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Oando aims to pick up Nigerian assets from embattled majors

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

LONDON (Reuters) – Nigerian-based oil producer Oando wants to double its oil output by 2019, targeting assets likely to be shed by majors hit by the crude price drop.

Chief Executive Wale Tinubu told Reuters in an interview on Monday the retreat among the world’s major producers from the onshore Nigerian oil industry would likely leave a lot of assets on the market.

“When you compare the size of the resource base (the majors) have in Africa vis-à-vis the rest of the world, it’s clear that they will have to do Nigerian divestments and we are the natural buyer of choice,” he said.

Oando, which produces some 50,000 barrels of oil a day, already bought ConocoPhillips’ Nigerian assets for $1.5 billion in July last year, with a view to meeting its target of hitting 100,000 bpd by 2019.

“We are driven, we are keen and we are on the lookout for opportunities and we are confident of securing opportunities towards increasing our reserve base and our production,” he said.

The price of oil has halved to below $50 a barrel over the last 12 months, as global supply has outstripped demand.

“We’re betting on an eventual oil price rise and we see the best time for securing those reserves as being now and not when the market rebounds,” Tinubu said.

Nigerian onshore oil projects have been plagued by industrial scale oil theft, security problems and oil spills, the latter having become a growing legal liability for major oil companies.

Nigeria is Africa’s largest oil producer and contributes some 2 million barrels a day to total world supply.

Shell has already sold some of its Nigerian oilfields and said last week it will focus its future investments there on natural gas. Its French peer Total agreed in March to sell a stake in an onshore oilfield to Nigeria’s Aiteo Eastern E&P.

Local oil producer Afren Plc, which went into administration in July, owns oilfields in Nigeria, but Tinubu said Oando was not considering them.

“We looked at it but we’re not really interested. It doesn’t satisfy our criteria we believe there are many better opportunities out there,” he said.

 

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Zimbabwe proposes 10% black empowerment tax

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

HARARE (Reuters) – Zimbabwe plans to impose a 10 percent tax on foreign-owned firms to fund a black economic empowerment programme that is designed to bring the companies under local majority control, a minister was quoted as saying on Monday.

Some of the companies that could be affected by the new tax include the world’s top two platinum producers Anglo American Platinum and Impala Platinum Holdings, which both have operations in the southern African nation.

Under Zimbabwe’s Indigenisation and Economic Empowerment Act passed in 2008, the minister of youth and empowerment can, with the approval of the finance minister, levy a tax on any company to raise money to fund the black economic empowerment programme.

Youth and Empowerment Minister Patrick Zhuwao told the government’s Herald newspaper that he would propose a 10 percent levy on all foreign-owned firms that have not complied with the law, known locally as indigenisation.

The money raised would fund mostly rural community trusts to invest in businesses, said Zhuwao, adding that the government expected to raise $93 million annually.

“For us to be able to fund empowerment programmes in the long term, we are proposing the introduction of an empowerment levy and we are empowered by law to propose the levy,” Zhuwawo was quoted as saying by the newspaper.

Zhuwao, a nephew to President Robert Mugabe who was appointed to his job on Sept. 11, could not be reached to comment further.

Efforts to introduce the levy in 2012 failed after then finance minister Tendai Biti, from the opposition Movement for Democratic Change party, refused to sanction its implementation.

Zhuwawo’s comments come more than a month after the previous empowerment minister said the government was relaxing the law in a bid to attract foreign investment.

Zimbabwe’s economy is expected to grow by 1.5 percent this year, half the government’s initial forecast, after weak global commodity prices hit exports and a drought halved the staple maize crop harvest.

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Egyptian business activity grows at slower pace in September

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

CAIRO (Reuters) – Business activity in Egypt expanded for the second consecutive month in September, although the pace of gains in output and new orders slowed, a survey showed on Monday.

Egypt’s economy is still struggling since a popular uprising ousted autocrat Hosni Mubarak in 2011 and was followed by political instability that kept foreign investors and tourists away.

In a survey, the Emirates NBD Egypt Purchasing Managers Index (PMI) for the non-oil private sector fell to 50.2 points in September, from an eight-month high of 51.2 in August, but stayed above the 50-point mark that indicates growth in activity.

The index was below 50 points for the first five months of 2015.

“Given ongoing weakness in the export sector, it is encouraging that the overall PMI index continued to show an expansion in private sector activity,” said Jean-Paul Pigat, senior economist at Emirates NBD.

“While the pace of growth is moderate, the survey nevertheless points to a slight improvement in domestic demand in the first quarter of Egypt’s fiscal year FY2015/16. The challenge will be to maintain this momentum through the remainder of the year.”

The PMI’s output sub-index eased to 51.5 points in September from 52.8 points in the previous month, and only one-in-five panellists reported improved activity due to stronger demand.

The new orders index slipped to 50.5 points, from August’s 52 points, while the new export orders index shrank for the third consecutive month, to 47.8 points from 49.2 points a month earlier.

The employment index for the non-oil private sector fell to its lowest level in five months at 48.7 points, from 49.3 points in August.

President Abdel Fattah al-Sisi has pledged to reduce the jobless rate to 10 percent over the next five years. Unemployment stood at 12.8 percent during the first three months of 2015 according to the government’s statistics agency, but analysts believe actual unemployment may be higher.

The index of output prices fell to 49.5 points from 50.2 points in August.

Egypt’s urban consumer inflation has slowed, to 7.9 percent in August from 8.4 percent in July, official data showed in early September.

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Ghana delays Eurobond it expected to launch on Friday

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Ghana money

ACCRA (Reuters) – Ghana has postponed a Eurobond sale of up to $1.5 billion it had expected to launch on Friday amid a rise in borrowing costs for emerging market nations, a senior government official said.

Analysts said the delay, following roadshows in London and the United States, was probably a response to the prospect of having to pay higher yields after concerns about China’s economy and a possible U.S. rate rise roiled global markets.

Eurobonds issued by other commodity-exporting African countries have sold off sharply in recent weeks as metals prices have plunged.

Ghana’s planned issuance was mainly to refinance debt. The country is heeding an International Monetary Fund programme to stabilize its economy in the face of a fiscal crisis that includes a debt to GDP ratio around 70 percent.

Senior Ghanaian financial policymakers have concluded a roadshow in London and U.S. cities and are returning to Accra. Officials said the launch could still happen in the near future.

“What it means is that we are not closing the book (launching the Eurobond) today,” said the official, who declined to be named. “But we are still live in the market and could seal a deal anytime we deem fit.”

A finance ministry statement said Ghana continues to consider the bond issue subject to market conditions. Another senior official told Reuters there was significant interest in the bond but the yields were not attractive.

“The reason why the deal is not announced yet, I suspect, is that the government was surprised that the cost of funding was still elevated relative to their expectations,” said a London-based fund manager.

Investors were demanding a high premium despite a World Bank guarantee for the bond of $400 million and the government appeared to be considering cutting the bond to $1 billion or lower to get the desired pricing, the manager said.

The manager said Ghana wanted to pay a 9.5 percent yield for the bond, while a source involved in book running for the launch said the market was demanding closer to 11 percent.

Angola on Wednesday cancelled plans for a $1.5 billion Eurobond due to challenging economic conditions and has not set a new time frame for the issue.

GROWTH SLOWS SHARPLY

For years, Ghana had one of the strongest economies in sub-Saharan Africa thanks to exports of gold, cocoa and oil. But growth has slowed sharply in the last two years due to a fall in global commodity prices and economic instability.

The government forecasts GDP growth at 3.5 percent this year and is under pressure to boost the economy ahead of what is expected to be a tight election battle in 2016, when President John Mahama will run for a second term.

“The Eurobond is critical in helping to anchor stability in foreign exchange rates and for government to refinance existing Eurobond issues,” said Sampson Akligoh, managing director of InvestCorp investment bank, which is based in Ghana.

The cedis gained slightly on Friday against the dollar but a trader said sentiment could turn bearish next week if the bond was not launched, given the market expected inflows from it and a $1.8 billion cocoa loan.

The yield on Ghana’s outstanding 7.87 percent Eurobond due 2023 has surged to record highs above 11.3 percent, according to Tradeweb data.

The average yield premium investors demand to hold emerging sovereign dollar bonds over U.S Treasuries soared almost 100 basis points in the third quarter. It now stands at 470 bps, close to 6-1/2 year highs hit at the end of last month, according to JPMorgan’s EMBi Global index.

But the average premium demanded of African sovereigns rose by an even greater 160 basis points in the third quarter and stands at 520 bps over U.S. Treasuries on the EMBIG index, while Ghana’s premium has jumped by 200 bps in this period to 914 bps.

(By Matthew Mpoke Bigg and Kwasi Kpodo, Reuters)

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South Africa’s Brait sells Steinhoff stake for $1 bil to pay debt

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JOHANNESBURG (Reuters) – South African investment firm Brait SE sold its stake in Steinhoff International for about 16 billion rand ($1 billion) and will use most of the proceeds to pay off debt, it said Friday.

Brait, which earlier this year sold its stake in low-end retailer Pepkor to Steinhoff for a combination of cash and a minority stake in the furniture retailer, said it would up its stake in British supermarket chain Iceland Foods.

After netting 15 billion in cash from the sale of its Pepkor shares, Brait has been on a buying-spree, lapping up gym chain Virgin Active and Britain’s clothing retailer New Look.

But the Pepkor deal, one of the largest in South Africa, also left it with 200 million Steinhoff shares.

“Brait’s minority shareholding in Steinhoff was not aligned with the company’s strategy of acquiring majority stakes in sizeable unlisted companies,” the investment house said.

The company plans to use the bulk of the money to pay off 14.2 billion rand debt. Brait also said it would pay 172 million pounds ($262 million) to raise its stake to 57 percent from 19 percent in Iceland Foods.

Brait said it would fund the Iceland Foods transaction from the 350 million pounds raised in a convertible bond issue earlier this month.

($1 = 0.6567 pounds)

($1 = 13.8925 rand)

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World Bank approves $500 mil loan for Tunisia

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TUNIS (Reuters) – The World Bank has approved a $500 million loan for Tunisia to help finance economic reforms and face the consequences of two big militant attacks targeting its tourism industry.

The bank said on Friday the operation would aid restructuring of state banks and administration as a way to help economic growth.

The North African state has mostly completed its democratic transition since the 2011 uprising that ousted Zine El Abidine Ben Ali. But international lenders want to see more economic reforms to help reduce the deficit and high public spending.

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Malawi to revise national budget after IMF suspends credit facility

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LILONGWE (Reuters) – The International Monetary Fund has suspended loans to Malawi for failing to cut its wage bill and improve revenue collection, making it less likely Western donors will resume budgetary aid, the finance minister said on Thursday.

This is the second time the Fund has suspended the program within a period of three years. It was halted in 2012 when the Malawi government failed to devalue its currency, the kwacha, and reform public financial management.

“Things are now out of hand because this completely jeopardises our chances of getting back budget support suspended under the Joyce Banda administration,” Finance Minister Goodall Gondwe told Reuters.

Gondwe said the Treasury was already working on revising the $1.5 billion budget, which was passed in July this year.

“We welcome the observations from the IMF and we already planned to reduce the budget by cutting down on total expenditure during the mid-term budget review meeting of parliament in February next year,” he said.

Budget assistance from Western donors worth millions of dollars has been withheld for two years now after revelations of corruption under ex-President Banda. Such aid has historically accounted for about 40 percent of the national budget.

The IMF said the loan facility would remain suspended until Malawi’s government met certain targets.

“The extended credit facility is off-track because Malawi failed to meet set targets by end-June 2015 and we have discussed a number of measures to bring it back on track starting with a revised budget,” said Oral Williams, the IMF mission head to Malawi.

“Fiscal slippages equivalent to about 2 percent of GDP emerged during the second half of the 2014/15 fiscal year, in part because of overspending on the wage bill, and these were exacerbated by revenue and external finance shortfalls.”

Williams said the mission reached an understanding on measures to bring programme back on track, including “a revised fiscal framework sufficient to meet the end December 2015 program target on net domestic financing and a tight monetary stance to maintain positive real interest rates.”

The IMF said Malawi had met targets on net international reserves and net domestic assets.

The IMF said on Wednesday that Malawi’s economic growth would slow to 3 percent this year from 5 percent in 2014, reflecting a decline in the maize harvest and weak private- sector investment and consumption.

Floods in January destroyed more than 60,000 hectares of crop fields cutting output for the staple maize by 27 percent.

(By Mabvuto Banda, Reuters)

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Orange in final talks to sell Kenyan mobile stake

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NAIROBI (Reuters) – France’s Orange SA is in the final round of negotiations with an unidentified party to sell its 70 percent stake in Orange Kenya, Kenya’s finance minister said.

Orange is the latest international operator to quit Kenya, where Safaricom, part owned by Vodafone, has 67 percent of Kenya’s 36 million mobile users.

“(Orange) wants to exit so they are selling their 70 percent,” Finance Minister Henry Rotich, who oversees the government’s 30 percent shareholding in Orange Kenya, told Reuters. “They are in final negotiations.”

Without naming the other party, Rotich said he expected the transaction to be completed “very soon”, adding that it could be completed before the end of year.

Orange paid $390 million for its stake in 2007, aiming to capitalise on what were fast growth rates in the sector. Its plan was to make the firm, then known as Telkom Kenya, profitable and then to take it public in five years.

Orange was not immediately available for a comment.

Faith Mwangi, a research analyst at Standard Investment Bank, said Orange Kenya has struggled in recent years despite enjoying a monopoly in fixed-line telephones.

“They essentially failed to innovate,” she said, adding Orange’s strategy of offering cheaper calls had helped it claw back some market share in recent years.

Orange increased its users to 4.0 million in the quarter ended June from 3.7 million in the previous quarter, industry regulator Communications Authority of Kenya said.

“They have been consistently gaining market share,” Mwangi said.

One of Safaricom’s main advantages has been the development of its pioneering M-Pesa mobile money system, which allows users of even the most basic mobile phones to make payments. Rival offerings have yet to break Safaricom’s dominance.

Kenya has two other telecom operators, India’s Bharti Airtel and Finserve, which is owned by one of the country’s biggest banks’ Equity. India’s Essar Telecoms sold its Kenyan business, Yu, last year after it failed to make it profitable.

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Mauritius MCB Group full-year pretax profit up 26 pct

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PORT LOUIS (Reuters) – Mauritius Commercial Bank Group’s (MCB) pretax profit for the full year to June rose 26 percent to 6.90 billion rupees ($195.19 million) on the back of higher net interest income, fees and commissions, it said on Tuesday.

MCB, the biggest bank by market value in East Africa and the Indian Ocean region, said that net interest income increased by 12 percent to 8.15 billion rupees in spite of pressures on margins posed by excess liquidity and restrained demand for credit locally amidst subdued private investment.

In a statement, MCB said loan book growth was supported by its international financing activities.

Net fee and commission income rose 17 percent to 3.36 billion rupees, driven by growth in revenues from regional trade finance, wealth management and card business activities.

“We are confident to grow the business further, which should result in higher profits for FY 2015/16,” the statement said.

Earnings per share rose to 24.04 rupees from 18.34 rupees.

Shares at MCB Group closed lower at 206.50 rupees from 207 rupees before the results were released.

 

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ICCO to move to Abidjan, seeks new Executive Director

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LONDON (Reuters) – The International Cocoa Organization said it will begin moving its headquarters from London to Abidjan, the commercial capital of Ivory Coast, later this week following an improvement in the security situation in the world’s top producer.

The ICCO originally agreed to relocate from London in 2002 but civil unrest disrupted the process which was subsequently suspended. The relocation will begin on Oct. 1 and should be completed at the latest by March 31, 2017.

The inter-governmental body, which has been based in London since its founding in 1973, originally sought to stabilise global prices through operating buffer stocks but has more recently provided statistical data and supported projects to develop cocoa production and trade.

The ICCO also said Executive Director Jean-Marc Anga had launched the process of recruiting his successor. He has been in the role since 2010.

The organisation aims to elect a new Executive Director at a council meeting in September 2016, a spokesman said.

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