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South Africa’s Harmony Gold pays off debt as weaker rand lifts revenue

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

JOHANNESBURG (Reuters) – Harmony Gold has repaid debt of 1.1 billion rand ($78 million) after benefiting from South Africa’s weaker rand currency, the company said on Wednesday, sending its shares rising.

Harmony has repaid $50 million on a $250 million revolving credit facility and another 400 million on its 1.3 billion rand facility, the company said in a statement, adding that its mines were performing in line with the set targets.

The company generates more than 90 percent of its revenue in South Africa, but has plans to expand into Papua New Guinea, where it jointly owns the project to develop the massive Golpu deposit with Australia’s Newcrest.

“Our hard work of the last couple of years is finally paying off, enabling us to reduce our debt, strengthen our balance sheet and provide us with even more certainty that we can fund the Golpu project,” Harmony Chief Executive Graham Briggs.

Shares in Harmony climbed 7.38 percent to 9.46 rand by 1130 GMT following the news, compared to a 2 percent rise in the Johannesburg Securities Exchange’s Gold Mining Index.

($1 = 14.3360 rand)

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Most depositors in Kenya’s Imperial Bank to get cash back

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NAIROBI (Reuters) – Kenya’s central bank said on Wednesday that almost 90 percent of depositors in Imperial Bank, which was taken into receivership in October because of fraud, would receive their full deposits back.

Governor Patrick Njoroge told a news conference the private shareholders had said they were “interested in recapitalising” the bank but had not presented a plan till now to allow it to re-open, so liquidation was still an option.

 

(Reporting by Drazen Jorgic; Writing by Edmund Blair; Editing by Duncan Miriri)

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Profiles of 5 Promising Kenyan Startups

Comments (0) Africa, Business, Featured

nairobi

Following up on our article about the blossoming startup scene in Nairobi, Kenya, we’ve compiled a list of 5 promising Kenyan startups with a quick description of what they do.

 

1. iCow

iCow is an Agricultural Information Service SMS mobile phone application designed to help enhance the productivity of small-scale dairy farmers in Kenya. Aiming to help rural communities and farmers by giving them knowledge to develop as both farmers and businessmen, each farmer enters personalized details about their cows – whether that may be five or 500 – before receiving text messages and voice prompts with tailored instructions about the breeding and production patterns of their livestock. It helps farmers manage their stock and tackle challenges by tracking the estrus stages of their cows, providing the cost per liter of milk produced by their animals, helping them find the nearest vet and AI providers, and by giving information on breeding, nutrition, milk production efficiency and gestation, fodder production, hygiene and animal diseases. Following the 365-day cow cycle, farmers are assisted year round in making informed decisions and reducing risk.

The app runs on even the most basic mobile phone, and each text message costs about 10 Kenyan shillings, or $0.10.

 

Zatiti

2. Zatiti 

Launched in 2013, Zatiti is a web platform which helps entrepreneurs create e-commerce websites (which are M-PESA compatible). 81% of sellers in Kenya are looking for a mobile e-commerce solution to reach the 98% of Kenyans who access the web through mobile devices, but coders and developers are hard to find. The Zatiti platform requires no technical expertise from customers, handling everything from set-up to the design of customized themes. And clients can easily update their platforms with the website builder’s simple content management system. Empowering entrepreneurs, users can also monitor revenue and sales orders, and receive messages through the service.

Zatiti charges a 2% transaction fee and a monthly subscription fee depending on type of plan, along with offering premium templates, increased storage space, and increased product variety.

soko

3. Soko

Soko is a mobile driven e-commerce platform that enables artisans to engage with the international marketplace, even if they lack access to the internet or a bank account. In a similar mold to Etsy, Soko works with artisans to create modern, ethical jewelry, handmade from sustainable materials, and then helps them to sell their products to a global audience of brands, retailers, and online customers around the world. Its niche: all that can be done via only SMS. An SMS entry form allows artisans to create online storefronts, profiles, and upload images. As they text the information is transcribed as metadata which is automatically uploaded to the Soko website. It uses a peer recruitment model whereby store owners recruit and mentor new sellers. Soko says: “With our tools, any talented artisan can participate in the global marketplace, becoming a driver of social and economic development in their community.”

Based in Nairobi, so far the company has 12 employees around the world, about 250 artisans currently featured on the site, and has raised close to $1 million in seed funding.

m-farm

4. M-Farm 

M-Farm is a SMS mobile phone application, compatible with even basic mobile phones, which aims to empower African farmers. M-Farm cuts out the middle man by connecting farmers directly with buyers. It provides them with real-time food pricing information, allowing them to sell their produce at much fairer prices. Making small farmers more visible, it offers a group selling tool where farmers can team up to bring their accumulated produce to drop off points and the SMS system then promotes what they have to sell. And it offers a group buying tool, allowing farmers to pool resources to get better prices for things like fertilizer. Kenyan CEO and founder Jamila Abass says she founded MFarm in 2010 after reading about how farmers have been “oppressed for decades and disconnected in terms of information”.

A SMS for a single crop is the cost of a text message. The company counts nearly 17,000 users in Kenya, and projects one million by the end of next year.

sokotext

5. SokoText

SokoText uses mobile phone text messages to aggregate demand for food in Kenyan slums and unlock wholesale prices for micro-entrepreneurs. The company says “Small-scale vegetable sellers and kiosk owners are the gatekeepers and key players of food accessibility in urban slums. Yet a lack of capital means that they cannot afford to buy in bulk and pay to travel long distances to markets every day to buy just enough stock that will help them get by. SokoText leverages the widespread and increasing use of mobile phones in slums to solve these problems. With SokoText, they can boost their business while becoming the key agents that empower people living in the slums to eat better and healthier.”

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South Africa’s Edcon secures repayment deal on debt of 7.9 bil rand

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

JOHANNESBURG (Reuters) – Bain Capital’s Edcon, a South African retailer, said on Monday it had secured a repayment deal on debt of 7.9 billion rand ($548 million) and access 1.85 billion rand to pay down some bonds.

The company, which is the biggest fashion retailer in Africa’s most advanced economy, completed a distressed exchange offer in July and has since issued new bonds to restructure its debt.

“The deal represents a strong statement of support from Edcon Group’s existing South African and international lenders under its revolving and term loan facilities, as well as new lenders into the capital structure,” Edcon said in a statement.

The company has also secured new commitments for a facility of 1.85 billion rand which it will use to pay down 1.0 billion rand in secured notes due in 2016 and to settle a 1.0 billion rand liquidity facility from Goldman Sachs, chief financial officer Toon Clerckx told Reuters.

Taken private by Bain in 2007 in a highly leveraged buy-out, Edcon has lost market share to other retailers as it struggled to pay its debts in a slowing economy.

Before refinancing its debt, it said it was considering selling non-core assets, but on Monday poured cold water on the idea. “There is no need to sell, you go to the market when you get the price you want or you trade your way out of it,” Clerckx said.

Most of South Africa’s largest banks hold part of the 7.9 billion rand in debt Edcon has now refinanced, he said.

Edcon said in July debt that restructuring attempts would decrease its interest payment obligations by more than 1 billion rand a year.

The retailer said on Monday its refinancing efforts of this year will lower its debt by around 4.5 billion rand.

The operator of clothing retailers Edgars and Jet, stationer CNA and homeware store Boardmans also said it had finished the final stage of the exchange offer lanched in June for a 2019 bond.

($1 = 14.4205 rand)

 

(Reporting by Zandi Shabalala and TJ Strydom; Editing by Tom Heneghan)

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Sibanye Gold says to conclude platinum acquisitions, shrugs off lower prices

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

JOHANNESBURG (Reuters) – Sibanye Gold said on Monday it remained committed to concluding the acquisition of two platinum assets despite lower prices as it awaited the approval of shareholders and South Africa’s anti-trust authorities.

The bullion producer said it expected a decision from the South African Competition Commission in March 2016 while shareholders are set to vote in January on the acquisition of Aquarius Platinum and Anglo American Platinum’s Rustenburg mine.

Platinum prices sank 16 percent in November to near seven-year lows on prospects of a U.S interest rate hike and ongoing concerns of oversupply. Despite this Sibanye said it would go ahead with the transactions.

“As highlighted when these transactions were announced, whilst near-term economic headwinds and supply side factors have resulted in downward pressure on metal prices, the long-term outlook for PGM demand remains constructive,” Chief Executive Neal Froneman said.

 

(Reporting by Zandi Shabalala; Editing by Himani Sarkar)

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Kenya’s Tech Renaissance: Nairobi Set to Become Africa’s Key Technology Hub

Comments (2) Africa, Business, Featured

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Mobile and internet penetration, a mobile economy, developing tech ecosystems, and government support are set to make Nairobi Africa’s key technology hub.

Over the last half-decade, Kenya has rapidly developed into a country of digital innovation, and its capital Nairobi, dubbed Silicon Savannah, looks set to become Africa’s key technology hub. With a fast-growing urban economy and a young and digitally savvy population, it is already easier to pay for a taxi by mobile phone in Nairobi than it is in London or New York. Since 2002 Kenya’s technology services sector has grown to more than £300 million (2013) up from just £11 million. And VC funding for African startups, which hit more than $400 million in 2014, is projected to grow to at least $1 billion by 2018. Google, Intel, Nokia, Vodafone, and Microsoft have already opened sites in Nairobi. And IBM has chosen the city for its first African research lab (a $100 million Innovation Centre).

A mobile economy 

At root, this technology renaissance has been spurred by mobile phone penetration. Back in 1999, Kenya, as with most of the Africa region, had a rudimentary telecommunications infrastructure and counted only 300,000 landline telephones. Over the last decade, it has proved easier and cheaper for the country to bypass the analogue age entirely and instead move directly to installing mobile phone networks. Mobile phones are also easily accessible, cheap, and practical, especially when compared with a computer. And unsurprisingly in just a few years mobile phone penetration in Kenya has grown from less than 20% to 85% (it’s 89% in the US).

At the same time, Kenya lacks a traditional banking infrastructure. Until recently, for example, the high proportion of Kenya’s urban population working to support family members in the countryside relied on hand delivery or sending cash through bus drivers. And the combination of these two elements has created the perfect setting for a mobile payments-based economy.

In 2007, state-owned telecoms company Safaricom launched M-PESA, the SMS-based money-transfer system (pesa is Swahili for “money”). Converting even the most basic phones into roaming banking devices, M-PESA spread at speed. And by 2012, more than 17 million Kenyans (70% of the adult population) were using mobile payments, the highest percentage of any country in the world. Now more than $320 million dollars are transferred via Kenyan mobile phones each month as huge swathes of previously unbanked customers join the digital economy. Safaricom also sells solar-powered charging equipment to expand the market.

mpesaGovernment support

With a 40% unemployment rate to solve, the Kenyan government is also supporting the country’s technology renaissance, determined to leverage the opportunity to create jobs and drive sustainable economic growth for the next generation.

In 2009, the East African Marine system, backed by the Kenyan government, laid a 5,000 km fiber-optic undersea cable linking the coastal town of Mombasa with the UAE. And since this time, internet penetration has grown to just under 67% of the population. This is a significant growth from 2010 when internet penetration was around just 14%.

It has created a fertile marketplace for e-commerce and tech businesses, in which the government continues to invest. In 2013 the government formed an Information Communication Technology (ICT) Authority. It laid out a policy roadmap, Vision 2030, focusing on digital infrastructure (e.g. a new fiber-optic network). And it is currently building a multi-billion dollar “techno city” called Konza with aims to create 200,000 jobs by 2030. Located 60 km south of Nairobi, a 2,000-hectare plot will offer office parks for science and technology firms, a university, retail outlets, and residential facilities. Tax breaks are also being offered to companies willing to move to the new city.

A tech ecosystem

A tech ecosystem is also starting to emerge. Where traditional ecosystems may be lacking, Silicon Savannah is filling the gap with innovation hubs and accelerators. The trend has been led in part by Ushahidi co-founder Erik Hersman who considers the future of tech in Kenya reliant on hubs to bring together technology entrepreneurs, young programmers, creative professionals, and investors, along with their ideas and innovation. “Hubs in major cities with a focus on young entrepreneurs… Part open community workspace (co-working), part investor and VC hub and part idea incubator. The nexus point for technologists, investors, [and] tech companies,” says Hersman. Ushahidi established the iHub innovation Centre in 2010, and since then it has been part of creating 152 startups and counts 15,000 members. iHub has also partnered with the ICT Authority on several initiatives, has hosted speakers including Yahoo’s Marissa Mayer, and has driven an upsurge in different types of innovation hubs across the continent.

Accelerators are also part of the emerging ecosystem. A particularly successful example is Nailab, which launched in 2011 to work with early stage globally scalable startups. So far it has incubated 30 companies, and in 2013 it partnered with the government to launch a $1.6 million technology program providing entrepreneurs with access to capital, education, and contacts within the industry. Tech competitions are also emerging. For example, the IPO48 startup competition brings together over 100 Kenyan entrepreneurs, programmers, designers, and project managers at a time, to build a new mobile or web service over the course of two days.

In Kenya, the stars of mobile and internet penetration, a mobile economy, developing infrastructure, and government support have aligned, and there are great opportunities ahead. And as its global reputation for innovation continues to grow, the country has the chance to future-proof itself both as an economic driver and Africa’s key technology hub.

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Nigeria’s Oando plans $350 mil gas processing plant

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

LAGOS (Reuters) – Nigeria’s Oando plans to build a gas plant for up to $350 million as it focuses on integrating gas production with its supply business, the head of the gas and power unit said on Thursday.

Bolaji Osunsanya, Managing Director of Oando Gas and Power said the plant, with a capacity to process 300 million standard cubit feet a day (scfd), will take 24 months to complete and cost $300 million to $350 million.

He said Nigeria had room to ramp up gas plants as current capacity was around 2 billion scfd, adding that its project was at the development stage to be launched in the first quarter.

London-listed Nigerian firm Seplat is also boosting gas capacity. It plans to increase gross output from around 120 million to 400 million scfd by 2017, as demand grows.

“We have done transport in the past, we are getting into (gas) processing right now,” Osunsanya told Reuters in an interview. “We are working ourselves up the chain.”

Oando’s gas and power unit reported a net income of $19 million for the nine months to September, down from $22 million the previous year.

Lagos-listed parent Oando, with interests in oil exploration, terminals and oil trading, has said it was seeking approvals to sell its gas and power investment to cut debt and raise up to 80 billion naira from shareholders.

Two years ago, Africa’s biggest economy broke up its monopoly on power generation and distribution by privatising the sector, hoping to attract foreign investors.

But the amount of power produced has stagnated since, failing to reach a 2012 peak of 4,500 megawatts of electricity due to gas constraints, plant outages and tripped circuits, according to Transmission Company of Nigeria.

Osunsanya estimated Nigeria will need around $55 billion over the next seven years to develop gas infrastructure to meet growing demand, which would include building new pipelines, processing plants and drilling of new wells.

He estimated demand at 5 billion scfd, of which 3.5 billion was needed for power and the rest for other uses. However, half the 7.5 billion scfd gas generated was flared or reinjected into the ground due to inadequate pipelines for distribution.

 

(By Chijioke Ohuocha. Editing by David Evans)

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Zambia’s Lungu says won’t take over struggling mines

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LUSAKA (Reuters) – Zambia does not plan to take over mines that have shed jobs after a sharp fall in global copper prices, President Edgar Lungu said on Thursday, backtracking from a warning earlier this month that the state would take over such mines.

Lungu said the economy would grow at a slower pace than previously estimated due to the struggling mining industry and electricity shortages, but that government would implement austerity measures to cope with the decline.

“The government can run the mines but we have no intention to take over the mines,” Lungu said, adding that government tried its best to keep the job losses to a minimum and that the troubles in the sector would lower economic growth.

On the job losses in the mines, Lungu said during a speech from his office that the government had tried its best to keep the job losses to the barest minimum.

“We would have lost all the jobs if we insisted on no job losses. The mines have told us why these jobs are being lost. The challenges in the mining sector are bound to continue. The government can run the mines but we have no intention to take over the mines,” he said.

Lungu earlier this month warned that he would not allow Glencore’s local unit to lay off workers.

The company has been cutting its copper output to support flagging global prices.

Vedanta Resources’ Zambian unit Konkola Copper Mines KCM) said it would mothball its loss making Nchanga underground mine by the end of the month.

 

(Reporting by Chris Mfula; Writing by Mfuneko Toyana; Editing by James Macharia)

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Zambia’s 2016 economic growth seen below 4%

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LUSAKA (Reuters) – Zambia’s economic growth will fall below 4 percent in 2016 due to a combination of domestic and international pressures but expansion in Africa’s second-largest copper producer will pick up in subsequent years, the World Bank said on Thursday.

“We expect growth to fall below 4 percent in 2016 and an improvement in growth in 2017 and 2018,” World Bank senior economist Gregory Smith said at a media briefing.

Severe electricity shortages, a plunge in global copper prices to record lows and a faltering currency have hurt the southern African country’s economy. The government forecasts growth at 4.6 percent in 2015.

 

(Reporting by Chris Mfula; Writing Mfuneko Toyana; Editing by James Macharia)

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Doing Business amidst Terrorism

Comments (0) Africa, Business, Featured, Middle East

lagos

Despite the odds, the Middle East and Africa show improved business environments.

On June 1, 2015 the World Bank Group published its 13th annual Doing Business 2016 report, a virtual check-up on the health of 189 different economies and each one’s environment for small and medium sized businesses. By monitoring domestic business regulations, the World Bank Group attempts to analyze the shifting horizons for international entrepreneurs, hoping to usher in a firm-friendly future in light of the ever-globalizing world economy.

The rise of cross-border terrorism has caused concern for many business leaders and potential investors in the region. Though the state of presumed instability may suggest a weakened business environment in the Middle East and Africa, contrary to media sensationalism these regions have made massive strides in improving the economic conditions for business owners alongside the threat of potential conflict. As always, there is much more than meets the eye.

A Binary Opposition between Appearance and Reality

In light of this, though most foreign policy surrounding terrorism concerns blunt force and combat, there is a need to not just strengthen the fighting power of our African and Middle Eastern allies, but also strengthen the structures that support them. The dangers portrayed by mainstream media are a bite-sized vision of the entire reality at play, as the emotional nuances of warfare footage packs a more memorable punch than the hard numbers Doing Business presents.

The toll of a nearby enemy is evident in the World Bank’s report. The Middle East and North Africa (MENA) is still held as the least transparent region internationally, and with the exception of Morocco there is little public engagement in forming regulatory policy. The region’s governance carries a relatively low regulatory quality but with great efficiency.

Improved Business Conditions as the Norm

Despite the multiplicity of issues these policy makers face, almost all nations within the Middle East and Africa have made huge strides to improve their business environment. This region currently represents half of the twelve nations that implemented four or more reforms, specifically Rwanda, Madagascar, Senegal, Morocco, and the United Arab Emirates. Across the board, low income economies have made much bigger improvements than high-income economies: Sub-Saharan Africa alone accounted for over 30% of all regulatory reforms made between 2014-2015.

In addition, Sub-Saharan Africa represents half of the top-ten improved economies as ranked by Doing Business, with Uganda, Kenya, Mauritania, Senegal and Bahrain implementing major economic reform. Within this region Rwanda also stands out, boasting a massive reduction in the number of days required to transfer property from 370 to a mere 32, and jumping from a score of 2 to 19 out of 20 on an index that rates the ease and efficiency of attaining credit.

The thirteen years of data collection has afforded the World Bank group several conclusions about the relationship between regulation, efficiency, and performance, and in this year’s Doing Business report they found that transparency during policy making was “highly and significantly” related to greater regulatory quality as well as efficiency. Currently in Mozambique, proposed regulations are published in a federal journal and distributed to stakeholders to encourage dialogue. In Ethiopia, Niger, and Afghanistan, public meetings are held so that the public and business leaders can be a part of the process of reform. In Kenya they even have a website for proposed regulations, where anyone at any time can weigh in on economic policy.

And Kenya’s not the only place that’s gone online- Rwanda made electronic tax filing and payment compulsory in 2014/15, and the time required for businesses to prepare and file taxes fell by 10 hours. Uganda introduced an online system for obtaining trading licenses, and other economies introduced systems where trade-related documents could be processed, including Benin, Côte D’Ivoire, Ghana, Madagascar, Mauritania, Suriname, Tanzania, and Togo. Currently, 25% of MENA nations have online systems for tax filing and payments, reducing the scope for bureaucratic discretion and corruption while increasing the system’s transparency, simplicity, efficiency, and cost-effectiveness.

The Best and the Worst

Countries’ ability to govern and enhance opportunities for citizens despite attacks from groups like ISIS and Boko Haram is commendable and demonstrates that optimism is in fact realistic. Turkey, though overrun with refugees, was able to streamline the process of obtaining construction permits. Saudi Arabia, with ISIS only 30km from their borders made property transfers faster by updating to a computerized registry system.

Nigeria and Kenya, the top two sub-Saharan nations affected by terrorism in the last year were still able to make their business environments healthier, with Nigeria reducing fees for property transactions and increasing the protection of minority investors by requiring external review. Kenya significantly reduced the time it takes to start a business by eliminating procedural inefficiencies, improved electronic document management for land registry, and improved access to credit, electricity, and proposed policy dialogues.

During a time of growing cross-border terrorism, with sensationalized militias such as Boko Haram and the Islamic State, as well as lesser known groups such as the al-Nusra Front or the Fulani militia, the significance of the stability a strong economy offers has never been so important. The relative security a growing economy offers provides the resources and willpower to combat terrorists, supports the persecuted, ensures justice, and dissuades the sympathetic from joining the extremists. Like many other groups branded with violence that preceded them, this generation of extremists will fall from within once they realize that peace is a more profitable reality.

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