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Mitsubishi Motors plans Nigerian assembly plant in next year

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

ABUJA (Reuters) – Mitsubishi Motors Corp expects to open an assembly plant in Nigeria in the next year, joining the growing list of carmakers setting up local assembly plants in the west African nation, the Japanese group’s regional head told Reuters.

“It’s still in negotiation – you can say in the third round out of 10,” Anand Singh, the regional head in west Africa, said. “We have identified the land. Now we are waiting for some clearances from customs, finance ministry … so that’s the status.”

Analysts say the auto market in Africa’s biggest economy has huge potential.

Only a small number of new vehicles are sold annually as the market has hitherto been dominated by secondhand imports.

However, along with the threat of imposing prohibitive import duties the government has been pushing for the development of local production under a National Automotive Industry Development Plan, with the industry ministry having ordered local car distributors last year to come up with plans for new assembly plants.

It was then up to the local companies to partner with a foreign car producer, Singh told Reuters.

Earlier this week Ford Motor Co announced the opening of its new Nigerian plant, its first in Africa outside South Africa, through dealer Coscharis Motors Ltd.

Germany’s Volkswagen AG also resumed local assembly operations in July, with local partner Stallion Group, after a 20-year hiatus, while Honda announced in July the start of local production for its Accord car.

President Muhammadu Buhari, who is keen to promote a “Made in Nigeria” industrial policy, also met this week with French carmaker Peugeot’s executive vice president for Africa and the Middle-East, Jean-Christophe Quemard, to discuss the revival of local production, Buhari’s office said.

 

(Reporting by Julia Payne; Editing by Greg Mahlich. Reuters)

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Nigeria hopes to reach rice mill deal with China by year-end

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

ABUJA (Reuters) – Nigeria hopes to reach a deal with China within weeks to set up 40 rice mills, its new agriculture minister said, as part of plans to eliminate the need for any imports of grain within two years.

Audu Ogbeh said in his first interview since taking office last week that Africa’s top oil exporter wants to boost production of tomatoes, soy beans, nuts and plant two million cocoa trees to reduce an annual food import bill of $20 billion and create jobs for its impoverished youth.

President Muhammadu Buhari, who took office in May on a campaign to usher in a new era for a country hit by corruption and mismanagement, wants to boost the agricultural sector and end reliance on oil exports after a plunge in crude prices.

That will be an uphill challenge as pot-holed roads hamper the transport of goods. Nigeria has tens of millions of farmers but the vast majority of them work on a subsistence basis and live on less than $2 a day.

As a first step, the new government hopes to reach by year end a deal with China to import equipment to build rice mills, Ogbeh said late on Thursday.

“The federal government plans 40 mills with the Chinese spread across the country, each capable of milling 100 tonnes per day,” Ogbeh said.

He declined to give more details on the talks, which began under the previous administration led by President Jonathan. Chinese state media and a Nigerian government document obtained by Reuters have said the oil producer was talking to China’s state Import and Export Bank.

 

CHALLENGES

Ogbeh said Nigeria wanted to be self-sufficient in wheat in three years, confirming a Reuters report earlier this month citing a confidential government paper.

He said Africa’s biggest economy had a similar goal for cashew and cocoa, while the government also wanted to ramp up farming of soy beans, groundnuts, bananas and tomatoes within the next three years.

Nigeria produced 3 million tonnes of rice last year, along with 64,000 tonnes of wheat, United States Department of Agriculture (USDA) figures show.

But it still needed to import 2.3 million tonnes of rice in 2012  — a record high, according to the latest U.N. statistics which also show some 4.1 million tonnes of wheat was brought into Nigeria in the same year – nearly double the amount imported in 2000.

Ogbeh said he also had plans to improve Nigeria’s position as the world’s fourth largest cocoa producer by planting at least two million cocoa trees – in 27 of the country’s 36 states – annually for the next three years. The minister said the same number of cashew trees will be planted over that period.

To attract more young people into farming, the new government plans to retain a policy it inherited, through which farmers could receive central bank loans at a rate of 9 percent, as opposed to borrowing from commercial banks at around 18 per cent.

The prospect of little financial reward has led to the average age of a Nigerian farmer rising to around 65, said Ogbeh, since many young people find the work unappealing.

He also said he was in talks with the minister of education to allocate at least an acre of land to each of some 12,000 students at the country’s three agriculture universities during their studies to gain farming experience.

 

(By Alexis Akwagyiram and Felix Onuah. Writing by Alexis Akwagyiram; Editing by Ulf Laessing and William Hardy, Reuters)

 

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Nokia remains bullish about Africa business despite economic slowdown

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

CAPE TOWN (Reuters) – Finnish network equipment maker Nokia remains upbeat about its growth prospects in Africa despite a slowdown in many of the continent’s fastest-growing economies, a senior company executive said on Thursday.

Nokia, which sold its once-dominant mobile handset business to Microsoft in 2014, deals in Africa mostly with telecommunications operators and governments, both of which have been hit by weaker currencies and slower economic growth.

But a growing wave of consolidation in the sector is forcing mobile operators to step up investment to take advantage of the spectrum they gain, said Nokia Solutions and Networks head for Southern Africa Deon Geyser.

“Worldwide growth is flattish, but Africa is a pocket of growth for us,” he told Reuters in an interview on the sidelines of the AfricaCom conference.

The region Geyser manages, which stretches from South Africa to Tanzania, is heavily dependent on commodities exports, and Geyser said the fall in the oil price had “hit a few key economies and subsequently the way they invest.”

However, he said fundamental technology trends remained unchanged and the company was “bullish” about Africa.

“You still have a significant amount of voice growth, even though revenue is flat, and you still have significant growth in data,” he said.

Nokia’s dominant networks division last month reported total net sales of 2.88 billion euros ($3.09 billion) in the third quarter, down two percent from a year earlier but up five percent from the second quarter.

Out of that total, the networks division reported net sales of 298 million euros in the Middle East and Africa in the third quarter, up six percent from a year earlier and up one percent from the previous quarter.

GDP growth in oil-rich Angola is forecast to fall to below 4 percent this year from 12 percent three years ago, while Zambia is also set slow to around 4 percent on the low copper price.

But these numbers won’t derail the general trajectory of telecoms spending on the continent, Geyser said.

“The consolidation on the continent will be good for us,” he said.

Nokia has launched an offer to take over rival network gear maker Alcatel-Lucent in a deal originally valued at 15.6 billion euros.

 

(Reporting by TJ Strydom; editing by Adrian Croft, Reuters)

 

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South Africa’s rand, stocks strengthen after rate hike

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

JOHANNESBURG (Reuters) – South Africa’s rand hit a two-week high against the dollar on Thursday after the central bank governor raised the repo rate, while shares rose led by Gold Fields which reported a much-improved quarter.

By 1548 GMT the rand was at 14.0020 versus the greenback, up 1.16 percent from Wednesday’s close. The currency had earlier touched a session low of 14.2155 to the dollar.

The central bank lifted interest rates by 25 basis points to 6.25 percent, to curb future inflation risks.

“One thing possibly working on the rand’ s favour on a relative basis is that the SARB has been one of the more proactive central banks in EM in that it has started its hiking cycle before the Fed,” HSBC Bank senior currency strategist Dominic Bunning said.

“This may provide some breathing room for the currency relative to others whose central banks might be seen as more “behind the curve”, he said.

Government bonds however, weakened across the curve with the yield on the benchmark government bond maturing in 2026 adding 1 basis points at 8.465 percent after shedding more than 9 basis points after the rate decision.

On the stock market, the benchmark Top-40 index rose 0.83 percent to 46,851 points while the All-share index climbed 0.89 percent to 52,116 points.

Shares in Gold Fields, which also reported flat normalised earnings for the third quarter, closed 17 percent higher at 36.26 rand, after rising as much as 29 percent, when it said it expected further improvements in its South Deep mine while reviewing the future of its costly Damang operations.

“Gold production at South Deep is up quite nicely in quarter and guidance for the year is decent,” said Noah Capital Markets analyst Rene Hochreiter.

Trade was brisk with 233 million shares changing hands, compared to last year’s daily average of 187 million shares.

 

(Reporting by Nqobile Dludla and Zandi Shabalala; Editing by James Macharia)

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Lonmin shareholders provisionally approve crucial rights issue

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

LONDON (Reuters) – Lonmin shareholders provisionally approved the company’s deeply discounted $407 million share issue on Thursday, its chairman said, as the beleaguered platinum producer seeks cash to stay afloat.

Battered by strikes, rising costs and weak platinum prices, South Africa-focused Lonmin said last month it also planned to raise another $370 million in loans to refinance debt currently due in May 2016.

The final results of the votes will be announced later on Thursday, Chairman Brian Beamish said after the shareholder meeting in London.

The loss-making platinum producer had asked its shareholders to vote on five proposals, including consolidation of Lonmin shares. Shareholders also provisionally authorised its directors to allot new shares.

Lonmin shares have plunged more than 90 percent this year and the company has written down $1.8 billion off the value of its assets.

The scale of Lonmin’s plight was illustrated on Nov. 9 when it priced its rights issue at just 1 pence a share – a huge discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange.

That meant investors would have to buy 46 new shares for every one they already hold, just to retain their current stake in percentage terms.

Analysts said the low price was a strategy to force shareholders to take up their entitlement or risk having their investment in the company heavily diluted.

Lonmin had warned that if it doesn’t raise the cash it needs, its shares could be suspended.

“We had no choice but to vote in favour because we will be wiped out if this doesn’t go through. But does that mean we will be with the company in the next 10 or even two years? We don’t know,” Anthony Guildford, a Lonmin investor since 1969, said.

Some investors, including pensioners, raised concerns about the consolidation of shares.

“There had to be a better idea than consolidation. I will never see my money (14,500 pounds in shares) back at 6 pounds where I bought … They were 1.70 last Christmas!,” one investor said.

Lonmin’s London-listed shares were down nearly 5 percent at 9.74 pence by 1127 GMT.

The company has said its share sale has been fully underwritten.

South Africa’s Public Investment Corporation (PIC), which owns about 7 percent of the company, has committed to buying its full entitlement and has sub-underwritten a material portion of the issue, over and above its entitlement, Lonmin said.

Lonmin still has to convince the wider market it can be a viable business with platinum prices near seven-year lows below $850 an ounce, hobbled by slowing demand in top consumer China and as the Volkswagen’s emissions-cheating scandal weighs on platinum market sentiment.

The metal used in emissions-capping diesel auto catalysts and jewellery is on track for a 30 percent decline this year, its third consecutive annual fall.

This would be Lonmin’s third rights issue in six years after it asked for cash from shareholders in 2009 and 2012 to shore up its balance sheet.

Lonmin was hit hard last year by a five-month strike in South Africa’s platinum belt – the country’s longest and costliest – because, unlike peers such as Impala Platinum and Anglo American Platinum, almost all its operations were in the strike-affected area.

(Writing by Olivia Kumwenda-Mtambo; Editing by Veronica Brown and Susan Fenton. By Atul Prakash and Clara Denina. Reuters)

 

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South Africa’s Barclays Africa keeps credit taps open for drought-hit farmers

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

JOHANNESBURG (Reuters) – Barclays Africa will keep lending taps open for South African farmers despite the worst drought in decades as growers can use high crop prices to offset lower output, the head of the lender’s agribusiness said on Wednesday.

The Johannesburg-listed bank, which funds farmers, is not concerned as yet despite the severity of the drought, Ernst Janovsky told reporters in Pretoria, adding that less than 0.2 percent of growers are defaulting on loans.

“There is still enough money around to survive the drought. We haven’t closed any taps. There is no real problem up to now,” he said.

While the weather slashed output. farmers can sell their crops at a higher price, Janovsky said, but warned that if substantial rains do not fall by March next year there could be a “serious problem”.

A combination of El Nino and drought conditions have hit production of soft commodities from sugar to maize in Africa’s most advanced economy, even forcing farmers to cull cattle due to lack of grazing grass.

Dry conditions last year cut South Africa’s staple maize crop by a third and the prospect of another drought pushed prices in July for white maize, the staple crop for the region,

to near record highs.

The South African Weather Service said last month that an El Nino weather system, which was already forecast to bring drought conditions for much of the southern hemisphere’s summer, now looks like it will extend into autumn next year.

 

(Reporting by Zandi Shabalala; Editing by Adrian Croft, Reuters)

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Third India-African Forum Summit

18 November 2015 Comments (0) Africa, Featured, Politics

india-africa-summit7592

The Third India-African Forum Summit took place in New Delhi on October 26-29, 2015. This Summit was arranged to develop trade between the emerging economies of Africa and India and explore improving relationships in other areas on a bilateral and continental level such as involvement in United Nations .The intent of this summit was shown by a higher representation from Africa (over 50 leaders) compared to the previous summits where only 10-15 African nations were present.

Developing relations in a new era

India is now Africa’s fourth largest trading partner behind China, the United States and the European Union nations. At this summit discussions were held at different levels addressing a number of issues with the intention of improving dealings between the attending nations. For instance, India proposed to increase concessionary credit to $10 billion over 5 years to enable further trading opportunities with African nations. Currently the trade figure between India and Africa stands at $70 billion – a substantial increase from $3bn in 2000 when India started showing significant growth. As more African nations are showing an improvement in economic growth, the discussions in this summit were an opportunity to work on higher goals.

Areas of further progress and new development

India’s trading with Africa is mainly in importing of oil and other raw energy products to support its own economy’s growth in areas such as manufacturing. This summit saw further discussion between India and its main trading countries such as Nigeria, South Africa and Angola on further trade in light of falling oil prices. Africa allows foreign investment in its oil industry unlike Saudi Arabia and certain Asian countries. It is expected that oil trade between Africa and India would further expand and flourish, as India imports 90% of its oil from Africa and the commodity is increasingly available in conflict-free areas.

Further agreements were reached to offer 50,000 scholarships for students from Africa to study in India over 5 years. India has also agreed to provide training and construction of more educational institutions across Africa as well as expand the Pan Africa E-Network. The continuation of duty free provision to 34 countries will allow further advantages to increase trade between attending nations

modi at african summitPrime Minister Narendra Modi also announced the joint co-operation in challenging the effect of climate change. India and the more developed African nations are known to have high rates of pollution and so any steps to control this situation on a collective basis would be beneficial. Growth on a scale not previously known to developing countries was acknowledged as being encouraged without any serious effect on the environment.

One of the obstacles to further growth of India and African nations, as with other nations, is terrorism. The biggest problems are in Somalia with Al Shabab and in Nigeria with Boko Haram. Somalia is in a particularly fragile situation and can ill afford to drive away investment. Nigeria is India’s biggest trading partner in Africa and so would benefit from efforts to control terrorism. The summit was also told that there would be improved arrangements in the deployment of troops in areas where conflict still exists. This would require the involvement of the African Union and the United Nations.

A summit too high?

Internet searches on interviews with African leaders provided little information on what African nations sought from this summit. The few interviews reported related to information about late arrivals by some leaders and non-attendance by others. There was also a similar lack of information from African academics and think tanks. This raises doubts about the importance they place on the event. Given that South Africa will host a summit of African nations with China in December, it is not clear how much importance is placed on developing trade with India.

India has had a long relationship with Africa because of a colonial past where several African nations are part of the Commonwealth. The Indian diaspora in Africa numbers approximately 3 million people and this provides an added advantage in developing links with India. While China’s trade figures with Africa are substantially higher than India’s at $200 billion, it has been noted that China has a more neo-colonial approach to foreign trade. Ultimately Africa should use investment to increase its own competiveness and capacity and not be dominated. India relies on Africa whilst being a more solid trading partner and this was one clear outcome of the Third India African Forum Summit this year. Africa’s stance in the forthcoming summit with China will be an interesting indicator.

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Kenya central bank holds rate, says exchange rate steady

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

NAIROBI (Reuters) – Kenya’s central bank held its benchmark lending rate at 11.50 percent, saying the exchange rate had stabilised and the current account deficit had narrowed, the bank’s Monetary Policy Committee (MPC) said on Tuesday.

The decision was in line with a Reuters poll of 10 analysts in which eight had expected no change in the rate.

The bank raised the lending rate by 300 basis points earlier this year in part to support the weakening shilling.

As well as noting that the shilling had stabilised, the committee said in a statement that lower oil prices and a slowdown in consumer demand had helped narrow the currency account deficit. The trade gap has put pressure on the currency.

“The committee concluded that the monetary policy measures in place are appropriate to maintain market stability and anchor inflation expectations,” the committee said.

 

(Reporting by Duncan Miriri; Editing by Edmund Blair, Reuters)

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South Africa’s RBPlat delays ramp up of Styldrift mine due to low prices

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

JOHANNESBURG (Reuters) – South Africa’s Royal Bafokeng Platinum will delay the ramp up of its new mine by a year as commodity prices sink to near seven-year lows, the company said on Tuesday.

The mid-tier producer now aims to fully ramp up production at the Styldrift project in the first quarter of 2020, compared with a previous plan for the first quarter of 2019, it said in a statement.

“Delaying the start of stoping at Styldrift I ensures that value is not destroyed by ramping up high quality Merensky ounces into a depressed market but that instead the business is well positioned to begin ramp-up when the market improves,” Bafokeng said.

Styldrift, with an estimated lifespan of more than 60 years, is a high grade, shallow mechanised mine in the North West province, about 100 km (62 miles) from Johannesburg.

Drilling at Styldrift could be further delayed from the first quarter of 2017 – after being pushed back from the third quarter of this year – if prices sink further, Bafokeng said.

The company had spent 5.19 billion rand ($361 million) by the end September on developing Styldrift, which is still expected to produce 2.76 million tonnes per year.

Spot platinum has recovered from seven-year lows of $851 hit on Friday on concerns about oversupply and slowing demand in top consumer China, but is still at levels last seen in 2008.

In the third quarter, Bafokeng cut its capital expenditure at Styldrift by 32 percent compared to the previous quarter on lower platinum prices while also slashing other “non-critical” spending.

Shares edged up 0.25 percent to 23.73 rand outpaced by the 1.17 percent rise in Johannesburg’s All-Share index.

 

(Reporting by Zandi Shabalala; Editing by Mark Potter, Reuters)

 

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BMW to invest $417 mil to make X3 model in South Africa plant

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

JOHANNESBURG (Reuters) – BMW’s South African unit plans to invest 6 billion rand ($418 million) at its plant in the capital Pretoria where the German carmaker would manufacture its new X3 model for export and local sale.

The X3 is one of the most successful model ranges for BMW, the world’s biggest luxury carmaker, representing 28 percent of total global sales, the local unit of the global car maker said.

BMW said 2015 production at its Rosslyn plant in Pretoria is expected to reach 70,000 units.

“The production of the next generation BMW X3 at Plant Rosslyn will replace the BMW 3 Series Sedan, which will now be allocated to other plants within the global BMW production network,” the car maker’s local said in a statement.

BMW’s South Carolina plant in Spartanburg will continue producing the carmaker’s new version of the X3 and the X7.

 

(Reporting by Zandi Shabalala; Editing by James Macharia, Reuters)

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