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South Africa considers privatisation to counter recession

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By Olivia Kumwenda-Mtambo and Mfuneko Toyana

JOHANNESBURG (Reuters) – South African Finance Minister Malusi Gigaba laid out an ambitious 14-point programme on Thursday to wrench the economy out of recession that included the sale of non-core assets and partial privatisation of state-owned firms.

The plans to stimulate growth in the continent’s most industrialised economy appear to represent an ideological shift by the African National Congress (ANC), whose political alliance with the unions has tended to make privatisation a dirty word.

A team commissioned by President Jacob Zuma to review state firms last year recommended that some should be sold. Now the government has set a date – March 2018 – by which to roll out a “private sector participation framework”.

“All of these items that we have announced … they constitute an important intervention to restore confidence and demonstrate action, and outline an action plan that we as government can be responsible for,” Gigaba said.

The government would also reduce the number of debt guarantees to this firms, especially those extended for operational purposes, he said.

Analysts said Gigaba’s plan could face opposition.

“I’m not sure how far he is going to be able to get with this because I think ideologically there’s a lot of opposition,” NKC African Economics analyst Gary van Staden said.

“The last time I heard the ANC even talk about privatisation or even talk about sale of state owned assets on any kind of level is when Thabo Mbeki was president. It’s been a long time.”

South Africa’s economy entered recession for the first time since 2009 in the first quarter and is also struggling with high unemployment and credit ratings downgrades.

The state of the economy is adding to the pressure on Zuma, who is also facing persistent corruption allegations and increasing calls for him to stand down from within the ANC. Parliament will hold a no-confidence vote on Zuma next month.

Many of South Africa’s 300-odd state-owned companies are a drain on the government’s purse. Ratings agencies have singled out some as threat to its overall investment grade rating.

The firms, known as “parastatals” in South Africa, include companies such as South African Airways, power utility Eskom and logistics group Transnet that are regarded as central to the functioning of the economy.

Gigaba did not say what would be going under the hammer first, saying that would be determined by an audit.

BNP Paribas South Africa economist Jeff Schultz said investors would want to see more details before endorsing it as a viable turnaround strategy.

“It’s very difficult to say at this stage. He was quite cagey on what sales of non-core assets he was referring to,” Schultz said.

South Africa sold its stake in mobile phone firm Vodacom in 2015 to as part of a 23 billion rand capital raising for Eskom.

Schultz said it might try to sell similar stakes, rather than embracing formal privatisation.

“In much the same way as government sold down their stake in Vodacom, the government is looking to do similar things to try and raise some revenue in the near term,” he said.

 

(Additional reporting by TJ Strydom and Tanisha Heiberg; Editing by Alison Williams)

 

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Remittances from expatriate Egyptians rise by 11.1 pct since float

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CAIRO (Reuters) – Remittances from expatriate Egyptians rose by 11.1 percent between the currency float in November and the end of April, the central bank said on Sunday, with economists suggesting recent reforms have begun restoring confidence in the banking system.

Expatriate remittances from November until the end of April have reached $9.3 billion, a central bank statement said.

Egypt’s central bank floated the pound in November to unlock foreign currency inflows and crush a black market for dollars that had discouraged people from channelling foreign currency through the banking system.

“The float is encouraging transfers through official channels, now that the parallel market no longer offers a premium above the official rate,” said Hany Farahat, a senior economist at CI Capital.

The currency float is part of a $12 billion International Monetary Fund lending programme aimed at putting Egypt on the road to recovery after years of turmoil that drove foreign investors and tourists away.

The three-year IMF programme also includes subsidy cuts intended to narrow the budget deficit and the removal of strict restrictions on bank transactions to attract foreign investors.

 

(Reporting by Ehab Farouk; writing by Arwa Gaballa; editing by Giles Elgood, Larry King)

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South Africa watchdog to oppose Zuma bid to set aside influence-peddling report

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PRETORIA (Reuters) – South Africa’s anti-corruption watchdog will oppose a bid by President Jacob Zuma to have a report on claims of influence-peddling by him and his government set aside, Public Protector Busisiwe Mkhwebane said on Monday.

Thuli Madonsela, Mkhwebane’s predecessor as Protector, released the report in November. It called for a judicial inquiry into allegations that Zuma, some cabinet members and some state companies acted improperly, but stopped short of asserting that crimes had been committed.

In December Zuma, who has denied wrongdoing and faced down calls for his resignation over a series of scandals that have plagued his administration, asked the High Court to set the report aside.

In February, Mkhwebane said she was seeking legal advice on how to proceed on the issue.

On Monday she told a news conference her office would oppose Zuma’s application to have the report set aside.

($1 = 12.7941 rand)

 

(Reporting by Dinky Mkhize; Editing by James Macharia and John Stonestreet)

 

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Vodafone’s South African arm Vodacom takes over $2.6 bln stake in Kenya’s Safaricom

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By Nqobile Dludla

JOHANNESBURG (Reuters) – UK-based telecoms group Vodafone moved to consolidate two of its African interests on Monday with the transfer of a 35 percent stake in Kenya’s Safaricom to majority-owned South African subsidiary Vodacom.

The 34.6 billion-rand ($2.6 billion) deal, structured as an acquisition of the stake by Vodacom in return for new shares, is the latest move by Vodafone’s chief executive Vittorio Colao to rationalise the group’s disparate portfolio of interests around the world.

Colao said last month that the company would fold some of its operations in sub-Saharan Africa into Vodacom as part of a “single, coordinated Africa strategy”.

He told South Africa’s Business Day publication that it made sense to consolidate operations in Vodacom given the group’s “scale, advancement and competence in technology”.

The Safaricom deal also simplifies the management of two of Vodafone’s biggest money-spinners in sub-Saharan Africa and promises to speed up the roll-out across the continent of mobile money transfer service M-Pesa, which was launched by Safaricom in 2007.

“Vodacom Group sees scope to create further value through closer cooperation between both companies, including replication of Safaricom’s success in M-Pesa in Vodacom Group’s other territories,” Vodacom’s chief executive Shameel Joosub said.

Under the deal Vodacom said it will acquire a 87.5 percent shareholding in Vodafone Kenya, equivalent to a 35 percent indirect interest in Safaricom, in return for issuing 226.8 million new shares to Vodafone, raising the British company’s stake in Vodacom from 65 percent currently to 69.6 percent.

Vodafone will retain a 12.5 percent interest in Vodafone Kenya, equivalent to a 4.99 percent stake in Safaricom, the companies said.

For Vodacom, which also has networks in Tanzania, Democratic Republic of Congo, Mozambique and Lesotho, the transaction takes it into a market where Safaricom has a 71 percent share and demand is still growing for mobile services, including M-Pesa.

POLITICAL UPHEAVAL

The sale could be the first step for Vodafone, which also operates in Ghana and Ethiopia, to transfer more of its African assets into Vodacom.

“I think this is about simplification. It has been talked about for a long time,” said Macquarie Research analyst Guy Peddy.

It also shows a commitment by Vodafone to Vodacom, despite the political upheavals that have rocked South Africa in recent months.

South Africa lost its highly coveted sovereign investment grade credit ratings from two rating agencies last month after a cabinet shake-up that saw the sacking of respected finance minister and sparked a selling frenzy in bonds, stocks and the rand currency.

“Vodafone always takes a long-term view of politics and doesn’t really get into the political environment,” Joosub told Reuters.

“Although there would be concern around things like downgrades, there is always a long-term approach to South Africa and overall positive sentiment.”

Shares in Vodafone closed up 0.02 percent at 210.9 pence, while Vodacom’s share price was up 0.2 percent at 152.8 rand and Safaricom was up 1.2 percent at 20.50 shillings.

Safaricom, which is 35 percent owned by Kenya’s government, said in a statement the deal promoted the continued successful expansion of the company as well as the opportunity to take M-Pesa into other African markets.

Safaricom made a success of M-Pesa in Kenya whereas Vodacom’s launch of M-Pesa in Tanzania in 2008 and South Africa in 2010 disappointed.

“Vodacom’s first attempt at a money transfer business wasn’t very successful, but this deal could lead to better results,” Morning Star analyst Allan Nichols said.

Completion of the deal, which is subject to shareholders’ approval, is expected in August.

($1 = 13.1750 rand)

(Additional reporting by Duncan Muriri in Nairobi and Paul Sandle in London; Editing by Greg Mahlich)

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Oil workers go on strike at Exxon Mobil in Nigeria: union

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LAGOS (Reuters) – Nigerian workers at U.S. oil major Exxon Mobil Corp have gone on strike in protest over the sacking of workers, oil labour union officials said on Thursday.

Nigerian labour unions have criticised oil companies for sacking workers in the last few months and held a number of strikes.

Abel Agarin, who chairs the Lagos zone of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said members of his union were on strike in protest at the sacking of 150 workers in December. He said 82 were PENGASSAN members.

“We want them to be brought back and if that is not possible we want a proper severance package for them,” said Agarin, who led around 50 protesters in the commercial capital.

PENGASSAN said strikes were being held in Lagos, Bonny, Akwa Ibom and Port Harcourt.

A spokesman for Exxon Mobil said by email that there were “no impacts” on oil production.

Two oil traders said it was too early to say whether the strikes would have an impact on production.

Strikes by Exxon workers in Nigeria at the end of 2016 did impact output, leading to weeks-long loading delays.

 

(Reporting by Tife Owolabi, Libby George and Alexis Akwagyiram; writing by Ulf Laessing and Alexis Akwagyiram; editing by Jason Neely)

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South Africa regulator to investigate Eskom over unsigned deals

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CAPE TOWN (Reuters) – South Africa’s energy regulator has agreed to investigate power utility Eskom’s refusal to sign power purchase agreements with independent power producers, the South African Wind Energy Association (SAWEA) said on Thursday.

SAWEA last October asked energy regulator NERSA to investigate Eskom’s unwillingness to finalise agreements which it said had delayed 2,942 megawatts in new solar and wind projects.

“We have had confirmation from NERSA that an expedited investigation into whether Eskom is in contravention of its licence, has now commenced,” said Brenda Martin, chief executive of SAWEA.

Some of the projects have been waiting for financial closure for more than two years and SAWEA estimates they would inject some 58 billion rand ($4.33 billion) of investment into the economy.

“Our primary intention is to achieve financial closure of power purchase agreements. It remains our hope that Eskom will comply with the legal framework for power purchase, so that penalties do not need to be imposed on Eskom,” Martin said.

An Eskom spokesman was not available for immediate comment.

($1 = 13.3800 rand)

 

(Reporting by Wendell Roelf; editing by Tiisetso Motsoeneng and Jason Neely)

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SocGen to pay $1.1 billion to end Libyan wealth fund row

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By Maya Nikolaeva and Julien Ponthus

PARIS (Reuters) – Societe Generale avoided a costly and potentially embarrassing court case on Thursday by agreeing to pay nearly 1 billion euros ($1.1 billion) to settle a long-running dispute with the Libyan Investment Authority (LIA).

France’s second-biggest listed bank reached an 11th-hour settlement over LIA allegations that trades were secured as part of a “fraudulent and corrupt scheme” involving the payment of $58.5 million by SocGen to a Panamanian-registered company.

“By settling this dispute … we avoid a long trial that would have demanded a lot of resources,” SocGen CEO Frederic Oudea told journalists on a results call, adding that the bank was now able to concentrate its energy on its main businesses.

A spokesman in Paris said SocGen was paying 963 million euros as part of the Libya settlement, which overshadowed a fall of 19 percent in SocGen’s first-quarter net income to 747 million euros which it posted on Thursday.

Asked if SocGen had taken any sanctions against employees or if any of its staff had left the bank as a result of the case, Oudea said “appropriate measures” had and would be taken, while SocGen added that it had apologised to the LIA.

The Libyan fund lost a high-profile case last summer against Goldman Sachs in which it tried to claw back $1.2 billion from the Wall Street firm relating to nine equity derivatives investments carried out in 2008.

The settlement also marks the end of proceedings against Libyan businessman Walid Giahmi who controlled Lenaida, the Panamanian-registered company alleged to have been paid by SocGen, which was dissolved in 2010.

“This is a complete exoneration of my client, who has been subject to serious allegations involving bribery and intimidation for the past three years,” Giahmi’s lawyer, Kathryn Garbett, head of fraud defence at Mishcon de Reya, said, adding that her client was relieved the case was over.

U.S. TALKS NOT OVER YET

While significant, the Libyan settlement does not mark the end of SocGen’s legal woes, with the bank still in talks with U.S. authorities over dollar transfers it made on behalf of entities based in countries subject to economic sanctions.

Oudea, who is seeking to turn the page following a series of legal disputes and scandals so that he can focus on a new strategic plan under a new management structure, said those discussions would continue for at least several months.

“Among French banks, SocGen is the only one that does not seem to be able to get rid of recurring reputational problems,” analysts at Kepler Cheuvreux, who kept a “buy” rating on SocGen, said.

SocGen shares were down 0.4 percent at 1030 GMT following the results, which came a day after BNP Paribas, France’s biggest bank by market capitalisation, beat forecasts with higher first-quarter profits.

(Additional reporting by Claire Milhench in London and Jean-Michel Belot in Paris; Editing by Sudip Kar-Gupta/Greg Mahlich/Alexander Smith)

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Old Mutual Wealth’s client inflows rise as parent works on break-up

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(Reuters) – Financial services group Old Mutual Plc’s UK asset management business reported its higher ever quarter for client inflows and funds under management for the first three months of the year, citing increased demand for its services and platform.

Old Mutual Wealth forecast that markets would remain volatile and challenging in the medium term, especially until the outcome of Britain’s June general election and more detail of the terms of the country’s exit from the EU were known.

The business’s net client cash flows, excluding Old Mutual Italy and the South African branches, rose 59 percent to 2.7 billion pounds ($3.5 billion) in the quarter ended March 31.

Its comparable funds under management jumped 6 percent to 122.3 billion pounds, Anglo-South African parent Old Mutual said in a statement on Friday.

“We have the right solutions for these uncertain times, particularly our multi-asset, absolute return and high alpha product ranges… We are hopeful that this momentum will continue throughout 2017,” the unit’s CEO Paul Feeney said.

In March, Old Mutual said it was on track to complete its break-up into four parts by the end of 2018, although improvements to IT systems at Old Mutual Wealth could take longer and cost more than expected.

($1 = 0.7752 pounds)

 

(Reporting by Esha Vaish in Bengaluru; Editing by Adrian Croft)

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Libya’s Sharara, El Feel oilfields restart after pipeline protest

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By Ahmad Ghaddar and Ahmed Elumami

LONDON/TRIPOLI (Reuters) – Libya’s Sharara oilfield has restarted after the end of protests by an armed group that had blocked pipelines there, National Oil Corp (NOC) chairman Mustafa Sanalla said on Thursday.

No details were immediately available about output at the field, which has a production capacity of nearly 300,000 barrels per day (bpd).

A Libyan oil source and a local official had earlier told Reuters production had resumed at the field, which is operated by state oil firm NOC with Repsol, Total, Norway’s Statoil and OMV.

Traders said the field restarted early on Thursday.

The oil source said El Feel oilfield, with a capacity of about 90,000 bpd, had also restarted. El Feel and Wafa field condensate make up the Mellitah blend which is exported from Mellitah terminal operated by NOC and Italy’s ENI.

Sanalla, speaking on the sidelines of an industry event in Paris, said Libyan oil production was about 491,000 bpd on Thursday and NOC hoped to reach 800,000 bpd soon.

He said NOC still planned to reach a production target of up to 1.1 million bpd by August, a goal that will receive a boost from the resumption of output from Sharara.

NOC said in a statement later it had agreed to lift a force majeure on Sharara oilfield, and production at the field would reach 200,000 bpd. It was not immediately clear when the lifting of the force majeure would come into effect.

El Feel oilfield production would reach 80,000 bpd, it said.

News about restarting Sharara and El Feel weighed on crude prices, pushing Brent crude futures around 1.5 percent lower to $51.04 a barrel at 1645 GMT. Investors are worried by oversupply in the market.

Oil security in Libya remains fragile and attempts to negotiate with groups that periodically block and close down pipelines to make political demands have fallen through in the past as rival factions compete for power.

Mohamed Almahdi Alnajeh, a member of the local Zintan region elders council, told Reuters it had reached a negotiated deal with the group blocking the Sharara pipeline to end the protest. The protesters were told to take demands to NOC, he said.

The Sharara blockade was the latest in a series of disputes. Protesters blocked a pipeline leading from Sharara in March. The protests ended in early April but resumed a week later, halting NOC’s plans to raise production there to 270,000 bpd.

Libya’s oil production has been hit by protests, Islamist militant attacks and fighting among rival military factions since the fall of Muammar Gaddafi in 2011 sent the country spiraling into turmoil.

Before the civil war, Libya produced 1.6 million bpd.

(Additional reporting by Julia Payne in London and Alex Lawler in Paris; Writing by Patrick Markey; Editing by Edmund Blair and Mark Potter)

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Strike over pay at South African Airways grounds over 30 flights

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JOHANNESBURG (Reuters) – South Africa’s state-owned airline South African Airways cancelled at least 32 flights on Wednesday and has said that number could grow because of a cabin crew strike.

Cabin crew at SAA went on strike in early hours of Wednesday over pay, the main union at the state-owned carrier said, disrupting domestic flights and international flights.

Twenty eight of the flights cancelled were destined for domestic destinations within South Africa, while the rest were external flights, a South African Airways (SAA) official said.

The carrier also said some flights had been delayed.

“We’re talking about a substantial amount of revenue that has been lost in only half a day,” SAA spokesman Tlali Tlali said in a video posted on the eNCA television channel’s Twitter feed.

“We’re hoping to get labour to sit down with us … so we can get everyone back to work, so that in the evening we are able to operate our international and regional flights,” Tlali said.

The South African Cabin Crew Association (SACCA) said its nearly 1,400 in-flight staff would stop work indefinitely.

SAA said the strike had delayed flights out of O.R. Tambo Airport in Johannesburg, which handles around 19 million passengers a year, and would also affect flights from its coastal airports.

Zazi Nsibanyoni-Anyiam, president of the SACCA union, told Reuters that the workers, who represent around 80 percent of SAA’s cabin crew, had not received pay increases for six years.

“We will be here until the company puts an offer on the table. We think what we are asking for is reasonable,” Nsibanyoni-Anyiam said from a picket outside O.R. Tambo Airport.

SAA, which is technically insolvent and reliant on government debt guarantees of almost 20 billion rand ($1.52 billion), has been singled out by rating agencies as a threat to the country’s credit status, which was recently downgraded to “junk” by two of the big-three ratings agencies.

($1 = 13.1375 rand)

 

(Reporting by Mfuneko Toyana; Editing by James Macharia and Jane Merriman)

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