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MTN Group sees pressure on profit margins in South Africa, Nigeria

25 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – MTN Group expects earnings to be under pressure for the rest of the year in its two main markets Nigeria and South African market, the company said on Wednesday, citing a weak exchange rate in Africa’s biggest economy.

Africa’s biggest mobile network operator by subscribers said in statement that weak economic growth in its key markets and tough competition could also negatively impact performance.

MTN said it was still negotiating a $3.9 billion fine by Nigerian authorities as the west African country.

Nigeria is pushing telecoms firms to verify the identity of subscribers amid worries that unregistered SIM cards were being used for criminal activity in a country still battling with Islamic militant group Boko Haram.

 

(Reporting by Zandi Shabalala; Editing by James Macharia)

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Nigeria to adopt flexible FX regime, details to follow

24 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria’s central bank is adopting a flexible foreign exchange rate regime, Governor Godwin Emefiele said on Tuesday, in a policy U-turn designed to boost exports and stave off a recession in Africa’s biggest economy.

The bank has previously kept a de facto peg of around 197 naira per dollar but that has become unsustainable due to a shortage of hard currency stemming from a slump in oil revenues.

On the parallel market, the naira has fallen to some 40 percent below the official rate.

“The MPC (Monetary Policy Committee) voted unanimously to adopt a flexible exchange rate policy to restore the automatic adjustment properties of the exchange rate,” Emefiele told reporters.

Details of the new rules would be published in a few days, he added.

He said the central bank would “retain a small window for funding critical transactions” and that “details of operations of the market would be released by the central bank at the appropriate time”.

On Monday, the government said it would use a lower rate of 285 naira per dollar for petrol imports rather than the pegged official rate of 197.

 

(Reporting by Camillus Eboh, Ulf Laessing and Alexis Akwaqyiram; Editing by Ed Cropley and Catherine Evans)

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Kenya Airways says fixing weaknesses found after forensic audit

24 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya Airways said on Tuesday preliminary results of a forensic audit had helped it identify weaknesses in its systems and internal controls, and it was taking remedial action that included disciplining some staff.

The statement, following the audit by Deloitte Consulting, did not give details about the actions taken by those staff.

The airline has been working on a turnaround plan after more than three years of financial losses.

 

 

(Writing by Edmund Blair; Editing by Mark Potter)

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South Africa’s Ascendis Health buys two European firms, shares rise

24 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Ascendis Health Ltd said on Tuesday it bought two European companies as part of its plan to expand globally and diversify its pharmaceutical products, sending its shares higher.

The health and care company will buy Cyprus-based pharmaceutical firm Remedica Holdings Ltd for between 260 million euros ($291 million) and 335 million euros and sports nutrition company Scitec International for 170 million euros.

Ascendis shares rose 2.95 percent to 23 rand.

The firm – which bought Spanish pharmaceutical company Farmalier S.A. in August last year – said it received the backing of 63 percent of its shareholders for the acquisitions which will be funded through a combination of debt, shares and proceeds from a rights issue.

Shareholders and new investors supported Ascendis’ proposed rights offer of 1.8 billion rand, the company said.

($1 = 0.8926 euros)

 

(Reporting by Zandi Shabalala; Editing by James Macharia)

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South Africa’s rand gains after police say have no plans to arrest finmin

23 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand strengthened early on Monday after the police said they had no plans to arrest Finance Minister Pravin Gordhan over his role in the formation of a surveillance unit within the revenue service.

At 0700 GMT the rand had edged 0.2 percent firmer to 15.6050 per dollar.

Bonds were also firmer in early trade, with the yield on the benchmark government issue due in 2026 cutting 6 basis points to 9.33 percent.

The elite Hawks police unit told Reuters it had no plans to arrest Gordhan as part of an investigation into a surveillance unit set up by the revenue service during his time in charge. Gordhan headed the tax agency between 1999 to 2009.

Numerous political upheavals since President Jacob Zuma’s shock sacking of then Finance Minister Nhlanhla Nene in December have seen the rand suffer.

Traders said the rand would benefit if political tensions around the finance minister eased.

“The rand has rebounded somewhat since hitting all-time lows in thin liquidity during mid-January, aided by hawkish action from the SARB (South African Reserve Bank) and generally calmer emerging markets,” analysts at NKC Africa Economics said in a note.

“However, further gains will be difficult given the heightened political risk environment.”

The rand has gained more than 1.5 percent against the greenback since slipping to a new one-month low after last weeks decision by the central bank to keep lending rates unchanged at 7 percent.

Stocks opened weaker, with the benchmark Top-40 index shedding 0.38 percent to 46,356 points by 0708 GMT.

 

(Reporting by Mfuneko Toyana and TJ Strydom; Editing by James Macharia)

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Zimbabwe’s platinum industry calls for $2.8 bln in new investment

20 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE, (Reuters) – Zimbabwe could double annual platinum production to more than 900,000 ounces in the next decade, making the metal the nation’s top export earner but current producers need $2.8 billion in new investment to do so, an industry association said on Friday. The southern African nation holds the second largest known reserves of platinum after South Africa but mines have struggled with low prices, a black empowerment law forcing mines to sell more than 50 percent of the business to locals, and power shortages. Zimbabwe Platinum Producers Association Chairman Winston Chitando told the annual meeting of the Chamber of Mines in the resort town of Victoria Falls that the industry needed new investment to raise annual production by existing producers from current levels of 458,000 ounces a year. “With vast platinum reserves, the sector has potential to increase production by the current producers from about 13 tonnes (458,562 ounces) to 20 tonnes (705,479 ounces) by 2020 and to 26 tonnes (917,123 ounces) by 2025,” Chitando said.

Anglo American Platinum, Impala Platinum and Aquarius Platinum are the three companies currently operating platinum mines in Zimbabwe.

He did not comment on the separate Russian-backed project which was announced by the two governments 20 months ago for the joint development of the Darwendale mine which was projected to be producing up to 800,000 ounces a year by 2024. http://reut.rs/1Tojx6y

Work on this project was still at the exploration stage, Zimbabwe’s mining minister told Reuters in March.

Chitando said on Friday revenue from platinum, which is the third largest export earner after tobacco and gold, could become the biggest at $1.2 billion in the next four years if more money was invested. “The industry requires around $2.8 billion over the next five years to ramp up and sustain operations. Bottlenecks that undermine capital inflows include clarity on indigenisation,” Chitando said. Under the Indigenisation and Economic Empowerment Act, which was passed in 2008, foreign-owned businesses are required to sell at least 51 percent of their local operations to Zimbabwean investors. But on April 12 President Robert Mugabe said the empowerment policy was confusing potential investors and made it hard to compete for foreign investment.

Noah Matimba, chairman of Zimbabwe Gold Producers Association said at the Chamber of Mines meeting that an investment of $600 million into existing gold mines would raise production to 50 tonnes.

The mining chamber projects gold output at 24 tonnes this year, up from 18.7 tonnes in 2015.

Gold producers say weak prices and electricity shortages and high tariffs are the biggest threat to producers.

Partson Mbiriri, the permanent secretary in the ministry of power and energy development, said the country would be self-sufficient in electricity generation by 2019 at the latest.

Zimbabwe’s power demand stands at 1,400 megawatts (MW) a day, while generating ranges from 1,000 MW to 1,200 MW. The deficit is met by imports from South Africa and Mozambique.

 

(By MacDonald Dzirutwe. Editing by James Macharia, editing by David Evans)

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South Africa buys most U.S. wheat since 2011

20 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CHICAGO (Reuters) – South Africa made its biggest purchase of U.S. wheat in nearly five years last week, U.S. Department of Agriculture data showed on Thursday, as drought reduced African grain output and low prices made U.S. supplies attractive in global markets.

USDA said South Africa bought 45,000 tonnes of hard red winter wheat, a variety used primarily for milling bread flour. The sale, for delivery during the upcoming marketing season beginning on June 1, was the first purchase of that variety since 2012 and the largest one-week sale of any variety of U.S. wheat since the week ended July 14, 2011. [EXP/WHE] [USDA/EST]

“It’s unusual and interesting,” one U.S. trader said. “HRW (wheat) is quite price competitive, and will garner business.”

Traders have been looking for signs of increased grain imports in South Africa, with the El Niño weather pattern contributing to blistering drought that was likely to cut their maize harvest by 30 percent and winter wheat crop by 18 percent.

K.C. July wheat futures, which reflect the approaching U.S. winter wheat harvest, tumbled to a contract low of $4.41-1/4 per bushel last week, enticing some buyers. Total sales last week of U.S. HRW wheat for shipment in the 2016/17 season were 293,932 tonnes, a marketing season high.

U.S. hard wheat export premiums have gained as demand improved, and as rains in U.S. growing regions could potentially delay the earliest phases of the harvest.

South Africa could purchase more high-protein wheat if prices stay low, another U.S. wheat trader said. “It’s a one-off sale for now,” he added.

 

(Reporting by Michael Hirtzer; Editing by James Dalgleish)

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South Africa cbank keeps key rate unchanged, sees tepid growth

19 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PRETORIA (Reuters) – South Africa’s Reserve Bank left its benchmark repo rate unchanged at 7 percent on Thursday, with the governor saying that moderating pressures to long term inflation left it room to pause in its tightening cycle.

The Bank had raised lending rates by a total of 100 basis points at its previous three meetings, as it fought to keep headline inflation within its target band of between 3 and 6 percent as severe drought and a weaker currency weighed.

The rand turned slightly weaker after the decision, easing to 15.9735 against the dollar.

Governor Lesetja Kganyago said the bank lowered its inflation forecast for the next three years, and noted that the country’s economic recovery would be slow.

He said that while headline consumer prices would average 6.7 percent in 2016, up from previous forecast of 6.6 percent, inflation in 2017 and 2018 would moderate.

“Although the inflation forecast has shown a moderate improvement over the medium term, the risks are still assessed to be on the upside,” Kganyago said.

“The MPC remains focused on its inflation mandate, but sensitive to the extent possible to the state of the economy.”

Inflation in Africa’s most industrialised country stood at 6.2 percent in April versus 6.3 percent in March, data showed on Wednesday.

“The MPC will not hesitate to act appropriately should the inflation dynamics require a response, within a flexible inflation targeting,” Kganyago added.

Twenty-two of the 32 economists polled by Reuters had expected the South African Reserve Bank (SARB) to hold interest rates at 7.00 percent this month.

 

(Writing by Mfuneko Toyana; Editing by James Macharia)

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Tanker begins delayed oil loading at Libya’s Hariga

19 May 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

BENGHAZI, Libya (Reuters) – A tanker that had been blocked for three weeks in a stand-off over oil exports at the eastern Libyan port of Marsa al-Hariga entered the port and began loading on Thursday, officials said.

The Seachance, which had been waiting to load oil for Glencore on behalf of the Tripoli-based National Oil Corporation (NOC), was loading 600,000 barrels for shipment to Britain, port and oil officials said.

Exports from Hariga have been blocked since early this month due to a dispute between competing eastern and western branches of the NOC.

The blockage reduced production from the eastern Messla and Sarir fields, lowering Libya’s output to around 200,000 barrels per day (bpd), a fraction of the 1.6 million bpd the OPEC member country was producing before the toppling of leader Muammar Gaddafi in 2011.

The heads of the two NOC branches reached an agreement in principle to resume shipments at talks held in Vienna last weekend, but details of the deal were not made public.

If further shipments are allowed to leave Hariga Libya could quickly raise its output to more than 300,000 bpd.

The Messla and Sarir fields were previously producing more than 200,000 bpd, though Omran al-Zwai, a spokesman for eastern NOC subsidiary AGOCO, said the company needed a budget for new equipment to ensure maximum production.

The oil dispute is tied up in the broader conflict between rival political and armed factions in Libya. The NOC in Tripoli is working with a new U.N.-backed unity government to try to revive oil production, but its rivals in the east tried last month to export a tanker of oil independently.

After the tanker was blacklisted and forced to return to a western Libyan port, the eastern NOC prevented the Seachance from loading at Hariga.

Oil trader Glencore, which had been exporting crude oil from the port under a deal reached late last year, on Thursday declined to comment.

In the past three years a combination of labour disputes, factional rivalries and security threats have shut down some of Libya’s key oil fields and facilities.

But the eastern ports of Hariga and Brega have continued to operate. On Wednesday a tanker loaded 600,000 barrels of oil at Brega for shipment to Italy, a port official said.

 

(Reporting by Ayman al-Warfalli and Ahmad Ghaddar; writing by Aidan Lewis; editing by Greg Mahlich and Jason Neely)

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South Africa’s NUM union says rejects power firm Eskom’s wage hike offer

18 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s National Union of Mineworkers said on Wednesday its members had rejected a 5 percent wage hike offer from power utility Eskom, and demanded increases of up to 18 percent.

The union demanded an increase of 18 percent for the lowest paid workers and 15 percent for the highest paid workers.

 

(Reporting by Stella Mapenzauswa; Editing by James Macharia)

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