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Malawi to revise national budget after IMF suspends credit facility

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(By Mabvuto Banda, Reuters)

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Orange in final talks to sell Kenyan mobile stake

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

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

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

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

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

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

Orange was not immediately available for a comment.

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

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

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

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

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

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

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Africa and the Middle East: Going Mobile

Comments (0) Business, Featured, Middle East

ME mobile

By Enu Afolayan, Contributor

Going mobile. That’s the tune businesses, and marketers, are singing in the Middle East and Africa as the end of 2015 nears. If you don’t have a plan or haven’t started one, for the mobile marketplace, then you are at risk at being a generation behind the competition. You’re still driving a moped while everyone else is passing you by in their sleek, new electric cars that are almost driving themselves. Moreover, they are working on an app for that.

The people of the MEA market are snatching up mobile devices at a rapid rate and are second only to the Asia-Pacific market as the largest users of mobile phones. According to eMarketer, an independent market research company, 606 million people in the region have at least one mobile phone. They expect an increase to over 789 million in 2019. That’s a lot of phones. That’s a lot of people with phones who use mobile services and are increasingly buying goods and other services with them.

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Mauritius MCB Group full-year pretax profit up 26 pct

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

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

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

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

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

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

Earnings per share rose to 24.04 rupees from 18.34 rupees.

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

 

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ICCO to move to Abidjan, seeks new Executive Director

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

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

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

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

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

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

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Lubna Olayan, a Modern Arab Business Leader

Comments (0) Featured, Leaders, Middle East

Lubna-Olayan

by Sheldon Mayer, Managing Editor

Lubna Olayan appears in “Most Powerful Women” lists every year, featured by Forbes, Fortune, and Bloomberg as a model of modern international business leadership. She was named Entrepreneur of the Year in 2010 by her alma mater Cornell University. After her renowned father and founder of OFC summoned her to head the Middle Eastern sector of his OFC conglomerate, Lubna Olayan raised the standards, and quietly began modernizing work flow practices, undaunted by her singularity as the only woman in a conservative, heavily male-dominated Arabic business-scape. Notably she now continues a trend to fill roles in her companies with women who are “deserving” of positions in business and engineering, in what she describes as a unique meritocracy for Middle Eastern businesses. Her meritocracy sweeps across vast borders of business and finance, and as a holding company it is uniquely diverse.

Although Olayan Financing Company is reserved in comments about their revenue and profit, assets are currently estimated to range from seven to ten billion dollars. With the leadership of Lubna Olayan the company expanded into real estate, manufacturing, and partnerships in international brands such as Nabisco and Burger King. Lubna, her brother, and two sisters sit on the board of directors of this global enterprise, each sibling taking a role as leader of a particular geographic area within the global scope.

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The Fraught Four: China’s Economic Crash Has Serious Consequences for Four Southern African Nations

Comments (0) Africa, Business, Featured

Africa-China-trade-007

By Enu Afolayan, Contributor

China is a superpower. If there was any lingering doubt as to this, it should have been erased as the widespread fall-out from China’s recent economic crash became evident. For Sub-Saharan Africa in particular, the impact of the crash was particularly harsh.

The stock market crash on August 24th had several immediate consequences: the yuan was devalued, there was a huge injection of capital into the Chinese economy to support financial markets and the risk of a decrease in Chinese tourism worried many nations.

China is the number one trading partner for most African countries. It has more than $20billion USD in investments in addition to billions in development aid. China is one of the biggest customers for Africa’s robust resource-selling market, particularly for mined minerals and crude oil. The devaluation of the yuan against the dollar will likely result in less demand for African goods as the purchasing power of the yuan plummets, thus increasing the relative price for Chinese consumers. For South Africa, Angola, Zambia and Sierra Leone in particular, China’s economic troubles may be manifested in crippling ways.

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Tentative Optimism as Cote D’Ivoire Heads Into First Election Since 2010 Violence

Comments (0) Africa, Featured, Politics

Ivory_Coast-election-2010-11-12-2

By Sheldon Mayer, Managing Editor

In the first step towards their landmark election, nine candidates have formally announced that they will run in the October election against incumbent Alassane Ouattara.

While the official campaign season does not begin until October 11th, just two weeks before the election on October 25th, the announcement by the Constitutional Council is an unofficial green light for candidates to begin their campaigning.

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Novartis launches chronic disease programme for poor countries

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

ZURICH (Reuters) – Drugmaker Novartis AG has begun a programme in Kenya, Ethiopia and Vietnam to supply 15 low-cost medicines to fight chronic diseases like diabetes and high blood pressure.

The Swiss-based pharmaceuticals group said on Thursday its Novartis Access scheme would supply drugs for just $1 per treatment per month to governments, aid groups and others for a range of conditions that also includes cardiovascular and respiratory disease.

The drug list include Novartis’s valsartan for hypertension, vildagliptin for diabetes, and generics from its Sandoz division including tamoxifen for breast cancer. The company aims eventually to expand the scheme to 30 developing countries.

Responding to past criticism of the industry over the cost of medicines in low-income countries, many firms including Novartis, Roche and GlaxoSmithKline already provide drugs at lower prices than in the developed world.

Novartis chose Kenya, Ethiopia and Vietnam for their “great but diverse access challenges” and because it already has a strong presence or ties to non-governmental organisations there.

“This will allow us to support the delivery of medicine by building awareness of key non-communicable diseases and strengthening healthcare system capabilities in these diseases, including diagnosis and treatment,” Novartis said.

It did not immediately return phone calls seeking details.

The United Nations has highlighted concerns over the developing world’s ability to cope with escalating chronic disease, citing data showing about 85 percent of premature deaths from non-communicable diseases occur in developing countries.

Four-fifths of the world’s 350 million diabetes sufferers are in developing nations, and the U.N. estimates more than 40 percent of adults in many African countries have high blood pressure.

Other companies have also publicised similar efforts.

Amid pressure on the pharmaceuticals industry to do more, GlaxoSmithKline in 2009 agreed to slash drug costs for poor countries. Novartis’s cross-town rival, Roche, is working with the government in Ivory Coast to provide medicines for breast cancer and hepatitis.

(By John Miller, Reuters)

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Starbucks’ partner sees potential for 200 S. African cafes in five years

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

JOHANNESBURG (Reuters) – Starbucks’ local partner sees potential for more than 200 of the U.S. chain’s coffee shops in South Africa within five years, it said on Wednesday, as it prepares to open the country’s first Starbucks’ outlet next year.

Starbucks signed an agreement with Taste Holdings in July that licensed the South African restaurant operator to develop and run Starbucks-branded coffee shops in Africa’s most advanced economy.

The first store is expected in Gauteng province, the region that includes Johannesburg, within the first half of 2016, Taste said in a statement.

“Market analysis has identified a conservative market opportunity of more than 150 outlets in South Africa today. We foresee this growing to more than 200 in five years,” Taste said.

Taste, which also operates Domino’s Pizza outlets in South Africa, said it would start with at least 12 outlets in the next year before expanding further.

Global restaurant brands are increasingly investing in Africa to join established international players such as McDonald’s Corp in tapping a growing middle class.

Starbucks’ entry into South Africa will pit it against established brands such as unlisted Cape Town-based Vida e Caffè, a local firm with more than 60 outlets.

 

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