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Nigeria’s “bad bank” AMCON seeks bids for stake in Peugeot plant

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

LAGOS (Reuters) – Nigeria’s state-backed AMCON “bad bank” said on Tuesday it plans to sell its majority stake in Peugeot Automobile Nigeria (PAN) Limited, a local joint venture with the major French automaker, and is seeking bids from investors.

Peugeot Citroen is the technical partner to the Nigerian assembly plant, which has capacity to assemble 240 cars a day, PAN said on its website.

In a statement, the Asset Management Corporation of Nigeria (AMCON) said it owned 79.3 percent of PAN Nigeria Limited, having acquired the stake four years ago after purchasing the company’s debt and taking some as equity.

PAN Nigeria Limited was set up in 1972 as a joint venture between the Nigerian government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s.

But operations nosedived and the company accumulated bad loans shortly after the government sold its stake via a privatisation to local core investors in 2006.

AMCON said PAN Nigeria had assets totalling 24.96 billion naira ($125.43 million) as of December 2014 and equity of 11.98 billion naira, and was seeking investors with experience in automobile manufacturing to buy the stake on offer.

Bids will close on Jan. 26 at 1600 GMT, it said.

President Muhammadu Buhari is keen to promote a “Made in Nigeria” industrial policy. In November, he met Peugeot’s executive vice president for Africa and the Middle-East, Jean-Christophe Quemard, to discuss the revival of local production.

The government under a National Automotive Industry Development Plan has ordered local car distributors to come up with plans for new assembly plants, along with threats of imposing prohibitive import duties.

U.S. carmaker Ford Motor Co’s partnership with a local car dealer has built its first model in Nigeria at a new assembly plant in November and said it will produce an initial 10 vehicles a day for the domestic market.

The auto market in Africa’s biggest economy has huge potential but only a small number of new vehicles are sold annually because the sector is dominated by imported used vehicles, and the absence of an industrial policy that would encourage suppliers to set up in Nigeria has stunted growth.

AMCON was set up to absorb bad loans from banks after a $4 billion bailout in 2009 rescued nine lenders from collapse. AMCON then bought bad loans at a discount in exchange for government-backed bonds and has since been selling off collaterals against those loans to pay bondholders.

 

(Reporting by Oludare Mayowa; Writing by Chijioke Ohuocha; Editing by Mark Heinrich)

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UAE moves to quash talk of OPEC emergency meet as oil slumps

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

ABU DHABI (Reuters) – The United Arab Emirates moved to quash talk of a potential emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC) after Nigeria’s oil minister said on Tuesday a “couple” of members had requested a gathering.

Benchmark Brent crude futures slipped towards $30 a barrel to a near 12-year low before rising slightly. They have shed almost three-quarters of their value since mid-2014.

Such market conditions supported an emergency meeting to review whether OPEC should change strategy, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told reporters on the sidelines of an energy conference in Abu Dhabi.

However, UAE Energy Minister Suhail bin Mohammed al-Mazroui later told the same conference the current OPEC strategy was working, adding that time was needed to allow this to happen — perhaps between one and 1-1/2 years.

“I’m not convinced OPEC alone can change or can solely unilaterally change this strategy just because we have seen a low in the market,” Mazroui said.

Mazroui added that while the first half of 2016 would be “tough” for the oil market, there would be a gradual recovery later in the year, aided by an expected drop in non-OPEC production.

Indeed, OPEC has no plan to hold an emergency meeting to discuss the drop in oil prices before its next scheduled gathering in June, two OPEC delegates said on Tuesday.

OPEC’s strategy of maintaining production levels, instead of reducing supply to allow prices to recover, has been aimed at defending market share at the expense of higher-cost producers such as those in the U.S. shale sector.

The supply glut is likely to be exacerbated in 2016 by the return of Iranian supply to the market, once Western sanctions have been lifted.

“I think all the members including Iran have the right to increase their production. I don’t think we are going to restrict anyone,” Mazroui said.

Such prospects have led oil analysts to downgrade their forecasts in recent days, with Standard Chartered saying prices could drop to $10 a barrel.

The likelihood of a meeting taking place will hinge on the attitude of OPEC heavyweight Saudi Arabia, which has been at the vanguard of resistance to a production cut.

“Saudi Arabia‎ has never held the position that it does not want to talk,” Kachikwu said. “In fact, it was very supportive of a meeting before June, at the time when we held the December meeting, if (there was a) consensus call for it.”

 

(By Rania El Gamal and Maha El Dahan. Writing by David French; Editing by Jason Neely and Dale Hudson)

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South African rand still fragile after sharp fall at start of week

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

JOHANNESBURG (Reuters) – South Africa’s rand remained on shaky ground against the dollar on Tuesday after tumbling as much as 9 percent in the previous session over concerns about both the Chinese and local economies.

The JSE securities exchange’s Top-40 futures index was down 0.97 percent, suggesting the local bourse would open more than 420 points lower at 0700 GMT.

At 0653 GMT, the rand traded 0.51 percent softer at 16.8850 per dollar compared with Monday’s close.

The rand had fallen to a record 17.9950 during Asian trade on Monday, on fears that China wants to weaken its currency aggressively and boost its export competitiveness.

It fared worse than most of its emerging market peers, reflecting additional concerns about the direction of policy in Africa’s most advanced but struggling economy after President Jacob Zuma inexplicably fired the finance minister in December.

“One can only hope that in the shorter term, the market has become a little stretched from all this negativity so far this year and that we get a bit of a relief rally,” Standard Bank trader Warrick Butler said.

In fixed income, the yield for the benchmark government bond maturing in 2026 added 5.5 basis points to 9.74 percent compared to Monday’s close. It was however still far off the previous session’s four-week high of 9.89 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Anand Basu)

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Nigeria to sell 80 billion naira of bonds on Jan 20

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

money nigeria

LAGOS (Reuters) – Nigeria said on Monday it will sell 80 billion naira ($402.92 million) worth of bonds  denominated in the local currency at an auction on Jan. 20, its first debt auction of the year, the Debt Management Office (DMO) said.

The debt office said it will issue 40 billion naira each of bonds maturing in 2020 and 2026, using the Dutch auction system.

The 2020 debt is a reopening of a previously issued bond. The 2026 debt is a fresh issue. Results of the auction are expected the next day.

Nigeria has proposed a plan to issue 260 billion to 390 billion naira in 5-, 10- and 20-year naira bonds in the first quarter of the year. [L8N14V1QE]

Nigeria said it will borrow about 900 billion naira locally to finance part of the 2.2 trillion naira deficit in its 2016 budget.

($1 = 198.5500 naira)

 

(Reporting by Oludare Mayowa, editing by Larry King)

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Sudan inflation eases to 12.58% in December

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

(Reuters) – Sudan’s annual inflation rate eased to 12.58 percent in December from a revised 12.8 percent in November, a monthly report from Sudan’s Central Statistics Office said on Monday.

Prices soared in Sudan after South Sudan seceded in 2011, taking with it three-quarters of the country’s oil output, the main source of foreign currency used to support the Sudanese pound and to pay for food and other imports.

As an oil importer, Sudan has benefited from the fall in global oil prices since last year.

Sudan expects a budget deficit of 1.6 percent of GDP for the coming year, up from 1.2 percent for 2015.

The government said last month it expected growth to increase in the coming year as lower oil prices reduce the burden of its oil import bill.

It projects a growth rate of 6.4 percent, up from an expected 5.3 percent for 2015.

 

(Reporting by Khaled Abdelaziz; Writing by Ola Noureldin; Editing by Toby Chopra)

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Kenya shilling stable, seen facing pressure from importer demand

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

NAIROBI (Reuters) – Kenya’s shilling was stable against the dollar on Monday but traders said they expected it to come under modest pressure during the week due to increased importer demand.

At 0728 GMT, commercial banks quoted the shilling at 102.20/30, the same as Friday’s close.

“Going into this week, we expect there will be some pressure on the shilling. The demand (for dollars) should pick up. Most corporate clients have come back to work,” a senior trader at one commercial bank said.

Typically demand for dollars comes from the energy sector, manufacturers and telecoms firms.

 

 

 

(Reporting by George Obulutsa)

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Central African growth hit by low oil price, security threats: IMF

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

YAOUNDE (Reuters) – Tighter public spending, economic diversification and greater regional trade are needed to spur growth in central Africa that has been hampered by plunging oil prices and security threats, the head of the International Monetary Fund said on Friday.

Speaking in Cameroon during a regional tour, IMF managing director Christine Lagarde said growth in the resource-rich CEMAC bloc – comprising Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon – slowed in 2015 to around 2 percent and will increase only slightly this year.

“The prolonged slump in oil prices presents a new reality for CEMAC,” Lagarde said. “An adjustment in large scale investment plans may be necessary in the short run, to preserve fiscal viability and debt sustainability in the medium term.”

Oil has dropped from over $100 a barrel in June 2014 due to global oversupply, to around $30 a barrel this week, which provides a challenge for countries in Central Africa whose economies rely largely on exports of oil.

Some have been hit harder than others. Equatorial Guinea experienced a “severe” contraction, Lagarde said, while Cameroon saw some robust growth.

Economies have also been hit by security concerns, particularly from Islamist militant group Boko Haram which has carried out attacks in northern Cameron and elsewhere, disrupting economic activity and diverting spending from social programs to the military.

An “ambitious” reform agenda will be needed to bolster growth, which is estimated at 2 percent for 2015, down from earlier estimates of over 4 percent, Lagarde said on Friday. The bloc’s fiscal deficit is seen to have widened 6.5 percent of GDP in 2015, with only modest improvement expected in 2016.

The block’s growth is expected to hit 3.5 percent in 2016, still far below the growth of previous years.

Lagarde urged CEMAC members to rein in spending to reduce deficits during tough times and increase regional trade. Of all formal trade conducted by CEMAC countries, less than 5 percent involves intra-CEMAC commerce, according to the IMF.

 

(Reporting By Sylvain Andzongo, writing by Edward McAllister; Editing by Toby Chopra)

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Rand gains, but South African and Chinese economies pose risks

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JOHANNESBURG (Reuters) – South Africa’s rand recovered against the dollar on Friday after hitting record lows in the previous session, but remained vulnerable to concerns about the local economy and that of China.

The rand rose a few cents after central bank data showed South Africa’s net gold and foreign exchange reserves were up slightly at $40.654 billion in December.

At 0704 GMT, the rand traded at 15.9400 to the greenback, a 0.9 percent gain over Thursday’s close at 16.0850.

The local currency had slid to a record low of 16.2015 as renewed concerns about China’s economy spurred an emerging markets sell-off.

The rand shed a quarter of its value against the greenback last year, undermined by worries about weak domestic growth and a global aversion to emerging markets as investors braced for the advent of policy tightening in the United States.

“With U.S. jobs data looming and the situation in China still perilous, respite (for the rand) will likely only be temporary,” NKC African Economics said in a note.

On the South African bourse, the Top-40 index added 0.7 percent while the broader all-share was up 0.56 percent after each dropped more than 2 percent on Thursday.

Government bonds also recovered, and the yield for the benchmark maturing in 2026 retreated 4 basis points to 9.575 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Dominic Evans)

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South Africa’s net reserves tick up to $40.654 bil in December

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

JOHANNESBURG (Reuters) – South Africa’s net gold and foreign exchange reserves were at $40.654 billion in December, up slightly from $40.471 billion in November, Reserve Bank data showed on Friday.

Gross reserves also edged higher to $45.787 billion from $45.14 billion previously. The forward position, which represents the central bank’s unsettled or swap transactions, dropped to $1.424 billion in December versus $2.106 billion.

 

(Reporting by Stella Mapenzauswa; Editing by Himani Sarkar)

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Somali Pirates Re-Imagine Governance

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Somalian pirate

A captured pirate was brought before Alexander the Great. How dare you pillage the sea? asked Alexander. How dare you pillage the whole world? the pirate replied, and continued: Because I do it with only one ship, I am called a thief, you, doing it with hundreds of ships, are called an emperor.Noam Chomsky

In the early 1990s, commercial foreign fishing vessels and trawlers began working off the Somali shore, invading sovereign waters and exclusive economic zones. Not only did they displace local fishermen, but the illegal over-fishing by these foreign companies severely depleted the fish stock and greatly reduced the long-term health of Somalia’s fisheries through over-exploitation. Greedy international fishing companies with illegal fishing technologies, in an eventual case of reverse irony, “pirated” Somali fishing stocks for illegal profit. Estimates place the foreign fishing poaching at $300 million USD every year, an astronomical sum considering that this occurred for over a decade. Put in scale, if only one year’s worth of the illegal poaching was returned to Somalia, the GDP would rise by over 5%. While poachers were moving in from Europe and Asia, European ships also went to Somali waters to illegally dump toxic industrial waste, another major violation of international law. The UN Environmental Program reports that the nuclear waste dumped on territorial shorelines caused sickness and disease in Somali coastal cities, and killed off the little fish that were left. These disenfranchised fishermen, left only with their boats and nautical expertise in the Gulf of Aden, would soon become the notorious pirates of Somalia.

The pirate economy is a considerable source of employment and income

For Somalis who live in coastal communities, the pirate economy is a considerable source of employment and income: there is a need for crews directly involved in the hijackings, and a local ground crew to guard captured moored ships. Among this exercise are entire administrative, legal, and financial teams, a network of financiers and shareholders, and guards to police the territory in which the pirates reside.

Interviews with former pirates suggest that typical crew men make between $30,000-$75,000 USD per haul, with a $10,000 bonus for the first man to board the ship, as well as bonuses for other displays of initiative. This is an astounding sum considering that the 2012 GDP per capita in Somalia was $128 in current USD. Pirates also face heavy fines for bad behavior, such as non-consensual sex or mistreating other crew members, which carries a $5000 fine and dismissal.

Between 2004 and the first quarter of 2009, Somali piracy rose from 3% to 60% of the global total of piracy attacks, with revenue growth almost quadrupling from 2008 to 2009. Somalia, like other states where piracy occurs, lacks the capacity to patrol its waters; thus Somali pirates have equal advantage to other pirates in terms of access to un-patrolled coastlines, and yet Somali pirates remain disproportionately successful on a global scale.

Attacks reported as far as 600 nautical miles from Mogadishu

And uniquely, these huge gains are not made in Somalia’s territorial waters, but in international territory, with some attacks reported as far as 600 nautical miles from Mogadishu, where the presence of armed guards, unregulated security measures, and international navies act as a powerful and permanent deterrent to pirates from other countries. This unique capacity demonstrates that the assumption that piracy simply exists due to weak statehood in protecting territorial waters does not fully explain the pervasiveness and huge growth experienced by the Somali pirate enterprise.

Somali pirates view themselves as the protectors of their territorial waters, with group names like “National Volunteer Coastguard of Somalia,” arguing that their ransoms are taxes levied in absentia of their defunct government. At the same time, supporting the ransom system and their Robin Hood enterprise is not a sustainable solution either: Somali pirates’ astounding capacity for growth and entrepreneurship suggest that increased revenues will result in better arms and equipment, increasing the likelihood of further attacks.

As ransom demands continue to rise, by the time Somali piracy becomes unaffordable the power of the pirate enterprise will be impossible to contain, let alone eliminate. This burden will be borne by the shareholders, crew members, and global consumers who depend on the 90% of world trade which is now moved by ocean. The problem must not be approached from the outside through militant suppression, or through the path of least resistance in paying a ransom. The situation demands a new and creative approach; using power structures that exist locally in pirate and traditional systems to build a government that meets the needs of both the local and international community from the ground-up.

Not a realistic solution for Somalis

Somali people do not identify themselves through a sense of nationhood, but a sense of kin, an indigenous six-thousand-year-old framework of social organization that was forged by the harsh terrain and nomadic lifestyle demanded by the barren Horn of Africa. As kinship emerged as the most effective form of social ordering in this environment, the clan acted as the largest unit of political organization, and legal and political institutions sprang from this system. The 400-year-old history of peaceful cohabitation among these clan polities demonstrates the efficacy of this form of governance. The centrally bureaucratic and non-personal structure of the state system is the polar opposite of the political realities and imagination of self in Somalia. The model of the nation-state, and forcing these clans together though imported institutions will never be realistic solution for Somalis.

Is self-governance possible?

The presence of pirates and other autonomous regions in Somalia signifies that there has been a shift in the modern political conception of authority and sovereignty: why is local authority less legitimate than authority granted by the international community?

Though mainstream political discourse assumes that self-governance could never facilitate order between members of different social groups, the relative stability piracy offers provides support for cooperative relationships between clans. Despite ubiquitous potential for conflict, pirates rarely fight, steal, or deceive each other. In Somalia, cooperation has always been essential for survival- especially today.

The pirate’s appropriation of the clan-system of leadership demonstrates that to some degree, state-building is possible in Somalia as long as people work with the way authority is recognized in the Somali imagination. Somalia’s history of fourteen failed foreign interventions demonstrates that traditional Western state structures are imperfect and do not comply with indigenous customs and institutions. However, the continued attempts to establish a centralized polity demonstrates that central governance is the type of entity the West is most comfortable dealing with.

Somalia isnt a state

Current political thinking assumes that Somalia is a failed state; therefore the logic infers that at one point Somalia was a state, which it never was- in reality, “Somalia” as a nation exists purely as fantasy and is perhaps one of the greatest untruths ever sold.

And if piracy is due to failed statehood, then the automatic conclusion is that the solution to piracy is statehood. This logical framework is at the heart of foreign policy towards Somalia and characterizes the nature of every intervention that has occurred. However, UN satellite maps of pirate activity indicate no clear relationship between political stability in post-state Somalia and the emergence of piracy. The presence of pirates in Somalia demonstrates that the failure does not lie in the condition of a failed state, but instead the imagination of failed statehood itself.

These repeated representations of the ‘failed state’ work to legitimize the concept, despite the inherent limitations and flawed assumptions that obscure its utility. And at the heart of this is Western universalism, as the construction of the failed state dichotomy finds its foundation on the West’s fixed standard of what they perceive to be a successful state: democratic, centralized, and transparent. It is at its core an imposition of political ideologies put forth through the humanitarian pretensions of the failed state rhetoric. Until this is understood, the international community’s disregard that alternative models of governance can succeed will continue to impede our larger goals of world peace and stability.

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