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Steinhoff buys Poundland stake ahead of possible takeover bid

15 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG/LONDON (Reuters) – South Africa’s Steinhoff has bought 23 percent of Poundland and is considering a full cash bid for the British no-frills homeware chain in its latest attempt to expand in Europe.

Steinhoff, a $22 billion furniture conglomerate which has lost out in two high profile takeover battles already this year, said on Wednesday it had acquired 22.78 percent of Poundland, which sells every item at a single price point of 1 pound.

Under UK takeover rules, Steinhoff has until July 13 to announce a firm intention to bid for all of Poundland, whose main shareholder had been private equity firm Warburg Pincus, which said on Tuesday it had sold down its 15 percent stake.

Steinhoff, which has lost out to rivals in two battles for Britain’s Home Retail and France’s Darty in the last three months, bought just over 61.2 million Poundland shares, which would be worth around 120 million pounds at the closing price. Poundland has a market capitalisation of around 537 million pounds ($761 million).

Poundland shares closed up 2.2 percent higher at 200 pence, after rising around 25 percent on Tuesday. The stock is still down about 7 percent so far this year.

News of the South African company’s latest move raised questions about its approach to expansion in Europe, where it already runs chains such as white goods retailer Conforama in France and furniture chain Harveys in Britain.

“There’s seem to be no obvious strategic fit but it might just be a matter of adding discounted chains to its stable because that’s essentially what they are: a discount retailer,” said Vestact’s Sasha Naryshkine in Johannesburg.

South African retail mogul Christo Wiese, Steinhoff’s chairman and biggest shareholder, told Reuters he was interested in Poundland because it would be a “good fit” for Steinhoff, adding it had a disciplined approach to acquisitions.

 

POUNDLAND PRESSURE

Steinhoff, which sells beds and cupboards to lower-income shoppers in Europe, southern Africa and Asia, is keen to expand further in Europe, where pressure on consumer income has made German’s Aldi the continent’s fastest growing supermarket chain.

Poundland, which is due to report annual earnings on Thursday, would give Steinhoff a company with more than 900 shops in Britain, Ireland and Spain but also one whose 1 billion annual sales have been under pressure.

Poundland’s 2015 purchase of rival 99p Stores for 55 million pounds has raised questions over its price model.

“Although Steinhoff has a proven track record of integrating businesses and improving their margins over time, we would see this acquisition as higher than average risk given the increasingly crowded UK variety discount space,” said RBC Europe Ltd’s analyst Richard Chamberlain.

Poundland, which competes with B&M, Home Bargains and Wilko and Bargain Buys, told shareholders to take no action, noting that there was no certainty an offer would be made.

Warburg Pincus originally listed Poundland in March 2014 at 300 pence per share.

($1 = 0.7059 pounds)

 

(By Tiisetso Motsoeneng and Freya Berry. Additional reporting by Wendell Roelf in Cape Town; Editing by Jane Merriman and Alexander Smith)

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South African rand on shaky ground after current account gap widens

15 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand stayed on the back foot against the dollar early on Wednesday a day after central bank data showed a wider-than-expected current account deficit.

By 0711 GMT the rand was at 15.2850 against the greenback, little changed from its New York close at 15.3040 in the previous session.

The local currency had fallen as much as 1.5 percent to its weakest in more than a week on Tuesday after the South African Reserve Bank said the current account deficit widened to 5 percent of GDP in the first quarter of this year 4.6 percent.

Government bonds edged higher, and the yield for the benchmark instrument maturing in 2026 eased 3 basis points to 9.17 percent.

South Africa relies heavily on portfolio flows to plug its current account shortfall, making the rand more vulnerable than its emerging market peers when risk appetite wanes.

“Local data this week has not provided any comfort for the local unit and this, long with markets bracing for a number of significant events, has seen the rand remain firmly under pressure,” Nedbank said in a market commentary.

Traders and analysts said markets were focused mainly on the U.S. Federal Reserve’s policy meeting later on Wednesday while the prospect of Britons voting to leave the European Union at a June 23 referendum had dampened risk appetite.

On the equity market, the JSE exchange’s All-Share index was up 1 percent in early trade, while the benchmark Top-40 index added 0.9 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Andrew Heavens)

 

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IMF says Angola needs fiscal prudence in run-up to 2017 elections

14 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LUANDA (Reuters) – Angola needs to maintain fiscal prudence in the run-up to the 2017 elections, an International Monetary Fund (IMF) team said on Tuesday after a two-week visit to the oil producing country.

Angola’s economy grew fast after a 27-year civil war ended in 2002, peaking at growth of 12 percent three years ago, but a sharp drop in oil prices has sapped dollar inflows, dented the kwanza and prompted heavy government borrowing.

Oil output represents 40 percent of Angola’s gross domestic product and more than 95 percent of foreign exchange revenue in sub-Saharan Africa’s third biggest economy.

The IMF team said the outlook for 2016 remained difficult, despite the increase of oil prices in recent weeks.

The global lender also warned that economic activity will likely decelerate further, adding that a modest recovery could be expected in 2017 if shortages of dollars are tackled.

“The significant fiscal effort carried out last year was a very important step to assuage fiscal and public debt sustainability concerns,” Ricardo Velloso, who led the team, said in a statement.

“However, further steps are still needed to reduce vulnerabilities, and maintaining fiscal prudence in the run-up to the 2017 elections will be critical.”

The IMF team arrived in Angola on June 1 to discuss options on how to diversify the economy and reduce the dependence on the oil sector, Angolan authorities have said.

 

(Writing by Nqobile Dludla; Editing by James Macharia)

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South Africa’s current account deficit widens, fuels likelihood of rate hikes

14 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

By Mfuneko Toyana

PRETORIA (Reuters) – South Africa’s current account deficit widened in the first quarter of 2016 as exports of platinum and coal slumped as miners cut production after global commodities prices tumbled, the central bank said on Tuesday.

The wider deficit, a sharp contraction in growth and the weakness of the currency led analysts to predict the bank would begin raising interest rates again after a pause at its last policy meeting in May.

The current account deficit widened to 5 percent of GDP in the first quarter from a revised shortfall of 4.6 percent in the final quarter of 2015, the central bank said.

Economists surveyed by Reuters had expected a 4.25 percent gap For the first quarter.

“We expect that this will force the South African Reserve Bank to hike its key interest rate, even in the face of very weak economic growth,” analysts at research house Capital Economics said in a note.

The central bank has raised lending rates by 200 basis points to 7 percent since over the past two years in a bid to keep inflation within its target band of 3 to 6 percent.

Lending rates in South Africa now sit at levels as high as during the 2008/9 financial crisis, and with more hikes in the offing as the worst drought in decades stokes inflation, a consumer-led growth recovery now looks unlikely.

In its June quarterly bulletin, the central bank said spending growth slowed by 1.3 percent in the first quarter as consumers cut down on purchases of big ticket items due to rising interest rates.

“One of the explanations for this rather sharp decline is that previously people were still buying, preempting that prices would go up quite a bit,” said head of economic reviews and statistics at the central bank Johan van den Heever.

The rand is down nearly 25 percent against the dollar since the second quarter of 2015, and fell more than 1 percent after the current account data.

Van den Heever said the bank saw a reversal in the moderation of inflation as climbing food prices and the higher cost of fuel were exacerbated by the weak rand.

“That’s kind of the double whammy of drought conditions, forcing us to import rather than export maize, at the same time as the weakish exchange rate is pushing up the prices of food.”

Headline inflation slowed to 6.2 percent in April from a peak of 7 percent in February.

Economists at Nedbank Capital said the data made the central bank’s policy choices difficult despite the breathing space provided by a delay in rate hikes in the United States.

“Much will depend on the rand as the year progresses. For now we anticipate one more hike of 25 basis points in the second half of the year,” the economists said in a note.

(Editing by James Macharia and Angus MacSwan)

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DR Congo slashes growth forecast for 2016 to 5.3 pct: cenbank

14 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KINSHASA (Reuters) – The central bank of the Democratic Republic of Congo has slashed its GDP growth forecast for 2016 to 5.3 percent, compared with 6.9 percent last year, as a slump in commodity prices batters its mineral-dependent economy.

The central bank statement obtained by Reuters on Monday did not give details as to what was behind the revision. Congo has suffered from falling prices in its key mineral exports, including copper, cobalt, tin and diamonds.

Its previous estimate in April projected growth at 6.6 percent for this year, itself revised down from 9 percent earlier. The latest estimate brings it closer to the IMF forecast, currently at 4.9 percent.

Congo, Africa’s biggest copper producer, relies heavily on raw materials, which account for 98 percent of export earnings. After bouncing back at the start of the year, copper on the London metal exchange fell by a quarter last year, and has fallen further in 2016.

 

 

(Reporting by Aaron Ross; Writing by Tim Cocks; Editing by Joe Bavier)

 

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World Bank to loan Kenya $1.1 bln for northern region, bank VP says

13 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya will get a World Bank loan of $1.1 billion for infrastructure projects in the country’s arid northern region, the bank’s vice president for Africa said.

The loan is the latest in series to Kenya, which amount to $5.5 billion, excluding the new package.

“It is an unprecedented financial commitment to this part of Kenya,” Makhtar Diop told Reuters in Nairobi over the weekend.

The funds will be used to build roads, improve water and energy supplies and support livestock keeping. They will have a maturity of 50 years and an interest rate of less than 1 percent. The package was prepared at the request of Kenyan President Uhuru Kenyatta, Diop said.

He did not say when the full disbursement of the funds would take place, but technical work on some projects has already started. Projects to be funded with the facility included a modern road linking Isiolo, a town in the lower eastern region, with Mandera, a town close to the border with Somalia.

Diop said the World Bank expected Kenya’s economy to expand by 5.9 percent this year, close to the government’s forecast of 6 percent. It grew 5.6 percent last year.

“Kenya is doing pretty well in the Africa context and in the global context, but the ambition of the government is to sustain that growth rate and accelerate it,” he said.

To attain faster growth, the country needed to increase efficiency in state-owned firms and improve competitiveness, through investments in infrastructure.

Last week, the government forecast a higher budget deficit of 9.3 percent of gross domestic product for the fiscal year starting next month as it increases public investments.

“Overall the fiscal deficit is financeable,” Diop said, adding total debt was increasing but remained sustainable at about 50 percent of GDP.

The World Bank cut its average growth forecast for sub-Saharan Africa to 2.5 percent this year because of lower commodity prices.

Diop said the continent could attract investment because of higher returns than other regions of the world, but he said some African nations needed to avoid building up their dollar-denominated debt.

 

 

(By Duncan Miriri. Editing by Larry King)

 

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Moroccan leased farmland attract $1.4 billion investment in 2015

13 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

RABAT (Reuters) – Private investments in Moroccan state-owned land leased to farmers and investors have reached 14 billion dirhams ($1.4 billion) at the end of 2015, a statement from the agriculture ministry said on Monday.

To attract foreign and local investors, the kingdom has been leasing farmland for 20 to 50 percent of its market value on long-term contracts of up to 40 years.

Morocco holds regular tenders as suitable state farmlands are gradually identified and made available.

About 111,000 hectares have been allocated in the last two years, the statement said, and the target is 500,000 hectares by 2020. Total farmland is estimated at about 7.8 million hectares.

Like other North African countries, Morocco is trying to modernise its farms to improve food security and avert the kind of price rises that contributed to popular unrest in Arab countries in 2011.

However, the North African kingdom still remains one of the World’s biggest wheat importers with volumes depending on local harvest.

The amount of investment attracted is 92 percent of the 15.2 billion targeted when the government stepped up the leasing programme to increase production and speed up modernisation of Moroccan farming in 2014.

The 14 billion dirhams investments include 4.7 billion dirhams in developing and equipping farmlands in general, 2.2 billion dirhams in vegetal production and 1 billion dirhams for breeding, the statement carried by the state news agency MAP said.

Morocco is expected to harvest a cereal crop of 3.35 million tonnes this year, down 70 percent from last season’s record 11 million tonnes after severe drought.

Rainfall was 43 percent less than an average year and 45.5 percent less than last season, which makes this the worst season in 30 years, with 98 dry days between November and February.

($1 = 9.6892 Moroccan dirham)

 

(Reporting By Aziz El Yaakoubi; Editing by Keith Weir)

 

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MTN settles Nigeria dispute, looks at local listing

10 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – MTN Group has agreed to pay a reduced fine of 330 billion naira ($1.7 billion) in a settlement with the Nigerian government of a long-running dispute over unregistered SIM cards, sending shares in the South African telecoms group soaring.

The settlement clears the way for MTN to list its local unit on the Nigerian Stock Exchange. Such a step had been on the firm’s radar but plans accelerated during negotiations over the fine, Executive Chairman Phuthuma Nhleko told Reuters.

The fine will be paid by MTN Nigeria over three years and is only around a third of the $5.2 billion figure initially demanded by the west African country last October for failing to deactivate more than five million unregistered SIM cards.

Nigeria has been cracking down on unregistered SIM cards, concerned they are used for criminal activity in a country fighting an insurgency by Islamist militant group Boko Haram.

MTN had threatened to pull out of Nigeria as paying the fine in full would have crippled its local operations, a government official said, asking not to be named.

“The present administration does not want to ground the operations of any investor in Nigeria,” he said.

Nigeria, Africa’s largest economy and most populous nation, faces its worst crisis for decades after the sharp fall in oil prices and last year’s introduction of a currency peg that put investors to flight.

But in a possible complication, Nigeria’s House of Representatives said it was surprised by the deal as its own probe into the MTN fine had not been concluded.

In March, the lower house launched an investigation, arguing that reducing the initial fine of $5.2 billion would require changing the law.

“We are still continuing with our investigation,” Fijabi Akinade, chairman of the House’s committee on communications, told Reuters. Lawmakers had summoned the communications minister and a top regulator official to discuss the deal on Monday.

“We want to know how they arrived at that decision and if it was done in good faith … But honestly, we are surprised,” Akinade told Reuters.

The dispute removed a cloud hanging over MTN and its shares surged more than 20 percent at one point and closed 13.18 percent higher at 140 rand. They had shed 22 percent since the fine was first announced.

“The relationship between MTN, the Federal Government of Nigeria and the Nigerian Communication Commission (NCC) has been restored and strengthened,” Nhleko said.

The Nigerian regulator said the settlement was acceptable to both parties and that it had not been “out to kill MTN”.

“Money was not the issue here. The breach was the issue. I believe MTN has learned its lesson,” NCC spokesman Tony Ojobo told Reuters.

 

MAJOR MARKET

MTN is the largest mobile phone operator in Nigeria with 62 million subscribers and the west African nation accounts for about one third of its revenues.

Nhleko, who was chief executive for nine years until 2011, was appointed on an interim basis for six months in November but has stayed on as the company negotiated with Nigerian authorities.

In February, MTN hired Eric Holder, the former U.S. attorney-general, to help negotiate the fine.

MTN, Africa’s largest telecoms company, has already paid 50 billion of the 330 billion naira owed. The rest will be paid in six instalments over three years, the company said.

Five weeks after the fine was first announced, MTN’s chief executive Sifiso Dabengwa resigned and the company asked Nhleko to take the reins temporarily.

A Johannesburg-based analyst gave Nhleko credit for not settling the fine earlier at a figure of $3.9 billion, the first sign Nigerian authorities gave after months of talks that it was willing to accept a lower sum.

“He’s the guy who built this ship and this shows he can still steer the ship,” Momentum SP Reid Securities analyst Sibonginkosi Nyanga told Reuters.

The telecommunications firm which spans 20 countries, set aside $600 million in March to pay the fine.($1 = 198.0000 naira)

 

(By Zandi Shabalala and Camillus Eboh. Additional reporting by Alexis Akwagyiram and Camillus Eboh in Lagos; Editing by Keith Weir and Mark Potter)

 

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Yeelenpix – the African startup changing the way Africa is seen

10 June 2016 Comments (0) Africa, Business, Featured

yeelenpix

Yeelenpix is the startup company selling images of Africa that reflect the continent’s diversity.

Yeelenpix is a company in its infancy, having only been launched in 2013, but it aims to broaden the way that Africa is presented in pictures. Asking someone to pick an image that represents a vast continent would be impossible, and the team behind Yeelenpix felt that the images available were too limited.

From the Pyramids of Egypt to iconic wildlife on safaris, there are images that are distinctly African, but whole areas of African life, trade and experiences had little documentation. Yeelenpix founder Moussa Fofana felt that this was problematic, not just for how the continent was seen by the rest of the world, but for businesses in Africa who needed stock images for marketing.

Fofana elaborated on the catalyst for starting up his company saying, “It all started with a remark made to me one day, by a friend who works in communications in Abidjan…she had to go and buy images on the western platforms to illustrate papers for her African clients, without the benefit of African images that are at hand.”

Moussa Fofana

Moussa Fofana

Fofana set up the company with his close friends Alex Poblah and Maguette Mbow, who were living in Paris at the same time as Fofana. Fofana is from the Ivory Coast, and the word “yeelen” actually means “light” in his native language of Dioula.

An African database

With a gap in the market identified, the three friends set up Yeelenpix, and immediately looked to source additional funding. However, thus far the company has been entirely self-funded as, according to Fofana, “The private equity firm with whom we were negotiating in Paris has proved too greedy.”

This setback did not stop the company from having early success. Yeelenpix quickly built up a large cache of over 10,000 images from across Africa, and they currently have a network of 50 professional photographers providing them with photographs. In addition to providing employment opportunities for African photographers, Yeelenpix also works with British and French photographers who spend extensive time on the continent.

Within 2 years of their launch, Yeelenpix’s clients include the TV station Africa 24, and Morocco’s Chaabi Bank. The range of images is set to grow, as Fofana has stated they aim to have 100 professionals working for them within a year, and they are also happy to work with amateurs if the quality of their work is good enough. If a company needs images of rice farming in Nigeria, or the cotton industry in Mali, then Yeelenpix can provide the pictures needed to create promotional brochures.

By accepting work from amateurs, Yeelenpix is not only providing work opportunities for aspiring photographers, but it is increasing the range of its reach. Areas of life that might not have attracted professionals become accessible, and countries with less status (than some of Africa’s most famous destinations) get greater opportunities for exposure.

Fofana explained the company ethos on utilizing talented amateurs saying, “They can express their vision of Africa and the market. Young people who are not yet professional contact us, word of mouth starts working.”

Democratizing the process of how the continent is represented puts at least some of the power into the hands of the people, who live and work in the nations being portrayed.

Affordable Accessibility

Yeelenpix operates a flexible price structure to allow as great a number of organizations as possible to access their database, and use their images. On average, it costs $22 to use a Yeelenpix image for a website, with a commission rate of 35% to 60% of sales paid to the photographer.

There are additional fees for companies wishing to use an image on printed materials, but pricing structures are negotiable, thus allowing smaller clients to still benefit from the wide stock of images available at the Yeelenpix website. The images are also hosted in various categories to help clients filter out images that are not relevant to their needs.

Fofana and his team want Yeelenpix to create jobs, but also to inspire pride in showcasing Africa in new ways. Talking about what drives his team Fofana sums it up saying, “We wanted to participate in the dissemination of a new image of Africa. Africa is changing and evolving. (We want to) enable African photographers to become better known and live their art.”

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Kenya’s Safaricom to launch local rival to Uber

9 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s biggest telecoms company Safaricom is joining up with a local software firm to launch a ride-hailing company to take on Uber [UBER.UL] as it seeks new sources of revenue, its chief executive said.

Safaricom, which is 40 percent owned by Britain’s Vodafone, and Nairobi-based software developer Craft Silicon will launch the app called Littlecabs in the next three weeks, Safaricom CEO Bob Collymore told Reuters in an interview.

“It is effectively a rival for Uber,” he said. “It is a local competitor which will be cheaper and better for the local community.”

Uber operates in several African countries, including Kenya where it launched in early 2015, drawing customers by offering lower prices and cutting out haggling over fares. But regular taxi drivers have complained about its impact on business.

In March, the Kenyan authorities charged six men with attempted murder and malicious damage to property over an attack on an Uber taxi driver in February. [nL5N1713UX]

Safaricom will help develop the application, offer the network connectivity, put Wi-Fi in vehicles that will be signed up on Littlecabs, and use its mobile-phone based financial service M-Pesa to process payments, Collymore said.

Safaricom remains focused on its core businesses of offering calls, texts, Internet access and M-pesa but Collymore said it was seeking new sources of revenue.

“The direction of the company is to become a platform,” he said, citing partnerships with local banks that use M-pesa to lend money on mobile phones.

Safaricom has had a three-year partnership with M-Kopa, a company that connects customers to solar electricity, and is about to invest in a firm involved in education and another that helps jobseekers, Collymore said.

“When M-Pesa was launched it wasn’t launched as a big thing. It was just launched as a thing that was right in the edge. Now it is 20 percent of (Safaricom’s) revenue,” he said.

Littlecabs is unlikely to grow to that level but would offer a new revenue source and develop skills in the local community, he said.

Safaricom expects its earnings to rise in the financial year to next March on the back of increased data usage driven by the youth segment and higher sales of smart phones. [nL5N188101]

Revenue from calls rose 4 percent in the financial year ending March 2016, bucking the trend in other markets where voice revenues are falling.

Collymore said political protests, which have led to clashes between demonstrators and police, could dampen the outlook.

“It is not a question of who is right and who is wrong; these pictures are not helpful for investments,” he said.

 

(By Duncan Miriri. Editing by Edmund Blair and Susan Fenton)

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