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More work needed before Congo Republic bailout -IMF

21 December 2017 Comments (0) Actualites, Africa, Economy

ABIDJAN (Reuters) – The International Monetary Fund (IMF) ended a week of talks in Congo Republic on Thursday saying the debt-crippled nation had more work to do if it hoped to gain the lender’s approval for a bailout package.

Like other Central African oil producers, Congo has been hit hard by low crude prices. Government revenues have dropped by a third since 2015. The IMF said in its end-of-mission statement that the non-oil economy was in recession, with a contraction of 9.2 percent expected for this year.

The Fund said it was encouraged by Congo’s draft 2018 budget and added that progress had been made in formulating medium-term macroeconomic and structural policies it could support.

However, it said the government needed to do more to restore debt sustainability, urging it to finalise the hiring of legal and financial advisors. More progress towards strengthening governance was also needed.

Congo is regularly singled out by anti-corruption groups for the opaque management of its oil sector.

The finance ministry acknowledged that “immediate measures” were needed.

“That is why… Congo Republic will open negotiations with its main creditors in the aim of restructuring its debt,” it said in a statement.

Once the Fund’s recommendations were carried out, “a financial arrangement to support Congo’s economic programme would be discussed at staff level before being proposed for the IMF Executive Board’s consideration,” said Abdoul Aziz Wane, who headed the mission.

The slow pace of the negotiations with the IMF, which have been under way for months, as well as continuing legal uncertainties, have compounded Congo’s acute liquidity pressures, according to Fitch.

Unsustainable debt meanwhile had led to high default risks for private creditors, the ratings agency said. ​

The IMF said in October that the country’s public or publicly guaranteed debt totalled $9.14 billion, or around 110 percent of GDP, by the end of July.

Much of that debt is believed to be owed to oil traders, who lent money to the government against future crude shipments.

A construction firm has also filed suit in a French court seeking payment of over $1 billion for public works projects dating back decades. That debt was not included in the IMF’s estimate.

Negotiations to hammer out the terms of an IMF assistance package will continue early next year, the finance ministry said in its statement.

 

 

(By Joe Bavier. Additional reporting by Aaron Ross; Editing by Alison Williams and John Stonestreet)

 

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South Africa’s Sibanye-Stillwater buys troubled platinum miner Lonmin

14 December 2017 Comments (0) Actualites

By Zandi Shabalala and Barbara Lewis

LONDON (Reuters) – South Africa’s Sibanye-Stillwater has agreed to buy Lonmin for about 285 million pounds ($382 million) in an all-share deal that drove shares in the troubled London-listed platinum miner up by more than a fifth.

Lonmin, the world’s third biggest platinum producer, has been battling weak global platinum prices and soaring operating costs in South Africa, shrinking the company’s market value by 98 percent in the past five years.

After the announcement, Lonmin’s shares jumped 23 percent, while shares in Sibanye-Stillwater, which will become the world’s second largest platinum producer on completion of the deal, fell 5 percent in Johannesburg.

“This is a bailout deal for Lonmin,” Nedbank precious metals analyst Leon Esterhuizen said “It makes for a good match, but it doesn’t resolve oversupply of the PGM (platinum group metals) industry.”

Global platinum prices are trading around their lowest levels since early 2016, under pressure from bloated supply and declining demand from the automotive industry.

“The flexibility inherent in the larger regional PGM footprint will create a more robust business, better able to withstand volatile PGM prices and exchange rates,” Sibanye Chief Executive Officer Neal Froneman said in a statement.

Under the offer, Lonmin shareholders would receive 0.967 new Sibanye-Stillwater shares for each Lonmin share, the firms said.

Following completion of the deal Lonmin shareholders would hold about 11.3 percent of the enlarged group.

“While in some way I am sad, I am sure has hell that this is the right thing for the sustainability of the company,” Lonmin CEO Ben Magara told Reuters.

Under Sibanye’s plans, Lonmin would put all of its older mines on care and maintenance, which means operations stop but they are kept in a condition to resume in future. The plan involves cutting 12,600 jobs in the next three years with a further 890 jobs at risk, a Sibanye presentation showed.

Job cuts are a particularly sensitive in South Africa where unemployment runs at around 27 percent. Lonmin now employs about 35,500 people. All of its mines are in South Africa.

The revised mine plan assumes “lower for longer” platinum prices, the presentation said.

“SUFFERING” SHAREHOLDERS

Sibanye and Lonmin have been talking for months, sources said, after looking at Lonmin a few years ago before turning to another deal. One banking source told Reuters the rest of Lonmin’s portfolio would be reviewed over time.

Lonmin, listed in London since 1961, has been undergoing an operational review to help resolve its cash crunch that led its banks to relax some debt covenants. The miner has tapped shareholders for cash three times since 2009.

“Doubtless welcome news to long suffering Lonmin shareholders averting the need to dig into their pockets once again to refinance the company in its regular three to four year refinancing cycle,” said Marc Elliott, analyst at Investec bank.

He said Sibanye management could get the most value from Lonmin’s smelting and refining assets and could also be betting on a rebound in the price of platinum group metals.

Lonmin emerged in the 1990s after the split up of Lonrho, a sprawling conglomerate run for three decades by buccaneering tycoon Tiny Rowland, whose firm was branded in the 1970s by Britain’s prime minister at the time as the “unacceptable face of capitalism”.

Lonmin was in the headlines again in 2012 when 34 striking miners at its Marikana facility were killed by police in the bloodiest confrontation since white rule ended in South Africa.

Sibanye, spun off from Gold Fields, made its first foray into platinum by acquiring Anglo American Platinum’s labour intensive Rustenburg operations in 2015. The company also bought Aquarius Platinum and U.S. palladium producer Stillwater.

With Lonmin, Sibanye will leapfrog another troubled miner, Impala Platinum, to become the world’s No. 2 platinum producer.

The government-owned Public Investment Corporation (PIC), which owns 30 percent of Lonmin, increased its stake in Sibanye in November to 10 percent.

PIC was not immediately available to comment on the deal.

In November, Reuters reported on its array of measures to save cash after it delayed its annual financial results pending conclusion of a business review.

UBS and HSBC advised Sibanye on the deal.

(Additional reporting by Noor Zainab Hussain, Ed Stoddard and Clara Denina; Editing by Adrian Croft and Edmund Blair)

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Steinhoff accounting irregularities trigger share crash, CEO exit

6 December 2017 Comments (0) Actualites, Africa, Business

JOHANNESBURG (Reuters) – Steinhoff International shares crashed on Wednesday after it revealed accounting irregularities and its CEO quit, shocking investors who had backed the rapid reinvention of a South African furniture chain into an international retail empire.

The company said late on Tuesday that “new information has come to light today which relates to accounting irregularities requiring further investigation” and that billionaire Christo Wiese, its largest shareholder and chairman, would take charge.

Steinhoff said chief executive Markus Jooste, who had been at the helm for nearly 20 years and oversaw its expansion to one of the world’s largest household goods retailers, had resigned with immediate effect and consultants PwC would undertake an “independent investigation”.

Steinhoff has been aggressively expanding in developed markets since moving its primary share listing from Johannesburg to Frankfurt in 2015, snapping up Britain’s Poundland, U.S-based Mattress Firm and Australia’s Fantastic.

Steinhoff said Wiese would “embark on a detailed review of all aspects of the company’s business with a view to maximising shareholder value”, but its South African shares slumped 65 percent to an eight-year low of 15.87 by 1120 GMT. Its stock was down in Frankfurt by 66 percent following the news.

Steinhoff has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015. Steinhoff has said that was a tax case relating to whether revenues were booked correctly, and taxable profit correctly declared.

Reuters reported last month that Steinhoff did not tell investors about almost $1 billion in transactions with a related company, despite laws that some experts believe require it to do so.

It is unclear what accounting irregularities the company was referring to in its statement on Wednesday. A spokesman declined further comment and attempts by Reuters to contact Jooste were not successful.

The development had wider repurcussions too, with the chief executive of Steinhoff African Retail (STAR), part of Steinhoff which includes the control of Shoprite, also resigning on Wednesday and its shares falling 21.5 percent to 19.30 rand by 0855 GMT.

“In light of these developments at Steinhoff, STAR’s existing CEO, Ben la Grange has decided to step down as CEO of STAR,” the company said.

 

TAX RATE QUESTIONS

Analysts have long questioned how Steinhoff managed to achieve such a low tax rate. Its tax rate has averaged 12 percent over the past five years — half the headline corporate tax rate in its main markets and less than half the rates paid by listed competitors including France’s Casino, Germany’s Metro AG and South Africa’s Woolworths.

Experts say such low tax rates can be the result of complex corporate structures which stretch accounting rules and such arrangements are occasionally challenged by courts as unlawful.

“The company recorded a very unusual tax rate of c. 15 percent and also guided that this would be the rate going forward,” Juergen Kolb, an analyst at Kepler Cheuvreux, said in a note, adding that if this tax rate was at risk it could also hit Steinhoff’s cashflow.

Kolb also raised the possibility that as chairman, Wiese’s role could now come under scrutiny too.

Steinhoff did not respond to requests for information about what, if anything, Wiese knew about the accounting problems now being investigated before Tuesday.

Investors also told Reuters they are concerned Wiese may be forced to sell shares he bought last year with borrowed money.

Wiese borrowed 1.6 billion euros ($1.9 billion) to buy additional Steinhoff shares through a family trust in September 2016, pledging 3.2 billion euros of his existing holding as security to the investment banks that lent the money.

With the share price plunge taking the security below the value of the loan, Wiese may be required by the financing banks — Citi, Goldman, HSBC and Nomura — to post more shares as collateral, or sell part of his holding.

($1 = 0.8459 euros)

 

(By TJ Strydom. Reporting by TJ Strydom; additional reporting by Tanisha Heiberg, Tom Bergin and Alasdair Pal; writing by Alexander Smith; editing by Tom Pfeiffer and Keith Weir)

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African Development Bank gives $148 million to support Namibia’s education, agriculture

5 December 2017 Comments (0) Actualites, Africa, Agriculture, Education

CAPE TOWN/WINDHOEK (Reuters) – The African Development Bank (AfDB) has approved a total of 2 billion rand 148 million) in loans to boost Namibia’s education and agriculture sectors, it said on Tuesday.

The funds are aimed at helping reduce youth unemployment by boosting technical and vocational training, and reducing food imports by the South-western African country.

Both the education and agriculture projects will receive additional Namibian government contribution, the AfDB said.

The south-western nation’s unemployment rate jumped to 34 percent of the working population in 2016 from 28.1 percent in 2014, the last time a labour force survey was conducted by the Namibia Statistics Agency.

($1 = 13.4738 rand)

 

(Reporting by Wendell Roelf in Cape Town and Nyasha Nyaungwa in Windhoek; Editing by James Macharia)

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Heineken to open $100 mln brewery in Mozambique in 2019

4 December 2017 Comments (0) Actualites, Africa, Business

JOHANNESBURG (Reuters) – Heineken will open a $100 million brewery in Mozambique, its first production facility in the southern African nation, the brewer said on Monday.

The world’s second-largest brewer plans to start production at the 0.8 million hectoliters capacity plant in the capital Maputo in the first half of 2019, it said in a statement.

Heineken, which also brews Amstel and Sagres, opened a marketing office in Mozambique last year, importing products to compete in a market where AB Inbev’s 2M is entrenched.

AB Inbev last year took over SABMiller, gaining a brewery in Mozambique among a host of assets worldwide.

“We are delighted to enter Mozambique, where we see promising long-term economic perspectives,” said Heineken’s managing director for East and West Africa Boudewijn Haarsma.

Heineken built a brewery in neighbouring South Africa less than a decade ago after ending a deal with SABMiller for brewing Amstel beer.

 

(Reporting by TJ Strydom; Editing by James Macharia and David Evans)

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Eskom says rolling cuts unlikely despite coal supply fall

30 November 2017 Comments (0) Actualites, Africa, Environment, Infrastructure

By Nqobile Dludla and Mfuneko Toyana

JOHANNESBURG (Reuters) – South African utility Eskom said on Thursday rolling power cuts are unlikely despite coal supply possibly falling below a 20-day requirement at its Hendrina power station.

On Thursday investigative news outfit AmaBhungane reported Eskom may be forced into nationwide electricity cuts after a coal mine linked to the Gupta family threatened to halt supply.

Eskom has been at the heart of allegations of illegal contracts and undue influence in awarding tenders to the Gupta family, friends of South African President Jacob Zuma.

Spokesman Khulu Phasiwe confirmed Eskom had held an emergency meeting last Friday to determine whether strategic coal stockpiles at Hendrina and other stations were sufficient after Tegeta Exploration and Resources threatened to halt supply to Hendrina.

Coal supply at Eskom’s power stations stood at 74 days’ worth in March but had fallen to 25 days’ worth at Hendrina by October and may have fallen below a 20-day requirement since, Phasiwe said.

He told Reuters the company was investigating whether supply at all its 12 power stations complied with regulations requiring at least 20 days’ worth.

South Africa had regular power cuts between 2008 and 2015, hitting key industries and knocking economic growth as demand exceeded capacity.

Quoting sources, AmaBhungane alleged that Tegeta has been exporting coal from its Optimum Coal Mine while limiting supply to Eskom.

“If it happens that for some reason they are unable to supply us with coal then clearly it means that they would have breached the contract and therefore it becomes a legal matter,” Eskom’s Phasiwe said.

A spokeswoman for Tegeta parent company Oakbay, founded by the Gupta family as its main investment vehicle in South Africa, said the company would likely comment on Friday.

The family agreed in August to sell Tegeta but the sale has not been finalised.

The Guptas are accused of using their links with the 75-year old Zuma to wield influence and win state contracts. Zuma and the family both deny any wrongdoing.

($1 = 13.6469 rand)

(Editing by Ed Stoddard and Jason Neely)

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S.Africa’s Zuma calls for action after S&P downgrade, rand up on Moody’s reprieve

27 November 2017 Comments (0) Actualites, Africa, Economy

By Olivia Kumwenda-Mtambo

JOHANNESBURG (Reuters) – South African President Jacob Zuma called for concrete measures to boost growth after S&P Global Ratings downgraded the local currency debt to sub-investment grade, while foreign currency debt was pushed deeper into “junk” territory.

The rand recovered on Monday from steep falls suffered late on Friday after the downgrade, taking some relief from Moody’s decision to only place South Africa on review for downgrade.

A cut to “junk” on the local currency debt by both S&P and Moody’s could have seen South African debt lose its place in Citi’s World Government Bond Index (WGBI), the biggest of the global benchmarks and tracked by about $2-3 trillion of funds.

Zuma directed Finance Minister Malusi Gigaba on Monday to finalise proposals for expenditure cuts amounting to 25 billion rand ($2 billion) and revenue boosting measures totalling 15 billion rand – including through taxes.

A proposal by a presidential commission to introduce free higher education should also be implemented in a “fiscally-sustainable manner”, the statement from Zuma’s office said.

Gigaba in October unveiled a gloomy outlook for the economy as he flagged weaker growth expectations, wider budget deficit estimates and rising government debt.

Both S&P and Moody’s cited deterioration in South Africa’s economic growth prospects and public finances.

As of 1527 GMT, the rand was trading at 13.7625 per dollar, 2.86 percent firmer than its New York close on Friday, when it had tumbled 2 percent following S&P’s announcement.

“The market is finding some relief in the fact that Moody’s has chosen to give us basically till February before they change our rating, if they do change our rating,” said Shaun Murison, currency strategist at IG Markets.

In fixed income, the yield for the benchmark government bond was down 9 basis points to 9.245 percent, also recovering after rising as much as 11 basis points earlier in the session.

Moody’s said the review will allow it to assess the South African authorities’ willingness and ability to respond to the rising pressures through growth-supportive fiscal adjustments that raise revenues and contain expenditures.

“The review period may not conclude until the size and the composition of the 2018 budget is known next February,” Moody’s senior analyst for South Africa, Zuzana Brixiova, said in a statement.

Moody’s rates South Africa’s foreign and local currency debt on their lowest investment grade rung of Baa3.

VOLATILITY

S&P’s decision will see South Africa excluded from the Barclays Global Aggregate index, whose inclusion criteria requires investment grade rating on its local currency debt from any two ratings agencies.

Fitch already rates South African debt as “junk”, and affirmed the rating on Thursday.

If nothing changes, the country will be downgraded to “junk” by all ratings agencies and the WGBI dream will be no more, at least for many a year, said Standard Bank chief trader Warrick Butler in a note.

“What this means, in terms of the currency, will be increased volatility.”

Falling out of the WGBI could have led to a larger sell-off in bonds, even though rising yields could present a buying opportunity for some yield-hungry investors.

“If you look at some of the metrics the real yields are among the highest in EM, the domestic curve is extremely steep, the current account is in better place than it was three to four years ago and the rand is quite competitive against likes of (Russia’s) rouble or Brazilian real,” said London-based Paul Greer, senior trader at Fidelity International.

“On the local side the real yield and steepness of curve look attractive from tactical perspective.”

Analysts said an exclusion from the Barclays index would lead to outflows of about $2 billion, compared with more than $10 billion if South Africa was to fall out of Citi’s WGBI.

South African debt was dropped from one the widely used global bond indexes, the JPMorgan Emerging Market Bond Index Global in April after S&P and Fitch downgraded foreign currency debt to sub-investment grade.

On the stock market, the Top-40 index was 0.35 percent lower at 53,810 while the broader all-share was down 0.28 percent at 60,157.

($1 = 13.7678 rand)

(Additional reporting by Sujata Rao in London; Editing by James Macharia/Mark Heinrich)

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Zimbabwe’s economic situation “very difficult”: IMF mission chief

23 November 2017 Comments (0) Actualites, Africa, Economy

JOHANNESBURG (Reuters) – Zimbabwe’s economic growth is threatened by high government spending, an untenable foreign exchange regime and inadequate reforms, a senior International Monetary Fund (IMF) official said.

Zimbabwe was once one of Africa’s most promising economies but suffered decades of decline as former President Robert Mugabe pursued policies that included the violent seizure of white-owned commercial farms and money-printing that led to hyperinflation.

Mugabe, 93, resigned on Tuesday after nearly four decades in power following pressure from the military, the ruling ZANU-PF party and the general population.

New ZANU-PF leader Emmerson Mnangagwa is expected to be sworn in as Zimbabwe’s president on Friday.

Zimbabwe has not been able to borrow from international lenders since 1999 when it started defaulting on its debt, and has $1.75 billion rand in foreign arrears.

“The economic situation in Zimbabwe remains very difficult,” Gene Leon, IMF’s mission chief for Zimbabwe said in a statement to Reuters late on Wednesday.

“Immediate action is critical to reduce the deficit to a sustainable level, accelerate structural reforms, and re-engage with the international community to access much needed financial support.”

Leon said Zimbabwe should resolve arrears to the World Bank, African Development Bank and the European Investment Bank, among other reforms, for the IMF to consider future financing request from the country.

Zimbabwe should also be ready to implement strong macroeconomic policies and structural reforms to restore fiscal and debt sustainability, Leon said.

 

(Reporting by David Lawder in Washington and Olivia Kumwenda-Mtambo in Johannesburg; Editing by James Macharia)

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Zambia’s central bank says delayed IMF programme affecting kwacha currency

22 November 2017 Comments (0) Actualites, Africa

LUSAKA (Reuters) – Zambia’s central bank governor said on Wednesday the delay in reaching a conclusion for an aid programme with the International Monetary Fund (IMF) was putting pressure on the kwacha currency.

Zambia and the IMF agreed in October to chart a new path towards debt sustainability after the IMF delayed the conclusion of talks with Africa’s No.2 copper producer, saying it was at high risk of debt distress.

The government had said it hopes to get board approval from the international lender by the end of 2017

“It is more of sentiment because the fundamentals point to continued appreciation,” central bank governor Denny Kalyalya told a media conference.

“One of the factors has been that players were looking to the conclusion of an IMF programme before the end of the year.”

The kwacha currency slid to 10.0850 per dollar on Wednesday from about 9.0000 three months ago and traders said it was due to increased dollar demand and short foreign currency supply.

 

(Reporting by Chris Mfula; Editing by James Macharia)

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South Africa considers privatisation to counter recession

13 July 2017 Comments (0) Latest Updates from Reuters

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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