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Nigeria’s Buhari signs delayed 2016 record budget into law

6 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

ABUJA (Reuters) – Nigeria’s President Muhammadu Buhari signed the delayed 2016 budget into law on Friday, ending weeks of wrangling with lawmakers and tripling capital expenditure as Africa’s biggest economy contends with its worst crisis in years.

The 6.06 trillion naira ($30.6 billion) budget is an attempt by Africa’s top oil exporter to stimulate an economy hammered by the fall in crude oil prices. Oil sales make up about 70 percent of national income.

The budget assumes oil production of 2.2 million barrels per day at 38 dollars a barrel, Budget Minister Udoma Udo Udoma told reporters shortly after the signing.

Growth last year fell to its slowest rate since 1999 at 2.8 percent and inflation rose to a near four-year high of 12.8 percent in March while capital imports declined by 74 percent year-on-year in the first quarter of 2016. [nL5N1817H4]

In a speech given after the signing, Buhari said the current period was “probably the toughest economic times in the history of our nation”.

“In designing the 2016 budget, we made a deliberate choice to pursue an expansionary fiscal policy despite the huge decline in government revenues from crude oil exports,” he said.

The president said 350 billion naira would be spent on capital projects, and he compared the 200 billion allocated to road construction with the 18 billion earmarked for that purpose in the 2015 budget.

Buhari withdrew his original budget bill in January because of an unrealistic oil price assumption. Parliament approved an amended proposal in March but only submitted highlights, prompting Buhari to say he would only sign the bill after it was resubmitted.

The lack of a budget, almost a year after Buhari took office, meant ministries were unable to allocate funds to projects in various sectors.

“The passage of the budget has been a long journey, and it has been as much about process as content,” Nigeria-focused PM Consulting’s Antony Goldman, said.

The government plans to generate 3.38 trillion naira this year from non-oil sources, up 87 percent from 1.81 trillion in 2015 [nL5N17E2KU]. But, with the heavy reliance on oil sales, it is unclear how this will be achieved.

Finance Minister Kemi Adeosun has said Nigeria is expected to post budget deficits for the next two to three years [nL5N17E17G]. In 2016, the deficit is seen at 2.2 trillion naira compared with a previously estimated 3 trillion.

She has said Nigeria plans to borrow a total of 1.8 trillion naira from abroad and at home.

($1 = 199.0000 naira)

 

(By Felix Onuah. Writing by Alexis Akwagyiram; Editing by Louise Ireland)

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South Africa’s rand weakens, focus on U.S. jobs report

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

JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar in thin trade early on Friday as investors positioned for a U.S. jobs report that is likely to provide clues about the Federal Reserve’s monetary policy intentions.

At 0705 GMT, the rand traded at 15.0550 versus the dollar, 0.6 percent weaker from Thursday’s New York close.

“Trade remains jittery and liquidity thin, so it is not going to take much to send the market running again,” Rand Merchant Bank analyst John Cairns said in a note.

“…The monthly (payrolls) release no longer has the importance that it had a year back but still remains the single most important global economic indicator for the markets.”

A strong number could encourage the Fed to raise rates sooner, lending some support to the dollar.

On the stock market, the Top-40 index was down 0.67 percent, while the broader all-share fell 0.44 percent.

In fixed income, the yield for the benchmark government bond due in 2026 was up 1 basis point at 9.195 percent.

 

(Reporting by Zimasa Mpemnyama; editing by John Stonestreet)

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Zimbabwe economy ravaged by drought, needs bold reforms

4 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

HARARE (Reuters) – Zimbabwe’s economic difficulties have deepened after drought weakened agricultural production and disrupted hydro power generation and the southern African nation needs bold reforms, the International Monetary Fund said on Wednesday.

“Unless the country takes bold reforms, the economic difficulties will continue in (the) medium-term,” the fund said in a statement after a consultation with Zimbabwean officials.

 

(Reporting by MacDonald Dzirutwe; Writing by TJ Strydom; Editing by James Macharia)

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Egypt says foreign reserves rise to $17.011 bln at end-April

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

CAIRO (Reuters) – Egypt’s net foreign reserves rose to $17.011 billion at the end of April, the central bank said on Wednesday.

Reserves stood at $16.561 billion at the end of March.

Egypt had roughly $36 billion in reserves before an uprising in 2011 overthrew Hosni Mubarak and ushered in a period of political turmoil that scared away tourists and foreign investors, key sources of foreign exchange.

Last month the United Arab Emirates pledged $4 billion to Egypt, half in investments and the rest as a central bank deposit to support cash reserves.

 

(Reporting by Asma Alsharif; editing by John Stonestreet)

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SABMiller, Coke agree concessions with South Africa over bottling merger

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

JOHANNESBURG (Reuters) – SABMiller and Coca-Cola have agreed concessions with the South African government to win approval for a deal to combine their soft-drink operations, the companies said on Wednesday.

The concessions, agreed with the South African Ministry of Economic Development, include a three-year freeze on layoffs and the companies investing 800 million rand ($54 million) to support small South African businesses.

SABMiller, which is in the process of the being taken over by larger rival Anheuser-Busch InBev, agreed in November to team up with Coke to create Africa’s largest soft drinks bottler, Coca Cola Beverages Africa.

The business will have annual sales of $2.9 billion and ambitions to corner the fast-growing market on the continent.

The all-equity deal was given a preliminary approval in December by South Africa’s Competition Commission, which said it could go ahead on several conditions including Coca-Cola Beverages Africa limiting jobs cuts to 250 and making sure it buys cans, glass, sugar and crates from local suppliers.

The Commission investigates deals for any antitrust issues and recommends remedies to the Competition Tribunal, which makes a final ruling. A Tribunal hearing on the proposed deal is due to start next Monday.

South Africa has a history of taking its time over approving deals, partly because regulators have a public interest mandate to safeguard jobs in addition to an antitrust mandate to protect competition.

“I am very happy that we have reached this agreement and hope we now have a clear path to the conclusion of this transaction,” said SABMiller Chief Executive Officer Alan Clark.

Coca-Cola Beverages Africa will account for 40 percent of all Coke volumes sold in Africa, serving 12 southern and eastern African countries. It will be headquartered in South Africa, its largest market.

The deal would also hand Coke an extra 20 brands, including sparkling soft drink Appletiser, whose fruit juice concentrate is sourced from South African producers.

Coca-Cola and SABMiller agreed to maintain and grow Appletiser production operations to serve the domestic market and use as a base from which to export elsewhere in the world.

The Gutsche family, Coke’s South African bottling partner, will also be a shareholder in the Coca-Cola Beverages Africa.

($1 = 14.6759 rand)

(Reporting by Tiisetso Motsoeneng; Editing by Mark Potter)

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West Africa pirates switch to kidnapping crew as oil fetches less

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

LONDON (Reuters) – Pirate gangs in West Africa are switching to kidnapping sailors and demanding ransom rather than stealing oil cargoes as low oil prices have made crude harder to sell and less profitable, shipping officials said on Tuesday.

Attacks in the Gulf of Guinea – a significant source of oil, cocoa and metals for world markets – have become less frequent partly due to improved patrolling but also to lower oil prices, according to an annual report from the U.S. foundation Oceans Beyond Piracy (OBP), which is backed by the shipping industry.

“They have had to move towards a faster model and that faster model is kidnappings,” OBP’s Matthew Walje said, noting that ransom payouts were as high as $400,000 in one incident.

“It only takes a few hours as opposed to several days to conduct the crime itself,” he told Reuters at the report’s launch in London. “Fuel prices have fallen, which cuts into their bottom line.”

OBP said violence had also risen, including mock executions, and last year 23 people were killed by pirates there.

“A lot of people are dying from piracy – nowhere near that number died in the last few years in the Western Indian Ocean (due to Somali piracy),” Giles Noakes, of leading ship industry body BIMCO, told the briefing.

“We are particularly concerned by the issue,” said Noakes, whose association audits the OBP’s annual report.

Last month, Nigeria and Equatorial Guinea agreed to establish combined patrols to bolster security.

Analysts say the pirates have emerged from Nigerian militant groups such as the Movement for the Emancipation of the Niger Delta and OBP’s Walje said a growing problem was the splintered nature of the various gangs operating in West Africa.

“It is more fractured than it would be off Somalia where there were a few major gangs and kingpins operating,” he said.

OBP estimated costs related to piracy and armed robbery in 2015 in the Gulf of Guinea were $719.6 million, 61 percent of which was borne by the industry. The 2014 cost was $983 million, 47 percent of which was borne by the maritime sector, it said.

 

(By Jonathan Saul. Editing by Louise Ireland)

 

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South African investment firm RMB Holdings to buy stake in Mall of Africa developer

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

JOHANNESBURG (Reuters) – South African investment firm RMB Holdings Ltd. plans to expand its portfolio by buying a stake in unlisted Atterbury, builder of the Mall of Africa, one of the largest shopping venues in the country.

RMB Holdings Limited, which holds a 34 percent stake in FirstRand, the largest banking group by value in Africa’s most industrialised economy as its only major asset, said on Tuesday it will buy 25.01 percent of Atterbury.

Although it did not put a price on the cost of investment for Attebury, RMB Holdings said in the statement it would fund the deal through preference shares.

RMB Holdings said in a statement it aimed to use Atterbury to spearhead its retail and industrial property business.

The Mall of Africa, which opened its doors last week, targets consumers in Midrand a middle-class suburb north of the commercial hub of Johannesburg.

“We thought it was a missing element of our overall portfolio,” RMB Holdings Chief Executive Herman Bosman told Reuters, referring to property investments.

Shares in RMB Holdings fell 4.60 percent on the bourse by 1358 GMT, as stocks tumbled across the board tracking a sell-off in emerging markets.

 

(Reporting by Tanisha Heiberg; Editing by James Macharia)

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IMF sees sub-Saharan Africa growth near two-decade low in 2016

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

JOHANNESBURG (Reuters) – Economic growth in sub-Saharan Africa will likely slow this year to its weakest in nearly two decades, hurt by a slump in commodity prices, the Ebola virus outbreak and drought, the IMF said on Tuesday.

In its African Economic Outlook, the Fund said the region would likely grow 3 percent this year – the lowest rate since 1999 – after expanding by 3.4 percent in 2015.

Growth was seen recovering to 4 percent next year, helped by a slight recovery in commodity prices, and the Fund said it was still optimistic about the region’s prospects in the longer term.

“However, to realise this potential, a substantial policy reset is critical in many cases,” the Fund said.

Affected countries needed to contain fiscal deficits as the reduction in revenue from the commodities sector was expected to persist, it added.

Major oil exporters Angola and Nigeria were hardest hit by the slump in commodities prices, as were Ghana, South Africa and Zambia, the report said.

Guinea, Liberia, and Sierra Leone were only gradually recovering from the Ebola epidemic, while several southern and eastern African countries including Ethiopia, Malawi and Zimbabwe were suffering from a severe drought, the IMF added.

On the upside, Côte d’Ivoire, Kenya and Senegal would see growth of more than 5 percent, mostly “supported by ongoing infrastructure investment efforts and strong private consumption,” the report said.

“The decline in oil prices has also helped these countries, though the windfall has tended to be smaller than expected, as exposure to the decline in other commodity prices and currency depreciations have partly offset the gains in many of them,” it added.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Andrew Heavens)

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Nigeria to begin exploratory oil drilling in Chad Basin by October

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

ABUJA (Reuters) – Nigeria plans to begin exploratory drilling in search of oil in the northeastern Chad Basin region by October, the head of the state oil company has said.

Emmanuel Ibe Kachikwu, who last year said Africa’s biggest crude exporter may be on the verge of a significant oil find in the Lake Chad area, said in a statement on Sunday that seismic studies were ongoing.

“Drilling activities will commence by the last quarter of 2016,” the Nigerian National Petroleum Corporation (NNPC) chief, who is also minister of state for oil, was quoted as saying in the statement issued by the state oil company.

Africa’s biggest economy has been hit hard by the sharp fall in global oil prices because it relies on crude exports for around 70 percent of government revenue.

NNPC spokesman Garba Deen Muhammad said exploration in the region was intended to “add value to the hydrocarbon potentials of the Nigerian inland basin, provide investment opportunities, boost the economy as well as create millions of new jobs”.

 

 

(Reporting by Camillus Eboh and Alexis Akwagyiram, editing by David Evans)

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Ivory Coast president calls for break-up of power, water monopolies

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

ABIDJAN (Reuters) – Ivory Coast will break up its long-standing electricity and water monopolies and introduce competition to reduce prices amid growing public concern over price increases, President Alassane Ouattara said.

The government decided in June last year to increase electricity prices by 16 percent over three years to keep pace with production costs.

Under the arrangement electricity prices were scheduled to increase by 5 percent in January. But some customers saw rates rise by as much as 40 percent, according to a government investigation, prompting Ouattara to cancel the January increases and call for a more competitive industry.

“This situation reminds us of the need to open up the water and electricity sectors to competition,” Ouattara, a former senior International Monetary Fund official, said in a Labour Day speech on national television on Sunday.

“It is competition that will lower the price of electricity. I appeal to all those who wish to invest in that sector,” he said.

The West African nation has emerged from a decade of political turmoil and civil war as one of the continent’s rising stars economically, with growth averaging around 9 percent for the past four years.

However, critics of the government complain that most Ivorians have not benefited from the new-found prosperity.

During his re-election campaign last year Ouattara promised to make economic growth more inclusive.

The Companie Ivoirienne d’Electricite (CIE), majority owned by Africa-focused public utilities manager Eranove Group, has supplied electricity to the Ivory Coast since 1990 under an agreement with the government. The deal, which puts CIE in charge of the distribution of power to homes and businesses, is not due to expire until 2020.

It is unclear how the utility markets will be liberalised or if it can be done before the agreement between CIE and the government ends in 2020.

But it is likely to be a major issue in French-speaking West Africa’s biggest economy where power producers are struggling to keep pace with growing consumption.

Demand for electricity is rising by some 10 percent a year, and the energy minister said last year that $20 billion of investment is needed in the industry over the next 15 years.

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