MENU

Business
Category

Orange completes acquisition of Congo mobile operator Tigo DRC

21 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

DAKAR (Reuters) – Orange has completed the $160 million acquisition of Democratic of Congo mobile operator subsidiary Tigo DRC from Millicom, the French company said on Thursday, one of four African purchases it has made this year.

“With a population of more than 80 million people and a relatively low mobile penetration rate of 50 percent of the population, the country offers considerable growth potential,” Bruno Mettling, deputy chief executive officer of Orange, said in a statement.

This month it completed the acquisition of Cellcom, Liberia’s leading mobile operator, and in January it announced a deal to buy Indian firm Airtel’s Burkina Faso and Sierra Leone subsidiaries.

 

(Reporting by Marine Pennetier; editing by Edward McAllister and Jason Neely)

Read more

Investors want answers from Mozambique, banks over loan mystery

21 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Investors holding Mozambique’s recently restructured ‘tuna bond’ are demanding answers from the government and its bankers over what the International Monetary Fund says are previously undisclosed loans that could exceed $1 billion.

The revelations have rocked the relationship between one of the world’s poorest countries and the International Monetary Fund (IMF), which last year agreed to lend Mozambique $286 million to cushion its economy following deep declines in commodity prices and the value of the metical currency.

Only last month investors met Mozambican officials and agreed to swap an outstanding $697 million of the dollar-denominated tuna bond, issued in 2013 by state-owned fishing-company Ematum, for a sovereign issue.

The deal was seen widely as investor friendly and accepted by holders representing more than 80 percent of the issue. Ratings agency Standard and Poor’s defined the restructuring as “tantamount to a default”.

The original $850 million bond has been controversial from the start: when it was launched, it was presented to investors as funding for “fishing infrastructure” but it quickly became apparent most of the cash was for defence.

Under IMF pressure, the government re-allocated $500 million of the debt to its defence budget. The subsequent bond rescheduling was part of efforts to clean up and rebuild trust for the southern African nation, under pressure from donors to improve the transparency of its finances.

However, last Friday the IMF said it believed Maputo borrowed $1 billion more than previously disclosed.

The Fund’s Africa Director, Antoinette Sayeh, said the additional loans appeared to have been borrowed from Credit Suisse and Russia’s VTB Bank and allocated to Mozambique’s defense and security sector.

Credit Suisse and VTB Bank were also joint dealer managers on the exchange offer launched in March. Mozambique’s Finance Minister Adriano Maleiane was quoted on Sunday saying the country had no hidden loans and that this was down to “some confusion”.

Investors say if found to be true, the IMF allegations could greatly damage the country’s reputation and ability to raise funds.

“At this stage, things are really up in the air until we hear from the various parties of what is really going on,” said one fund manager, who holds the bond but declined to be named. “If this is additional debt which was not included in the overall debt stock it completely changes the overall relationship with the international financial institutions’ community, the IMF, the donor community and it changes the market relationship. There is a lot of harm created in the short term.”

Details of the alleged new loans are sketchy and have not been disclosed in the prospectus to holders of the new bond issue.

However, a February 2013 Credit Suisse document obtained by Reuters outlines a $372 million loan to Proindicus, a company owned by the Ministries of Interior and Defence and the State Security and Intelligence Service. According to the document, the funds are to be spent on high-speed naval interceptors, radar stations, off-shore patrol vessels and aircraft. Credit Suisse declined to comment on the document.

The Ematum bond swap prospectus seen by Reuters also notes under “conflicts of interest” that the dealer managers may make loans or be involved in other transactions to Mozambique.

Marco Ruijer, portfolio manager at NN Investment Partners, who also holds the bond said he had addressed questions to Credit Suisse.

“It was perhaps not prudent of Credit Suisse to say we are doing restructuring to extend maturity from 2020 to 2023 when they themselves have a loan on the books which is maturing before 2023,” said Ruijer. “Now they get money back earlier than the bondholders.”

A Credit Suisse spokesman declined to comment on whether the bank had arranged loans for Mozambique in addition to the Ematum bond.

A source closed to VTB said the bank was assured by Mozambique’s finance ministry that all its financing had been disclosed to the IMF, and that the total debt spelled out in the prospectus included all outstanding direct and publicly guaranteed debt.

Mozambique has seen its foreign debt spiral in recent years. According to the restructuring prospectus, total foreign direct and government-guaranteed debt ballooned from $5.244 billion in 2012 – before the Ematum bond issue – to $9.637 billion in 2015. Combined with domestic debt of $1.5 billion, the government had obligations last year equivalent to 102 percent of GDP, the document said.

 

(By Karin Strohecker. Additional reporting by Sujata Rao in London, Ed Cropley in Johannesburg and Lidia Kelly in Moscow; Editing by Dominic Evans)

Read more

Burundi’s inflation eases to 4.3% in March

20 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KIGALI (Reuters) – Burundi’s year-on-year inflation eased to 4.3 percent in March from 6.7 percent in February due to falling food costs, official data showed on Wednesday.

Food inflation in the 12 months to March slowed to 6.4 percent from 10.9 percent in February, the country’s Institute of Economic Studies and Statistics (ISTEEBU) said.

Despite falling inflation, the economy has been battered by a year-long political crisis and associated violence, mainly in the capital. Western donors have reduced vital aid leaving the poor nation more dependent on its modest tea and coffee exports.

Burundi’s economy shrank by 7.2 percent in 2015 and is only expected to expand by 3.4 percent in 2016, according to the International Monetary Fund in a recent report.

 

 

(Reporting by Patrick Nduwimana; Writing by Edmund Blair, editing by David Evans)

Read more

We Cash Up aims to be the PayPal of Africa

20 April 2016 Comments (0) Africa, Business, Featured

Cedric Atangana

With e-commerce on the continent poised for growth, We Cash Up develops an innovative platform to enable online purchases on phones.

Hoping to ride a wave of innovative online technology and mobile adoption in Africa, the startup We Cash Up has set its sights on becoming the Pay Pal of the continent.

Cedric Atangana, co-founder and CEO of the Marseille-based company Infinity Space, said its We Cash Up network will aim to provide online purchasing power for Africans who do not have bank accounts.

Atangana said as many as 800 million Africans are excluded from internet commerce because they do not have bank accounts. At the same time, most of them have mobile phones.

His solution? A mobile network that enables users to make secure payments via their phones.

A network of businesses and buyers

Small businesses and stores that participate in the network are both a point of deposit and a point of withdrawal so We Cash Up does not have to develop an expensive new infrastructure to manage cash transactions.

We Cash Up says one key feature of We Cash Up is that its developers found a way to communicate across mobile money systems in 54 African countries that enables transactions across borders.

Infinity Space also developed an artificial intelligence that tracks the behavior of mobile users in order to identify risky or fraudulent transactions, the company said.

Infinity Spaces is also developing a We Shop Up platform for participating merchants.

The company operates as a virtual team. Atangana is based in Marseille while other team members work from Kenya or Cameroon.

African e-commerce faces challenges

Atangana sees vast potential both for merchants and buyers and internet use grows in Africa.

Experts agree that the potential to expand e-commerce in Africa exists but it faces key challenges. For example, e-commerce giants including Kalahari and Mocality have invested in Africa and then retrenched after failing to achieve profitability.

Wealthier Africans have not embraced online shopping, for example, because of concerns about fraud. At the same time, many African cultures value their vibrant and plentiful physical marketplaces over online shopping.

Cross-border differences inhibit scaling efficiencies and require duplication of services. The logistics of delivery are complicated.

E-commerce expected to increase

At the same time, the continent appears poised for growth in e-commerce as spending power increases along with internet access. One study predicts e-commerce, now a tiny fraction of the economy, will grow by 40 percent annually during the next decade.

Atangana believes We Cash Up can tap into that growth and change attitudes about online shopping.

Atangana, who holds a degree in engineering from Polytech Marseille, founded Infinity Space in Cameroon in 2010. The company operated in Nairobi, Kenya before Atangana moved its current headquarters to France.

He and Infinity Space chief marketing officer Marcelle Ballow Bekono were named to Forbes list of top 30 African entrepreneurs under 30.

We Cash Up has received several awards in startup competitions, including $20,000 at the 2014 Google Pitch Night.

Friends lacked bank accounts

He said he got the idea for We Cash Up after he had to help friends who did not have credit cards make online purchases.

On separate occasions, he said, friends in Cameroon and Kenya were unable to participate in developer competitions because they could not provide banking details.

“Indeed, one of the conditions for registration was to provide bank details or the majority had no credit card. And it has been very frustrating for me,” he said. “The idea of this project is born from our desire to help these people.”

Atangana said very few similar services are currently available and they seldom cross borders.

Account Nickel offers prepaid cards to people who do not have bank accounts but operates only in France. MPesa is a leading mobile payment platform in East Africa while telecom operators offer prepaid services in other countries.

But Atangana has a bigger vision of mobile e-commerce across international borders.

“This is the Airbnb financial system,” Atangana said.

Read more

Kenya KCB Group to manage and may buy closed Chase Bank

20 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s KCB Group has been appointed to manage Chase Bank and could buy a majority stake in the closed lender whose branches will reopen next week, the central bank said on Wednesday.

The Central Bank of Kenya said in a statement that an understanding had been reached with KCB on “modalities to reopen Chase Bank Ltd in the next few days and the eventual acquisition of a majority stake in the bank.” It said KCB would carry out due diligence to inform its decision on taking a stake.

Central Bank of Kenya Governor Patrick Njoroge told a news conference he had received nine indications of interest in the mid-sized lender that was put into receivership this month.

 

 

(Reporting by Duncan Miriri; Writing by Edmund Blair; Editing by George Obulutsa)

Read more

South Africa’s rand weakens as oil price retreats

20 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar on Wednesday, in line with a pullback in commodity currencies as the global oil price fell one more.

The rand fell to 14.3750 versus the dollar earlier in the session, and was trading at 14.3015 by 0656 GMT, 0.2 percent lower than Tuesday’s New York close.

Commodity-linked currencies such as the rand reversed the previous day’s gains as a recovery in crude oil prices stalled after a workers’ strike which had cut output ended in Kuwait.

The rand had touched a near five-month high of 14.1900 on Tuesday in the wake of improved global risk sentiment linked to better oil prices.

“Commodities are off their highs from yesterday and trade softer so far; this has seen the rand get back above 14.3500 with more resistance at 14.4000/4100 likely to attract offers first up,” said Standard Bank trader Oliver Alwar.

Traders and analysts said the rand could take further direction from domestic CPI data due out at 0800 GMT, with analysts polled by Reuters expecting the main year-on-year number to ease to 6.3 percent from 7 percent.

Government bonds also weakened, and the yield for the benchmark instrument due in 2026 rose 4 basis points to 8.925 percent.

The stock market looked set to open slightly down, with the

Top-40 futures index down 0.5 percent by 0656 GMT.

 

(Reporting by Tanisha Heiberg; Editing by Stella Mapenzauswa)

Read more

Sinosteel cedes half its chrome claims in Zimbabwe to state

19 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – China’s Sinosteel Corp Ltd’s business in Zimbabwe has ceded half its mining claims to the government, complying with Harare’s demands to chrome producers to give up some of their claims, a company official said on Tuesday.

The Southern African nation holds the world’s second largest deposits of chrome, which is smelted to produce ferrochrome, a raw material used in the making of stainless steel.

Zimbabwe’s mines minister last year asked Sinosteel’s Zimasco and Zimbabwe Alloys, which owned 80 percent of all chrome mining claims, to release some ground for distribution to new investors. The companies were owned by Anglo American until 2006.

The government has previously said it wants to redistribute some claims to several local investors as part of its black economic empowerment drive and would not pay compensation.

Zimasco held 45,900 hectares of claims before giving up half to the government, Clara Sadomba, the company’s general manager for administration told Reuters.

“It is accurate regarding Zimasco in that we have indeed ceded 50 percent of our chrome claims to the government,” said Sadomba.

Zimbabwe Alloys officials would not say whether they had also given up some of the company’s claims.

Zimbabwe holds more than 950 million in chrome reserves, according to ministry of mines data.

In 2014 Zimbabwe produced 260,000 tonnes of high-carbon ferrochrome, which was 2.3 percent of global output. Zimasco produced 68 percent of Zimbabwe’s ferrochrome in 2014.

 

(Reporting by MacDonald Dzirutwe; Editing by Alexander Smith)

Read more

Mugabe looks to nationalize Zimbabwe’s diamond industry

19 April 2016 Comments (5) Africa, Business, Featured

Robert Mugabe

Zimbabwe’s longtime President, Robert Mugabe, has announced the state will seize all of the nation’s diamond mines.

Zimbabwe’s controversial President, Robert Mugabe, has announced a massive change to the country’s diamond mining industry, in that all assets will now be state owned. In a move that is a throwback to his socialist roots, Mugabe claims that foreign mining companies have profiteered for too long off one of the nation’s most valuable commodities and he will ensure that the nation now reaps the rewards from its diamonds.

Mugabe gave an interview in early March to the state broadcaster ZBC, during which he expressed his anger at what he sees as foreign companies plundering Zimbabwe for a precious, natural resource. Mugabe claimed that, in doing so, foreign companies made around $15 billion in profits, while Zimbabwe itself had only earned $2 billion in the same period of time and, as such, the diamond rich region of Marange would now be a “state monopoly”.

The Marange diamond fields were only discovered in 2006 but by 2013 they were producing an astonishing 16.9 million carats of diamonds, which is akin to 13% of the world’s rough diamond supply. However, this output has dropped significantly due to reluctance by companies to invest in deeper exploration. Industry group Kimberly Process states that in 2014 Zimbabwe’s diamond production was around 4.7 million carats.

While it is understandable that Mugabe may feel the country needs to earn a greater proportion of the wealth that the Marange region is host to, issues of corruption and internal theft are perhaps as large a problem as outside sources. As far back as 2012, South Africa’s former President Thabo Mbeki warned that Zimbabwe was losing much of its diamond wealth to a “predatory elite” within its own nation.

Illegality plagues Zimbabwe’s diamond industry

The NGO Partnership Africa Canada (PAC), which monitors conflict minerals in Africa, produced a damning report in 2012 that stated government ministers in Zimbabwe were the ones becoming rich off the back of stolen diamonds. Corruption and theft were so rife that the organization said, “The scale of illegality is mind-blowing” and the investigation named former mines minister Obert Mpofu as having amassed an unaccountable fortune since mining began. Mpofu was said to have been spending $20 million “mostly in cash” over a 3 year period.

If high level government figures are the very people denying the state treasury of its rightful income from Marange’s diamond mines, then will a state owned monopoly make much difference? While Mugabe has angrily pointed the finger of blame abroad, it remains to be seen whether those now in charge of the state’s new body, Zimbabwe Diamond Consolidated Company, can ensure that the profits from diamond minds find their way to the rightful government coffers.

What is certain is that the foreign companies who have been mining in Zimbabwe will not take Mugabe’s orders without a fight. China has developed closer trade agreements with Zimbabwe in recent years and the Chinese-run mining company Anjin Investments has already challenged Mugabe’s ruling at the High Court. The early indications are that the courts might well side with the mining companies as the largest mine, Mbada Diamonds, has already won its case at the High Court and been given full control of its assets.

Whether this is a ruling that Mugabe’s government will accept and adhere by is an entirely different question. While some voices have expressed concern over how this dispute could affect trade between China and Zimbabwe, Mugabe himself dismissed such worries, saying, “I don’t think it has affected any of our relations at all…I told President Xi Jinping that we were not getting much from the company, and we didn’t like it anymore in this country.”

Zimbabwe diamond mine

Zimbabwe diamond mine

Where does Zimbabwe’s diamond industry go from here?

If the government of Zimbabwe overcomes the legal challenges, maintaining the $1 billion worth of Chinese trade despite seizing Chinese interests, and eradicates the corruption that has plagued the mining industry thus far, then it would obviously earn considerably more money. However, these are a sequence of unlikely outcomes given the manner in which the move has come and given the history of the mining industry in Zimbabwe.

There is the additional concern that potential investors in other mining projects within the country could be put off by this recent announcement regarding diamonds. John Turner, head of the mining group at law firm Fasten Martineau says, “To the extent that private firms were looking at Zimbabwe thinking they were ahead of the curve, this may give them pause for though.”

Any concerns outside of Zimbabwe have not appeared to weaken the resolve of Mugabe or his government. They insist that the problem lies with theft from abroad and moreover that recent mining has actually been illegal, as the mining companies had not renewed their licenses.

Amid conflicting claims and ongoing lawsuits, who emerges as having control over the lucrative Marange diamond mines over the next few months will be of interest to many parties and people both in and outside of Zimbabwe.

Read more

France signed deals worth 2 bil Euros with Egypt

19 April 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

PARIS (Reuters) – France signed several deals worth about 2 billion euros ($2.26 billion) with Egypt during a visit by French President Francois Hollande to Cairo, the French president’s office said on Monday.

The deals included a satellite communications contract agreed upon following discussions between the two presidents and their defence ministries, the Elysee said.

The military telecommunications satellite is expected to be build by France’s Airbus Space Systems et Thales Alenia Space.

French energy Engie firm said earlier that it also signed LNG and renewable energy contracts during the visit.

 

(Reporting by Elizabeth Pineau and Jean-Baptiste Vey; Writing by Bate Felix; Editing by Sandra Maler)

Read more

Tripling of South African bond buying signals new faith in rule of law

18 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A tripling of South African bond sales this year on Monday added to signs that investors’ faith in its institutions has been somewhat restored following a court ruling against President Jacob Zuma and the appointment of a former finance minister.

Securities exchange figures showed foreign investors bought a net 30 billion rand ($2 billion) worth of South African debt in 2016, compared with 10 billion in the same period last year.

The Treasury is flush with cash after a $1.25 billion 10-year bond sale this month was two times oversubscribed, and bond yields have recouped heavy losses in December after Zuma fired his finance minister, raising fears of political interference.

Benchmark yields, which spiked to a record 10.38 percent after Zuma briefly replaced Nhlanhla Nene with a virtually unknown politician, have since recouped nearly 140 basis points, a third of which was after the ruling against Zuma.

Sentiment, helped by Zuma bringing back Pravin Gordhan as finance minister, improved further after the Constitutional Court found that the president was wrong to ignore an order to repay state funds used to upgrade his Nkandla home.

“Having Pravin Gordhan back in control, and having this noise around Nkandla and Jacob Zuma, is showing the market that South African institutions are still strong,” Investec fixed income portfolio manager Vivienne Taberer said.

Analysts said markets were also cheered by a backlash against the Gupta family and its businesses. South Africa’s four big banks cut ties with a Gupta-owned investment company over criticism that the family has undue influence with Zuma.

“Government and state owned enterprises can get about their constitutionally mandated activities, less encumbered by predatory actions of (the) president and his allies,” BNP Paribus Securities South Africa analyst Nic Borain said.

“We expect markets – especially the bonds, currency and banks – to track the ebbs and flows of Jacob Zuma’s fortunes.”

Added to that, signals from the central bank and Treasury that they will pursue prudent policy have seen South African assets leading emerging market gainers, boosted by signs that the U.S. may not hike interest rates as quickly as expected.

Recent economic data out of China, a major consumer of emerging market commodities, has also lessened worries over a slowdown in the world’s second largest economy.

“If this environment, where we see the Fed not really doing much and being cautious over the balance of this year, continues and we continue to see reasonable data coming out of China … then this constructive risk environment can continue for the next three or so months at least,” Investec’s Taberer said.

The litmus test for assets will be whether credit rating agencies decide to downgrade debt. A cut from Moody’s would mean a loss of its investment grade status and possible ejection from the prestigious World Government Bond Index (WGBI).

“Such an ejection would represent possibly the most dramatic outcome of a ratings downgrade and should be South Africa’s biggest cause for concern,” Citadel chief strategist Adrian Saville said.

 

(By Stella Mapenzauswa. Editing by James Macharia and Louise Ireland)

Read more