodity price slump persists

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By Olivia Kumwenda-Mtambo

(Reuters) – Mining and trading company Glencore acknowledged on Monday the severity of the global commodity market slump as it suspended dividends and said it would sell assets and new shares to cut heavy debts built up through years of rapid expansion.

The London-listed company came under pressure to cut its net debt of $30 billion, one of the largest in the industry, as prices for its key products, copper and coal, sank to more than six-year lows. (more…)

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Ethiopia’s inflation at 11.6 pct year-on-year in August

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

NAIROBI (Reuters) – Ethiopia’s inflation slowed to 11.6 percent year-on-year in August from 11.9 percent the previous month, owing to a dip in non-food items, the statistics office said on Monday.

The Central Statistics Agency said non-food price inflation fell to 9.2 percent from 9.7 percent in July.

The food inflation rate rose to 14.7 percent in August from 13.9 percent the previous month.

 

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