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Nigeria signs agreements to add more than 500 megawatts to national grid

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LAGOS (Reuters) – Nigeria has signed agreements to add more than 500 megawatts of capacity to its national grid, the office of the vice president said on Thursday.

Africa’s most populous nation produces less than 4,000 megawatts (MW) but requires around 10 times that amount to guarantee power for its 180 million inhabitants.

Chronic power shortages have hindered the country’s development for decades and are one of the biggest constraints on investment and growth in Africa’s largest economy, which is in recession for the first time in more than 20 years.

The vice president’s office said a number of agreements had been signed including ones with the World Bank and Niger Delta Power Holding Company (NDPHC).

“Vice President Yemi Osinbajo at the signing ceremony described the agreements as significant, enabling the consistent additional generation of more than 500 MW of electricity to the national grid,” said his spokesman Laolu Akande.

The vice president said the agreements would open up new opportunities for investments in Nigeria’s gas and power sectors.

He suggested that the West African country could potentially attract investment into the power sector.

Osinbajo’s office said Nigerian gas supplier Seven Energy was investing around $500 million in the construction of a gas processing facility at the Uquo Field in the southern state of Akwa Ibom.

And a Partial Risk Guarantee between the World Bank and NDPHC was signed to secure the supply of some 130 million cubic feet per day of gas to a power plant in the southern city of Calabar by Seven Energy.

The agreement covers private debt in the event of a government’s failure to meet specific obligations to a project.

 

(Reporting by Alexis Akwagyiram; Editing by James Dalgleish)

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Ethiopia looks to Islamic finance to tap domestic savings

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(Reuters) – Ethiopia’s central bank aims to develop Islamic finance to help expand financial access and inclusion, part of wider government efforts to mobilize domestic resources to diversify its economy, a central bank official said.

The landlocked country has one of the highest economic growth rates in Africa, but relies heavily on an agricultural sector that employs three-quarters of the workforce and contributes to around 80 percent of exports.

The government wants to industrialize its economy but this requires sustaining investment rates of almost 40 percent of GDP over the next five years, said Getahun Nana, Vice Governor of the National Bank of Ethiopia.

“This can only be achieved if the financial sector, particularly the banking industry, can play significant role in mobilizing desperately needed savings from domestic sources.”

Islamic finance could help in this endeavor, so the central bank is conducting a study to determine the demand for sharia compliant financial products in a country where around a third of the population of 100 million is Muslim.

The study would help determine what proportion of Muslims are excluded from the financial sector, Nana said in a speech during an Islamic finance conference held this week in neighboring Djibouti.

“If this is identified to be a barrier, a specific and enabling regulatory framework will be developed so as no one is excluded from obtaining financial services because of religious reasons.”

Islamic finance is still new in Ethiopia, despite the government allowing financial institutions to offer such products back in 2008.

Currently eight out of 18 financial institutions offer sharia compliant products via Islamic windows but they have so far mobilized less than 1 percent of total deposits, Nana said.

“Sharia compliant financing facilities that these banks provided to their customers are even very much insignificant.”

 

(Reporting by Bernardo Vizcaino; Editing by Simon Cameron-Moore; Editing by)

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European Union to ready sanctions over Congo vote delay, violence

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By Robin Emmott

LUXEMBOURG (Reuters) – The European Union will prepare economic sanctions on the Democratic Republic of Congo unless its ruling coalition, which has delayed next month’s elections, holds a fresh vote early next year, diplomats say.

President Joseph Kabila was due to leave at the end of his mandate in December but authorities have postponed it until April 2018, citing logistical problems.

The vote delay sparked two days of protests in the capital Kinshasa last month that killed dozens of people.

“Elections must take place as early as possible, and no later than in 2017,” said an EU diplomat involved in the talks. “Given the situation, we are prepared to consider sanctions and work is already under way,” the diplomat said.

European Union foreign minister meeting in Luxembourg on Monday are expected to agree a statement in which they will make clear that travel bans and asset freezes are a genuine threat.

“The EU will use all the means at its disposal, including individual restrictive measures,” said a draft statement seen by Reuters that would target “those responsible for serious human rights violations, those who promote violence.”

Foreign ministers are expected to task EU foreign policy chief Federica Mogherini to draw up sanctions, which could be on senior police and other members of the security forces, potentially broadened to government officials at a later stage if there is no progress on an electoral agenda.

The European Union, a major donor of foreign aid as well as a big foreign investor and trade partner, is also seeking an independent inquiry into the violence last month and wants talks on a new timetable for presidential and parliamentary elections.

Former colonial power Belgium is pushing EU governments to reduce the duration of diplomatic visas issued to officials, having cut its own visas to six months, one diplomat said.

Kabila, who came to power in 2001 when his father was assassinated, says he will respect the country’s constitution but has yet to rule out attempting to change laws to enable him to run for a fresh term.

The presidents of neighbouring Rwanda and Congo Republic changed their constitutions last year to allow themselves to stand for a third term. Kabila’s opponents say they fear he will do the same.

Hundreds of people have also died since last year in Burundi, where the EU has also imposed sanctions, after its president Pierre Nkurunziza pursued and won a third term in office that his opponents say is unconstitutional.

The head of the U.N. mission in Congo warned last week that the political impasse poses an “extreme risk” to stability. Millions died in regional conflicts between 1996 and 2003 and Congo has never had a peaceful transition of power.

 

(Reporting by Robin Emmott; Editing by Tom Heneghan)

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Gabon cuts 2017 budget again as oil output falls

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(Reuters) – Gabon’s cabinet has cut its 2017 budget by over 5 percent as persistently low crude prices and falling output pressure the oil-producing Central African economy, it said in a statement on Thursday.

Next year’s budget will drop to 2.478 trillion CFA francs ($4.23 billion) in 2017 from 2.626 trillion CFA francs this year, the statement said, citing a drop in oil prices and production in the OPEC member.

It comes after a small budget drop in 2016 and a 14 percent drop in 2015, both due to a steep drop in crude prices since 2014 and depleting oil fields.

Gabon is Africa’s fourth largest oil producer with an output of around 220,000 barrels per day, dominated by international oil majors Total and Royal Dutch Shell.

President Ali Bongo has said that he plans to diversify the Gabon economy away from oil, but a falling budget will likely apply further political pressure after his razor thin victory in a presidential election in August that the opposition said was rigged. Violent protests ensued in which at least 6 were killed.

Bongo’s victory by less than 6,000 votes over opposition leader Jean Ping has drawn unwelcome scrutiny of the president, whose family has ruled the oil-producing state in Central Africa for 49 years. Many in Gabon complain that the oil wealth is not distributed, leaving most poor and out of work.

Bongo’s international reputation has taken a hit since the election and just a handful of African leaders attended his inauguration.

($1 = 585.6200 CFA francs)

 

(Reporting by Edward McAllister; Editing by Sandra Maler)

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UN rights forum sets up inquiry into grave crimes in Burundi

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GENEVA (Reuters) – The top U.N. human rights forum agreed on Friday to set up a commission of inquiry to identify perpetrators of alleged international crimes in Burundi, including killings and torture, and ensure that they are brought to justice.

The 47-member state forum adopted a resolution submitted by the European Union by a vote of 19 states in favour and 7 against with 21 abstentions.

Burundi’s delegation took the floor after the vote to reject the resolution as containing “a lot of lies” about the situation in the central African country which it said had stabilised.

 

(Reporting by Stephanie Nebehay, editing by Tom Miles)

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Kenya secures deal to keep duty-free access to EU market

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By Duncan Miriri

NAIROBI (Reuters) – Kenya will retain duty-free access to the European Union for its products, its trade minister said on Thursday, reassuring exporters who feared problems in clinching a deal between the EU and the East African Community could lead to tariffs.

Kenyan businesses have been alarmed by delays in signing the trade pact, known as the Economic Partnership Agreement (EPA), between the EU and five-nation East African Community (EAC), after reservations raised by Tanzania.

Kenya stood to lose most as it would have lost duty- and quota-free access, whereas other EAC member states are categorised as poorer nations who keep that access whether or not the more comprehensive trade deal is signed.

The deadline for the EAC to finalise the agreement was Oct. 1 and there were fears that Kenyan goods could be locked out or become subject to tariffs.

“Come next week Kenyan exports will still have access to the EU market without paying any duties, as it was before,” Aden Mohamed, the Kenyan minister for trade and industrialisation, told Reuters.

Kenya, which exports coffee, tea and horticultural products to Europe, secured the continued free access to EU markets after it signed the deal with the EU, despite Tanzania holding back.

Kenya has also already ratified the pact in parliament and it presented a copy to the EU in Brussels on Wednesday.

EAC heads of state are scheduled to discuss the EPA with the EU in January but Mohamed said Kenyan goods would maintain their access regardless of the outcome.

“We are hopeful everybody will come on board and then rather than just having a window of access into the EU, we will enjoy a much more comprehensive agreement that has some benefits of development infrastructure that will come as a result of that agreement being signed,” he said.

Mohamed also said on Thursday that the government had revoked a rule in the 2015 companies law demanding that foreigners investing in Kenya offer a 30 percent stake to a Kenyan party. Foreign investors had criticised the new rule.

“The spirit of what we want to do in the country is to have an economy that is open for business and doesn’t want to impose pressure,” he said.

 

(Editing by Edmund Blair and Gareth Jones)

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Moody’s may downgrade five South African state-owned firms

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JOHANNESBURG (Reuters) – Moody’s may cut the ratings of five South African state-owned firms, including utility Eskom, it said on Wednesday, citing funding risks after some local institutional investors said they had stopped lending to some parastatals.

Asset manager Futuregrowth, which manages client assets of about $12 billion, and rival Abax Investments said this month they had reduced or stopped lending to several state-run firms due to political uncertainty and governance issues.

Moody’s said in a statement it was putting Eskom’s Ba1 rating on review for downgrade on the grounds that its funding needs were exacerbated by the rising cost of buying power from independent producers, as well as its spending to revamp and build new power stations.

Eskom is building new plants and transmission lines to augment a power grid that nearly collapsed in 2008 and forced the company to implement controlled blackouts, or load shedding, early last year that dented economic growth.

Chief Financial Officer Anoj Singh called the review “unfortunate” and said Eskom would meet Moody’s to resolve its concerns.

“The review by Moody’s is unfortunate given the progress made towards improving the company’s financial profile, successful implementation of the operations turnaround plan and Eskom’s healthy liquidity position,” Singh said in a statement.

Moody’s is also reviewing the ratings of four other state-controlled entities: the Development Bank of Southern Africa, the Industrial Development Corporation, the South African National Roads Agency (SANRAL) and Land Bank.

“Today’s review for downgrade … primarily reflects the increased risk of funding and liquidity challenges, following some signals of increased risk aversion by funding counterparties owing to market concerns regarding the governance of South African state-owned enterprises,” Moody’s said.

Many of South Africa’s 300-odd state-owned companies, including South African Airways, are a drain on the government’s purse and rating agencies have singled out some as threat to the country’s investment grade rating.

South Africa’s President Jacob Zuma last month defended plans to give his office supervision over state-controlled companies after allies of under-fire Finance Minister Pravin Gordhan said it was a tool to limit his control.

Analysts have said Zuma’s team and the Treasury under Gordhan have disagreed about government spending, including on loss-making state firms, such as South African Airways.

Gordhan has pledged to rein in government spending to limit rising inflation, narrow a gaping budget deficit and appease ratings agencies considering cutting South Africa to “junk” status in reviews expected by December.

 

(Reporting by Tiisetso Motsoeneng; Editing by David Clarke and Catherine Evans)

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South Africa’s rand tumbles from two-week peak as uncertainty saps momentum

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JOHANNESBURG (Reuters) – South Africa’s rand extended losses against the dollar to more than 1 percent on Friday, weighed down in part by fears over an ongoing investigation into Finance Minister Pravin Gordhan which exacerbated the impact of a decline in global risk appetite.

Stocks were up slightly, buoyed by resource firms Anglo American and BHP Billiton. The JSE’s benchmark Top-40 index was up 0.4 percent by 1110 GMT.

At 1110 GMT the rand had weakened 1.22 percent to 14.3180 per dollar, its weakest in three sessions.

The unit had touched its firmest in two weeks on Thursday before it began backtracking as doubts over Gordhan’s tenure and uncertainty in global markets over the path of interests rates in the United States and Europe stalled the currency’s progress.

Gordhan, at two separate events on Thursday, questioned the motive of a police investigation into his role in setting up a surveillance unit at the tax service.

“It seems like the rand is rebalancing after over-extending in the previous sessions and traders are waiting for some definitive direction,” said head of foreign exchange at Capilis Asset Management Giacomo Bonavera.

“Around 14.20 or 14.30 might be nice place for it to settle in the medium term. But any bad news from the political side would weaken the currency.”

The rand slipped nearly 10 percent in the wake of police unit the Hawks issuing Finance Minister Gordhan with a summons on Aug. 23 to answer questions about a spy unit in the revenue service during his time as commissioner.

Opposition parties have called the investigation a witch-hunt and a veiled attack on the independence of the treasury.

Government bonds were also weaker, with the yield on the 2026 benchmark issue climbing 14 basis points to 8.74 percent.

A decision on Thursday by the European Central Bank to keep interest rates at record lows received a mixed reaction from emerging markets.

Appetite globally for the high-yielding assets waned as the length that rates would remain low in Europe and in the United States remained uncertain.

 

(Reporting by Mfuneko Toyana and TJ Strydom; Editing by Robin Pomeroy)

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Nigeria postpones elections in Edo state over security threats

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ABUJA (Reuters) – Nigeria’s Independent National Electoral Commission (INEC) has postponed elections in the southern state of Edo to Sept. 28 from Sept. 10 because of security threats, a government official said on Thursday.

Soyebi Solomon, the national commissioner in charge of voters, education and publicity, said after a meeting with police and security agents that a delay “is necessary in view of threats of terrorists activities in Edo State and other states of the federation during the election.”

The decision highlights another security hotspot in Nigeria, which is fighting Islamist militants of Boko Haram in the north and militants in the oil-producing Delta region in the south.

 

(Reporting By Libby George; editing by Grant McCool)

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S.Africa’s manufacturing slows, mining falls as recession fears resurface

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JOHANNESBURG (Reuters) – Growth in South Africa’s two key sectors slowed on Thursday, with weak activity renewing fears South Africa may struggle to avoid recession and a downgrade of its debt to junk status by year’s end.

Manufacturing output braked to below 1 percent year-on-year while mining output contracted sharply, dousing optimism earlier in the week after second quarter gross domestic product bounced back from a contraction in the first quarter.

Manufacturing slowed to 0.4 percent year-on-year in July, well below expectations of 3 percent after rising by a revised 4.7 percent in June.

Mining output contracted by 5.4 percent in the month from a 3 percent contraction previously, data from Statistics South Africa showed, below expectations of a 1.4 percent contraction.

Production of electrical machinery shrank 13.7 percent, basic iron by 4.9 percent and vehicle production by 3.8 percent, all on a year-on-year basis.

“The first Q3 South African output data support our view that the rapid growth reported in Q2 is unlikely to be sustained,” Africa analyst at Capital Economics John Ashbourne said in a note.

Africa’s most industrial economy grew by a surprise 3.3 percent in Q2, data on Tuesday showed, but was only up 0.6 percent year-on-year, prompting analysts and the central bank governor to warn that growth remained insufficient.

Reserve Bank Governor Lesetja Kganyago said on Wednesday that current levels of growth were inadequate and needed to be closer to 6 percent. The Bank forecasts zero percent growth in 2016.

Ratings firms Fitch and S&P Global Ratings, which both rate South Africa’s debt one notch above junk status, have cited low growth as possible trigger for a downgrade in reviews in December.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia and Jon Boyle)

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