By Duncan Miriri

NAIROBI (Reuters) – The World Bank cut Kenya’s economic growth forecast for this year by half a percentage point on Wednesday to 5.5 percent, citing drought, sluggish private sector credit growth and rising prices of oil.

The country is estimated to have expanded by 5.9 percent last year, the highest annual expansion in half a decade.

But the outlook has been hit by months of dry weather, that left 2.7 million people in need of food aid, and a drop in annual private sector credit growth to 4 percent in February from 17 percent at the end of 2015.

In its latest report on the Kenyan economy, the World Bank said growth would pick up after this year, driven by the expected normalisation of rainfall, a firmer global economy, a rebound in tourism and the resolution of challenges curbing credit growth.

“GDP growth is expected to accelerate to 5.8 percent and 6.1 percent in 2018 and 2019 respectively,” the Bank said.

The main risks facing the economy were the weather and any slowdown in economies of major trading partners, the bank said.

It urged the government to stick to its fiscal consolidation path and to review last year’s changes to the banking law, which capped commercial lending rates at 4 percentage points above the central bank rate.

Henry Rotich, the finance minister, set the deficit for the fiscal year starting in July at 6 percent of economic output and promised to reduce it further towards 4 percent in the 2019/20 fiscal year.

The budget deficits, which have driven up borrowing, have been used to fund a range of public investments in roads, railways and energy generation, the government says.

The cap on commercial lending rates, which was imposed last September, has been partly blamed for the slowdown in credit growth.

The World Bank said Kenya can quicken economic growth by boosting its construction sector, through offering innovative housing financing through the creation of mortgage refinance companies and the provision of housing finance guarantees.

There were less than 25,000 mortgages in Kenya and mortgage debt made up just 3.15 percent of the GDP in 2015, the bank said.

“Unlocking the residential housing market through the development of the housing finance market can provide a wide range of income opportunities,” the bank said.

(Editing by Jeremy Gaunt)

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By Stanley Carvalho and Chijioke Ohuocha

DUBAI/LAGOS (Reuters) – The Nigerian arm of Abu Dhabi telecom group Etisalat is yet to agree a deal on restructuring a $1.2 billion loan with local banks after it missed a payment, a company source told Reuters.

Etisalat Nigeria told Reuters last month that it was in talks with lenders to restructure the loan.

The source, who is not authorised to speak to media, said that Etisalat and the group of 13 Nigerian lenders were yet to agree on a debt restructuring proposal.

The source was speaking on the sidelines of Etisalat’s annual general meeting in Abu Dhabi on Sunday, where Chief Executive Saleh Al Abdooli declined to comment on the debt talks when asked by Reuters.

Etisalat did not respond to a request for comment.

Nigerian regulators agreed with local banks in March to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis.

Sources have said that Etisalat would consider selling its stake in the Nigerian entity after the debt deal is agreed.

(Editing by Susan Fenton)

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CAIRO (Reuters) – Egypt’s urban consumer inflation rose at a slower pace in March and core inflation dipped, the first signs of stabilising prices after the shock from a huge currency depreciation.

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.

Urban inflation rose for the fifth consecutive month to reach an annual 30.9 percent, the official CAPMAS statistics agency said on Monday, its highest point in more than three decades.

However the rise from 30.2 percent in February was the smallest since Egypt abandoned its currency peg in November, driving up the price of imports.

The pound currency has since depreciated by roughly half and in Egyptian cities and towns, food and beverage inflation reached 41.8 percent year on year in March.

Annual core inflation, on the other hand, declined for the first time in eight months, reaching 32.25 percent in March from 33.1 percent in February, the central bank said in a statement.

“The deceleration in core inflation is in line with the expected headline deceleration in March,” said Reham El Desoki, senior economist at Arqaam Securities.

“March 2017 was a month void of significant inflationary pressures, where price rises slowed and a lower customs dollar rate stabilized the cost of imports,” El Desoki said

Egypt abandoned its currency peg of 8.8 to the U.S. dollar on Nov. 3 but the pound has been stable around 18 per dollar for the past two weeks.

March’s annual urban consumer inflation figure is the highest since June 1986, when it reached 35.1 percent, according to Reuters data. However, monthly urban inflation eased to 2 percent in March from 2.6 percent in February.

The central bank accompanied the November float with a 3 percent interest rate hike to fight price pressures but inflation is expected to keep climbing as the government pushes on with economic reforms, including fuel subsidy cuts.

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

Egypt’s central bank has held interest rates steady at four monetary policy meetings since the currency flotation although some economists expect further rate hikes this year.

IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017. [ID:nC6N1DO017]

(Reporting by Asma Alsharif; Editing by Toby Chopra)

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JOHANNESBURG (Reuters) – South Africa’s bourse will investigate an increase in the trading of certain securities in the hours before former finance minister Pravin Gordhan was recalled from an international investor roadshow, BusinessDay newspaper reported on Monday.

On March 27, news broke that President Jacob Zuma had ordered Gordhan to return immediately from a trip to Britain and the United States. Gordhan was later dismissed in a cabinet reshuffle.

The newspaper reported that the Johannesburg Securities Exchange was examining trading in securities that were affected by news of the recall.

Officials at the exchange would not initially confirm or deny the report when contacted by Reuters.

The report said that the exchange would seek to identify activity that might warrant further investigation by the Financial Services Board’s market abuse department.

“The news precipitated material moves in the value of numerous listed securities including currency futures,” the exchange’s director of market regulation Shaun Davies is quoted as saying by the paper.

Davies declined to say which securities were being investigated, but it is likely that banking stocks will be among them, the BusinessDay said.

The rand weakened by about 2.5 percent ahead of the news, according to Thomson Reuters data, falling further after the recall was confirmed.

Speculation of large bets on currency futures at around the same time also surfaced, causing market watchers to speculate the currency was being “shorted”, local media reported.

Short-selling refers to the selling of instruments that have been borrowed, in anticipation of a fall in prices.

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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By Sumeet Chatterjee and Carolyn Cohn

HONG KONG/LONDON (Reuters) – Old Mutual has put up for sale its 50 percent stake in a Chinese insurance joint venture, people with direct knowledge of the matter said, as part of a revamp of the Anglo-South African financial group and amid a tough market for foreign insurers in China.

Old Mutual, which is working with financial advisers on the stake sale plan, could sell its holding in the 13-year-old life insurance joint venture with Guodian Corp to one or more local firms, said the people.

The move is part of a broader Old Mutual group restructuring exercise to exit non-core and smaller operations, they said, adding there is no certainty a deal would happen and the company could end the process if the bids don’t match its expectations.

An Old Mutual spokesman declined to comment, while an email sent to Old Mutual-Guodian Life Insurance Co Ltd did not elicit an immediate response.

Despite being the world’s second-largest insurance market, restrictive ownership limits, capped at 50 percent for foreign life insurers, and tough local competition have weighed on foreign firms’ operations and market share in China.

Chinese firms, including China Life Insurance Co, Ping An Insurance Group Co of China and a host of mid-sized insurers dominate the local market, with foreign joint ventures owning less than a 10 percent share.

The restrictive ownership limit and the tough competition from local firms, many of them state-backed, have especially impacted the smaller foreign insurance joint ventures such as Old Mutual’s in China.

In 2015, Old Mutual’s share of profit in the joint venture was 2 million pounds ($2.50 million), as per its annual report. The venture’s insurance business income in the fourth quarter of last year rose 12 percent to 118.4 million yuan ($17.16 million).

Given the venture’s small size, it was not immediately possible to estimate the potential sale value of Old Mutual’s stake, the people said. They declined to be named as they were not authorised to speak about Old Mutual’s plan, which is not public yet.

Guodian is one of China’s five major state-run power generation companies.

Old Mutual is in the midst of breaking up its business in four parts by the end of next year. The firm aims to list or sell its emerging markets business and is sharpening focus on its sub-Saharan Africa business.

The company sold a 25 percent stake in its Old Mutual Asset Management business last month to China’s HNA for $446 million, after selling its Italian wealth management business last year for $297 million.

Besides China, Old Mutual’s Asia presence includes its life insurance joint venture in India with Kotak Mahindra Group.

($1 = 0.8010 pounds)

($1 = 6.8982 Chinese yuan renminbi)

(Reporting by Sumeet Chatterjee in HONG KONG and Carolyn Cohn in LONDON; Additional reporting by Julie Zhu; Editing by Muralikumar Anantharaman)

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ABUJA (Reuters) – Nigeria’s cabinet has approved $1.3 billion of loans from international lenders to fund the newly licensed Development Bank of Nigeria, the finance minister said on Wednesday.

The money is made up of $500 million from the World Bank, $450 million from the African Development Bank, $200 million from German state bank KfW and $130 million from France’s state development agency, said Kemi Adeosun, Nigeria’s finance minister.

The loan facility is still subject to approval by the National Assembly, she said.

(Reporting by Felix Onuah; Writing by Paul Carsten; Editing by Larry King)

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