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Kenya secures $1.5 bil IMF standby facilities in case of shocks

15 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – The International Monetary Fund (IMF) has approved two-year standby facilities for Kenya worth about $1.5 billion, which can be drawn on if the East African nation faces unforeseen shocks.

“The Kenyan authorities have indicated that they will continue to treat both arrangements as precautionary,” the IMF said in a statement issued late on Monday after the completion of discussions with Kenya on replacing existing facilities.

The funds comprise a standby arrangement worth about $990 million and a standby credit facility worth about $495 million.

The IMF said Kenya only intended to draw on them if it faced “exogenous shocks” that led to a balance of payments need.

The Central Bank of Kenya calmed volatility in the markets last year after hiking its benchmark lending rate by 3 percentage points to 11.50 percent. It has also increased foreign reserves without turning to the IMF standby loan.

So far this year, the shilling has been firm, appreciating by about 0.6 percent against the U.S. dollar. On March 10, reserves stood at $7.33 billion, the equivalent of 4.7 months import cover, up from $7.1 billion at the end of 2015.

“Kenya’s recent growth performance remains robust and the outlook is positive,” IMF Deputy Managing Director Min Zhu said in the statement.

At the end of last year, Kenya has estimated growth for 2015 at between 5.8 to 6.0 percent, lower than originally expected but still higher than the 2014 figure of 5.3 percent.

“Despite positive policy steps undertaken under the current Fund-supported program, the economy remains vulnerable to shocks, reflecting less favorable global financial market conditions, as well as continued security threats and potential extreme weather events,” the IMF deputy managing director said.

The IMF said cutting the budget deficit was a key step to contain risks, while still supporting major infrastructure projects and providing essential health and education needs.

Kenya’s budget deficit for the financial year 2015/16 ending on June 30 is forecast at 8.1 percent of gross domestic product, falling to 6.9 percent in 2016/17, draft Finance Ministry figures have shown. [nL8N15G1VC]

The East African nation has ramped up spending in recent years to build a modern railway, roads and electricity plants, driving up the deficit and unnerving investors.

 

(Reporting by Duncan Miriri and Edmund Blair; Editing by Richard Borsuk)

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South Africa turns on Saudi-built solar to cut coal reliance

14 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa and Saudi Arabian ACWA Power launched a $328 million solar power plant in the Northern Cape province on Monday, as Africa’s most industrialised country rushes to expand its power supply and cut its coal reliance.

The Bokpoort Concentrated Solar Power (CSP) Project, developed by a consortium led by ACWA Power, is set to provide 1,300 megawatts per hour, powering more than 200,000 homes, a statement from media firm OLB said.

Construction of the plant began in 2013, following a successful bid by ACWA Power, as part of South Africa’s plan to expand the use of renewable energy.

“It is aimed at providing energy security and diversified energy. It instils confidence that major green projects are going to be built in South Africa,” said the Department of Trade and Industry’s (DTI) deputy director general Yunus Hoosen.

Chronic energy shortages are pushing the government to seek alternative sources of electricity from state-owned power utility Eskom’s coal-powered stations that take much longer to build.

Eskom, which provides virtually all of South Africa’s power, is facing a funding crunch as it races to bring new power plants online.

With year-round sunshine and thousands of miles of windswept coast in South Africa, investors are warming to the renewable energy potential, with 66 projects completed or underway since the government launched a first bid round four years ago. [L5N0W61SY]

Bokpoort CSP plant is the first in a series of investments that ACWA Power is making in the power sector in South Africa, said the DTI.

The company expects to commence construction on the 100 MW Redstone concentrated solar power project, also in Northern Cape, later this year and is awaiting the outcome of tender submissions for a 300 MW coal-fired plant in Mpumalanga province in eastern South Africa.

 

(Reporting by Nqobile Dludla; Editing by James Macharia and Alexander Smith)

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S.African rand slides as appetite for emerging assets wanes, stocks rise

14 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand fell against the dollar as appetite for emerging assets was dented by a firming dollar in cautious trade ahead of the interest rate decision on Thursday.

By 0925 GMT the rand had slipped 0.82 percent to 15.3475 per dollar, reversing a run that took the currency towards 15.00, a level it has not breached in nearly three months.

Measured against a basket of major currencies, the greenback was 0.2 percent firmer.

With a dearth of data due in the session traders expect direction later in the week from the local release of an interest rate decision on Thursday.

“You have the FOMC and then the local interest rate decision. And in the trading world we’re limited to the scenarios we have on hand,” said trader at WWC Securities Marten Banninga.

“If you look at some of the forecasts its looks like its 50/50,” Banninga said.

A Reuters poll of 30 economists expects the South African Reserve Bank (SARB) to leave its benchmark lending rate at 6.75 percent after hiking by 50 basis points in January, despite rapidly rising inflation.

A rates decision on Wednesday by the United States central bank is also set to determine emerging market flows as investors look for clues on the pace of rate hikes in the world’s top economy.

Bonds were also weaker, with the government paper due in 2026 adding 1 basis point to 9.125 percent.

Stocks were higher, with the JSE securities exchange’s Top-40 up 1.5 percent to 46,464 points.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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South Africa’s MTN offers $1.5 bil to settle Nigeria fine

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

ABUJA (Reuters) – South African telecoms firm MTN Group has offered $1.5 billion to settle a much larger fine from Nigerian regulators for missing a deadline to disconnect unregistered SIM card users, a document seen by Reuters shows.

Africa’s biggest mobile phone group has been in talks with Nigerian authorities to have the $3.9 billion penalty reduced and last month made a “good faith” payment of $250 million towards a settlement.

In a letter to the Nigerian government from MTN’s lawyer, former U.S. Attorney General Eric Holder, the company proposed a 300 billion naira ($1.5 billion) settlement to be paid through a combination of government bond purchases, cash instalments and network access to the Nigerian government.

Holder said in the letter, dated Feb. 24, the offer “ultimately is in the best interest of the FGN (Federal Government of Nigeria) and MTN Nigeria.”

Johannesburg-based MTN said on Friday talks with the Nigerian government were ongoing.

“MTN has previously advised shareholders not to make decisions based on press reports and MTN again urges its shareholders to refrain from doing so,” it said.

Nigeria’s telecoms ministry had no immediate comment.

In its annual results last week, MTN said it had put aside $600 million to cover a deal over the fine, which was originally set at $5.2 billion on the basis of charging $1,000 for every unregistered SIM card.

Nigeria imposed a deadline on mobile operators to cut off unregistered SIM cards, which MTN missed, amid fears the lines were being used by criminal gangs, including militant Islamist group Boko Haram.

The fine, equating to more than twice MTN’s annual average capital expenditure over the past five years, came months after Muhammadu Buhari was swept to power after an election campaign which pledged tougher regulation and a fight against corruption.

Shares in MTN, which makes about 37 percent of its sales in Nigeria, were little changed at 147.53 rand at 0839 GMT, after rising more than 2 percent shortly after the market opened.

($1 = 199.0000 naira)

 

(By Camillus Eboh. Additional reporting by Zandi Shabalala in Johannesburg; Writing by Tiisetso Motsoeneng; Editing by Mark Potter)

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Old Mutual says to split up, asset management sale eyed

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

LONDON (Reuters) – Anglo-South African financial services group Old Mutual Plc said on Friday it would split up into its four main businesses, strengthening expectations of the sale or listing of its UK asset management arm.

The break-up of the company, which is listed in London and Johannesburg and has insurance, asset management and banking operations, follows a strategic review announced in November, when former Standard Bank executive Bruce Hemphill took over as chief executive.

Changes to the regulatory environment in Europe and South Africa have made the company, which started out in 1845 as a life insurance firm in Cape Town, more complex to run, it said in a statement.

“It’s a costly structure with insufficient synergies to justify those costs,” Hemphill said.

Old Mutual’s solvency capital ratio under new European rules was 135 percent, lower than many of the other major insurers that have reported earnings so far this year.

The group said it had not yet decided how it would go about spinning off the units but that it expected the separation to be largely completed by the end of 2018.

The company’s four units are Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management.

It said it planned to cut its majority stake in Nedbank to a minority one.

Old Mutual’s shares have risen since Sky News reported the break-up plans last weekend, and said private equity firms had tabled a multi-billion pound cash bid for Old Mutual Wealth.

Analysts said the unit would be worth 3-4 billion pounds.

The group said its pretax adjusted operating profit for 2015 rose 4 percent in reported currency terms to 1.7 billion pounds ($2.4 billion).

($1 = 0.7004 pounds)

 

(By Carolyn Cohn and Noor Zainab Hussain. Additional reporting by Soumithri Mamidipudi in Bengaluru; Editing by Rachel Armstrong and Mark Potter)

 

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South Africa’s rand firms to 2-1/2-month high after ECB cuts rates

10 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand rallied to its firmest since December in afternoon trade on Thursday after the European Central bank cut interest rates and stepped up its stimulus program.

By 1305 GMT the rand had firmed 1.12 percent to 15.0300 per dollar, its strongest level since Dec. 21.

“This means there is more cheap money going around and the risky assets are loving it,” said chief currency at Bidvest Bank Ion de Vleeschauwer.

 

(Reporting by Mfuneko Toyana; Editing by Tiisetso Motsoeneng)

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Zimbabwe needs up to 8% growth in next decade to revamp economy

10 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe needs an annual growth rate of up to 8 percent over the next 10 to 15 years to revamp its economy, Finance Minister Patrick Chinamasa said on Thursday, in addition to other reforms agreed with an International Monetary Fund delegation.

On Wednesday, Chinamasa said President Robert Mugabe had agreed to major reforms, including compensation for evicted white farmers and a big reduction in public sector wages as the government tries to woo back international lenders.

Chinamasa said that new loans from international lenders will only come if the drought-stricken Southern African nation showed the capacity to introduce a raft of economic reforms.

“Any reform agenda is painful. The journey we have travelled has been difficult and will remain difficult,” Chinamasa told a forum discussing Zimbabwe’s future prospects.

Chinamasa and Reserve Bank governor John Mangudya are leading Zimbabwe’s re-engagement with international lenders and the finance minister has previously said he has had to overcome divisions within Mugabe’s cabinet to pursue that process.

Zimbabwe is trying to emerge from more than a decade of isolation that saw the IMF, World Bank and African Development Bank freeze lending in 1999. Western powers imposed sanctions on Mugabe’s government over allegations of vote rigging and human rights abuses. Mugabe rejects the charges.

The IMF executive board will on May. 2 consider Harare’s plan to repay $1.8 billion in arrears. Chinamasa said he was seeking clear commitments from the IMF that clearing the arrears would trigger new financial aid.

“As I stand before you I am in buoyant spirits because I know that the measures that we are taking will exploit and realize the full potential of this country. We just need an uninterrupted process of reform,” said Chinamasa.

 

(Reporting by Macdonald Dzirutwe; Editing by James Macharia)

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African telecom towers firm IHS to buy Nigerian rival

10 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Pan-African mobile telecoms infrastructure group IHS has agreed to buy Nigerian rival Helios Towers Nigeria (HTN) for an undisclosed sum, its chief executive said on Thursday.

Issam Darwis, who founded IHS, said Africa’s largest tower company, which builds and leases mobile telecoms towers in five countries across the continent, will acquire 1,211 towers spread across 34 of Nigeria’s 36 states.

IHS will acquire the entire issued share capital of HTN, IHS said in a statement.

“IHS will have full operational control of the underlying business and will market independent infrastructure sharing services to mobile network operators and internet service providers in Nigeria,” it said.

The deal is expected to close in the second quarter of 2016, it said.

IHS already has around 23,000 towers across Nigeria, Ivory Coast, Cameroon, Zambia and Rwanda. It has around 15,000 towers in Nigeria, its biggest market and Africa’s most populace nation.

“We remain committed to the Nigerian tower market where coverage levels are yet to mature and explosive data growth continues,” Darwis said. “This is a statement of how confident we are in the Nigerian economy.”

Africa’s biggest economy and top oil producer is flagging due to the fall in crude prices and restrictions imposed by the central bank to defend its currency.

Building and maintaining mobile communications towers in Africa tends to be more expensive than in other regions because of security costs and electricity shortages, while revenue per user is often lower.

These costs have prompted many mobile operators to sell or lease towers to specialist companies such as IHS, which can reduce building and maintenance costs by hosting multiple tenants — mobile operators and internet providers — on the same towers.

 

 

(By Alexis Akwagyiram. Editing by Susan Thomas)

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Ghana consumer inflation slows to 18.5% in February

9 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana’s annual consumer price inflation fell to 18.5 percent in February from 19.0 percent the month before, helped by the stability of the local currency, the statistics office said on Wednesday.

Consumer prices could fall further if the cedi holds steady and in the absence of any external shock, deputy government statistician Anthony Amuzu told reporters in Accra.

After weakening nearly 4 percent in January on seasonal high corporate dollar demand, the cedi, has remained firm in recent weeks. It was trading at 3.8500 to the greenback on Wednesday, down 1.3 percent year-to-date.

“The stability of the cedi was the major driver in February,” Amuzu said, adding that it drove down prices of imported items.

The commodities exporter is implementing a three-year aid programme with the International Monetary Fund (IMF) in an attempt to remedy fiscal problems including inflation persistently above government targets.

The IMF projects that inflation will peak before slowing to around 10 percent at the end of the year and the central bank has been tightening monetary policy in order to contain it.

Analyst say the easing in February CPI showed that the central bank’s tight monetary policy had been effective.

“The deceleration in year-on-year inflation also relieves the pressure on the Bank of Ghana to raise interest rates in the near term,” said Standard Chartered’s head of Africa research Razia Khan.

Year-on-year non-food inflation for February, which comprises imported goods, was 24.5 percent, compared with 25.5 percent the month before. Food inflation was 8.3 percent, from 8.2 percent in January.

 

(Reporting by Kwasi Kpodo; Editing by Matthew Mpoke Bigg and Toby Chopra)

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Moody’s to visit South Africa next week to decide on ratings

9 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Ratings firm Moody’s will visit South Africa next week to decide whether to downgrade the credit status of Africa’s most industrialised economy to just one notch above sub-investment grade, the Treasury said on Wednesday.

South Africa’s Finance Minister Pravin Gordhan told local station Radio 702 that Moody’s informed him of their decision during his stop in London on an overseas roadshow to meet with investors and convince them the economy could be turned around.

“They will be in South Africa and meet with various stakeholders and get relevant information that will influence them either not to downgrade us or not to downgrade us,” Gordhan said.

The Treasury said in a statement that the “review visit will primarily serve to either affirm the current ratings or downgrade them.”

Gordhan is battling to boost South Africa’s growth and to persuade ratings agencies not to cut the country’s credit rating to junk following his appointment last December.

Late on Tuesday, Moody’s said it was placing South Africa’s Baa2 ratings on review for downgrade, citing the economy’s weak growth prospects and worsening fiscal position. [nFWN16G023]

“The review will allow Moody’s to assess to what extent government policy can stabilize the economy and restore fiscal strength,” the agency said in a statement.

Moody’s put South Africa’s Baa2 credit rating on a negative outlook in December, and is the only agency that does not have South Africa a step away from junk status.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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