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Gold extends gains on geopolitical tensions but US rate view drags

25 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

SINGAPORE (Reuters) – Gold added to overnight gains on Wednesday on a softer dollar and heightened tensions after Turkey shot down a Russian warplane, but the rally was capped on expectations of a U.S. rate hike next month.

Turkey shot down the Russian jet near the Syrian border on Tuesday, saying the plane had violated its air space, in one of the most serious publicly acknowledged clashes between a NATO member country and Russia for half a century.

U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while NATO Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey.

The tensions triggered a sell-off in equities and the dollar, while boosting the safe-haven yen, gold and government debt.

Spot gold edged up 0.3 percent to $1,078.61 an ounce by 0645 GMT, following a 0.6 percent gain on Tuesday. U.S. gold rose 0.5 percent, after a near 1 percent gain in the previous session.

“Gold rose on flight-to-quality as investors sought protection from volatile financial markets in the wake of global stresses,” said HSBC analyst James Steel.

“While we think gold may be supported, we are not anticipating a robust rally, and look for only moderate gains, with a lot of upside resistance,” he said.

Despite the gains, gold wasn’t too far from a near-six-year low of $1,064.95 hit last week on increasing views that the Federal Reserve will hike U.S. rates next month for the first time in nearly a decade.

Gold tends to benefit from ultra-low U.S. rates, which lower the opportunity cost of holding non-yielding bullion.

Data on Tuesday supported views of a December rate hike. The U.S. economy grew at a healthier clip in the third quarter than initially thought.

Traders will be eyeing more U.S. data due later on Wednesday, including weekly jobless claims and October new home sales, to gauge the strength of the economy.

Liquidity, however, could be thin ahead of the U.S. Thanksgiving holiday on Thursday.

Among other precious metals, silver rose for a second session after dipping to a six-year low of $13.86 earlier this week, while platinum was trading just above a seven-year low.

Palladium rose nearly 1 percent to $540.65.

 

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and Subhranshu Sahu)

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South African rand steadies but looming U.S. rate hike poses risk

25 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand was largely unchanged against the dollar in early Wednesday trade but analysts said the short-term prognosis was for the currency to weaken as U.S. interest rates look set to rise.

The JSE securities exchange’s Top-40 futures index was up 0.6 percent, indicating the actual index would open 265 points higher.

At 0648 GMT the rand traded at 14.0250 versus the dollar, barely moved from Tuesday’s New York close at 14.0370.

The rand was aided by broad-based dollar losses as investors cut crowded long positions in the lead-up to the U.S. Thanksgiving holidays.

“The rand will continue to be vulnerable for further depreciation as we approach the start of U.S. monetary policy normalisation – widely expected to happen in mid-December,” NKC African Economics said in a note.

“Higher local interest rates will not remedy this situation as the rand remains at the mercy of broader emerging market sentiment.”

The rand has given up most of last week’s gains after pushing to 2-1/2 week highs following a surprise 25 basis point hike in rates by the South African Reserve Bank.

Government bonds edged higher on Wednesday, and the yield for benchmark debt due in 2026 dipped 2 basis points to 8.43 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)

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Nigeria central bank cuts rates for first time in six years

24 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria’s central bank surprisingly cut the benchmark interest rate to 11 percent from 13 percent on Tuesday, its first reduction in the cost of borrowing in more than six years, in an effort to stimulate growth in Africa’s biggest economy.

The bank also reduced the cash reserve ratio for commercial banks to 20 percent from 25 percent, another move to try to inject liquidity into the banking system and encourage lending.

The central bank has been injecting cash into the banking system since October in a bid to stave off recession in Africa’s top oil producer, which has been hit hard by the sharp fall in crude prices over the last year.

“We must stimulate growth,” Governor Godwin Emefiele said, adding that committee members had voted by a margin of eight to two in favour of the reduction.

He said the step was taken “in consideration of the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment”.

The move took many in the market by surprise. In a Reuters poll, 15 of 23 analysts had predicted the central bank would hold the monetary policy rate at 13 percent, while four expected a 100-basis point cut.

The bank also broadened its interest rate corridor to 200 basis points above the benchmark rate and 700 basis points below, which means it will borrow from commercial lenders at four percent and lend to them at 13 percent.

The regulator hopes the measures will provide an incentive to banks to lend to local manufacturers such as food producers – in line with President Muhammadu Buhari’s policy of boosting output of rice and other basic food items.

Nigeria’s benchmark 20-year bond yield fell 95 basis point between Monday and Tuesday as some traders had expected the central bank to lower rates.

Emefiele said fresh liquidity from the cash reserve rate cut would only go to banks that were ready to channel it into “employment generating activities” such as infrastructure projects, the agricultural and minerals sectors.

He rapped those banks which had used a cut in the cash reserve ration in September to invest in bonds rather than lend to households and businesses.

“Unfortunately what we have found out is that rather than banks redeploying that liquidity… what the banks do is just dump their money on CBN (the central bank) and earn 11 percent – and I use the words – for doing nothing,” Emefiele said.

Standard Chartered’s chief Africa economist Razia Khan said the easing of monetary policy was aimed at boosting the real economy but their success would also depend on the availability of foreign exchange.

The central bank has restricted access to foreign currency to stop a slide in the naira, effectively pegging it at 197 to the dollar. Emefiele said the restrictions, which importers say is crippling their operations, were working well.

“Nigeria has sacrificed free movement of capital in order to keep the NGN at 200 (per dollar) while cutting interest rates to help the budget,” Charles Robertson, head of research at Renaissance Capital.

“Unfortunately this will not produce budget revenue growth…It also reduces the return for owning naira, which will presumably encourage more purchasing of U.S. dollars instead,” he said.

(By Julia Payne and Camillus Eboh. Additional reporting by Lagos newsroom; Writing by Alexis Akwagyiram and Ulf Laessing; Editing by Ed Cropley and Richard Balmforth)

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Glencore’s Zambia copper mining unit lays off 4,300 workers: company and union sources

24 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Glencore’s Zambian unit has laid off 4,300 workers, union and company sources said on Tuesday, as the mining and trading company deepens cuts in copper output to support flagging prices.

“The company started giving out the letters of redundancy yesterday and has continued with the exercise today,” one union official said, referring to Glencore unit Mopani Copper Mines.

The union source said around 5,000 employees working for contractors would also lose their jobs as Mopani would only maintain two contractors specialized in the sinking of shafts.

Mopani had said in a letter dated October 21 giving notice of redundancy to mine unions that the firm was still losing millions of dollars and had to take action to secure its long term viability.

Mining companies are under Zambian law required to labour unions at least one month’s notice before laying off employees.

Zambia’s President Edgar Lungu said earlier this month he would not allow Glencore’s unit to lay off workers.

Mopani was expected to pay the 4,300 workers a total of $33 million, two company sources with knowledge of the retrenchment plan told Reuters.

Swiss-based Glencore has pledged to cut its net debt to $20 billion by the end of 2016 to regain the trust of investors after its shares tumbled to record lows this year.

 

(Reporting by Chris Mfula; Editing by James Macharia)

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Gilbert Diendéré: Coming Out from the Shadows

24 November 2015 Comments (0) Africa, Featured, Leaders

Diendéré

Chief of staff to Blaise Compaoré, Burkina Faso’s ex-president, Gilbert Diendéré is far more than a jack of all trades; intelligence, information, organisation and control, he is a master of all.

Burkinabé military officer and head of the powerful Presidential Security Regiment (RSP) for almost three decades, Gilbert Diendéré, who was known to lead from the shadows, took an unprecedented step into the lime light on September 17th, 2015.

In a move the General is now calling “the biggest mistake,” he took power of his West African home country, in a coup d’état that lasted a mere six days. After which, he and his army succumbed to mounting pressure to step down.

The coup, which pushed out the interim president, appears to have been an attempt to reinstate his comrade, Compaoré, the man for whom he was the quiet power behind through the former president’s entire time in office.

A Military Force

As the officer who announced the October 1987 coup, this was not Diendéré’s first experience of overthrowing a government. Taking power from the popular and revolutionary Thomas Sankara, with whom Diendéré had trained alongside as a young cadet in the army, he then placed it in the hands of Compaoré.

This was a pivotal time for the General, who was subsequently made head of the Presidential Security Regiment (RSP). With Compaoré’s blessing, he developed and expanded the RSP into a reportedly stronger and better trained army, which offered its soldiers better conditions and higher pay. It also answered directly and exclusively to the president himself.

Together the pair ruled Burkina Faso for an almost unfeasibly long time. Not until October of last year, when Compaoré’s push to be re-elected resulted in him being ousted by mass public demand, did their reign come to an end. Throughout his time in power, Diendéré has been accused of crimes against humanity. The charges against him include murder and firing at unarmed protestors, allegations for which the General will now stand trial.


Multifaceted Man

Standing at an impressive 6.5 ft, Diendéré may be physically imposing and considered to be one of the most powerful men in Burkina Faso, but until recent events the 56 years old had chosen to exert his power indirectly.

His international connections boosted Compaoré’s network and political status, whilst also cementing his own reputation internationally, particularly in America and France. In 2008 Diendéré was awarded the Légion d’Honneur, one of France’s most prestigious military medals.

The former head of RSP is highly regarded for being well informed, knowledgeable in many fields; particularly that of the West African political affairs, and a skilled negotiator and strategist. Known as a “master of intelligence,” the Burkinabé General has been involved in delicate negotiations with al-Qaeda linked group AQMI and in the release of several European hostages in 2009 and 2011.

A fearless thrill seeker, he enjoys regular parachute jumps and is popular and respected amongst his colleagues. However, it is recognised that the man described as shy and calm, with the formidable “iron fist” handshake, is a man one would prefer as a friend and not a foe.

In the Face of Justice

Just days after the coup began Diendéré conceded, “I am willing to turn myself over to face justice,” and called for his army to lay down their weapons. “I would like the people of Burkina Faso to find a solution to this crisis through dialogue.” He said, after turning himself in on October 1st.

The self-appointed Chairman of the National Council for Democracy sought shelter in the Vatican embassy as crowds on the Burkina Faso streets became violent. Negotiations took place to ensure his safety before he was handed back to the interim government. The Presidential Security Regiment (RSP) was later ordered to be disbanded and the assets of Gen. Gilbert Diendéré, frozen.

What is next for the shadowy figure is uncertain. He remains adamant that Compaoré had no dealings with the latest coup and has openly denounced his own actions. For now the country awaits the delayed elections which will take place on November 29th, perhaps a clever by-product of the General’s failed coup. The complicated history of Burkina Faso informs us that the future is most likely to follow suit, as for the rest, only time will tell.

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Congo cuts growth forecast to 7.7% as copper output falls

24 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

KINSHASA (Reuters) – Democratic Republic of Congo lowered its 2015 economic growth forecast to 7.7 percent from an earlier prediction of 8.4 percent due to weak commodity prices and lower mining output, the prime minister’s office said in a statement on Monday.

The economy of Africa’s largest copper producer grew by 9.5 percent in 2014, according to the government, which had predicted growth of 10.3 percent for 2015 in May.

But demand has been hurt by falling demand for minerals, particularly in top industrial metals consumer China. Three-month copper on the London Metal Exchange hit a fresh 6-1/2 year low on Monday at $4,444 a tonne before recovering slightly to $4,500.

Congo’s economy is heavily dependent on the export of raw minerals. Copper and cobalt exports alone accounted for 79 percent of the value of Congo’s exports in the first half of 2015, according to the Central Bank.

In another blow, Swiss-based trading house Glencore began an 18-month suspension of copper and cobalt production at its Katanga Mining unit in the country’s southeast in September.

The mine produced about 15 percent of Congo’s total copper output prior to its suspension. The country’s chamber of mines estimates that the production freeze combined with power shortages will cause output of the metal to fall from 1.03 million tonnes in 2014 to about 980,000 tonnes this year.

Prime Minister Augustin Matata Ponyo said last month that the mine’s suspension would cost the government about $215 million in tax revenues next year.

The statement from Matata Ponyo’s office on Monday promised that the government would study measures to diversify the economy, without elaborating further.

 

(Reporting By Aaron Ross; Editing by Dominic Evans)

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African Solutions to African Problems: Ushahidi is Taking the Internet to the Next Five Billion

23 November 2015 Comments (1) Africa, Featured, Leaders

Ushahidi's BRCK

Representing a new frontier of innovation in Africa, non-profit technology collective Ushahidi is developing African solutions to African problems

“If it works in Africa, it will work anywhere,” is the motto of Ushahidi, a Kenyan non-profit technology collective which designs and builds open source software and digital tools to help people in the developing world.

Indeed, while in the West technological possibilities are being stretched to their bounds, across Africa something as seemingly straightforward as an Internet connection is unreliable. Figures from the East African Community (EAC) suggest 90% of schools and 30% of hospitals are still off-grid. Only 24% of the developing world is connected to the internet. And, as Ushahidi comments, “power spikes and outages are everyday occurrences in Nairobi and across Sub-Saharan Africa, no matter your income level”. But in a region lacking adequate roads and clean water, developing reliable Internet connectivity is simply not a priority for governments.

There are a number of Western companies working to solve the problem – and at the same time bringing their products to the world’s next five billion Internet users. For example Google has ProjectLink Uganda and LoonBalloon, and Microsoft is experimenting with the TV White Spaces spectrum. But Ushahidi has developed an African solution that really might solve the African problem.

The Internet back-up generator BRCK

Designed to be an “internet back-up generator”, Ushahidi has developed BRCK, a piece of hardware that offers rugged and reliable connectivity. Working like a phone, it can be used in any area that gets mobile signal, as it works by intelligently and seamlessly switching as per the need between the strongest network types in the vicinity (broadband, Ethernet cable, Wifi, CDMA, and 3G or 4G mobile phone networks). It supports up to 20 wireless connections at a time. And it also has up to 16 gigabytes of storage space and a BRCK Cloud connection so it can serve as a back-up server and sync with connected devices and cloud applications.

Designed to face Africa-specific environments, the portable hardware handles the heat and dust of even the most demanding environments. And while it connects to the mains, is also comes with about 8 hours of power back up, can be charged via a car battery, or plugged to a solar charger, combating the region’s lack of reliable energy sources.

“As the next 4.5 billion people (65% of the world) start coming online, the need for rugged, reliable, and simple connectivity becomes critical in places with poor infrastructure and limited resources. While existing technologies work well in modern cities, the demands of emerging markets necessitates a rethinking of how technology is engineered, packaged, delivered, and supported. BRCK was conceived in exactly this type of environment. In particular, our struggles in Africa with reliable connectivity inspired us to rethink the entire concept of rugged internet access device – designing the world’s first go-anywhere, connect-to-anything, always available internet device,” says Ushahidi.

Ushahidi driving innovation in Africa

Indeed, Ushahidi, which is part of the thriving Kenyan tech start-up scene – nicknamed the Silicon Savannah -, developed BRCK as a solution to its own problems. “As a company full of engineers working in places with poor infrastructure, we simply couldn’t get connected as reliably as our peers in the developed world”.

Ushahidi designed and developed BRCK with $172,000 raised on Kickstarter. And in doing so, pushed another frontier of innovation in Africa. Crowdfunding is a relatively new phenomenon in the region, but Ushahidi’s Kickstarter success has kick-started crowd-funded entrepreneurship and innovation.

UshahidiExpanding technology’s reach

Co-founder Ory Okolloh, previously Google’s policy manager for Africa and named by Forbes as “one of the most influential women in global technology”, is committed to bringing the benefits of technological innovation to Africa. The company’s first project, for example, was a location-based crowdsourcing crisis-tracker map developed in the wake of Kenya’s 2007 post-election violence. Empowering individuals to document and report incidents in real time, the software allows users to text, email, tweet, or photograph information which is then plotted on to a map. The idea is that media, governments, and relief organizations can see a live picture of what’s happening on the ground and can target responses in real-time. The map has since been used in India during the 2008 Mumbai attacks, during the Haiti earthquake in 2010, and in Japan during the tsunami in 2011. It has also been used to log medicine shortages across Africa and reports of violence in the Middle East.  The company takes its name from this piece of software; “Ushahidi” means “testimony” in Swahili.

And the company is currently expanding its reach with the launch of a digital classroom – the Kio Kit. Ushahidi explains: “You open a box and there are 40 tablets inside, there is a BRCK inside and on the BRCK there is a Linux [open-source] server — so we can locally cache educational content, and serve it up to the tablets.” Ever prepared for the African environment, the modem is in a watertight, hardened-plastic wheeled suitcase and acts as a wireless charging station.

African solutions to African problems has become a bit of a catchphrase, but the impact of socially motivated entrepreneurs could have huge implications for the technological development of the region.

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South Africa’s Netcare FY profit up 10%, lags consensus

23 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s second-largest private hospital firm Netcare missed estimates with a 10 percent increase in full-year profit on Monday as weaker demand in the United Kingdom offset a strong showing at home.

Netcare, which runs Britain’s largest private hospital network, BMI Healthcare, said diluted headline EPS totalled 170 cents in the year to the end of September, below a 190 cent-estimate in a Reuters poll of 10 analysts.

While demand for private healthcare is increasing in South Africa thanks to a fast-growing middle class, tentative economic growth in the United Kingdom has led to a drop in the number of Britons with private medical insurance.

Netcare said sales rose 6.1 percent to 33.7 billion rand ($2.41 billion).

 

(Reporting by Tiisetso Motsoeneng; Editing by Sunil Nair, Reuters)

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Zambia needs measures to lower deficit, restore confidence: IMF

22 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – The implementation of measures to lower Zambia’s fiscal deficit will go a long way towards restoring market confidence, the International Monetary Fund said on Friday.

“The pressures on the economy have not only reflected the impact of external shocks but also the waning market confidence,” the IMF said in a statement.

“Fiscal discipline has been undermined by additional spending commitments that stand in contrast to lower-than-budgeted revenues.”

 

(Reporting by Chris Mfula; Writing by Stella Mapenzauswa; Editng by Joe Brock)

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South Africa’s rand on firmer footing after rate hike, stocks also gain

21 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand traded at two-week highs against the dollar on Friday, still boosted by the central bank unexpectedly raising interest rates the previous day to curb inflation pressures.

Stocks ended slightly higher, led by Mr Price as investors piled into the discount clothes retailer after a broker upgraded the stock to ‘buy’.

The rand climbed to 13.8900 per dollar during Friday’s session, its strongest since Nov. 6, and was trading at 13.9300 by 1550 GMT, up 0.7 percent on the day.

This was after the central bank raised the benchmark repo rate by 25 basis points on Thursday, warning that failure to act on inflation risks could worsen the country’s already weak growth.

Traders and analysts however warned the currency could come under renewed pressure should the U.S. Federal Reserve hike lending rates in the world’s biggest economy in December, as widely expected.

“The rand is in an interesting attempt to establish a new, bullish channel, but it is unlikely to persist through

December, as market jitters arise again in the lead up to the December FOMC (Federal Open Market Committee),” Investec analyst Annabel Bishop said.

“While it could test 13.5000/dollar, it could equally show a lightening turnaround to attempt to test the level a rand higher.”

The rand has given up nearly 17 percent of its value against the dollar this year, mainly because investors are betting on higher U.S. rates dumping emerging market assets which offer relatively higher yields but also carry more risk.

On the local bourse, the blue-chip JSE Top-40 index added 0.24 percent to 46,963 and the broader All-Share index gained by the same margin to 52,240.

Mr Price, which also reported a 16 percent increase in half-year earnings this week, jumped 8.7 percent to 200.01 rand, booking its biggest daily percentage gain in more than seven years.

Brokers at HSBC raised their rating on the stock to “buy” from “hold” and upgraded their price target to 200 rand from 195.

Other gainers included Tiger Brands, up 5.9 percent to 357 rand, a level last seen in February. Investors have welcomed news that Tiger Brands will no longer provide funding to its money-losing Nigerian unit.

On the downside, MTN Group was off 1.25 percent at 142 rand as it battles to reduce a $5.2 billion fine in Nigeria.

Overall, traders took their cue from higher overseas markets, where sentiment was helped by growing expectations of more European Central Bank stimulus.

Trade was robust with more than 328 million shares changing hands, well above last year’s daily average of 183 million shares.

The bullish tone on South African markets extended to fixed income, where the yield for paper due in 2026 reached its lowest since Nov. 4 at 8.4 percent.

It ended Friday’s session at 8.415 percent, down 4 basis points from Thursday.

 

(Reporting by Stella Mapenzauswa and Tiisetso Motsoeneng; Editing by Andrew Roche)

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