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Time to cut? Nigeria central bank gathers for first 2018 meeting

Comments (0) Actualites, Africa, Economy

LONDON (Reuters) – The Nigerian central bank’s monetary policy committee will finally meet on Wednesday to set interest rates for the first time this year.

Interest rates have been stuck at a record high of 14 percent since July 2016. However, the committee had to cancel its January meeting due to an inability to form a quorum following a number of departures that reduced it to just five out of 12 members.

A majority of analysts taking part in a Reuters poll said they expected rates to stay on hold for now, but that they would be cut later in the year.

Here are three graphics showing Nigeria’s changing economic dynamics.

 

1/ EASING PRESSURE

The pace of inflation has steadily slowed since the start of 2017, with the core reading hovering close to the 12 percent mark. And with exchange rates fairly stable and demand-related pressures absent, inflation rates could be sinking further, making Nigeria ripe for easier monetary policy.

“After a year of lethargic disinflation, the drop in headline inflation to 14.3 percent in February 2018 ignites hope that inflation is still on a steady course towards the target 9.0 percent ceiling and that conditions could continue improving to favour unwinding the present hawkish monetary stance,” StratLink wrote in a note to clients.

 

2/ WHERE’S THE GROWTH?

Nigeria returned to growth in 2017 with the economy expanding 0.83 percent after shrinking by 1.58 percent in 2016, which was its first annual contraction in 25 years. However, latest growth figures are still well below its potential, the recovery has been fragile, and private sector credit lending lacklustre.

Political stalemate has been a common occurrence in Nigeria and has hampered reforms, while lawmakers still have to pass the 2018 budget. But with elections coming up in 2019, the heat is on for policy makers to help stimulate growth.

“The main focus will be to try and do something positive to the economy, to try to kickstart bank lending to the economy against a very weak backdrop, where the budget has not been passed and money supply is weak,” said Razia Khan, chief economist for Africa at Standard Chartered.

 

3/ RISING BUFFERS

Meanwhile a recovery in oil prices, successful debt sales including rolling local into external debt, and a significant amount of portfolio investment have helped replenish the central bank’s coffers. In March, foreign exchange reserves stood at $46.2 billion – a near 9 percent jump month-on-month.

Nigeria’s foreign exchange buffer has climbed 53 percent since March 2017 when it stood at $30.30 billion – though reserves remain far from the peak of $64 billion in August 2008.

 

(Reporting and graphics by Karin Strohecker; Editing by Gareth Jones)

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South Africa’s Gold Fields ties up with Canada’s Asanko in Ghana

Comments (0) Actualites, Africa, Business, Mining

JOHANNESBURG (Reuters) – South Africa’s Gold Fields will buy a near 50 percent share of Asanko Gold Inc’s Ghana subsidiary and take a stake in the Canadian miner in a $202.6 million deal announced on Thursday.

Investors were cautious, questioning whether the African joint venture would make a return any time soon and sending Gold Fields’ shares down nearly 6 percent, in an already weak bullion sector.

Gold Fields said in a statement that as well as acquiring half of Asanko Gold Ghana’s 90 percent interest in the Asanko Gold Mine, its Ghana subsidiary will also acquire associated properties and exploration rights in the African country.

Shares in Goldfields fell more than the broader bullion sector – which was down 2.8 percent – tumbling 5.9 percent to 46.01 rand by 0858 GMT.

“There’s always some execution risk, they are buying these things but can they actually make money out of it, is what the market is asking,” said Cratos Capital equities trader Greg Davies.

The deal includes an upfront payment of $165 million on closure of the transaction and a deferred payment of $20 million. Gold Fields’ subsidiary will also take a 9.9 percent stake in Toronto-listed Asanko for $17.6 million in a share placement.

The South African miner said the $203 million deal fitted in with its strategy to improve its portfolio by lowering all-in costs and extending mines’ lifespans to enhance cash generation.

Asanko, which is expected to produce 253,000 ounces of gold annually from 2019 to 2023 with a life-of-mine of at least 15 years, also has the potential to make further discoveries, Gold Fields said.

“The Asanko joint venture will give immediate access to low cost production ounces, increasing the quality of the Gold Fields’ portfolio,” the South African miner said.

(Reporting by Tanisha Heiberg and Nqobile Dludla; Editing by Susan Fenton)

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South Africa cuts main interest rate as inflation falls within range

Comments (0) Actualites, Africa, Economy

PRETORIA (Reuters) – South Africa’s central bank cut its main interest rate to 6.5 percent on Wednesday, in another boost for the economy after ratings agency Moody’s left intact its last investment-grade credit rating.

Traders and economists had expected the 25 basis-point cut in the repo rate after a slowdown in consumer price inflation to 4.0 percent in February, which put price growth well within the central bank’s 3-6 percent target range.

It was the first easing step since July and comes as South Africa rides a wave of investor optimism in the wake of President Cyril Ramaphosa replacing scandal-plagued Jacob Zuma as head of state in February.

The rand fell, however, as the rate cut dents somewhat the appeal of local assets versus developed-market peers. Banking stocks also fell.

South African Reserve Bank Governor Lesetja Kganyago told a news conference that inflation risks had subsided somewhat since January and that the bank had raised its economic growth forecast for this year to 1.7 percent from 1.4 percent.

But he said that the bank had not started “a journey of cutting” and that the future path of the repo rate would depend on data.

Four members of the Monetary Policy Committee voted to cut the rate while three wanted to keep it on hold, Kganyago said. There was no discussion of a more aggressive 50 basis-point rate cut.

Despite the central bank’s broadly upbeat tone, Kganyago said that the growth outlook remained relatively constrained and that the policy-setting committee would prefer to see inflation expectations anchored closer to the midpoint of its target range.

Analysts said they were not expecting to see a flurry of further rate cuts.

Razia Khan, an Africa-focused economist at Standard Chartered, said: “We think that today’s 25 basis-point cut was probably it in terms of South Africa’s easing cycle”.

Moody’s said on Friday that it expected to see a strengthening of South Africa’s institutions under Ramaphosa which could translate into greater economic and fiscal strength.

S&P Global, another of the “big three” ratings agencies, said it wanted to see stronger per capita growth before it would consider raising its credit rating.

 

(Reporting by Olivia Kumwenda-Mtambo and Nomvelo Chalumbira; Writing by Alexander Winning; Editing by James Macharia and Hugh Lawson)

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South African Netcare gives up on British health prospects

Comments (0) Actualites, Africa, Europe, Health

(Reuters) – South African private healthcare operator Netcare drew a line under its ambitions in Britain on Wednesday, saying it would exit the market due to difficult trading conditions.

Netcare shares were up 7.7 percent at 1349 GMT following the announcement by South Africa’s third-largest private hospital chain, which has been in Britain for a decade through a controlling stake in BMI Healthcare.

The company, which in September made an all-share offer to buy out minority BMI Healthcare shareholders said it was making the move because trading conditions “remained difficult” across the private healthcare market.

It said a poor performance by BMI Healthcare was the result of National Health Service (NHS) demand management initiatives and weaker private medical insurance demand.

Netcare said in November it would restructure its British operations, after reporting a drop in annual profit due in part to belt-tightening by Britain’s publicly funded healthcare system.

The NHS, which has been operating with an over 1 billion pound deficit and a shortage of beds and staff, has been seeking help from private companies such as BMI Healthcare, Spire Healthcare and Nuffield Health.

However, the total NHS caseload at BMI Healthcare dropped by 4.4 percent year-on-year for the 5 months to the end of February due to “stringent demand management strategies” Netcare said.

Netcare expects the core earnings (EBITDA) margin in the British business to be between 0.8-1.2 percent in the first half of 2018, down from 5.2 percent in the prior period.

Netcare reiterated that underlying trading EBITDA margins across the group are expected to remain broadly flat in the first half of 2018 from a year earlier.

 

(Reporting by Justin George Varghese in Bengaluru; Editing by Alexander Smith)

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Frozen $500 mln in Angolan fraud probe came from central bank account with Standard Chartered

Comments (0) Actualites, Africa

LUANDA/LONDON (Reuters) – The $500 million at the centre of an alleged fraud involving the son of Angola’s former president was transferred out of a Standard Chartered account held by Angola’s central bank, the British bank told Reuters on Wednesday.

The Angolan prosecutor general’s office said on Monday it had charged Jose Filomeno dos Santos, the former president’s son, and Valter Filipe da Silva, the former governor of the central bank known as Banco Nacional de Angola, with fraud over the case.

Britain’s National Crime Agency said last week that $500 million had been frozen in the UK as part of an investigation into a potential fraud against Angola’s central bank and could be returned to the southern African country.

“We are aware that our client, Banco Nacional de Angola (BNA), was the victim of an attempted fraud in Angola which involved the transfer of funds from their Standard Chartered Bank account,” Standard Chartered said in an emailed response to questions.

The bank did not respond to a question on how the transaction appeared to bypass security mechanisms.

The Angolan central bank, which has so far made no public statement about the case, did not immediately respond to a request for comment.

Dos Santos is the highest profile figure charged since President Joao Lourenco succeeded longtime leader Jose Eduardo dos Santos last September pledging to tackle an endemic culture of corruption in the oil-producing country.

Reuters was unable to immediately contact Jose Filomeno dos Santos. He said in a statement circulated in Angolan media on Tuesday that he was cooperating with the investigation and had handed his passports in to the prosecutor general’s office.

Reuters has also been unable to reach Da Silva for comment.

Standard Chartered said it is closely cooperating with Angola’s central bank and British law enforcement.

A source familiar with the matter told Reuters on Wednesday that HSBC had frozen a bank account in connection with the alleged fraud.

The Financial Times, which reported the HSBC bank freeze earlier, said documents purporting to be from Swiss bank Credit Suisse were also used in the fraud.

The documents were fake and Credit Suisse was not involved in the transaction, a source familiar with the matter told Reuters.

Britain’s National Crime Agency said the funds were frozen after the transaction raised suspicions, without naming the banks involved.

Standard Chartered, which has operations across Asia and Africa, ended its dollar-clearing operations with commercial banks in Angola in Dec. 2015 because it deemed it too risky.

Singapore said last week its central bank had imposed penalties of nearly $5 million on Standard Chartered Bank and Standard Chartered Trust (Singapore) for breaching money laundering rules and terrorism financing safeguards.

HSBC’s move to freeze the accounts and work with authorities to return the funds will reinforce the lender’s assertion that its efforts to improve financial controls are bearing fruit.

The bank paid $1.9 billion in fines to U.S. authorities in 2012 and agreed to install an independent monitor to improve its anti-money laundering controls, after it was used to launder Mexican cartel drug money.

A five-year period in which the bank faced criminal prosecution if it breached U.S. compliance rules again ended in December.

 

(Reporting by Stephen Eisenhammer in Luanda and Lawrence White in London; Editing by Adrian Croft)

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Djibouti plans new container terminal to bolster transport hub aspirations

Comments (0) Actualites, Africa, Business, Economy, Infrastructure

ABIDJAN (Reuters) – Djibouti is in talks with French shipping company CMA CGM to develop a new container terminal at an initial cost of $660 million as part of the tiny African country’s bid to expand into a sea and air transport hub for the continent.

Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority (DPFZA), told Reuters on Tuesday that the authority hopes to award the concession in July. It was also prepared to buy out DP World’s stake in an existing container terminal to end a row with the Dubai port operator and avoid arbitration, he said.

Djibouti’s strategic location has led the United States, China, Japan and former colonial power France to build military bases there.

Its ports already serve as an entry point for cargo which is then sent by smaller vessels to ports along Africa’s eastern coast, but it is now seeking to become a sea-air transshipment hub for the entire continent.

To do this, Hadi said DPFZA was also planning to construct a $350 million airport and expand Air Djibouti’s fleet of cargo aircraft.

The new container terminal project could break ground as early as September with construction expected to take 24 months, Hadi said, speaking on the sidelines of the Africa CEO Forum in Abidjan, Ivory Coast.

“We are going to build DICT, Doraleh International Container Terminal. This is a new plan,” he said. “We are in discussions with CMA CGM.”

The port authority was not in talks with any other potential partners, he said. CMA CGM did not immediately respond to a request for comment.

Once operational, Hadi said the port terminal would boast an annual capacity of 2.4 million twenty-foot equivalent units (TEU), but subsequent expansion phases would bring that up to 4 million TEUs.

Fifteen percent of the project’s cost will be financed through equity. Of that, the DPFZA will contribute 85 percent, with its concession partner providing 15 percent. The rest will be raised via international institutions and banks.

“We are targeting trans-shipment,” Hadi said.

 

DP WORLD DISPUTE

Meanwhile, Hadi said the port authority was ready to end a dispute with DP World over its cancellation of a concession contract for another facility, the Doraleh Container Terminal, by buying out DP World’s 33 percent stake.

Djibouti ended the contract with the Dubai state-owned port operator last month, citing a failure to resolve a dispute that began in 2012.

DP World has called the move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“We are prepared to pay them their 33 percent of shares,” Hadi said. “There is no need for arbitration. We are going to buy their shares.”

 

(Reporting by Joe Bavier; Additional reporting by Gus Trompiz in Paris; Editing by Aaron Ross and Susan Fenton)

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South African rand at one-month peak after Moody’s rating reprieve

Comments (0) Actualites, Africa, Economy

By Olivia Kumwenda-Mtambo

JOHANNESBURG (Reuters) – South Africa’s rand raced to a one-month high against the dollar on Monday and government bonds firmed as investors cheered Moody’s decision to change the country’s credit outlook to stable from negative while affirming an investment-grade rating.

Moody’s late on Friday affirmed South Africa’s debt at ‘Baa3’, the lowest rung of investment grade, saying the previous weakening of national institutions was gradually reversing which supported an economic recovery.

While the decision to affirm the rating was widely anticipated by market participants and largely priced in, the unexpected move to revise the rating outlook boosted markets.

At 0850 GMT, the rand traded at 11.6400 per dollar, 0.94 percent firmer than its New York close on Friday and its firmest level since Feb. 27, Thomson Reuters data showed.

In fixed income, the yield for the benchmark government bond due in 2026 dipped 10 basis points to 7.89 percent, reflecting firmer bond prices.

“What surprised markets on Friday is that Moody’s upgraded the rating outlook from negative to stable – which means that a downgrade is no longer likely even in the medium-term, unless of course new developments overtake us,” Commerzbank analysts said.

On the bourse, banks bucked the weaker trend on the broader market, rising 0.65 percent with FirstRand up 0.8 percent to 69.26 rand.

Banks, considered the barometer of both political and economic sentiment, have largely borne the brunt of previous credit ratings downgrades given their substantial exposure to sovereign debt and various state-owned companies.

INTERESTS RATE CUT?

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index (WGBI) and could have triggered up to 100 billion rand ($8.58 billion) in asset sales by foreign investors.

Moody’s is the only major ratings agency that rates South African debt as investment grade after S&P Global Ratings and Fitch downgraded the sovereign to “junk” status last year following a deterioration in the country’s economic outlook.

South Africa has this year seen a return of sorely needed investor confidence since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma, who resigned in mid-February on the orders of the ruling African National Congress party.

Moody’s decision was likely to influence decision making at the three-day meeting of the South African Reserve Bank (SARB) Monetary Policy Committee, which starts on Monday, Nedbank analysts said.

The interest rates decision will be announced on Wednesday.

As consumer price inflation eases, a Reuters poll conducted before Moody’s review showed markets expect the central bank to cut its repo rate by 25 basis points to 6.50 percent to stimulate economic growth.

Forward rate agreements were on Monday pricing in a 94 percent chance of a 25 basis points rate cut in the benchmark lending rate, up from an 80 percent chance two weeks ago.

“We expect SARB to shift to an easing bias this year,” UBS analysts said. “Still, nominal and real yields should remain attractive compared to peers and support the return outlook for the rand.”

($1 = 11.6487 rand)

(Additional reporting by Tiisetso Motsoeneng; Editing by Peter Graff)

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DP World wins 30-year Congo port concession

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DUBAI (Reuters) – DP World said on Sunday it had won a 30-year management and development concession for a greenfield, multi-purpose port in the Democratic Republic of the Congo (DRC).

The Dubai-owned port operator will set up joint venture with the Central African country’s government to manage and invest in the Atlantic Coast’s Port of Banana, it said in a bourse statement.

An initial $350 million will be invested to construct a 600-metre quay and a 25-hectare yard extension with a container capacity of 350,000 TEUs (twenty-foot equivalent units) and 1.5 million tons for general cargo.

Congo has long looked to develop a port along its less than 50 km (30 miles) of coastline to handle larger vessels than those that can reach its existing shallow ports up the Congo River.

Construction is expected to start this year and take two years to complete. A total project cost of over $1 billion, spread over four phases, will be dependent on market demand.

DP World will control 70 percent of the joint venture with the government of the DRC retaining the remaining 30 percent, the statement said.

The award includes an option to extend the concession for an additional 20 years.

 

 

 

(Reporting by Alexander Cornwell. Editing by Jane Merriman)

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Zimbabwe hopes to transform mining sector with $4.2 bln platinum deal

Comments (0) Actualites, Africa, Economy, Mining

HARARE (Reuters) – A Cypriot investor signed a $4.2 billion deal on Thursday to develop a platinum mine and refinery in Zimbabwe, an investment that President Emmerson Mnangagwa said showed the country was “open for business”.

Signing the agreement with Cyprus-based Karo Resources, Mines Minister Winston Chitando said work would start in July, with the first output of platinum group metals expected in 2020, aiming to reach 1.4 million ounces annually within three years.

It was unclear, however, where all the funding would come from and analysts said the project start date of July looked very ambitious.

Located in the Mhondoro-Ngezi platinum belt, west of Harare, where Impala Platinum Holdings has operations, the project will include a coal mine and power station to produce electricity for the smelter, and should employ 15,000 people when fully implemented, Karo head Loucas Pouroulis said.

Keen to revive the mining sector after years of reticence by foreign investors during Robert Mugabe’s rule, President Mnangagwa said the deal showed things had changed since his ascendancy after Mugabe’s ousting in November.

“Zimbabwe is open for business and whoever stands in the way, hurting business in this country, will fall. It is not business as usual anymore, things have to change,” Mnangagwa said at the signing ceremony.

The project was first mooted six years ago but had been held back by government red tape and “other unnamed vested interests, which are corrupt interests,” he said.

Mines Minister Chitando added: “This is the largest investment structure in the country’s mining industry in Zimbabwe. The landscape of Zimbabwe’s mining industry will never be the same.”

Zimbabwe’s government did not give details of the source of funding for such a big investment.

Industry sources, who asked not to be named, said there was no obligation to provide any cash until firmer plans for the development were in place.

Cyprus-born Pouroulis spent his early career with industry giant Anglo American in South Africa, branching out on his own to establish more niche operators such as Petra Diamonds, Eland Platinum and Tharisa Minerals, according to his profile on Tharisa’s website.

As well as heading Karo, Pouroulis is chairman and founder of Tharisa, in which his family has a 45 percent stake.

Tharisa, which has chrome and platinum operations in South Africa’s Bushveld, has made clear its interest in the potential of Zimbabwe, which holds the world’s second-largest platinum deposits after neighbouring South Africa.

The company, however, has a market capitalisation of only 5.5 billion rand ($464 million), although it is well regarded by many city analysts and its share price has rallied 15 percent this year.

HSBC initiated covered of the stock on Thursday, rating it a buy. It predicted it would have a net cash position of $185 million by the end of 2022 and said platinum prices should benefit from continued supply curtailment in South Africa because of regulatory and funding uncertainty.

Foreign investment stalled in Zimbabwe during the later years of Mugabe’s reign.

Analysts say the outlook is still uncertain, but interest is strong in a country that has rich, underexplored resources.

An investment conference on Zimbabwe in London last week was heavily oversubscribed.

On Monday, Mnangagwa’s government amended the Mugabe-era Indigenisation and Economic Empowerment Act, which aimed to increase black Zimbabweans’ ownership of mines by preventing foreign entities holding majority stakes.

The revised law removed that stipulation for most types of mining, but not diamond and platinum mines.

Chitando said Karo Resources was expected to comply with the empowerment law by giving up majority ownership in the project. He did not elaborate.

($1 = 11.8491 rand)

 

(By MacDonald Dzirutwe; Additional reporting by Barbara Lewis in London; Editing by Ed Cropley/Robin Pomeroy/Susan Fenton)

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First Quantum hopes to resolve mammoth $8 bln Zambian tax bill

Comments (0) Actualites, Africa, Canada, Economy, Mining

TORONTO/LONDON (Reuters) – Canada’s First Quantum Minerals on Wednesday was hopeful of resolving a dispute with Zambia over a whopping 76.5 billion Zambian kwacha ($8.07 billion) bill for unpaid duties on imported mining equipment.

Zambia has reduced “significant” tax assessments against it in the past, Chief Executive Philip Pascall said on a conference call with analysts. He declined to speculate on the possible outcome of Zambia’s review of the latest claim, which involves more than 23,000 documents and could take up to six months.

The bill comprises $150 million in higher import duties, $2.1 billion in penalties and $5.7 billion in interest, First Quantum said. It relates to $540 million in mining equipment imported to its Sentinel copper mine between 2012 and 2017.

“We have, in the past, seen assessments that were significant and then the settlement might be reduced considerably,” Pascall said. “In this context, it’s not prudent for us try and speculate.”

The company’s preliminary review of assessment documents, which require approval by the Zambian Revenue Authority (ZRA) before imports are released, show an erroneous application of both higher and lower duties than appropriate, Pascall said.

It was unclear how Zambia calculated the $2.1 billion penalty, First Quantum said, noting that smuggled goods tend to get a 300-percent penalty for customs avoidance, while simple errors typically get a 15-percent penalty.

“This is clearly an eye-watering amount,” Bernstein analyst Paul Gait said in a note to clients, comparing the $8-billion bill to First Quantum’s market capitalization on Wednesday morning of about $9.5 billion.

“If anything like these claims is actually enforced, it will make Zambia largely uninvestable for any mining company, and probably any other industry as well,” Gait said.

First Quantum, which has paid a cumulative $3 billion in taxes to Zambia, said it was unaware why the matter was made public, an unusual move for Zambia. The company’s two copper mines in Zambia are unaffected by the issue.

Zambia, which collected 39.1 billion kwacha in taxes last year, netted 4.4 billion kwacha in hidden assets from small companies after they were offered amnesty for such declarations. Dozens of mining companies operate in Zambia, primarily extracting copper.

The Zambian Revenue Authority said it had started detailed audits on all companies for compliance, suggesting other miners may come under scrutiny.

First Quantum shares dipped nearly 2 percent on Wednesday to C$17.68. Shares sank 12.4 percent in Toronto on Tuesday before trading in the stock was suspended.

($1 = 9.4810 Zambian kwachas)

 

(Reporting by Susan Taylor in TORONTO and Zandi Shabalala in LONDON; Editing by Tom Brown and Bernadette Baum)

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