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Peugeot Nigeria: Rebirth and Revival thanks to Africa’s richest man?

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

Aliko Dangote

January 26th saw the closing of bids for AMCON’s controlling shares of Peugeot Automobile of Nigeria Ltd.

AMCON’s acquisition of PAN’s controlling shares in October 2012 is set to end as Nigeria’s so called “bad bank” opens its shares of PAN up to bidders. Africa’s wealthiest man, Aliko Dangote, is ready to step up to the challenge.

January 2016 saw AMCON (the Asset Management Company of Nigeria), Nigeria’s so called “bad bank”, look to sell its stake in PAN (Peugeot Automobile of Nigeria Ltd.), and they began to invite bids from investors. AMCON currently owns a 79.3% controlling interest in PAN.

PAN was founded in 1972 as a joint venture between the French automaker and the Nigerian government, with the goal being to manufacture and market vehicles under the brand name of Peugeot.

Peugeot NigeriaDuring the 1980s PAN was profitable and produced upwards of 90,000 cars yearly. However, due to the influx of cheap, second-hand vehicles that began to come in to the country from Asia, the company began losing profits. This led to the sale of the controlling stake in the company, by the Nigerian government, to investors in 2006.

Unfortunately, the new investors did not fare well and managed to accumulate bad debt during their leadership, leading to AMCON’s acquisition of the majority share in the company in October 2012.

“Following the accumulation of huge non-performing loans (NPL) indebtedness to banks, in October 2012, the AMCON acquired the debts of the company and converted a portion to equity to help restructure the firm,” Peugeot had said.

Aliko Dangote and his associates take center stage

Enter Aliko Dangote, President and Chief Executive Officer of the Dangote group. A man that also carries the distinction of being Africa’s richest man, as ranked by Forbes in 2015, with an estimated wealth of $17.3 billion.

Dangote is already active in the cement, oil, food, sugar and farming industries, and now has his sights set on the automotive industry. Aliko Dangote has teamed up with the Nigerian States of Kaduna, and Kebbi, as well as the development lender Bank of Industry (BOI) to bid for the shares now up for sale by AMCON.

Governor Nasir El-Rufai told a conference, “We have submitted bids for the carmaker… with Aliko Dangote on board together with BOI, Kebbi and Kaduna State, we are confident our bid will sail through.”

Bidding for the stake controlled by AMCON closed on January 26th, and Governor El-Rufai did not provide any further details.

On its website PAN stated that its assembly plant, which is located in Kaduna state, has Peugeot Citroen PEUP.PA as its technical partner, and it has the capacity to assemble 240 cars in a day.

Made in Nigeria

Meanwhile, the Nigerian government has been keen on promoting a “Made in Nigeria” industrial policy and ordered local car distributors to make plans for new assembly plants back in 2014. They threatened to begin imposing prohibitive import duties.

Jean-Christophe Quemard, who is the executive vice president for Peugeot in Africa and the Middle-East, met with President Muhammadu Buhari in November to discuss reviving local production.

Other automakers such as Germany’s Volkswagen, Renault-Nissan, and South Korea’s Kia motors have also announced plans to begin assembling their vehicles in Nigeria, which is currently Africa’s biggest economy.

Not to be outdone, the Ford Motor Company of the United States will set up an assembly plant in Nigeria in November. With a 5,000 vehicle annual capacity, the plan is to produce up to 10 vehicles each day for the local market and eventually move into export into West African countries.

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Nigeria’s inflation rises to almost 4-year high in March

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

LAGOS (Reuters) – Nigeria’s annual inflation rose to a near four year high of 12.8 percent in March from 11.4 percent in February, driven by a rise in food prices, the National Bureau of Statistics said.

Africa’s biggest economy is facing its worst economic crisis in decades fueled by the collapse in crude prices, which has slashed government revenues, weakened the currency and caused growth to slow. The economy grew 2.8 percent last year, its slowest pace in decades.

Food prices, which account for the bulk of the inflation basket, rose by 1.4 percent points to 12.7 percent in March, the bureau said on its website.

“The higher price level was reflected in faster increases

across all divisions,” the bureau said in a report.

The NBS expects inflation to end the year at 10.16 percent, above the central bank’s target upper limit of nine percent. The price index ended at 9.55 percent last year.

 

(Reporting by Ulf Laessing; Editing by Tom Heneghan)

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Bank of Ghana governor plans to fight inflation, boost growth

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

ACCRA (Reuters) – Ghana’s new central bank governor said on Monday his top priority was to fight inflation, but he also wanted to pursue new policies to boost local business growth.

In his first interview since being named Bank of Ghana governor last week, Abdul-Nashiru Issahaku pledged full commitment to an International Monetary Fund (IMF) programme aimed at stabilising the economy.

“My focus is to work assiduously to achieve our core responsibility of ensuring price stability,” Issahaku said.

Consumer inflation in the West African country, an exporter of gold, cocoa and oil, eased to 18.5 percent in February from 19 percent in January.

But it remains above the government’s upper target of 15.7 percent, while the central bank’s benchmark 91-day Treasury bill rate stood at 22.7713 percent on Friday.

At the same time, gross domestic product growth has fallen from around 14 percent in 2011 to 4.1 percent last year, in part because of a global slump in commodity prices.

President John Mahama promoted Issahaku from deputy governor when his predecessor, Henry Kofi Wampah, stepped down last month ahead of what is expected to be a closely fought election in November when Mahama will run for a second term.

Issahaku takes over at a crucial time for the bank, one year into the IMF programme. Some fear the election will put pressure on policy makers, including the central bank, which is independent, to loosen financial controls.

It also comes as the bank’s main lending rate stands at 26 percent, leading to complaints by many in the business community that it is stifling growth.

Issahaku, a member of the government’s economic management team, said he would work with the Finance Ministry and other agencies to maintain spending limits. “Elections or no elections, I remain committed to the programmes and we cannot afford to derail,” he told Reuters.

But he said Ghana had to begin immediately to “start to think out of the box about propelling growth of local businesses and creating employment.”

Ghana was one of Africa’s economic stars for years. Since the 2012 election, however, it has been tackling a budget deficit, high levels of public debt, inflation and a currency that fell sharply in 2014 and 2015.

Ghana’s cedi currency withstood a seasonal first quarter pressures to rally against the dollar in a sign of the impact of the IMF programme and bank policies.

Issahaku said he wants to sanitize the financial sector, especially micro finance firms, and enhance the regulator’s transparency and capacity. To boost growth, he would consider options to provide incentives to banks to offer credit to strategic sectors at reasonable rates. The governor has worked with the World Bank and the African Development Bank and holds a PhD in International Affairs and Development from Clark Atlanta University.

 

(By Kwasi Kpodo. Editing by Matthew Mpoke Bigg and Richard Balmforth)

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Nigeria wants to boost non-oil income by 87% to offset oil slump

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

LAGOS (Reuters) – Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters on Monday.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70 percent of state income.

Funding of the budget with an expected deficit of 2.2 trillion naira has been so far unclear.

Detailing its plans, the government expects to generate 3.38 trillion naira ($17 billion) this year from non-oil sources, up 87 percent from 1.81 trillion naira in 2015, the presentation showed.

Corporate income tax collection is expected to exceed the 700 billion naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said.

The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33 percent.

On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget.

The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16 percent now, the presentation showed. Loan repayments will be stretched.

Buhari has asked the United States for help in returning stolen Nigerian assets stashed in U.S. banks. In March, the U.S. said it had frozen more than $458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3 billion of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects.

($1 = 198.0000 naira)

 

(Reporting by Chijioke Ohuocha; Editing by Ulf Laessing and Toby Chopra)

 

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Mauritius says tourist arrivals up 12.5% in Q1

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

PORT LOUIS (Reuters) – The number of tourists visiting Mauritius rose 12.5 percent in the first quarter of 2016 from a year ago, thanks to increased arrivals from Europe and Asia, official figures showed on Monday.

Tourism is a key source of hard currency for the Indian Ocean island state, which like other long-haul destinations in the region has turned east in search of visitors to compensate for weak growth in its traditional European markets.

Arrivals in the first three months of 2015 increased to 327,836 from 291,329 a year earlier, Statistics Mauritius said.

Numbers from Europe, which accounts for two-thirds of visitors, rose 18 percent to 199,525 as arrivals from France, the island’s main market, increased by 4.7 percent.

The number of tourists visiting from Asia rose by 7.3 percent to 49,289, helped by an 11.1 percent increase in arrivals from India.

The statistics agency expects visitor numbers to rise 6.7 percent to 1,230,000 this year.

 

(Reporting by Jean Paul Arouff; Editing by Toby Chopra)

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Tourism in Morocco down amid regional unrest

11 April 2016 Comments (0) Business, Featured, Middle East

Casablanca Morocco tourism

While the North African nation is considered safe, instability in neighboring countries prompts decline in foreign visitors.

As regional unrest results in declines in tourist visits by Europeans, Morocco is attempting to attract more visitors from Russia, China and West Africa.

A visit by Moroccan King Mohammad VI to Moscow in March underscored the North African nation’s strategy of attracting tourists from outside European nations that have traditionally been major sources of visitors.

The Ministry of Tourism of Morocco is also in talks with airlines to open direct flights to that country from Russia and China.

Safety fears groundless

Tourism minister Lahcen Haddad said Morocco has lost tourists because of unwarranted fears about safety prompted by continuing unrest in Libya, Tunisia and Egypt as well as recent attacks by terrorists in Turkey.

“Morocco remains a very safe and secure country,” Haddad said. “But we need to do more to get that message across.”

A 2015 report by the Overseas Security Council also declared all areas of Morocco safe for tourists, citing mostly minor thefts as the main risk.

Tourist visits down 1 percent

The country’s tourism industry got a wakeup call in 2015, when total tourism revenues and tourist visits declined after a decade of growth.

According to the Treasury and External Finance agency, tourist revenue to hotels and restaurants declined by 1.3 percent during the first three quarters of 2015, following an increase of 3.3 percent a year earlier.

The agency said tourist arrivals at Moroccan border posts also declined by 1 percent in 2015 while these arrivals had increased by 2.4 percent to more than 10 million in 2014.

French visits drop by 7 percent

The largest decline has been among the French, who constitute Morocco’s largest source of tourism. French tourism to Morocco declined by 7 percent in 2015. The nation also saw declines in visitors from Spain, Italy and Belgium, while arrivals from the United Kingdom and the United States increased, according to the tourism ministry.

Tourism revenue in 2015 totaled about $6 billion, still a significant share of Morocco’s $100 billion economy. The sector employs about 400,000 people.

Like other countries in the region, Morocco experienced significant growth in its tourism industry between 2001 and 2011, according to Eurostat. The Arab Spring began in Tunisia in 2010 and spread to Egypt, Libya, Syria, Yemen, and Bahrain the following year, prompting varying degrees of unrest and instability that persists in some countries today.

Other countries see steep declines

Morocco has not fared as badly as some other countries in the region.

Egypt more than tripled the number of visitors to 14.7 million in 2010, only to see tourism drop by one third. Jordan, while stable, saw tourism fall by 17 percent in 2010 and 2011.

Turkey, hit by terrorist attacks, also experienced steep declines in tourism, which accounts for 15 percent of its gross domestic product.

As Europeans stay away, Morocco is pinning its hopes to expand the tourism sector on visitors from Russia, West Africa and China.

King Mohammad visits Moscow

King Mohammad visits Moscow

King visits Moscow

In March, a visit to Moscow by King Mohammad VI’s included talks about ways to encourage more Russians to visit Morocco as well as talks about providing direct flights to the North African country from St. Petersburg and Moscow.

In his first visit to Russia since 2002, the Moroccan king met with Russian President Vladimir Putin to discuss bilateral cooperation in tourism, agriculture and energy. The two countries signed 12 agreements related to tourism.

The king also inaugurated an exhibition “Morocco-Russia: A shared ancient history,” which includes bronze objects from ancient Roman sites as well as Roman statues at Moscow’s Pushkin Museum.

Goal is 200,000 Russian visitors each year

Haddad, the Moroccan tourism minister, said the nation hopes to increase the number of Russian tourists five-fold, from 40,000 annually in 2015 to 200,000 by 2019.

“Russia offers us a big opportunity,” he said.

Haddad said talks are under way with Royal Air Maroc and Russia’s Aeroflot about opening new routes between Marrakesh and Agadir in Morocco and Moscow and St. Petersburg.

A 2014 plan to add direct flights between Morocco and China has not been implemented.

Morocco is hub for West African travelers

Meanwhile, Haddad said Morocco is a top hub for West Africans traveling to Europe or other countries in Africa.

Haddad said Morocco could attract as many as 160,000 visitors from West Africa if it can entice transit travelers to stay a few nights in Casablanca and visit attractions such as the medina and Hassan II mosque.

Morocco’s tourism industry is expected to get a boost later this year with more than 30,000 attendees at COP22, the 2015 global climate conference November 7 – 18 in Marrakesh.

Morocco has also started talks with European carriers about offering low-cost flights to Moroccan tourist destinations such as Ouarzazate and Errachidia, Haddad said.

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Kenya central bank to help banks that face liquidity pressure

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

NAIROBI (Reuters) – Kenya’s central bank will provide a facility to any bank or microfinance institution that faces liquidity problems through no fault of its own, starting on Monday, Governor Patrick Njoroge said on Sunday.

Njoroge said the facility, for which he did not give the amount but said had no upper limit, would be available for as long as necessary to provide a sense of calm and reiterated that the financial sector was stable.

“From Monday, we will avail a facility to any bank or microfinance institution that comes under liquidity for no fault of its own. We will avail this facility for as long as is necessary,” Njoroge told a news conference.

Last week, the central bank put Chase Bank Kenya into receivership after its gross non-performing loans rose sharply last year.

The mid-sized bank was the third lender to be taken over by the central bank in nine months, fuelling worries over the health of the sector.

On Saturday, President Uhuru Kenyatta said he supported central bank Njoroge’s actions to protect depositors’ money.

“We are really dealing with any fear, anxiety that is out there,” Njoroge said.

 

(Reporting by George Obulutsa; Editing by Alison Williams)

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South Africa’s dollar bond oversubscribed despite political cloud

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

JOHANNESBURG (Reuters) – South Africa has successfully issued a dollar bond overseas to help finance its medium-term foreign currency commitments, the Treasury said on Friday, touting this as a sign of investor confidence despite political upheaval.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

On Friday, the Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

“The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” it said.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he flouted the law by not heeding a directive to make payments for upgrades to his personal home.

Ratings agencies, most recently Standard & Poor’s, have warned they might downgrade South Africa if political issues divert the government’s attention from properly implementing policy.

S&P and Fitch both rate South African credit just one notch above junk, while Moody’s is two notches over sub-investment grade.

Analysts said South Africa had benefited from a general rise in demand for high-yielding emerging market assets after the U.S. Federal Open Market Committee (FOMC) signalled it might be a while before U.S. rates rise.

“There was clearly a window here for them to issue after the FOMC reprice and before a wall of downgrades from the ratings agencies,” Nomura analyst Peter Attard Montalto said.

“They have significant forex deposits already so they can probably wait until next year for the next issuance.”

The rand extended gains against the dollar after the Treasury’s statement, climbing to a session high of 15.0155, up 1.5 percent for Thursday’s close.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8.5 basis points to 9.19 percent.

The Treasury said the new foreign bond formed part of South Africa’s 2016/17 financing programme and would partly finance foreign currency commitments of $6.4 billion over the medium term.

The coupon for the bond represents a spread of 335 basis points (bps) above the 10-year U.S. Treasury benchmark, which analysts said was in line with South Africa’s current funding rate.

“I don’t think it’s too expensive,” said Rand Merchant Bank trader Gordon Kerr.

The price compares to initial thoughts of plus 350 bps and guidance of plus 335 bps, plus or minus 5 bps.

“There is always demand for our paper and there will always be demand for EM in general because of the nice yields that it provides,” Rand Merchant Bank trader Gordon Kerr said.

 

(By Stella Mapenzauswa. Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg and Claire Milhench in London)

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Zimbabwe’s central bank says excessive demand causing cash crunch

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

HARARE (Reuters) – Zimbabwe’s banks are limiting withdrawals as an excessive demand for cash has lead to shortages, the central bank chief said on Friday.

Zimbabwe ditched its currency in favour of the U.S. dollar after hyper-inflation scaled 500 billion percent in 2008, leaving it unable to print its own money.

A shortage of notes surfaced at the beginning of March, which the Reserve Bank of Zimbabwe (RBZ) initially said was caused by financial institutions underestimating demand and failing to improve distribution to branches.

On Friday, RBZ Governor John Mangudya told a parliament committee that the government had injected $145 million worth of cash into the financial system between Jan. 1 and April 6, while banks had imported $118 million.

“We don’t think the money is circulating … that money is not there in the banks,” Mangudya said. “There is excessive demand for cash. The appetite for holding cash in this country is very high.”

Banks have been limiting withdrawals to as low as $200, causing frustration among customers and discouraging deposits.

Most Zimbabweans earn a living in the informal sector and prefer cash transactions. Confidence in banks was also dented after hyper-inflation effectively wiped out savings.

In February Mangudya said companies and individuals in Zimbabwe had illegally exported $1.88 billion last year. He capped daily withdrawals at $10,000, saying amounts above that would require central bank approval.

Besides the U.S. dollar, Zimbabwe also allows use of South Africa’s rand, pound sterling, the euro and China’s yuan.

 

(Reporting by MacDonald Dzirutwe; Editing by Stella Mapenzauswa and Janet Lawrence)

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South Africa’s Eqstra says receives offer, shares jump

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

JOHANNESBURG (Reuters) – Shares in South Africa’s Eqstra surged as much as 15 percent on Friday after the leasing equipment firm said it had received a non-binding takeover offer.

Eqstra, which leases equipment to construction and mining companies, did not name the firm it was in discussions with.

Eqstra’s shares surged more than 15 percent after the announcement, before giving up some of the gains to trade 12 percent higher at 2.09 rand by 1133 GMT.

Eqstra is in a process of selling its non-core assets in the commodities and construction equipment division in order to improve its balance sheet as depressed commodity prices hurt mining companies, its major clients.

 

(Reporting by Nqobile Dludla and Zimasa Mpemnyama; Editing by Tiisetso Motsoeneng and Joe Brock)

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