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Kenya launches phone-based bonds, tapping pool of small investors

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By Duncan Miriri

NAIROBI (Reuters) – Kenya began selling its first mobile-phone-based government bond on Thursday, part of an ambitious plan to broaden the pool of investors in government securities.

The government is initially making a limited offer of 150 million shillings to test the system before a bigger offer in June, Finance Minister Henry Rotich said.

Governor Patrick Njoroge said the bond, called M-Akiba, allows people to invest as little as 3,000 Kenyan shillings ($29.20).

“This is a product that will dramatically improve the savings culture of our people,” he said.

Treasuries in other emerging economies will be watching with interest. Most would like to broaden their sources of borrowing beyond local banks and international financial institutions.

Kenya pioneered the use of mobile money in 2007 with M-Pesa, a money transfer service, by telecoms operator Safaricom.

The M-Akiba bond will be offered on M-Pesa and similar mobile-phone financial services by other firms. Investors will be able to buy the bond through their phones, where a record of their holdings will be stored. Coupon payments will also be made through the phone.

M-Pesa allows users to transfer cash and make payments on even the most basic mobile phone. In partnership with local banks, Safaricom has since expanded the service to offer savings, lending and insurance products.

($1 = 102.7500 Kenyan shillings)

(Writing by Katharine Houreld, editing by Larry King)

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Nigeria weakens naira in attempt to close black market spread -traders

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By Chijioke Ohuocha

LAGOS (Reuters) – The Nigerian central bank has weakened the naira by 0.6 percent in the last two weeks through dollar interventions on the official market aimed at narrowing the spread with the black market, traders said on Tuesday.

The naira was trading at 307.50 on the interbank market on Tuesday, almost 30 percent weaker than on the unapproved retail market where it was quoted at 435 per dollar.

The central bank had been selling dollars at 305 levels since August to support the Nigerian currency. However it devalued the naira last month for individuals, paving the way for a possible broader move to narrow black market rates.

“The central bank is depreciating the currency. It’s a deliberate effort to narrow the gap with the black market,” one trader at a major local bank told Reuters.

The central bank, which declined to comment, is due to announce its decision on interest rates at 1330 GMT with markets watching for signs of a more relaxed foreign exchange rate regime after the government this month called for “market-determined” rate.

A Reuters poll expects the bank to leave its benchmark interest rate unchanged at 14 percent to tackle high inflation.

The West African country has tried to make the exchange rate more flexible before, leading to a 30 percent devaluation last year, only to reimpose a quasi currency peg, creating multiple exchange rates.

Two weeks ago Nigeria unveiled an economic recovery plan, including measures to relax foreign exchange restrictions, in a drive to pull Africa’s largest economy out of its first recession in 25 years.

It said the central bank will aim to achieve a market-determined exchange rate regime, but did not specify whether this would mean allowing the naira to float freely or keeping the current system of dollar injections to address shortages.

The bank’s governor later said he was not convinced about a currency float due to its effect on inflation, which fell for the first time in 15 months in February.

Instead the bank has sold millions of dollars via currency forwards on the official market in recent weeks to try to clear a backlog of demand and narrow black market rates which traded as weak as 520 last month.

 

(Editing by Alexander Smith)

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World bank disburses another $1 billion loan to Egypt

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CAIRO (Reuters) – The World Bank has disbursed another $1 billion in financial assistance to Egypt out of its $3 billion loan programme with the country, the bank said in a statement on Monday.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy hit by political upheaval since a 2011 revolt and to ease a dollar shortage that has crippled imports and hampered its recovery.

“The government has taken important steps in implementing key policy and institutional reforms that are laying down the foundations for accelerated job creation and inclusive growth,” said Dr. Asad Alam, World Bank Country Director for Egypt, Yemen and Djibouti in the statement.

The World Bank issued the first $1 billion tranche of the loan in 2015, with two more instalments of the same size to follow, linked to additional reforms that the government planned.

Faced with a gaping budget deficit, Egypt began a series of painful economic reforms and has taken steps to lower fuel subsidies, introduced a new value-added tax (VAT) and let its currency float freely in the foreign exchange market in November to attract foreign inflows.

Sahar Nasr, Egypt’s minister of investment and international cooperation, said in a statement that the second tranche will help spur private sector investment and development projects and services, which should help improve people’s standard of living.

Hafez Ghanem, the World Bank’s vice president for the Middle East and North Africa, told Reuters this month that Cairo’s next set of economic reforms should focus on making its bureaucracy more transparent for investors.

Egypt expects to receive the second tranche of a $12 billion International Monetary Fund loan in May or June, Finance Minister Amr El-Garhy told Reuters last week.

 

(Reporting by Lin Noueihed; Additional reporting by Ehab Farouk; Writing by Amina Ismail; Editing by Hugh Lawson)

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World Bank to lend Tanzania $2.4 bln over 3 years for infrastructure projects

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DAR AS SALAAM (Reuters) – The World Bank will lend Tanzania $2.4 billion over the next three years to finance infrastructure projects, the bank’s president Jim Yong Kim said on Monday.

Tanzania is seeking financing for infrastructure projects as part of its plans to transforming the country into a regional transport and trade hub.

“Tanzania will be able to access an estimated $2.4 billion in concessional financing, an increase of half a billion dollars over the past three-year period,” Kim said during a visit to Tanzania’s commercial capital Dar es Salaam.

Kim and Tanzania’s President John Magufuli also attended the signing of documents on three World Bank-funded projects worth $780 million aimed at improving public infrastructure.

East Africa’s second-biggest economy wants to profit from its long coastline and upgrade its rickety railways and roads to serve the growing economies in the land-locked heart of Africa.

Big gas finds in Tanzania and oil discoveries in Kenya and Uganda have turned east Africa into an exploration hotspot for oil firms, but transport infrastructure in those countries has suffered from decades of under-investment.

 

(Reporting by Fumbuka Ng’wanakilala; Editing by Aaron Maasho and Hugh Lawson)

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China’s Sinopec nears deal to buy Chevron’s South African assets -sources

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By Jessica Resnick-Ault and Florence Tan

NEW YORK/SINGAPORE (Reuters) – China’s Sinopec is nearing a deal to buy Chevron’s South African oil assets for up to $1 billion to secure its first major refinery on the continent, several people familiar with the matter said.

China Petroleum and Chemical Corp, or Sinopec, Asia’s largest oil refiner, was the last bidder remaining, and close to a deal with Chevron after an auction that spanned more than a year for its refinery, retails business and storage terminals.

French oil firm Total and commodity traders Glencore and Gunvor looked at the assets, Reuters reported last year.

The South Africa government’s desire to keep the refinery operating has nevertheless proven to be a major stumbling point for buyers who would prefer to convert the site into a more profitable storage terminal, sources said.

Sinopec is in discussions with the government on ways to keep the 110,000 barrels per day refinery in Cape Town running, but talks could still fail, sources said.

The sources declined to be identified because they were not authorised to discuss the matter publicly.

Chinese oil companies and merchant traders have become more visible in chasing refinery assets that come on the market as oil majors reshape asset portfolios.

Sinopec declined to comment.

Chevron spokesman Braden Reddall said “the process of soliciting expressions of interest in the 75 percent shareholding is ongoing”. Plans to sell the stake in the South African business, including the Cape Town refinery, were first announced in January 2016.

Besides the refinery, Chevron has interests in a lubricants plant in Durban on the east coast, storage tanks and a network of Caltex service stations, making it one of South Africa’s top five petroleum brands.

Financial advisor Rothschild & Co is helping Chevron on the sale of the assets.

The remaining 25 percent interest is held by a consortium of Black Economic Empowerment shareholders and an employee trust.

(Additional reporting by Ron Bouss and Dmitry Zhdannikov in London, Joe Brock in Johannesburg and Chen Aizhu in Beijing; writing by Anshuman Daga; editing by Kenneth Maxwell and Susan Fenton)

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Allan Gray signals Net1 shareholder revolt over South Africa grants debacle

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JOHANNESBURG (Reuters) – Investment company Allan Gray said on Friday its 16 percent stake in Net1 allowed it to call a shareholders’ meeting over the payment technology provider’s handling of the scandal over a South African welfare contract.

South Africa’s Constitutional Court was set to rule on Friday in a case concerning the unlawful tender of a contract to Net1 unit Cash Paymaster Services (CPS) to manage welfare benefits to 17 million people.

The stakes are high as the welfare system is a lifeline for South Africa’s most vulnerable and includes more than 11 million child support grants, many of whom would go hungry without the monthly payment.

Allan Gray could push for the removal of the Net1 board, Chief Investment Officer Andrew Lapping was quoted in the Business Day newspaper.

“Sixteen percent allows us to call a shareholders’ meeting,” Allan Gray Chief Operating Officer Rob Dower told Talk Radio 702.

Friday’s looming judgment by the country’s top court stems from a case brought by applicants who want it to take oversight of a new contract.

South African President Jacob Zuma said in parliament on Thursday there was no “crisis”. Earlier this week the country’s chief justice placed the blame for the debacle squarely on the shoulders of Social Development Minister Bathabile Dlamini, calling her inaction incomprehensible.

The creation of a welfare safety net which supports one in three South Africans has been one of the signature achievements of the ruling African National Congress (ANC), in power since the end of white apartheid rule in 1994.

The chaos in South Africa’s social security agency comes three years after the Constitutional Court ruled that the tender won by CPS was illegal.

The government was given time until April 1 to take responsibility for social service payments or find a new provider, but it has so far failed to do so, raising concerns that grants may not be paid on time next month.

 

(Reporting by Ed Stoddard; Editing by James Macharia)

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Nigerian lawmakers aim to pass 2017 budget by end of March: Senate president

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By Felix Onuah

ABUJA (Reuters) – Nigerian lawmakers aim to pass the 2017 budget by the end of March, the president of the upper house of parliament said on Tuesday, following a meeting with President Muhammadu Buhari.

The budget lays out plans to pull Africa’s largest economy out of its first recession for 25 years, largely prompted by low global prices for the oil it produces and by attacks on energy facilities in the OPEC member’s Niger Delta oil hub last year.

Buhari, a 74-year-old former military ruler who has faced rising disenchantment over his handling of Nigeria’s economy, presented his record 7.298 trillion naira ($23.21 billion) budget to lawmakers in December.

“This month is our deadline to finish work on the budget and return it to the executive,” Senate President Bukola Saraki said after the meeting with Buhari and the head of parliament’s lower house. “We are working very hard to ensure we meet that deadline.”

The budget must be agreed by lawmakers before the president can sign it into law.

The 2016 budget became law in May last year after being delayed by several weeks of wrangling between the government and the Senate.

Saraki said he had also briefed Buhari at their meeting on the activities of parliament during the president’s lengthy absence due to illness.

Buhari resumed his presidential duties on Monday after spending seven weeks in Britain on medical leave for an undisclosed ailment.

Saraki said the issues discussed with Buhari had included “stability in the Niger Delta” and the $1 billion Eurobond issued by Nigeria last month.

Vice President Yemi Osinbajo drove policy implementation in Nigeria, Africa’s most populous nation, during Buhari’s absence.

 

($1 = 314.5000 naira)

 

(Writing by Alexis Akwagyiram; Editing by Gareth Jones)

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Growth, policy and politics remain concern to South Africa rating: S&P

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JOHANNESBURG (Reuters) – S&P Global Ratings reiterated its concerns on Tuesday about weak economic growth, political tensions and policy reform in South Africa, which faces the prospect of downgrades to its sovereign credit ratings which would raise the cost of borrowing.

The political temperature has been rising in Africa’s most industrialised economy ahead of the ruling African National Congress (ANC) party’s key policy and leadership conferences this year, to chart the country’s economic and political course. A successor to President Jacob Zuma as head of the party is due to be elected at the ANC’s conference in December.

“If we see a lot increasing political tensions, infighting in state institutions which could derail the government’s plans in boosting economic growth then that can impact on our forecasts on growth,” Gardner Rusike, S&P associate director told a conference.

S&P has cited “political turmoil and tension” before and the issue clearly remains high on the investment radar screen.

Growth has also been a persistent concern. South Africa’s economy grew by 0.3 percent in 2016 versus 1.3 percent in 2015, well short of the government’s target of 5 percent.

(Reporting by Olivia Kumwenda-Mtambo; Writing by Ed Stoddard; Editing by James Macharia)

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Nigerian regulators meet to try and solve Etisalat loan issue

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By Camillus Eboh and Chijioke Ohuocha

ABUJA/LAGOS (Reuters) – Nigeria’s telecoms regulator and central bank governor intervened on Thursday to try and help Etisalat Nigeria resolve debt restructuring talks with its lenders, after the company missed a payment on a $1.2 billion loan.

A banking source told Reuters on Wednesday that the Nigerian affiliate of Abu Dhabi-listed telecoms company Etisalat, had given notice to its Nigerian lenders that it would miss a payment in February. Debt talks were triggered 10 days ago but the two sides have not been able to agree on terms.

One of the lenders, Access Bank said on Thursday that it was owed 40 billion naira ($131 million) by Etisalat Nigeria.

The consortium of 13 banks had asked Etisalat to convert loans from its parent into equity and inject fresh capital into its Nigerian unit.

The Nigerian Communications Commission (NCC) said in a statement that it was worried about the negative impact the issue could have on Eitisalat subscribers and the industry, and wanted to prevent a possible takeover of Etisalat by the banks.

NCC Chairman Umar Danbatta met with central bank Governor Godwin Emefiele to try and find a solution and ordered Etisalat Nigeria and the banks to meet again on Friday. It gave no details.

“NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry,” it said in the statement.

 

LEASE PAYMENT AT RISK

Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013.

Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.

Banks involved in the loan deal include: Zenith Bank , GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

Access Bank’s Chief Executive Herbert Wigwe told an analysts’ call on Thursday that Etisalat had converted a shareholder loan to the Nigerian arm to equity to free up cashflows and that it may need to bring in fresh equity.

As well as the loan from banks, Etisalat also entered into a sale and lease-back of its phone towers with tower firm IHS Nigeria to free up cash. Analysts worry that IHS, which has Etisalat as its second-biggest customer, may be affected too.

JP Morgan analyst Zafar Nazim said in a note on Thursday that on Wednesday it downgraded IHS bonds due 2021 because of Etisalat Nigeria as it was uncertain whether the company could keep up with lease commitments.

Nazim also said it was unclear whether Etisalat’s parent firm would recapitalize the Nigerian operations given its small market share in the country, but added that a quick resolution to the loan issue would boost IHS bonds.

 

(Additional reporting by Andrew Torchia in Dubai; Writing by Chijioke Ohuocha and Ulf Laessing; Editing by Mark Potter and Susan Fenton)

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Egypt’s Feb annual urban consumer price inflation hits 30-yr high

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CAIRO (Reuters) – Egypt’s annual urban consumer price inflation soared to its highest level in more than three decades, hitting 30.2 percent in February, the statistics agency CAPMAS said on Thursday.

It was the fourth consecutive jump in inflation since the central bank abandoned its currency peg to the U.S. dollar on Nov. 3 in a dramatic move that has since seen the currency depreciate roughly by half.

Urban consumer price inflation had reached 28.1 percent in January year-on-year. The February number is the highest level since November 1986, when it reached 30.6 percent, according to Reuters data. (for chart click on http://reut.rs/2mExYx8)

Monthly urban consumer inflation eased to 2.6 percent in February from 4.07 percent in January.

The central bank accompanied the float with a 3 percent interest rate hike to fight price pressures but inflation has jumped over the past four months and is expected to climb further this year as the government pushes on with economic reforms, including fuel subsidy cuts.

“We expect headline inflation to remain elevated at similar and higher levels until Q4 2017, at least, as the pass-through effect from the higher FX rate continues, albeit at lower levels,” said Reham ElDesoki, senior economist at Arqaam Securities.

The economic reforms helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November.

President Abdel Fattah al-Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.

On Tuesday hundreds of Egyptians protested around the country, blocking roads and surrounding government offices, after a change to the way bread rations are managed raised fears that the government was cutting food subsidies by the back door.

In cities and towns food and beverage inflation reached 40.5 percent year on year in February. Clothing and footwear inflation reached 23.4 percent while transport inflation reached 28.8 percent annually, the statistics agency said.

“The prices are very expensive, nothing is getting cheap. People are buying much less, instead of 2 kilos, they get 1.5, tightening the belt until things get better,” Abdullah Mohsen, a vegetable seller at a market in Cairo on Thursday.

“Traders have hiked up the prices of the vegetables we buy in bulk, and it’s unimaginable. I’ve never heard of aubergines or beans selling for these prices,” he added.

Some economists expect the rising inflation to erode spending power, hit economic growth and prompt further hikes to interest rates, which are already up to 15.75 percent.

Egypt’s central bank has held interest rates steady at three monetary policy meetings since the flotation and some economists expect further rate hikes this year. The central bank’s monetary policy committee is due to meet on March 30 to decide on its key rates.

IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017.

 

(Reporting by Asma Alsharif, additional reporting by Nadine Awadalla; Editing by Richard Borsuk and Toby Chopra)

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