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Platinum producer Lonmin cuts jobs and costs

28 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Lonmin said on Thursday it would continue to review its services and reduce costs, mainly through job cuts, as the sliding price of platinum bites further.

The company said labour costs fell 194 million rand ($11.8 million) in the last three months of 2015 after it shed 5,077 jobs, or 84.6 percent of its planned reduction in headcount.

“Progress continues with the restructuring programme due to the new benchmarked operating model and removal of high-cost production to ensure the business remains viable,” Lonmin said in a statement.

It is targeting savings of 700 million rand in 2016.

Hurt by a 2014 strike, rising costs and a plunging platinum price, Lonmin raised $400 million through a cash call in December which failed to find favour with shareholders and priced shares at about a penny each.

Some of the proceeds of the rights issue were used to pay down debt, leaving the company with $69 million in cash at end of December.

The miner said production of refined platinum reached 171,441 ounces in the three months to the end of December, up 22.6 percent from a year earlier.

The price of platinum has been on the decline for about five years. It fell 26 percent last year and is trading at less than half its 2011 peak.

Shares in Lonmin have lost nearly all of their value over the last year. It was the worst-hit of three top platinum miners by the 2014 five-month labour stoppage.

Lonmin maintained its full-year production guidance of 700,000 platinum ounces and its capital expenditure plan of $132 million despite projecting sustained weaker metal prices.

($1 = 16.3897 rand)

 

(Reporting by Zandi Shabalala; editing by David Clarke and Jason Neely)

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Ghana producer inflation jumps to 10.5% in December

27 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana’s producer price inflation rose sharply to 10.5 percent in December from 3 percent the month before, the statistics office said on Wednesday.

The West African country is under a three-year International Monetary Fund aid programme to address financial problems that include high budget deficits and consumer inflation persistently above government targets.

 

(Reporting by Kwasi Kpodo; Editing by Emma Farge)

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South African president Zuma under pressure as economy worsens

27 January 2016 Comments (2) Africa, Featured, Politics

Jacob Zuma

Analysts point to potential losses for the African National Congress in upcoming local elections, which could pave the way for Zuma to exit the presidency later this year.

South Africa’s venerable African National Congress party may lose political ground in upcoming municipal elections as economic conditions worsen and controversy swirls around President Jacob Zuma.

As business confidence in the government and popular opinion of Zuma plummet, some are predicting the ANC could pave the way for Zuma to exit the presidency later this year if the local elections go badly.

Zuma’s six-year tenure has been mired by accusations of corruption, policy missteps and controversial appointments that his critics contend have created economic stagnation and stifled investment in South Africa.

Ouster of finance minister sparks protests, while rand plunges

Zuma caused a national uproar in December when he abruptly fired a respected finance minister and then was forced to sack an inexperienced replacement only four days later amid protests and plunging currency rates and capital markets.

The rand dropped to under 16 to the dollar for the first time and the benchmark stock index lost the equivalent of $11 billion after Zuma fired finance minister Nhlanhla Nene and replaced him with parliamentarian David van Rooyen on Dec. 9.

Business leaders protested while thousands of South Africans took to the streets using the slogan “Zuma Must Fall” and demanding that Zuma leave office.

ANC leaders persuaded Zuma to quickly replace van Rooyen and a measure of stability was restored with the appointment of a third finance minister, Pravin Gordhan who had served in that post from 2009 to 2014.

Economy worsens with record drought

South Africa, the most industrialized country on the continent, was under economic pressure well before the latest events. The rand has steadily declined, losing half its worth since Zuma took office in 2009. The economy is stagnant, unemployment is high, and the country is undergoing its worst drought since record keeping began in 1904.

Maize production has dropped by 30 percent and prices on the South Africa Futures Exchange have more than doubled in the past year. While agriculture makes up only a small fraction of South Africa’s gross domestic product, the country will be forced to import food, including as much as $710 million worth of maize, which will result in even higher prices.

Christo Joubert, a price analyst with the National Agricultural Marketing Council, said the council expected prices to increase by as much as 20 percent in 2016. “The drought is hitting everything,” Joubert said.

The higher prices will present further struggles in a nation with an unemployment rate of 30 percent. Also, analysts predict the nation’s economy could stagnate in 2016 for the third straight year, with a growth rate of less than 1 percent.

Support for government declines

ANCBusiness confidence and popular support for the incumbent government have also dropped.

The business community’s confidence dropped to its lowest rate in 20 years, according to the South African Chamber of Commerce and Industry. As the finance upheaval unfolded in December, the chamber’s confidence index declined to 79.3 percent, the lowest level since June 1993.

Meanwhile, even before December’s events, public distrust of the president had reached a record 66 percent, up from 37 percent in 2011. A majority of South Africans believe Zuma ignores the courts and the parliament, according to an Afrobarometer poll released in November.

Municipal elections could be pivotal

The troubled economy and public distrust put in doubt whether the ANC can maintain its grip on power and whether Zuma will serve out his term.

The ANC has won 60 percent of the vote since coming to power with Nelson Mandela two decades ago.

Gary Van Staden, an analyst with NKC African Economics, said the party could lose as much as 10 percentage points of support in local elections between May and August. He said the ANC can expect to lose control in some municipalities, which run parks, libraries, utilities and sanitation.

If the elections go badly for the ANC, some analysts predict the party will try to replace Zuma.

“We look for a cornered ANC machine having the possibility of managing the exit of President Zuma around July,” said Peter Attard Montalto, an analyst at Nomura.

For now, however, the ANC has voiced support for the embattled president. In the annual speech on the January 8 anniversary of the party, Zuma touted the progress the ANC has brought to the country and said the ANC was needed as a unifier.

Meanwhile, several possible candidates to become Zuma’s successor have emerged. Among those mentioned are Zuma’s former wife, Nkosazana Dlamini-Zuma, who heads the African Union Commission; Cyril Ramaphosa, the deputy president; and Baleka Mbete, the ANC national chairwoman and speaker of parliament.

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South Africa’s rand firmer, but will struggle to sustain gains

27 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand was a tad firmer against the dollar on Wednesday, in a market anticipating an interest rate hike as the central bank fights inflation pressures.

But analysts said the rand was not likely to gain on a sustainable basis, being at the mercy of general risk aversion as investors worry about the impact of slowing growth in China.

At 0651 GMT the rand was trading at 16.4050 versus the dollar, up 0.09 percent compared with where it ended Tuesday trade.

Just one month into 2016, the local currency has already weakened nearly 6 percent against the greenback, dragged down by concerns over sluggish domestic growth and a slowdown in the world’s second biggest economy.

“Aside from domestic factors, the rand will continue to be vulnerable until markets in China calm down,” NKC African Economics said in a note outlining short-term risks to the domestic currency.

“Higher local interest rates will not remedy this situation even if the central bank hikes significantly in the first quarter of 2016 as the rand remains at the mercy of broader emerging market sentiment.”

South African stocks looked likely to start slightly firmer, with the Top-40 futures index ALSIH6 up 0.36 percent prior to the start of trade at 0700 GMT.

On the debt market, the yield for the 2026 benchmark government bond eased 2 basis points to 9.635 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Ed Stoddard)

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Mozambique’s Nyusi fires deputy central bank governor

26 January 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

MAPUTO (Reuters) – Mozambican President Filipe Nyusi has fired the central bank’s deputy governor António Pinto de Abreu, the president’s office said on Tuesday, without giving a reason.

The sacking of de Abreu, who has been deputy governor of the Bank of Mozambique since Dec. 2010, comes ahead of its annual meeting later this week.

 

(Reporting by Manuel Mucari; Writing by Stella Mapenzauswa; Editing by James Macharia)

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Nigerian minister tells MTN to drop lawsuit over fine

26 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

By Julia Payne

ABUJA (Reuters) – South African cellphone operator MTN should drop its legal action over a $3.9 billion fine imposed in Nigeria to help facilitate talks on a possible settlement, the Nigerian telecommunications minister said on Tuesday.

The Nigerian Communications Commission (NCC) slapped a $5.2 billion fine on MTN in October for failing to disconnect users with unregistered SIM cards but after weeks of negotiations reduced it by 25 percent.

MTN, which makes about 37 percent of its revenue from Nigeria, then filed a suit in the West African country questioning NCC’s legal grounds for imposing the penalty.

“I’m not aware of any out-of-the-court settlement,” telecoms minister Adebayo Shittu told reporters.

Shittu said President Muhammadu Buhari will have the final decision on the matter, adding that MTN might be advised to withdraw the court case filed against the fine.

“If they withdraw it creates a better environment, an environment where there is no stress or pressure on either side,” he said.

A judge in Lagos, Nigeria’s commercial capital, last week gave the company until March 18 to try to reach a settlement with the Nigerian authorities over the fine. The prospect of a lower fine boosted MTN shares.

The fine equates to more than twice MTN’s annual average capital spending over the past five years.

Nigeria has been trying to halt the widespread use of unregistered SIM cards amid worries these are being used for criminal activity, including by the militant Islamist group Boko Haram.

 

(Writing by Ulf Laessing and Chijioke Ohuocha; Editing by Kevin Liffey and Keith Weir)

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Tanzania stock exchange poised for initial public offering

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

dar es salaam stock exchange

The East African nation will become one of only three on the continent that is owned by shareholders.

Tanzania’s stock exchange is poised to join an elite African club as it finalizes plans for an initial public offering by the end of March.

Only two other African exchanges trade their own stock. The Johannesburg Stock Exchange became self-listing in 2005, followed by the Nairobi Stock Exchange in 2014. But about a dozen more African countries are considering the change.

In Tanzania, the Dar es Salaam Stock Exchange (DSE) has an application for the initial public offering (IPO) pending before the Capital Markets and Securities Authority.

With approval, the stock exchange expects to conduct both its initial public offering (IPO) and self-listing before the end of the first quarter this year, according to Moremi Marwa, chief executive officer of the exchange.

Stock exchange will be owned by shareholders

In this process, the exchange will demutualize, which means it will change from a member-owned entity to become a public limited company that is owned by shareholders. Once the self-listing is completed, the name of the exchange will be changed to Dar es Salaam Stock Exchange Public Limited Company (PLC).

Conversion to a public limited company is expected to strengthen governance of the exchange and enable it to better ensure financial sustainability since it will be able to raise funds through rights issues or bond issues.

This translates into access to efficiently priced funds to finance the exchange’s growth, including investments in new trading technologies, products and services as regional financial markets become more competitive.

Ambitious plans for growth

The Dar es Salaam Stock Exchange has a market capitalization of 20.8 trillion Tanzanian shillings ($9.5 billion). The exchange has an ambitious goal: By 2017 it aspires to build more than double its market value to equal half of Tanzania’s gross domestic product, which was estimated at $40 billion in 2015.

Last year, the stock exchange scrapped controls on foreign ownership of shares in order to boost demand. As a result, the exchange was Africa’s best performer last year, when it gained 64 percent. Trading in November totaled more than $42 million, according to the African Securities Exchanges Association.

Marwa also said he expects the Tanzanian exchange to add at least five new listings of equities and corporate bonds this year.

Currently, 22 companies are listed or cross-listed on the exchange, which was founded in 1996 and began trading in 1998.

Self-listing trend grows

Self-listing by stock exchanges started when the Stockholm Stock Exchange made the change in 1993, followed by Helsinki (1995), Copenhagen (1996), Amsterdam (1997), the Australian Exchange (1998) and Toronto, Hong Kong and London stock exchanges in 2000.

Given the advantages of demutualization, Marwa said more than a dozen other exchanges in Africa are considering initiating the process. There are 29 stock exchanges on the continent.

Despite its growth in 2015, the Dar es Salaam Stock Exchange is dwarfed by Africa’s largest stock exchange, the Johannesburg Stock Exchange with a market capitalization of more than $1 trillion.

Tanzania’s economy is the 12th largest in Africa. It grew by more than six percent in 2015, with infrastructure construction and transportation projects in the run-up to national elections driving economic growth.

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Bank of Ghana keeps benchmark interest rate at 26%

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

ACCRA (Reuters) – Ghana’s central bank kept its benchmark policy rate at 26 percent on Monday citing moderation in the pace of consumer inflation, its governor Henry Kofi Wampah said.

The West African nation is under a three-year aid program with the International Monetary Fund (IMF) to support an economy dogged by high fiscal deficits and public debt, with consumer inflation consistently above government target.

The Bank of Ghana had set the current rate in November, its highest level in 12 years.

“The current tight monetary stance, supported by the continuing fiscal consolidation and improvement in the energy situation have led to a low risk in the outlook,” Wampah told journalists.

Ghana’s consumer inflation rose marginally to 17.7 percent, one of the highest in the West African region but Wampah said the central bank’s monetary tightening in recent months could limit any further rise.

“Going forward, the committee expects the slower pace of price changes to continue and steer inflation down towards the medium target band of eight percent, plus or minus two percent,” Wampah said.

Ghana’s economy is expected to pick up speed this year, even as the government abides by IMF-set spending limits, and Wampah said the bank had begun its zero financing of the budget deficit limit placed on it under the aid deal.

The country is preparing to hold presidential and parliamentary elections in November which are expected to produce a tight race between President John Mahama and Nana Akufo Addo of the main opposition New Patriotic Party, partly due to economic concerns.

 

(Reporting by Kwasi Kpodo; Editing by Edward McAllister and Dominic Evans)

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Ivory Coast rains don’t end cocoa farmers’ worries

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

ABIDJAN (Reuters) – Rain that has fallen in many of Ivory Coast’s cocoa growing regions will aid the April-to-September mid-crop but damage caused by the Harmattan wind remained a concern for some, farmers said on Monday.

The Harmattan is a wind that usually blows from the Sahara during December to March. At its peak it can destroy cocoa pods and sap soil moisture, making beans smaller. Ivory Coast is also in its dry season from mid-November to March.

Farmers said their eyes were on the April-to-September mid-crop since most of the main cocoa crop was complete.

In the western region of Soubre, at the heart of the cocoa belt, an analyst reported 37 millimetres of rainfall in the spell, compared with none last week.

Salame Kone, who farms in the outskirts of Soubre, said farmers were pleased with the rainfall this week and hoped it would continue so the mid-crop would start well. But the main crop had ended poorly, he said, adding:

“There are few pods on the trees. The flowers of the main crop weakened a great deal.”

In the eastern region of Abengourou, known for the good quality of its beans, farmers reported one good downpour followed by the return of the Harmattan dry wind.

N’Dri Kouao, who farms near Niable, said little of the main cocoa crop remained and predicted that, if the weather persisted, the mid-crop would disappoint.

“The rain is good but the return of Harmattan worries us because it is drying up the leaves and the flowers,” said Kouao.

Similar growing conditions were reported in the western region of Duekoue.

In the centre-western region Daloa, which produces a quarter of Ivory Coast’s national output, farmers reported no rain, adding that persistent drought had weakened trees.

Farmer Albert N’Zue said the mid-crop may be small in the first three months because of the weather conditions.

“Many trees will not endure for a long time if it doesn’t rain soon,” said N’Zue.

Downpours were reported in southern regions of Divo and Aboisso.

 

(Reporting by Loucoumane Coulibaly; Editing by Keith Weir)

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First International Business Forum in the Democratic Republic of the Congo

25 January 2016 Comments (0) Africa, Business, Featured

Kinshasa International Forum

The first Kinshasa International Forum, #KINFOR16, at the Hotel Beatrice in Kinshasa on the 26 and 27th of January, 2016, is bringing together seven hundred entrepreneurs from Africa, America, Asia and Europe to meet with Congolese innovators and the large companies which operate within the country, aiming to foster new relationships and opportunities through business to business meetings, informal sessions and thematic workshops. The forum is organized jointly by a Belgian organization called Africa Rise and the Democratic Republic of Congo Conseil Economique et Social – C.E.S.

Africa Rise is dedicated to the social and economic development of the Democratic Republic of the Congo, and they are already known for their ABBW, Africa Belgium Business Week. They firmly believe that the emergence of a stronger, more capable nation is to be reached through business networking and the sharing of ideas and expertise.

The Conseil Economique et Social is a think tank. They are built up from players within the Congolese society such as employers, workers, NGOs, religious leaders, scientists and bankers. Their role is to advise upon issues chosen for them by the presidency and the state.

The spirit of African Business

Africa in general, and the Democratic Republic of Congo in particular, is no stranger to entrepreneurial spirit and business innovation. The country however has had many years of struggle and while things are improving there are still significant challenges to be met.

Here the entrepreneurial spirit is not something reserved for business people or the creative industries; here the basics of business innovation and entrepreneurship are the very stuff of survival. From Benedict Mundele, the twenty one year old woman from Kinshasa who is aiming to provide a healthy and sustainable lifestyle through Surprise Tropical which she founded at the tender age of sixteen, to Abraham Kazadi, who sells fermented tea in Goma in the troubled east of the country to people in his local community, the spirit of business innovation runs high.

A helping hand where most needed

A forum for these innovators may help to enable the Democratic Republic of Congo to emerge both economically and socially from the troubled haze which has for so long hampered the development of the country. A chance to meet and exchange ideas and experiences with business people from all over the world will be an invaluable asset to the youth of the DRC, where seventy percent of the population is under twenty five.

“It is our strong commitment and a will to contribute to the emergence of a dynamic entrepreneurial scene in Democratic Republic of Congo” said Binta Sagna, Communication Director of Africa Rise.

An interesting idea aimed at just these young innovators is a project called #Kinpitch. As the name suggests this project allows entrepreneurs to pitch their idea, dragon’s den style, to a worldwide panel of business leaders and idea shapers. The seven finalists will be invited to the international forum and be given a year-long mentorship to realize the potential of their ideas.

The First International Forum is a platform for enablement for a troubled but resource-rich nation and hopefully the first of many.

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