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Sub-Saharan Africa rail projects promise to increase trade

26 April 2016 Comments (0) Africa, Business, Featured

uganda railway

Rail projects proposed or under way on the southern continent will cost an estimated $60 billion.

Railway projects totaling more than $60 billion are proposed or under way in sub-Saharan Africa.

That estimate comes from Terrapin, which is organizing a major rail conference June 28-29 in Johannesburg. According to Terrapinn, projects in Uganda, Namibia, Batswana, Mali, and Nigeria have the largest budgets, ranging from $8 billion up to nearly $14 billion each.

One massive project is a 3,000-kilometer rail line that will link Benin, Burkina Faso,

Niger, Ivory Coast, Nigeria, Togo and Ghana.

These nations and mining companies that operate within them are funding the project as the mining industry seeks to increase mineral exports from 109,000 tons a year to 3.4 million tons in 2020, a 30-fold increase.

Without rail network, transport expensive

The lack of a cross-border rail network has made transport expensive, especially in land-locked countries such as Niger, which derives 11 percent of its gross domestic product from mining, and Burkina Faso, which derives 13 percent of GDP from mining.

The rail network also is expected to boost trade among the linked nations and drive economic development in other sectors.

Nigeria also has ambitious plans for domestic rail lines, including one linking Lagos and Kano and another between Lagos and Calabar along the coast. Both were designed to ease commuter congestion and facilitate transport of goods.

However, plans were thrown into doubt in April when the Nigerian National Assembly removed $300 million in funding for the coastal project from the 2016 budget. Funding for a third line between Idu and Kaduna was severely reduced as well.

New line will transport coal

Meanwhile, Botswana and Namibia in southern Africa, are seeking private investment to build a 1,500-kilometer rail line that would transport coal from land-locked Botswana’s fields to Namibian ports on the Atlantic coast.

The project was estimated to cost $15 billion when first proposed in 2011. In 2015, the two countries staffed an office to begin looking into legal and cross-border issues that will have to be addressed.

In Mali, China has agreed to finance an overhaul of a rail line linking the capital of Bamako to Dakar in Senegal. Renovation of the 1,300-kilometer rail line will cost a total of $2.5 billion.

China will also train engineers and technicians and overhaul more than 20 train stations and domestic routes.

China will build Ugandan network

China will also play a role in development of a light-rail commuter network in the Ugandan capital of Kampala. The two countries in December signed an agreement for the China Civil Engineering Construction Corporation to build the first phase of the project at a cost of about $440 million.

Plans call for a 240-kilometer network with rail lines from the city center to Entebbe, Nsangi, Wakiso and other towns surrounding the capital. To ease traffic congestion, Uganda also launched an experimental commuter rail line in December between Kampala and Namanve.

Terrapinn listed the following countries with projected rail costs in its report: Uganda ($13.8 billion), Namibia-Botswana ($10 billion), Mali ($9.5 billion), Nigeria ($8.3 billion), Mozambique –Malawi ($4.4 billion), South Africa ($4.3 billion), Kenya ($4 billion), Angola ($3.3 billion), Cameroon ($2.9 billion), Zambia ($1 billion), Democratic Republic of the Congo ($630 million), Zimbabwe ($450 million), Ghana ($300 million), and Tanzania ($40 million).

Terrapinn earlier this year reported a boom in rail development in the Middle East and North Africa with proposals and projects estimated at more than $350 billion, with a number of high-speed rail lines under way.

Railways are vital to economic growth

According to the African Development Bank, railways have an important role to play in the economic development of the continent.

“Rail transport is inevitably critical to support economic development. Unless this mode of transport is developed, Africa may not realize its full potential in exploiting its abundant natural resources and wealth,” the bank said in a 2015 report.

However, the African Development Bank report said the poor condition of rail and rolling stock in many African countries is undermining the potential of rail systems to make a strong contribution to economic growth.

Unfortunately, the ability of African countries to attract investment for railway upgrades has been mixed, it said.

However, the report said support for investment in rail infrastructure will grow as African production of goods and minerals increase and as environmental concerns are heightened.

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South Africa’s MTN pays former CEO $1.6 million after resigning over Nigeria fine

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

JOHANNESBURG (Reuters) – South Africa’s MTN paid its former chief executive officer Sifiso Dabengwa 23.7 million rand ($1.6 million) after he resigned over a record fine imposed on the company by Nigerian authorities.

Dabengwa quit in November after Nigerian authorities imposed a $5.2 million fine on MTN’s Nigerian unit in October.

He was awarded a total payout of 40.6 million rand, MTN said in its annual report on Monday.

Non-executive chairman Phuthuma Nhleko was then named executive chairman of Africa’s biggest mobile phone group for a period of six months, to help resolve the fine.

MTN has since managed to negotiate the penalty down to $3.9 billion but is still hoping to reduce it further.

MTN’s share price has been down almost 20 percent since October when the fine was imposed. The stock had fallen 1.21 percent at 145.59 rand by 1407 GMT.

Last year, 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.

($1 = 14.4865 rand)

 

(Reporting by Nqobile Dludla and Tanisha Heiberg; Editing by James Macharia

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South Africa could extend talks on proposed empowerment rules

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

JOHANNESBURG (Reuters) – South Africa could extend consultations on a draft law opposed by mining companies that say the move to redress imbalances of the nation’s past apartheid rule would impose unfair conditions over black ownership.

Mining minister Mosebenzi Zwane announced the potential extension at a business briefing on Friday and later said that talks with the industry over the proposed changes to the Mining Charter would take place next Monday and Tuesday.

The new draft of the charter says that companies must be at least 26 percent black-owned at all times, even if some of the black shareholders choose to sell out.

Mining companies argue that after they have complied with the 26 percent black empowerment rule it shouldn’t be their responsibility to monitor the ownership balance continually.

A 30-day consultation period started when the draft law was published last Friday, but the mining industry has said this is not long enough.

“Should it be necessary for us to go beyond 30 days that call will be made as the necessity arises,” Zwane said. “Rather than us complaining about time, let’s engage.”

The news about next week’s talks was announced by Zwane at AngloGold Ashanti’s TauTona mine west of Johannesburg, where he said: “It (the draft law) is just a proposal, which is why we are saying ‘come, let’s talk’.”

The Chamber of Mines, which represents companies such as Anglo American and Glencore, said it was not consulted about the proposed changes and that the draft law comes at a difficult time for commodity producers contending with depressed prices and rising costs.

“We are saying it’s a tough time and, for us to regulate and go through these processes right now, the industry is taking strain,” the chamber’s president Mike Teke told Reuters.

AngloGold CEO Srinivasan Venkatakrishnan, meanwhile, said that judgment should be reserved until after “robust engagements and discussions” have been completed.

“We have high expectations,” he said of the talks.

Failure to meet the empowerment targets could result in mining permits or rights being revoked.

“This draft seems to me like all stick and no carrot for the industry,” said one fund manager at a large South African firm. “The whole situation adds another layer of confusion.”

A court process is under way to clarify the “once-empowered, always-empowered” principle and could have an impact on the draft bill.

Zwane said that investors should not be concerned by the bill because the process will be transparent and inclusive.

“I don’t foresee a situation where investors should be scared of people practising their democratic right to engage,” he told Reuters. “Let’s get real with the issues, let’s talk.”

 

(By Zandi Shabalala. Additional reporting by Ed Stoddard; Editing by James Macharia and David Goodman)

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Zimbabwe to present new IMF financing programme by November

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

HARARE (Reuters) – Zimbabwe will present a financing programme to the International Monetary Fund by November this year after clearing its arrears, opening the door to receiving its first loan from the Fund in nearly two decades, the finance minister said on Friday.

Patrick Chinamasa told reporters that he was optimistic an IMF executive board meeting on May 2. would accept Zimbabwe’s plan to pay $110 million in arrears to the Fund.

Another $1.7 billion would then be paid to the African Development Bank and World Bank.

Zimbabwe has not received a loan from the IMF since 1999.

President Robert Mugabe agreed last month to major reforms, including compensation for evicted white farmers and a big reduction in public sector wages. Those reforms are expected to be part of a new financing programme.

“Between September and November Zimbabwe will work feverishly to come up with a new country financing programme, on the basis of which we hope, if we clear our arrears, we should get new financing,” Chinamasa said.

Reserve Bank of Zimbabwe governor John Mangudya said on March 16. he expects a loan from the IMF in the third quarter of this year, after paying off foreign lenders by the end of June.

 

(Reporting by MacDonald Dzirutwe; Editing by James Macharia)

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Drawing On the Diaspora: Africa’s First Tech Diaspora

22 April 2016 Comments (0) Africa, Business, Featured

haweya-mohamed-afrobytes

Afrobytes, the first diaspora for African tech innovators, held a biannual conference on March 21-22 to discuss the future of development and role of technology for Africans.

Diasporas are common the world over but as the rigidity of nations and states disintegrates with the expansion of technological inclusion, the shape of diasporas is shifting. No longer are diasporas defined as concentrated groups of immigrants/non-native individuals in another country. Afrobytes, the self-described “first African tech diaspora in Europe,” aims to connect leaders in African innovation across the European and African continents to create a better flow of ideas. This sort of boundary-less platform is an intriguing look at the future of diasporas and the future of development.

Paris-based Afrobytes held its first conference on March 21-22, organized by CEO Ammin Youssef, and Head of Communications Haweya Mohammad. The goal of the conference was to bring the brightest minds from France (and greater Europe) and Africa together to discuss the future of Africa’s development. The conference was broken into four categories: mobile education; women as Africa’s future innovators; sustainable infrastructure development and sustainable agricultural development.

Featured speakers hailed from all corners of the globe with all varieties of expertise, from the founder of Libraries without Borders to the PR Manager of WeFarm, from the founder of an open source drone company, Flylab, to the creator of Nairobi’s premier co-working space, iHub. This enormously diverse group of speakers came together to discuss the best way to promote inclusive, sustainable, bottom-up development for the African people.

Inspiring Change: The Themes of the Day

The idea of “re-branding” Africa was a driving force behind the selected themes: after all, without investment, how can Africa develop outside of the traditional and increasingly obsolete top-down model? Re-branding Africa as a well-educated, innovative, inclusive (55% of speakers and attendees identified as women) and multi-faceted sustainable market is important for the future of the continent.

As all conferences on development must, Afrobytes kicked off with a half-day dedicated to the discussion around the role of technology in education. Experts in information-sharing were featured speakers, and topics ranged from traditional, school-based education to the borderless open-source sharing of the WeFarm platform. WeFarm, for example, connects more than 43,000 farmers from Sub-Saharan Africa and South America to share tips on sustainable agriculture near and far.

The next theme was women as the emerging innovators of Africa. While hardly new, the idea that women should be encouraged to think critically, listened to and seen as mentors is new to many, African and otherwise. The primarily female speakers gave lectures on connecting with commercial investors, utilizing co-working spaces, both physical and on-line, and more.

On March 22nd, discussions surrounding Africa’s next “raw material” focused on the necessity of providing African’s with 21st-century-standards of living, including universal access to reliable (and ideally renewable) sources of electricity. The challenges facing the start-up culture and overall clean energy sector were discussed, including a talk by leaders in existing sustainable agriculture initiatives like founder and CEO Abdoulaye Niang of Transconcept Food, Senegal, a company that specializes in the re-appropriation of traditional farming techniques for the modern world. GreenTec Capital spoke to the diverse group, saying “a lot of work is still to be done to support the African start-up environment, and we are thankful for initiatives like Afrobytes.”

Why an Online Diaspora?

The population of Africa is expected to double by 2050 to 2.5 billion, or one-quarter of the world’s projected population. Unless living conditions rapidly improve for millions of Africans, this level of population growth could prove disastrous. According to the African Economic Outlook, “despite progress, the level of human development in Africa remains low….gender inequality and exclusion exist in many countries,” which is exactly why the sorts of dialogue inspired at Afrobytes is so critical. Not only is Afrobytes an inclusive platform that provides women and men equal space to voice their ideas, but it is an important step away from traditional forms of top-down (or government-led) development.

More than three-fifths of Africa’s population is under 25 years old. These individuals have grown up with greater access to knowledge than any generation before, and are therefore more driven to change their surroundings because they are aware, to a painfully precise degree, of what they are missing out on in comparison to their foreign counterparts. The way in which Africa is developing demonstrates the importance of the free-flow of ideas between continents.

By inviting speakers from different physical diasporas, such as the Kenyan ambassador to France, Afrobytes has given its online diaspora a real sense of physical community. Eric Yoon of GreenTec Capital expects “Afrobytes to become an important platform for digital stockholders on the African data scene.”

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South Africa’s former finmin Nene appointed as advisor at Thebe Investment

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

JOHANNESBURG (Reuters) – Former finance minister Nhlanhla Nene has been appointed as an advisor at Thebe Investment Corporation to help roll-out the firm’s growth plan, his second private sector job in a week.

Nene said on Thursday in an interview with Business Day TV that his appointment will be full-time for a term of two years effective from next month.

“This is interesting that I find myself in the public sector again,” he said.

“It’s going to be an interesting journey and provide me with an interesting opportunity of finding a symbiotic relationship between the private sector and public sector.”

On Monday, Asset management group Allan Gray appointed Nene as a non-executive director, hoping to tap his strategic and leadership skills.

President Jacob Zuma fired Nene, who was keen to rein in government spending in Africa’s most industrialised economy, in December, replacing him with little-known David van Rooyen.

Days later, Zuma appointed Pravin Gordhan as finance minister, giving South Africa its third finance chief in a week after a selling frenzy in the markets.

 

(Reporting by Nqobile Dludla; Editing by James Macharia)

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South Africa expects jump in maize imports due to drought – minister

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

CAPE TOWN (Reuters) – With two weeks left in the current marketing season, drought-hit South Africa has imported 1.732 million tonnes of yellow maize and 72,000 tonnes of white maize in line with expectations, the agriculture minister said on Thursday.

The country will significantly increase imports in the next season when 2.4 million tonnes of yellow maize and 1.9 million tonnes of white maize will be shipped to its shores, Agriculture Minister Senzeni Zokwana told parliament.

(Reporting by Wendell Roelf; Editing by James Macharia)

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Orange completes acquisition of Congo mobile operator Tigo DRC

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

DAKAR (Reuters) – Orange has completed the $160 million acquisition of Democratic of Congo mobile operator subsidiary Tigo DRC from Millicom, the French company said on Thursday, one of four African purchases it has made this year.

“With a population of more than 80 million people and a relatively low mobile penetration rate of 50 percent of the population, the country offers considerable growth potential,” Bruno Mettling, deputy chief executive officer of Orange, said in a statement.

This month it completed the acquisition of Cellcom, Liberia’s leading mobile operator, and in January it announced a deal to buy Indian firm Airtel’s Burkina Faso and Sierra Leone subsidiaries.

 

(Reporting by Marine Pennetier; editing by Edward McAllister and Jason Neely)

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Investors want answers from Mozambique, banks over loan mystery

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

LONDON (Reuters) – Investors holding Mozambique’s recently restructured ‘tuna bond’ are demanding answers from the government and its bankers over what the International Monetary Fund says are previously undisclosed loans that could exceed $1 billion.

The revelations have rocked the relationship between one of the world’s poorest countries and the International Monetary Fund (IMF), which last year agreed to lend Mozambique $286 million to cushion its economy following deep declines in commodity prices and the value of the metical currency.

Only last month investors met Mozambican officials and agreed to swap an outstanding $697 million of the dollar-denominated tuna bond, issued in 2013 by state-owned fishing-company Ematum, for a sovereign issue.

The deal was seen widely as investor friendly and accepted by holders representing more than 80 percent of the issue. Ratings agency Standard and Poor’s defined the restructuring as “tantamount to a default”.

The original $850 million bond has been controversial from the start: when it was launched, it was presented to investors as funding for “fishing infrastructure” but it quickly became apparent most of the cash was for defence.

Under IMF pressure, the government re-allocated $500 million of the debt to its defence budget. The subsequent bond rescheduling was part of efforts to clean up and rebuild trust for the southern African nation, under pressure from donors to improve the transparency of its finances.

However, last Friday the IMF said it believed Maputo borrowed $1 billion more than previously disclosed.

The Fund’s Africa Director, Antoinette Sayeh, said the additional loans appeared to have been borrowed from Credit Suisse and Russia’s VTB Bank and allocated to Mozambique’s defense and security sector.

Credit Suisse and VTB Bank were also joint dealer managers on the exchange offer launched in March. Mozambique’s Finance Minister Adriano Maleiane was quoted on Sunday saying the country had no hidden loans and that this was down to “some confusion”.

Investors say if found to be true, the IMF allegations could greatly damage the country’s reputation and ability to raise funds.

“At this stage, things are really up in the air until we hear from the various parties of what is really going on,” said one fund manager, who holds the bond but declined to be named. “If this is additional debt which was not included in the overall debt stock it completely changes the overall relationship with the international financial institutions’ community, the IMF, the donor community and it changes the market relationship. There is a lot of harm created in the short term.”

Details of the alleged new loans are sketchy and have not been disclosed in the prospectus to holders of the new bond issue.

However, a February 2013 Credit Suisse document obtained by Reuters outlines a $372 million loan to Proindicus, a company owned by the Ministries of Interior and Defence and the State Security and Intelligence Service. According to the document, the funds are to be spent on high-speed naval interceptors, radar stations, off-shore patrol vessels and aircraft. Credit Suisse declined to comment on the document.

The Ematum bond swap prospectus seen by Reuters also notes under “conflicts of interest” that the dealer managers may make loans or be involved in other transactions to Mozambique.

Marco Ruijer, portfolio manager at NN Investment Partners, who also holds the bond said he had addressed questions to Credit Suisse.

“It was perhaps not prudent of Credit Suisse to say we are doing restructuring to extend maturity from 2020 to 2023 when they themselves have a loan on the books which is maturing before 2023,” said Ruijer. “Now they get money back earlier than the bondholders.”

A Credit Suisse spokesman declined to comment on whether the bank had arranged loans for Mozambique in addition to the Ematum bond.

A source closed to VTB said the bank was assured by Mozambique’s finance ministry that all its financing had been disclosed to the IMF, and that the total debt spelled out in the prospectus included all outstanding direct and publicly guaranteed debt.

Mozambique has seen its foreign debt spiral in recent years. According to the restructuring prospectus, total foreign direct and government-guaranteed debt ballooned from $5.244 billion in 2012 – before the Ematum bond issue – to $9.637 billion in 2015. Combined with domestic debt of $1.5 billion, the government had obligations last year equivalent to 102 percent of GDP, the document said.

 

(By Karin Strohecker. Additional reporting by Sujata Rao in London, Ed Cropley in Johannesburg and Lidia Kelly in Moscow; Editing by Dominic Evans)

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Burundi’s inflation eases to 4.3% in March

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

KIGALI (Reuters) – Burundi’s year-on-year inflation eased to 4.3 percent in March from 6.7 percent in February due to falling food costs, official data showed on Wednesday.

Food inflation in the 12 months to March slowed to 6.4 percent from 10.9 percent in February, the country’s Institute of Economic Studies and Statistics (ISTEEBU) said.

Despite falling inflation, the economy has been battered by a year-long political crisis and associated violence, mainly in the capital. Western donors have reduced vital aid leaving the poor nation more dependent on its modest tea and coffee exports.

Burundi’s economy shrank by 7.2 percent in 2015 and is only expected to expand by 3.4 percent in 2016, according to the International Monetary Fund in a recent report.

 

 

(Reporting by Patrick Nduwimana; Writing by Edmund Blair, editing by David Evans)

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