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Nigerian lawmakers to question presidency over long-overdue budget

14 April 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

Nigerian President Muhammadu Buhari

ABUJA (Reuters) – Nigerian lawmakers said on Wednesday they planned to hold talks with the presidency over the 2016 budget bill, which has yet to be signed into law by President Muhammadu Buhari after being passed by parliament last month.

The announcement suggests further delays before the legislation takes effect in Africa’s biggest economy and top oil producer, which is going through its worst crisis in years brought on by the slump in global crude prices.

Buhari withdrew his original budget bill in January because of an unrealistic oil price assumption and flaws in the draft. Lawmakers approved an amended proposal last month but only submitted headline figures rather than the whole document to the president’s office.

That prompted Buhari, who is currently in China, to say he would only sign the bill after checking it thoroughly.

Following closed-session talks by lawmakers in the lower house of parliament, a spokesman for politicians in that chamber said media reports about the contents of the budget submitted to the president last week had caused concern.

“We agreed as a chamber, as a House delegated the Speaker to please go ahead and engage the executive to identify the areas of concern,” said House of Representatives spokesman Abdulrazak Namdas.

He said there was particular concern about media reports that a proposed rail project linking the southwestern commercial capital, Lagos, with the eastern city of Calabar had been removed by parliament as part of their amendments.

Namdas said it “was not among the projects submitted by the President to the National Assembly”.

“Our own area of concern is that people say this thing was in the budget and we removed it. That is why we asked our speaker to liaise with the executive,” he said.

Last month Lai Mohammed, the information minister, said there was no rift between the executive and legislature over details of the budget.

 

(By Camillus Eboh. Writing by Alexis Akwagyiram; Editing by Hugh Lawson)

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World Bank set to provide Egypt with first $1 billion of $3 billion loan

13 April 2016 Comments (0) Latest Updates from Reuters, Middle East, Politics

CAIRO (Reuters) – The World Bank will provide the first $1 billion tranche of a $3 billion loan to Egypt after parliament approves the government’s economic programme, World Bank vice president Hafez Ghanem said at a news conference late Tuesday.

Parliament is expected to pass the program in April.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and ease a dollar shortage that has crippled import activity and hampered recovery.

The lender had agreed to provide the first $1 billion in December but is waiting for the government’s economic programme, which outlines the broad strokes of its reform plans, to be passed by parliament.

The government presented a programme to parliament in late March that aimed to reduce the budget deficit while protecting the poor.

The World Bank told Reuters in December that the first tranche was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

A long-delayed Value Added Tax (VAT) that has yet to be implemented but was included in the government programme was one of the reforms agreed to as part of the first tranche, Ghanem said.

Ghanem said that there would not be specific conditions placed on future tranches but highlighted certain changes the lender would like to see, such as a shift in food subsidy policy away from reduced prices to direct cash transfers for the poor.

Egypt has delayed a number of difficult reforms, from a VAT that would increase government revenues and a civil service law that would trim the country’s public workforce, to an ambitious plan to wean the country off costly energy subsidies that has since been scaled back.

Egypt’s economy is currently growing at around 4.2 percent with a budget deficit of about 11.5 percent, the prime minister said last month.

Saudi Arabia, along with other Gulf oil producers, have pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.

But Egypt has said it would rely less on grants from its neighbours moving forward and would focus instead on attracting foreign investment that could relaunch its dollar starved economy.

Last week it signed an agreement with Saudi Arabia to set up a 60 billion Saudi riyal ($16 billion) investment fund among other investment agreements including an economic free-zone to develop Egypt’s Sinai region.

 

($1 = 3.7488 riyals)

 

(Writing by Eric Knecht; Editing by Toby Chopra)

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Nigeria’s inflation rises to almost 4-year high in March

12 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s annual inflation rose to a near four year high of 12.8 percent in March from 11.4 percent in February, driven by a rise in food prices, the National Bureau of Statistics said.

Africa’s biggest economy is facing its worst economic crisis in decades fueled by the collapse in crude prices, which has slashed government revenues, weakened the currency and caused growth to slow. The economy grew 2.8 percent last year, its slowest pace in decades.

Food prices, which account for the bulk of the inflation basket, rose by 1.4 percent points to 12.7 percent in March, the bureau said on its website.

“The higher price level was reflected in faster increases

across all divisions,” the bureau said in a report.

The NBS expects inflation to end the year at 10.16 percent, above the central bank’s target upper limit of nine percent. The price index ended at 9.55 percent last year.

 

(Reporting by Ulf Laessing; Editing by Tom Heneghan)

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Bank of Ghana governor plans to fight inflation, boost growth

12 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana’s new central bank governor said on Monday his top priority was to fight inflation, but he also wanted to pursue new policies to boost local business growth.

In his first interview since being named Bank of Ghana governor last week, Abdul-Nashiru Issahaku pledged full commitment to an International Monetary Fund (IMF) programme aimed at stabilising the economy.

“My focus is to work assiduously to achieve our core responsibility of ensuring price stability,” Issahaku said.

Consumer inflation in the West African country, an exporter of gold, cocoa and oil, eased to 18.5 percent in February from 19 percent in January.

But it remains above the government’s upper target of 15.7 percent, while the central bank’s benchmark 91-day Treasury bill rate stood at 22.7713 percent on Friday.

At the same time, gross domestic product growth has fallen from around 14 percent in 2011 to 4.1 percent last year, in part because of a global slump in commodity prices.

President John Mahama promoted Issahaku from deputy governor when his predecessor, Henry Kofi Wampah, stepped down last month ahead of what is expected to be a closely fought election in November when Mahama will run for a second term.

Issahaku takes over at a crucial time for the bank, one year into the IMF programme. Some fear the election will put pressure on policy makers, including the central bank, which is independent, to loosen financial controls.

It also comes as the bank’s main lending rate stands at 26 percent, leading to complaints by many in the business community that it is stifling growth.

Issahaku, a member of the government’s economic management team, said he would work with the Finance Ministry and other agencies to maintain spending limits. “Elections or no elections, I remain committed to the programmes and we cannot afford to derail,” he told Reuters.

But he said Ghana had to begin immediately to “start to think out of the box about propelling growth of local businesses and creating employment.”

Ghana was one of Africa’s economic stars for years. Since the 2012 election, however, it has been tackling a budget deficit, high levels of public debt, inflation and a currency that fell sharply in 2014 and 2015.

Ghana’s cedi currency withstood a seasonal first quarter pressures to rally against the dollar in a sign of the impact of the IMF programme and bank policies.

Issahaku said he wants to sanitize the financial sector, especially micro finance firms, and enhance the regulator’s transparency and capacity. To boost growth, he would consider options to provide incentives to banks to offer credit to strategic sectors at reasonable rates. The governor has worked with the World Bank and the African Development Bank and holds a PhD in International Affairs and Development from Clark Atlanta University.

 

(By Kwasi Kpodo. Editing by Matthew Mpoke Bigg and Richard Balmforth)

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Nigeria wants to boost non-oil income by 87% to offset oil slump

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters on Monday.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70 percent of state income.

Funding of the budget with an expected deficit of 2.2 trillion naira has been so far unclear.

Detailing its plans, the government expects to generate 3.38 trillion naira ($17 billion) this year from non-oil sources, up 87 percent from 1.81 trillion naira in 2015, the presentation showed.

Corporate income tax collection is expected to exceed the 700 billion naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said.

The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33 percent.

On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget.

The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16 percent now, the presentation showed. Loan repayments will be stretched.

Buhari has asked the United States for help in returning stolen Nigerian assets stashed in U.S. banks. In March, the U.S. said it had frozen more than $458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3 billion of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects.

($1 = 198.0000 naira)

 

(Reporting by Chijioke Ohuocha; Editing by Ulf Laessing and Toby Chopra)

 

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Mauritius says tourist arrivals up 12.5% in Q1

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – The number of tourists visiting Mauritius rose 12.5 percent in the first quarter of 2016 from a year ago, thanks to increased arrivals from Europe and Asia, official figures showed on Monday.

Tourism is a key source of hard currency for the Indian Ocean island state, which like other long-haul destinations in the region has turned east in search of visitors to compensate for weak growth in its traditional European markets.

Arrivals in the first three months of 2015 increased to 327,836 from 291,329 a year earlier, Statistics Mauritius said.

Numbers from Europe, which accounts for two-thirds of visitors, rose 18 percent to 199,525 as arrivals from France, the island’s main market, increased by 4.7 percent.

The number of tourists visiting from Asia rose by 7.3 percent to 49,289, helped by an 11.1 percent increase in arrivals from India.

The statistics agency expects visitor numbers to rise 6.7 percent to 1,230,000 this year.

 

(Reporting by Jean Paul Arouff; Editing by Toby Chopra)

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Kenya central bank to help banks that face liquidity pressure

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s central bank will provide a facility to any bank or microfinance institution that faces liquidity problems through no fault of its own, starting on Monday, Governor Patrick Njoroge said on Sunday.

Njoroge said the facility, for which he did not give the amount but said had no upper limit, would be available for as long as necessary to provide a sense of calm and reiterated that the financial sector was stable.

“From Monday, we will avail a facility to any bank or microfinance institution that comes under liquidity for no fault of its own. We will avail this facility for as long as is necessary,” Njoroge told a news conference.

Last week, the central bank put Chase Bank Kenya into receivership after its gross non-performing loans rose sharply last year.

The mid-sized bank was the third lender to be taken over by the central bank in nine months, fuelling worries over the health of the sector.

On Saturday, President Uhuru Kenyatta said he supported central bank Njoroge’s actions to protect depositors’ money.

“We are really dealing with any fear, anxiety that is out there,” Njoroge said.

 

(Reporting by George Obulutsa; Editing by Alison Williams)

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South Africa’s dollar bond oversubscribed despite political cloud

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa has successfully issued a dollar bond overseas to help finance its medium-term foreign currency commitments, the Treasury said on Friday, touting this as a sign of investor confidence despite political upheaval.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

On Friday, the Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

“The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” it said.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he flouted the law by not heeding a directive to make payments for upgrades to his personal home.

Ratings agencies, most recently Standard & Poor’s, have warned they might downgrade South Africa if political issues divert the government’s attention from properly implementing policy.

S&P and Fitch both rate South African credit just one notch above junk, while Moody’s is two notches over sub-investment grade.

Analysts said South Africa had benefited from a general rise in demand for high-yielding emerging market assets after the U.S. Federal Open Market Committee (FOMC) signalled it might be a while before U.S. rates rise.

“There was clearly a window here for them to issue after the FOMC reprice and before a wall of downgrades from the ratings agencies,” Nomura analyst Peter Attard Montalto said.

“They have significant forex deposits already so they can probably wait until next year for the next issuance.”

The rand extended gains against the dollar after the Treasury’s statement, climbing to a session high of 15.0155, up 1.5 percent for Thursday’s close.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8.5 basis points to 9.19 percent.

The Treasury said the new foreign bond formed part of South Africa’s 2016/17 financing programme and would partly finance foreign currency commitments of $6.4 billion over the medium term.

The coupon for the bond represents a spread of 335 basis points (bps) above the 10-year U.S. Treasury benchmark, which analysts said was in line with South Africa’s current funding rate.

“I don’t think it’s too expensive,” said Rand Merchant Bank trader Gordon Kerr.

The price compares to initial thoughts of plus 350 bps and guidance of plus 335 bps, plus or minus 5 bps.

“There is always demand for our paper and there will always be demand for EM in general because of the nice yields that it provides,” Rand Merchant Bank trader Gordon Kerr said.

 

(By Stella Mapenzauswa. Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg and Claire Milhench in London)

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Zimbabwe’s central bank says excessive demand causing cash crunch

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe’s banks are limiting withdrawals as an excessive demand for cash has lead to shortages, the central bank chief said on Friday.

Zimbabwe ditched its currency in favour of the U.S. dollar after hyper-inflation scaled 500 billion percent in 2008, leaving it unable to print its own money.

A shortage of notes surfaced at the beginning of March, which the Reserve Bank of Zimbabwe (RBZ) initially said was caused by financial institutions underestimating demand and failing to improve distribution to branches.

On Friday, RBZ Governor John Mangudya told a parliament committee that the government had injected $145 million worth of cash into the financial system between Jan. 1 and April 6, while banks had imported $118 million.

“We don’t think the money is circulating … that money is not there in the banks,” Mangudya said. “There is excessive demand for cash. The appetite for holding cash in this country is very high.”

Banks have been limiting withdrawals to as low as $200, causing frustration among customers and discouraging deposits.

Most Zimbabweans earn a living in the informal sector and prefer cash transactions. Confidence in banks was also dented after hyper-inflation effectively wiped out savings.

In February Mangudya said companies and individuals in Zimbabwe had illegally exported $1.88 billion last year. He capped daily withdrawals at $10,000, saying amounts above that would require central bank approval.

Besides the U.S. dollar, Zimbabwe also allows use of South Africa’s rand, pound sterling, the euro and China’s yuan.

 

(Reporting by MacDonald Dzirutwe; Editing by Stella Mapenzauswa and Janet Lawrence)

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South Africa’s Eqstra says receives offer, shares jump

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Shares in South Africa’s Eqstra surged as much as 15 percent on Friday after the leasing equipment firm said it had received a non-binding takeover offer.

Eqstra, which leases equipment to construction and mining companies, did not name the firm it was in discussions with.

Eqstra’s shares surged more than 15 percent after the announcement, before giving up some of the gains to trade 12 percent higher at 2.09 rand by 1133 GMT.

Eqstra is in a process of selling its non-core assets in the commodities and construction equipment division in order to improve its balance sheet as depressed commodity prices hurt mining companies, its major clients.

 

(Reporting by Nqobile Dludla and Zimasa Mpemnyama; Editing by Tiisetso Motsoeneng and Joe Brock)

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