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Egypt eyes $2-3 bln deposit from Saudi Arabia to help seal IMF deal: fin min

Comments (0) Latest Updates from Reuters, Non classé

CAIRO (Reuters) – Egypt is in advanced talks with Saudi Arabia to secure a new deposit worth $2-3 billion as part of about $6 billion in bilateral financing required to seal an IMF loan, the finance minister said in comments published by Al Borsa newspaper.

Borsa quoted Amr El-Garhy as saying that negotiations with Saudi Arabia were due to be completed in the next few weeks.

It was not clear if Garhy was expecting Egypt to agree on the disbursement of a $2 billion deposit agreed with Saudi Arabia in April or if the country was seeking new funding.

Egypt reached a preliminary agreement with the International Monetary Fund in August for a $12 billion three-year lending programme to help it plug its funding gap and stabilise markets. But the deal requires Egypt to secure a further $6 billion in bilateral financing.

 

(Writing by Lin Noueihed; Editing by Toby Chopra)

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Volkswagen targets East Africa with Kenya car assembly plant

Comments (0) Latest Updates from Reuters

By George Obulutsa

NAIROBI (Reuters) – Volkswagen’s will resume producing cars in Kenya by the end of the year as it looks to sell more vehicles across the East African region.

After a four decade pause in production by the German carmaker in Kenya, VW will establish an assembly plant to initially produce its Vivo model, President Uhuru Kenyatta and Thomas Schafer, Volkswagen South Africa’s chief executive, said.

Emerging market production is familiar territory for VW, whose familiar Beetle model was a favourite on the streets of Mexico, but Kenya’s car market is dominated by low-priced second-hand imports from countries such as Japan.

VW, which assembled cars in Kenya in the 1960s and 1970s, will join other brands already being put together in the country, including Isuzu, Toyota, Nissan and Mitsubishi.

“Volkswagen South Africa will now again establish an assembly plant to produce motor vehicles at the Kenya Motor Vehicle Manufacturers limited in Thika,” Kenyatta said on Wednesday after meeting Volkswagen South Africa executives.

Kenya mostly assembles trucks, pick-ups and buses from kits supplied by foreign manufacturers, although data from the Kenya National Bureau of Statistics showed that the number of vehicles assembled between January and April was down 31 percent year-on-year to 2,258 vehicles.

The Kenya Vehicle Manufacturers Association (KVMA) attributed the slowdown to tough economic conditions for buyers, including high interest rates and cuts in government spending, while VW said it saw opportunity in the market.

“We believe that Kenya has got the potential to develop a very big fully-fledged automotive industry. The East African Community has got the potential, and today is the first step in this direction that we want to take with our passenger cars,” Schafer said.

VW is the second-biggest auto maker by sales in South Africa after Toyota with its vehicles sold domestically as well as exported to the rest of Africa.

Kenyatta said that VW’s assembly plant would begin with the Vivo and expand to a range of vehicles, with the first car expected to be rolled out before the end of the year.

Neither Kenyatta nor Schafer said how much VW was investing or what the plant’s production capacity would be.

 

(Editing by Alexander Smith)

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IMF revises Guinea growth forecast up to 5.2 pct

Comments (0) Latest Updates from Reuters, Non classé

DAKAR (Reuters) – The International Monetary Fund on Wednesday revised higher its forecast for Guinea, whose economy is recovering from an Ebola epidemic, to 5.2 percent from an earlier 3.8 percent.

“The recovery is driven by positive supply shocks in the mining, agriculture, and energy sectors, which were less affected by the Ebola epidemic,” the statement said.

 

(Reporting by Emma Farge; Editing by Nellie Peyton)

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South Africa’s Q3 business confidence improves but political uncertainty a risk

Comments (0) Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s business confidence rose in the third quarter, ending seven straight quarterly declines, a survey showed on Wednesday, but could fall again over the uncertainty facing the finance minister.

Police are investigating Finance Minister Pravin Gordhan over the activities of a surveillance unit set up when he headed the tax department, a probe that has also rocked South African markets and raised concerns over a possible credit downgrade.

The Rand Merchant Bank (RMB) survey said further ructions around Gordhan could keep business executives on tenterhooks.

The RMB index, which is compiled by the Bureau for Economic Research, climbed to 42 points in the third quarter from 32 in the three months to June, helped by a stronger currency and lower fuel prices and inflation.

“A continuation of the current domestic political uncertainty, or renewed adverse international political or economic developments could easily see business confidence falter again,” it said in a statement.

 

(Reporting by Stella Mapenzauswa; Editing by James Macharia)

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Steinhoff reports 3 pct drop in earnings per share

Comments (0) Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa-based retail group Steinhoff reported a 3 percent decline in its earnings per share on Wednesday, weighed down by an increased number of shares and the weaker rand currency.

Steinhoff, which has been seeking to expand abroad with a series of acquisitions, the latest being the offers to buy U.S. bedding retailer Mattress Firm and Britain’s Poundland, said diluted adjusted EPS came in at 29.5 euro cents in the year ended June, down from 30.3 cents the previous year.

Adjusted EPS strips out certain one off, non-trading items and is a required performance measure by the Johannesburg Stock Exchange, where Steinhoff has a secondary listing.

Steinhoff funded its 2014 purchase of Africa’s no-frills clothes retailer Pepkor with cash and shares, while the result was also affected by weaker exchange rates, with the rand depreciating by 17 percent during the period.

Since moving its primary listing to the Frankfurt Stock Exchange in December last year, Steinhoff has been looking to expand its businesses abroad at a time when consumers are turning to cheaper chains and its home market is struggling.

Steinhoff is close to securing an $800 million takeover of British discount retailer Poundland, with shareholders due to vote on the deal later on Wednesday.

Meanwhile its $3.8 billion offer for the United States’ largest bedding retailer Mattress Firm already has the backing of the board and the Texas-based company’s biggest shareholder, JW Childs.

“Steinhoff continues to see opportunities for growth within our key markets in the territories where the group operates,” said Chief Executive Markus Jooste.

 

(Reporting by Tiisetso Motsoeneng; Editing by Ed Cropley, Greg Mahlich)

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China’s gifts to Africa: Government buildings, stadiums

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While much of the aid China provides to Africa comes in the form of investment and loans for infrastructure and economic development, the Asian nation has also given the continent dozens of government structures and sports stadiums.

For example, China has promised the government of Zimbabwe $46 million for a new building to house the nation’s parliament. The building will be located in Mount Hampden, about 10 miles outside the capital city of Harare.

Zimbabwe’s Senate and House number a total of 300 members and the legislative bodies have outgrown the current parliament building.

The pledge followed the Forum on China-Africa Cooperation in Johannesburg last December. The Chinese government also agreed to forgive $40 million in Zimbabwean debt to the Asian nation. At the same time, China pledged to invest more than $1 billion in development of a thermal power plant in Zimbabwe.

In return, Zimbabwe agreed to make the Chinese Yuan legal tender. Zimbabwe abandoned its own dollar currency seven years ago after a period of hyperinflation and uses multiple currencies, including the United States dollar and the South African Rand.

Support fosters economic ties

As China seeks to strengthen its economic ties to the continent, support public and government structures has emerged as one facet of the strategy. With its interest in Africa’s minerals and other resources, China has become a major investor and financier of infrastructure projects.

In 2012, China funded a $200 million headquarters in Addis Ababa for the African Union, dubbing it “China’s Gift to Africa.” The building, 100 meters tall, dominates the skyline of the Ethiopian city. Most of the materials and furnishings were imported from China and more than 1,000 construction workers from China and Ethiopia worked on the project.

China also built an opulent presidential office complex for Mozambique, complete with crystal chandeliers and marble interiors. The structure, which opened in 2014, overlooks Maputo Bay. Cost was not disclosed.

China also donated $25 million for a new building to house the offices of the president and vice president in Uganda and provided furnishings from China. The building, next to the Ugandan parliament building, opened in 2011.

In Sierra Leone, China built a new foreign ministry complex and offices for parliament as well as a 100-bed friendship hospital outside Freetown. China also renovated government offices in Zambia.

China conducts “stadium diplomacy”

The Asian nation has also conducted an effort dubbed “stadium diplomacy,” building more than a dozen sports venues on the continent.

They include Mozambique National Stadium which was built to Olympic standards at a cost of $80 million and seats 42,000 spectators; Tanzania National Stadium, also built to Olympic standards and accommodating 60,000 spectators and built with a contribution of more than $33 million from China; and Malawi National Stadium, which can seat 40,000 and cost $70 million.

China also assisted with construction of four stadiums for the 2010 African Cup of Nations competition in Angola. The complex cost an estimated $600 million. For the 2012 African Cup, Equatorial Guinea built two stadiums with Chinese assistance while 2012 co-host Gabon enjoyed a gift from China of a $60 million stadium.

Chinese investment, trade on the rise

The millions of dollars spent on public structures are dwarfed by ongoing Chinese investment in the continent. In December, China pledged to $60 billion to Africa, most of it in the form of loans and export credits.

China said its cumulative direct investment to Africa over 15 years ending in 2014 was $30 billion.

China has become by far Africa’s biggest trading partner, and more than one million Chinese laborers and traders have moved to the continent in the last decade.

Trade between Africa and China was $220 billion in 2014 and was expected to increase to $300 billion in 2015.

The United States and India are also major trading partners with Africa, according to the World Bank. In 2014, China accounted for 15 percent of imports to Africa and 6.5 percent of its exports. The United States represented 5.5 percent of imports and nearly 5 percent of exports. India accounted for 6 percent of imports and more than 8 percent of exports. Africa also imports about 5 percent of its goods from Germany and exports more than 6 percent to the Netherlands and 4.5 percent to Spain.

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South Africa’s economy avoids recession as manufacturing, mining grow

Comments (0) Economy, Latest Updates from Reuters

PRETORIA (Reuters) – South Africa’s economy grew by its most in six quarters as the mining and manufacturing sectors reversed sharp contractions due to an uptick in exports, the statistics agency said, ending fears of a recession.

Growth beat market consensus, rising by 3.3 percent in the second quarter of 2016, its fastest quarterly growth since the fourth quarter of 2014, after shrinking by 1.2 percent in the three months to March, Statistics South Africa said on Tuesday.

The currency of Africa’s most industrialised economy extended its gains to 1.3 percent after the growth data was released. The rand traded at 14.1890 per dollar at 1023 GMT versus overnight close of 14.3800.

Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 2.3 percent while the economy was seen expanding 0.5 percent year-on-year.

Mining led the growth, expanding by 11.8 percent after an 18.1 contraction in the first quarter.

Manufacturing also grew, up 8.1 percent quarter on quarter from 0.6 percent previously.

“The mining and manufacturing were your key drivers for the 3.3 (percent growth) mainly related to exports of platinum and exportation of motor vehicles,” said chief director for national accounts at Stats SA Michael Manamela.

On a year-on-year basis, the economy grew 0.6 percent versus a 0.1 percent contraction in the first quarter, the agency said.

The agency however warned that the jump in quarterly growth was also due to the sharp contraction in the previous quarter, and the more realistic measure was to look at the first six months of 2016, which showed growth at 0.3 percent.

“You should see it in context of that it compares with a very low first growth,” Manamela said.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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South Africa’s AMCU, platinum mines fail to reach wage deal

Comments (0) Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s biggest platinum mine-workers’ union and the industry have failed to reach a deal on workers’ pay, the union said on Monday, raising the prospect of industrial action in the world’s biggest producer of the white metal.

The Association of Mineworkers and Construction Union (AMCU), which led a crippling five-month strike in 2014, has been in talks with Anglo American Platinum, Impala Platinum and Lonmin since July this year.

 

(Reporting by Tiisetso Motsoeneng; Editing by Ed Cropley)

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Angolan President fires finance minister Manuel

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

LUANDA (Reuters) – Angolan President José Eduardo dos Santos fired Finance Minister Armando Manuel on Monday two months after the government of Africa’s biggest oil producer broke off talks with the IMF over emergency funding.

In a cabinet reshuffle, dos Santos also replaced his agriculture minister and dropped the powerful Chief of Staff in the presidency, Edeltrudes da Costa, who was implicated in a recent land eviction.

A statement said Manuel, who was appointed in 2013 and whose term had been due to run to 2017, would be replaced by capital markets commission head Augusto Archer de Sousa Hose, more commonly known as Archer Mangueira.

Over the last two years, Manuel had presided over an economic slump caused by a sharp drop in oil prices that sapped dollar inflows, hammered the kwanza and prompted heavy government borrowing.

The kwanza slid more than 30 percent against the dollar in 2015, and in January the central bank allowed for another 15 percent weakening to 155 against the dollar.

The currency was bid at 165/dollar on Monday, according to Thomson Reuters data. On the black market, it has been trading as low as 600.

The weaker currency has seen inflation soar to 35 percent from 10 percent a year ago, forcing the central bank to hike interest rates by 675 basis points since June 2015.

However, it said on Monday it had kept its benchmark rate unchanged at 16 percent at its latest policy meeting.

Before his appointment, 53-year-old Mangueira was President of Angola’s Capital Markets Commission, making him a familiar face to foreign investors, and had recently been brought onto the central committee of the ruling MPLA party.

Diplomats said his promotion was not a major surprise, especially in the wake of the government’s decision in late June to end emergency financing talks, supported by Manuel, with the International Monetary Fund (IMF).

Angola’s economic slump has fuelled opposition to dos Santos’ 36-year rule, although the MPLA re-elected him as its leader last month ahead parliamentary elections in 2017.

 

(Reporting by Herculano Coroado; Writing by Stella Mapenzauswa; Editing by Ed Cropley)

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Despite cuts, Big Oil to expand production into the 2020s

Comments (0) Business, Latest Updates from Reuters

By Ron Bousso

LONDON (Reuters) – Never mind the drop in crude prices, huge spending cuts and thousands of job losses – the world’s top oil and gas companies are set to produce more than ever for some time.

While top oil companies struggle with slumping revenues following a more than halving of prices since mid-2014 after years of spectacular growth, their production has persistently grown as projects sanctioned earlier in the decade come on line.

Overall production at the world’s seven biggest oil and gas companies is set to rise by around 9 percent between 2015 and 2018, according to analysts’ estimates.

With an expected recovery in prices, the increased production should boost cash flow and secure generous dividend payouts, which had forced companies to double borrowing throughout the downturn.

“There are a lot of projects coming on stream over the next three years that will support cash flow and ultimately dividend,” Barclays analyst Lydia Rainforth said.

And despite a drop in new project approvals, companies have throughout the downturn cleared a number of mammoth undertakings such as Statoil’s Johan Sverdrop oilfield off Norway and Eni’s Zohr gas development off the Egyptian coast.

Others opted to acquire new production, such as Royal Dutch Shell, which bought smaller rival BG Group for $54 billion this year, and Exxon Mobil through investments in Papua New Guinea and Mozambique.

Shell is expected to see the strongest growth among its peers over the next two years at 8 percent, according to BMO Capital Markets.

Production is unlikely to drop after 2020, and could post modest growth as companies continue to bring projects onstream, albeit at a slower pace, BMO analyst Brendan Warn said.

French oil major Total, for example, plans to clear three major projects by 2018 – the Libra offshore oilfield in Brazil, the Uganda onshore project and the Papua LNG project – that will begin production after 2020.

“We won’t see 5 to 10 percent growth that we’ve seen from companies in recent years. It will be closer to 1 or 2 percent,” Warn said.

 

SUSTAINABLE

Capital spending, or capex, for the sector is set to drop from a record $220 billion in 2013 to around $140 billion in 2017 before modestly recovering, according to Barclays.

But companies have learnt to do more with the money after slashing expenditure and tens of thousands of jobs, while the cost of services such as rig hiring dropped sharply throughout the downturn.

“2017 is the sweet spot for integrated companies. It took two to three years to adjust to the drop in oil prices, and a lot of the efficiencies introduced in recent years will roll into 2017, when projects kick in and free cash flow will improve,” Rainforth said.

The resilience is mostly due to new gas projects coming on stream as companies shift towards the less polluting hydrocarbon that is expected increasingly to displace oil demand in coming decades.

The slower pace of project development after a decade of rapid growth that was accompanied by soaring costs will help companies, Warn said.

“That is much more sustainable for a major that will reduce the number of large capex projects.”

 

(Reporting by Ron Bousso; Editing by Dale Hudson)

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