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South Africa’s Vodacom drops Neotel deal on regulatory hurdles

1 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa mobile operator Vodacom on Monday dropped a planned acquisition of local fixed line operator Neotel, citing regulatory complexities.

“It is disappointing that we have reached this conclusion despite all our efforts to find a way to deal with the complexities of the restructured transaction,” said Vodacom Chief Executive Shameel Joosub.

Vodacom, a unit of Britain’s Vodafone, had offered $500 million to Neotel owner, India’s Tata Communications, in 2014 but was forced to rework it after regulators raised anti-trust issues.

Under the modified deal, announced in December, Vodacom would have bought assets related to Neotel’s fixed-line business but not its frequency spectrum – which the Competition Commission’s said would have given Vodacom an unfair advantage in rolling out a high-speed 4G network.

South Africa is in the midst of switching its television signal to digital from analogue, a move that would free up much-needed airwaves as consumers increasingly use smartphones to browse the internet and download applications.

 

(Reporting by TJ Strydom; Editing by Tiisetso Motsoeneng and Joe Brock)

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South African rand recovers as Zuma says not at war with finmin

29 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand firmed against the dollar on Monday after President Jacob Zuma said he was not at war with Finance Minister Pravin Gordhan, following media reports of a fallout.

The currency fell nearly 4 percent on Friday, its biggest daily loss since 2011, after Gordhan said there were attempts to discredit him and the integrity of the Treasury.

Gordhan’s statement followed a newspaper report which quoted sources as saying he had threatened to resign after receiving a letter from the elite Hawks police unit questioning his knowledge of a suspected rogue unit at the revenue service.

This followed media reports of a clash between Gordhan and the head of the South African Revenue Service (SARS).

The Hawks also said they were not investigating Gordhan, and there was no case against the minister.

“The media has incorrectly reported, among other things, that there is a war at SARS and that the President and the Minister of Finance are somehow at war. This is a total fabrication and mischievous sensationalism,” the presidency said in a statement.

“The President wishes to emphasise that Minister Gordhan remains the Minister of Finance and any positing that the position of the Minister is under any threat is dismissed with the contempt it deserves.”

As of 1344 GMT, the rand had firmed 1.45 percent to 15.9260 versus the dollar from Friday’s close of 16.1600.

Government bonds also recovered. The yield on the benchmark instrument due in 2026, which soared as much as 28 basis points in early trade, was up 4.5 basis points to 9.41 percent as of 1434 GMT.

“It is a case of correction following knee jerk selling on Friday. The markets will continue to keep a close eye on narrative and look for further confirmation Gordhan will be allowed to do his job,” NKC African Economics economist Bart Stemmet said.

On the stock market, both the Top-40 index and the broader All-share were largely unchanged.

Barclays Africa Group Ltd fell as much 6 percent when the market opened, and traded 5 percent lower after Barclays Plc said on Sunday its board was evaluating strategic options in relation to its shareholding in its African business.

($1 = 16.0379 rand)

 

(By Olivia Kumwenda-Mtambo. Additional reporting by Stella Mapenzauswa and Nqobile Dludla; Writing by James Macharia, editing by Ed Osmond)

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Kenya’s inflation falls, may pave way for easing of rates

29 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s year-on-year inflation rate slowed to 6.84 percent in February, the statistics office said on Monday, prompting at least one analyst to say the central bank could start easing rates gradually.

February’s rate is the lowest since October last year, when it stood at 6.72 percent, the statistics office said.

Razia Khan, head of research for Africa at Standard Chartered in London, said this supported the case for policymakers to start lowering costs of credit later this year.

“While lower global oil prices have clearly helped, we nonetheless expect the CBK (Central Bank of Kenya) to enact a moderate pace of easing, paying careful attention to continued foreign exchange stability in the process,” she said.

The statistics office added the fall was driven by a -0.43 percent monthly drop in the price of food, which has the biggest weighting in the basket of goods used to measure inflation.

“This resulted from notable decreases in prices of key food items which slightly outweighed the increases,” the Kenya National Bureau of Statistics said in a statement.

Prices of housing and transport also came down on a monthly basis, the bureau said.

The governor of the central bank Patrick Njoroge told Reuters in December he expected inflation to be contained within the government’s preferred band of 2.5-7.5 percent.

 

(Reporting by Duncan Miriri; Editing by Janet Lawrence)

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Gulf Economies Can Survive Plummeting Oil Prices, says IMF

28 February 2016 Comments (0) Business, Featured, Middle East

Lagarde-Christine

The IMF is confident that GCC economies can survive continued low oil prices by reducing state spending and increasing government revenues.

The International Monetary Fund (IMF) is confident that GCC economies can make the adjustments needed to cope with continuing low oil prices, but only by reducing state spending and increasing government revenues, said IMF Managing Director Christine Lagarde last week.

Speaking to a conference of Arab economic officials, Lagarde, recently given a new five-year term as IMF chief, said: “Oil prices have fallen by two-thirds from their most recent peak but supply and demand-side factors suggest they are likely to stay low for an extended period. The size and likely persistence of this external shock means that all oil exporters will have to adjust by reducing spending and increasing revenue.” However, she was cautiously optimistic, arguing that most of the GCC countries have the scope to pace their adjustment over several years and limit the impact on growth.

Oil prices have plummeted from their summer 2014 highs of $115 a barrel to the low $30s. Lagarde argues that the oil-reliant Gulf States’ ability to survive the drop will rely on greater taxation and fiscal reforms. She called for the introduction of value-added tax, “ideally a harmonized regional VAT”, commenting that “even at a low single-digit rate, such a tax could raise up to 2% of GDP”. She also called for a greater weight on corporate and personal income and property and excise taxes to increase revenues, as well as bringing energy subsidies to an end. She also called for the diversification of the economy away from oil, for example by adding incentives for entrepreneurship and boosting private sector employment.

IMF cuts economic growth forecasts

Lagarde’s comments follow the IMF’s Regional Economic Outlook report of the MENA economies, which was a brutal assessment of the slowing growth and effect of low oil prices on the region. The IMF has also cut economic growth forecasts for the oil-exporting Gulf States to 3.4% this year, as it reports that last year MENA oil exporters as a whole lost more than $340 billion of revenues (equivalent to 20% of their combined gross domestic product).

While Kuwait, Qatar, and the United Arab Emirates have strong enough fiscal buffers to last for twenty years, Oman, Algeria, Saudi Arabia, Bahrain, Libya, and Yemen are in a worrying situation, with only five years of fiscal buffers left. Masood Ahmed, the IMF’s regional director, comments: “GCC countries have sizeable buffers — most of them can finance substantial deficits for four to five years. But will they want to use buffers … to continue running large deficits?”

But it is not all bad news. The share of GDP of the non-oil sector is rising, up by 12% to 70% between 2000 and 2013 in the GCC countries as the UAE, Kuwait, Qatar, Bahrain, Saudi Arabia, and Oman all put in place strategies to promote non-oil trade, attract more foreign direct investment, and begin to lift subsidies.

Diversified economy in the UAE

Dubai

Dubai

The UAE has one of the most diversified economies in the region. Non-hydrocarbon revenues account for 75% of GDP and 80% of total export revenues. Retail and real estate sectors are showing strong growth driven by wealthy ex-pat domestic demand. And tourism, encouraged by the country’s position as a safe haven, is expected to grow further with Dubai Expo 2020.

The food and beverage sector is also looking strong. The UAE has invested $1.4 billion in the food processing industry since 1994, and it continues to expand the halal food segment which is projected to grow to $1.6 trillion by 2018.

Bahrain and Kuwait implement painful reforms under the cover of the IMF

IMF recommendations are also making it easier for some governments to implement painful reforms and cuts which could lower their citizens’ living standards. Bahrain has planned a series of austerity cuts under the cover of IMF recommendations, introducing VAT, cutting spending on social transfers, removing domestic subsidies for meat and cutting them for gasoline, and freezing public-sector wages. The country is also trying to boost revenues from tourism, light manufacturing, and services industries.

Finance Minister Sheikh Ahmed bin Mohammed al-Khalifa said: “Bahrain’s Government Action Plan, currently underway, includes wide-ranging measures that will ensure the sustainability of Bahrain’s financial resources and development, benefiting the entire country”.

The IMF is also playing an increasingly important role in Kuwait, where it has helped the government design a broad-based tax system, and introduce VAT and a business profit tax.

Oman aims to be a logistics hub for the region

Oman is traditionally dependent on oil to fund its national budget, currently accounting for 77%. But in 2015, sales fell 35%. And while Oman’s leaders have been discussing the diversification of the economy since the 1990s, it has always been put off for a later date, and today the country has almost no manufacturing or agricultural production.

However, the country does now have plans to develop manufacturing, transportation, and tourism sectors. And the government is building a huge port at Duqm, on Oman’s central coast, in an attempt to become a logistics hub for the region. This would provide an alternative shipping route for oil exports from Iran or Iraq as well as for manufactured goods. Good plans, but now we need to see some action.

Saudi Arabia searching for diversification

Saudi Arabia is similarly reliant on the oil sector, currently accounting for 85% of its budget revenues. And although finances are buffered by huge reserves of foreign currency, they can only last so long if the government continues to sell them at speed to finance spending and its fight with US oil producers. Benefitting from a surplus of 6.5% of GDP in 2013, by 2014 that figure was a deficit of 2.3%. And the struggle looks set to grow in importance over the coming years as the number of working-age Saudis is predicted to hit 4.5 million by 2030.

As part of its diversification program, the government plans to invest in transport infrastructure, energy, utilities, and housing. The Kingdom’s Unified Investment Plan also seeks to boost investment and further investment in education to improve the Kingdom’s competitiveness. A McKinsey study has also highlighted eight sectors with potential — mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction. It believes that investment in these areas will enable Saudi Arabia to double its GDP and create as many as six million new jobs by 2030.

Qatar sees impressive economic expansion

In Qatar, economic diversification of the non-hydrocarbon sector, particularly focused on manufacturing, chemicals, and services, is estimated to have grown 11.3% in 2014. As Lagarde commented last November: “A non-oil GDP growth of more than 10% is impressive.” Qatar has also announced plans to scale up petrochemical production, and private sector credit growth is being driven by growing construction and real estate.

Driven by higher investment spending — $182 billion was earmarked for new project implementation over five years from 2014 — and population growth, the Qatar National Bank expects the country’s economic growth to reach a significant 7.8% in 2016, up from 6.8% in 2015. Non-hydrocarbons contributed 62% of the country’s GDP in 2014. And Qatar’s policy to diversify its oil economy received praise from the IMF, with Lagarde commenting: “as far as Qatar, there have been solid and strong policy measures to diversify the economy.”

Let’s hope that the other GCC countries can successfully emulate Qatar’s economic success.

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Kenya, Senegal join effort to fight tax evasion

28 February 2016 Comments (0) Africa, Business, Featured

Kenya signs the Convention on Mutual Administrative Assistance in Tax Matters

Twelve African countries sign multilateral agreement to counter tax abuse, which costs the continent an estimated $50 billion annually.

Kenya and Senegal have joined 10 other African countries in signing an international agreement designed to reduce tax evasion.

The multilateral convention enables cooperation among nations, including exchange of information about tax evaders and assistance in collecting taxes from them.

African nations lose an estimated $50 billion per year to illegal financial transfers, including tax avoidance, according to a 2015 report by the African Union and UN Economic Commission for Africa. In comparison, Africa received about $29 billion in foreign aid in 2013.

The tax evasion problem is particularly acute for poorer countries that do not have tools to fight sophisticated schemes by large multinational companies. The report and aid groups have noted that these billions of dollars might otherwise be used to develop services and infrastructure on the continent.

Multinational companies blamed

“Africa is hemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and health care, societies and economies would further flourish,” said Winnie Byanyima, executive director of Oxfam International.

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is one tool to fight large-scale tax evasions. It was developed by the Council of Europe and the Organization for Economic Cooperation and Development in 1988 and updated in 2010.

Parties to the agreement cooperate by providing financial information to other party countries on request, performing tax examinations and assisting with recovery of tax dollars.

Twelve African nations sign agreement

Kenya and Senegal signed the agreement in February. Other African parties to the convention are Morocco, Gabon, Cameroon, Mauritius, Uganda, Ghana, Nigeria, South Africa, Tunisia and Seychelles. Globally, a total of 94 countries have signed the convention.

Kenya also recently passed a law that prevents companies from using a common tax-avoidance practice called “transfer pricing” or “trade mispricing.”

Using this practice, companies allocate their costs to subsidiaries in high-tax jurisdictions in order to pay most of their taxes at the lower rate while moving their profits to jurisdictions where they pay little or no tax.

For example, the African Union study described a South African case in which a multinational corporation claimed that a large part of its business was located in the United Kingdom and Switzerland, with relatively low tax rates.

On investigation, South African officials found the European branches had only a few staff while the company conducted most of its business in South Africa. The scheme had enabled the company to avoid $2 billion in taxes, which the South African government reclaimed.

Invoices misstate value

Other practices are “under-invoicing” or declaring a low value on exports to minimize profits on paper and “over-invoicing” by declaring a high cost on imports.

For example, Mozambique records showed an export of 260,385 cubic meters of timber was exported to China in 2012 while records in China show 450,000 cubic meters were imported from Mozambique that year, according to the report.

Another study, by Global Financial Integrity (GFI), found high rates of over and under-invoicing in Kenya, Ghana, Mozambique, Tanzania and Uganda in the decade leading up to 2011.

Kenya, Tanzania see high losses

GFI said Kenya had an estimated $10 billion and Uganda $813 million in under-invoicing. At the same time, Tanzania had $10 billion to over-invoicing. Ghana had more than $14 million for the decade in misstated invoices and Mozambique more than $5 million.

The African Union report said illicit financial outflows from Africa have more than doubled since 2001, from $20 billion to the current $50 billion. The report said African nations lost about $850 billion to illegal transfers between 1970 and 2008, including $218 billion from Nigeria, $105 billion from Egypt and $82 billion from South Africa.

The report said mispricing occurs in a number of sectors, including mineral production in the Democratic Republic of the Congo and South Africa, crude oil exports from Nigeria, and timber sales from Mozambique and Liberia.

Corporations, organized crime cited

Thabo Mbeki, the former president of South Africa who chaired that panel that produced the report said large corporations were the main tax abusers aided by corrupt officials and weak governance.

“The information available to us has convinced our panel that large commercial corporations are the biggest culprits of illicit outflows, followed by organized crime,” Mbeki said.

African and non-African governments as well as oil, mining, banking, legal and accounting firms were involved in tax avoidance schemes, according to the study.

It found that 38 percent of the outflows from the continent originated in West African and 28 percent in North Africa. Southern, Central and East Africa each accounted for about 10 percent.

While significant to the continent, Africa’s losses are a small share of the illicit outflows globally, about six percent of an estimated $1 trillion between 2007 and 2009.

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Tunisia seeks to improve appeal to foreign investors

27 February 2016 Comments (0) Business, Featured, Middle East

tunis

A proposed investment code offers incentives to investment as the country aims to double investment to $2.5 billion by 2020.

Tunisian government officials hope to speed up implementation of a code that the North African nation hopes will make it more attractive to desperately needed foreign investment.

As its economy struggles in the aftermath of the 2011 revolution, Tunisia hopes to double foreign investment to $2.5 billion by 2020.

The Tunisian cabinet recommended hastening adoption of an investment code in February following protests a month earlier over high unemployment that included clashes with police in several towns and the capital of Tunis.

The protests were a grim reminder to the government that poor economic conditions, including high unemployment, prompted demonstrations that ended the 23-year presidency of Zine El Abidine Ben Ali during the 2011 revolution in Tunisia.

Incentives, smooth path for investment

The proposed investment code, which must be approved by the Tunisian parliament, is designed to clear administrative obstacles by creating an agency to smooth the way for companies to invest within the country, according to Yassine Brahim, Tunisian minister of development, investment and international cooperation.

The code will include financial incentives for investors, especially companies that intend to export from Tunisia and those that invest in poorer interior sections of the country.

It also will give international investors more flexibility to transfer funds out of the country, Brahim said.

Tax exemptions offered

Yassine Brahim

Yassine Brahim, Tunisian minister of development, investment and international cooperation.

Tunisia already offers significant incentives to potential investors, including a 10-year tax exemption, and, in some locations, state subsidies. The government also created industrial zones and promised significant investments in improving roads and other infrastructure.

The investment is sorely needed as the country struggles with an overall unemployment rate of 15 percent and a rate of 32 percent among college graduates. The country’s economy in 2015 grew by less than 0.3 percent.

Tunisia is generally seen as the one success story from Arab Spring, which also saw violent revolts in nearby Egypt and Libya.

However, Tunisia has struggled to form a government and improve its economy.

Civil unrest returns amid high unemployment

In January, economic conditions and regional inequalities prompted the worst civil unrest in the country since the 2011 revolution.

Protest that began in Kasserine in the central part of the country spread to several other towns and to Tunis, where shops were looted and burned. Frustrations ran highest in marginalized rural areas and in poor urban districts of the capital.

Tunisia also lost about a third of its tourism revenues in 2015 after two Islamic State attacks killed 59 foreign tourists.

Government proposes bond issue

In February, the government announced that it was preparing a bond issue of up to one billion euros to cover a budget deficit stemming from losses from January’s unrest.

Violence and unrest has kept investors away. An estimated 300 investors have left the country since 2011.

For example, one Bahraini official recently told Tunisian President Béji Caied Essebsi that Bahraini business leaders are interested in investing in the country and a delegation would visit from Bahrain.

However, Khaled Abderrahmen Al Moyed, president of the Bahraini Chamber of Industry and Commerce, also said the business leaders would require “sufficient guarantees” of success to launch projects in Tunisia.

Location, workforce are positives

The primary investment sectors in Tunisia are textiles, energy, computer science, corporate services and energy. The largest sources of investment are France, Austria, Canada and the United Kingdom.

An analysis by Santander Bank cited positives about investing in Tunisia, including its strategic location on the Mediterranean, proximity to major European capitals, a well developed social system, qualified workforce, competitive salary levels, and the increasing diversification of it economy. The main negative, Santander said, is a cumbersome Tunisian bureaucracy.

Brahim, the investment minister said Tunisia hopes to attract $1.4 billion in investment this year, an increase of 12 percent from $1.25 billion invested in 2015, with a goal of $2.5 billion by 2020.

That compares with investment of $2.2 billion in 2010, the year before the revolution.

Joblessness sparks unrest, support for IS

Despite Tunisia’s difficulties, foreign investment has been increasing in recent years.

In 2015, investment increased by 21 percent compared to 2014, which saw a 19 percent increase over 2014.

That growth hasn’t translated into enough jobs.

The economic conditions are believed to be driving many Tunisians into the ranks of Islamic State and other militant groups. An estimated 3,000 Tunisians are fighting in militant Islamic groups in Iraq, Syria and Libya.

Aymen Abderrahman, 28, a Tunis-based activist, said that “frustration and total despair” drove the January protests.

The unemployed who are living in the same conditions as before 2011 “are seeing a spark to bring back to life the revolutionary past,” he said.

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Rwandan economic growth to slow to 6.8% in 2016

26 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KIGALI (Reuters) – Rwanda’s economic growth rate will ease to 6.8 percent in 2016 from 7.1 percent in 2015, the World Bank said on Friday, noting the slow implementation of the country’s budget.

Rwanda maintained “steady growth and macroeconomic stability” for much of 2015, the bank said in a report, adding that the aid-dependent country had benefited from low oil prices.

“Downside risks have been increasing, both externally and domestically,” Yoichiro Ishihara, the bank’s senior economist for Rwanda, said in a statement. “On the domestic front, delayed execution of the budget and inadequate financing for development are of concern.”

Rwanda is one of the economies in the region that investors have hailed for solid fundamentals, including low debt and inflation.

The growth rate averaged 8.2 percent from 2006 to 2012 in the landlocked state, which has become a favourite with international investors two decades after the 1994 genocide.

 

(Reporting by Clement Uwiringiyimana; Editing by Edith Honan and Hugh Lawson)

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6 African, Middle East startups in global competition

26 February 2016 Comments (0) Africa, Business, Featured, Middle East

New ventures from South Africa, Morocco, Sudan, Saudi Arabia and Egypt will compete in the Get in the Ring final in March.

Six startups from Africa and the Middle East will compete in the world finals of Get in the Ring, a global competition that helps raise the visibility of new ventures and connects them with potential investors.

The six startups representing South Africa, Morocco, Sudan, Saudi Arabia and Egypt include delivery services, mobile applications and energy developers. They will compete in the Get in the Ring world final in Medellin, Columbia in March.

Get in the Ring is one of the world’s largest competitions for startups.

Contestants face off in a boxing ring to deliver 30-second pitches for their product or service and they are judged by investors and other experts. They are scored based on their business model and potential market, their team, their achievements and their financials.

Two South African startups win regional

Winners for the sub-Saharan region are two South African startups, Newtech Rail and iMORPH3D.

Newtech Rail has developed technology for railway overhead infrastructure. Jan Jooste, a South African industrial engineer and director of innovation at Vaal University of Technology, launched the startup in 2015.

iMORPH3D is a mobile application that enables users to create anamorphic 3D illusions. Android and Apple versions are available for download. It is a product of Adfire Creative M3dia.

Morocco, Sudan among winners

In the North African regional competition, held in Casablanca, Moroccan startup LIK and a Sudanese startup SmartDelivery emerged as the winners.

LIK from Morocco is a mobile application that gives users free phone credits in exchange for agreeing to display advertising on their smart phones when they receive calls. The ads are location-based and contextual based on age, gender, and language. Launched late last year, the app already has more than 100,000 users.

LIK at Level Up Competition

LIK at Level Up Competition

LIK found that its users were seeing advertising everywhere but were not realizing any benefit from viewing the ads. “With LIK, they can finally benefit,” Ismail Bargach said. He co-founded LIK with Omar Kadiri, and Yassine Faddani. The startup also won the Level Up Morocco competition last year in Casablanca.

The Sudanese startup SmartDelivery lets customers order fresh vegetables, fruit and meat via an app and it provides free delivery. It is able to charge lower prices because it buys directly from farmers and eliminates the middlemen. According to the company, the app enables efficient communication on customer orders.

Middle East winners

Vanoman from Saudi Arabia and SolarizEgypt won the Middle East regional competition.

Vanoman is a platform to connect truck drivers in Saudi Arabia with customers who want furniture transported. Fadi Almaghrabi, its CEO, represented the company.

SolarizEgypt designs and installs grid-connected PV solar power plants as a supplement for conventional types of power for industrial, commercial and residential customers. The company was launched by a group of graduates of the American University in Cairo.

Participants pitch their ventures

Get in the Ring brings entrepreneurs together to compete in local, national and regional competitions that winnow the field for the world finals, where they compete for funding of up to one million euros and investment dollars.

Along the way, participants received expert advice, coaching on their pitches and the opportunity to meet investors and develop a fan base.

“This event is not just about pitching for funding. It is also about pitching for attention’’ according to Brian Walsh, founder and chief executive officer of The REAL Success Network, one of the partners for the event. Walsh said the multiple rounds of competition expose them to thousands of potential funders and supporters.

Steven Cohen, head of event co-sponsor Sage One International, said Get in the Ring “is helping to encourage excellence and innovation among local businesses, and to provide role models and inspiration for the entrepreneurs of the future.”

In 2014, the South African startup GoMetro was a runner-up in the global finals.

Get in the Ring began in 2012 in the Netherlands and has grown rapidly into a major global event. Get in the Ring competitions are now held in more than 60 countries. Between 2012 and 2014, more than 3,000 startups participated.

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Tough year ahead for South African retailers as Massmart stalls

25 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Massmart reported flat annual earnings on Thursday and highlighted the difficulties South African food retailers are likely to face this year as shoppers contend with rising prices, mounting debt and high unemployment.

The retailer, majority owned by Wal-Mart Stores Inc, earns 91 percent of its revenue in South Africa, an economy expected to grow by less than 1 percent this year.

The biggest worry this year is how inflation will affect the lowest income earners, Chief Financial Officer Hans van Lierop told Reuters.

Massmart, which also sells appliances and building materials to wealthier shoppers, supplies staples such as maize and rice in bulk to traders who sell them on to poor urban and rural consumers.

Though retailers absorb some of the cost increases, maize and sugar prices could climb by a double-digit percentage due to a severe drought in southern Africa, said Van Lierop.

Poorer South Africans spend a large part of their income on food and transport, so even when retailers do not pass on price increases they struggle to afford anything but essentials.

Massmart noted a slowdown in general merchandise sales toward the end of 2015 as business confidence sagged and the currency depreciated to new lows.

The rand has declined 20 percent against the dollar since October, offsetting gains for consumers from lower fuel prices.

“People are travelling less, less often and less far to go to shops,” said Chief Executive Guy Hayward in a presentation to analysts.

Basket sizes are smaller than a year ago, he added.

Rival Shoprite also noted the impact of transport costs on customers when it reported an 8.9 percent rise in half-year profit on Tuesday.

In some parts, shoppers increasingly prefer informal retailers to stores because it involves less travel, Shoprite Chief Executive Whitey Basson said then.

Low-income shoppers would struggle, Basson said, adding Shoprite could benefit as middle-income customers trade down.

Pick n Pay, a grocer focused on the middle and upper end of the market, on Thursday piloted a project to supply informal shops, called “spazas”.

The trial could be extended to hundreds of independent spaza owners if successful, it said.

Massmart posted diluted headline earnings per share (EPS) of 508.8 cents for 2015, compared with 504.7 cents in 2014.

Headline EPS is South Africa’s main profit gauge and strips out certain one-off items.

 

(Reporting by TJ Strydom; Editing by Stephen Coates and Mark Potter)

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African tourism declines by 3 percent in 2015

25 February 2016 Comments (0) Africa, Business, Featured

The number of tourist visits to North Africa drops eight percent while sub-Saharan Africa sees a one percent decline.

International tourist arrivals in Africa declined by three percent in 2015 but experts predict a revival this year.

The overall decline of arrivals on the continent was fueled by a drop of eight percent in North Africa, which accounts for about one third of all arrivals, according to the United Nations World Tourism Organization (WTO).

In sub-Saharan Africa, the decline for the year was only one percent and travel began to increase in the second half of the year.

The tourism organization said there were a total of 53 million tourist arrivals on the continent in 2015.

Global travel increased

The decline contrasts with other regions of the world that saw increases in international arrivals, including Europe, Asia and the Americas, which each rose by five percent, and the Middle East, which saw a gain of three percent after experiencing declines for years prior to 2014.

The drop in travel to Africa ended more than a decade of increases in tourist travel to the continent.

WTO Secretary-General Taleb Rifai predicted the number of arrivals this year will increase by two to five percent, driven by a rise in tourism. He said experts expect tourism to more than double to about 130 million arrivals per year by 2030.

One reason for optimism is that more visitors are coming from emerging economies in Asia and in Central and Eastern Europe. At the same time, fewer travelers are coming from China as its economy struggles.

Continent offers diverse attractions

Popular African attractions include the wildlife of Masai Mara in Kenya, Victoria Falls in Zimbabwe and Zambia, the pyramids of Egypt, Cape Town in South Africa, Marrakech in Morocco, the Omo River region of Ethiopia, the gorillas of the Virunga Mountains in Uganda, Rwanda and the Democtratic Republic of Congo, and Mount Kilimanjaro in Tanzania.

According to the African Development Bank, Morocco, Egypt, South Africa, Tunisia and Zimbabwe were the African countries with the most international visitors in 2014. It predicted that Algeria, Mozambique and Kenya soon would join the ranks of the most visited nations.

The report (pdf) estimated that there were a total of 65 million international arrivals in 2014. About half came from Europe, a total of 582 million travelers. Another 24 percent come from the Asia-Pacific region (263 million); 11 percent from North America (120 million). Smaller percentages come from Latin America, Africa and the Middle East.

In Egypt, 1.3 million tourism jobs

Egypt has the most direct employment in tourism at 1.3 million jobs, followed by Ethiopia with 980 million, Nigeria with 884 million, Morocco with 775 million and South Africa with 680 million.

The countries with the largest share of employment devoted directly to tourism are: Seychelles (24 percent), Cabo Verde (14 percent), Mauritius (11 percent), and Morocco and Tunisia (7 percent each).

The World Travel and Tourism Council estimates that travel and tourism and travel represents more than 8 percent of the gross domestic product of Africa and contributed about three percent of employment in hotels, airlines and other passenger transportation, as well as travel agents, restaurants and leisure industries.

Tiny share of global market

Africa holds a small share of the global market. Africa had 65.3 million arrivals in 2014, just fewer than 6 percent of the 1.1 billion tourist arrivals reported worldwide, the tourism monitor report said. Africa received a total of $43.6 billion in tourism revenue, about 3.5 percent of the global total.

While tourism in Africa was rising steadily until 2015, myriad challenges including lack of high airline prices, convenient transport, security concerns, threats to wildlife and lack of cooperation between nations, may be holding it back from even greater growth.

In North Africa, terror and civil strife sharply reduced the flow of tourists, while violence and the Ebola crisis scared many tourists away from the southern continent.

Security fears undermine tourism

Among major destinations, Kenya, Nigeria, Tunisia and Egypt have seen their tourism industries battered by security fears.

South Africa, Nigeria, Ghana and Uganda also saw significant drops in travel, according to one estimate.

The tiny West African country Mali has seen its tourist business collapse amid ongoing terrorist attacks and anti-government unrest.

From a peak of 200,000 visitors a year in 2011, Mali’s tourist trade has slowed to a trickle of a few thousands as numerous governments, including the United States, Britain, France and Australia, have issued travel warnings.

High number of travel warnings

Travel warnings can be a deterrent to tourism and Africa has seen a large share issued by the U.S. State Department. A 2015 analysis by Skift of 261 travel alerts issued or updated since 1996, found that 30 of 82 countries that had notifications were in Africa.

Algeria, Burundi and Congo, along with Afghanistan, had the most frequent updates.

Meanwhile, the African Union’s commissioner for transport and infrastructure recently urged representatives of African nations to adopt a more collaborative approach to increasing tourism to the continent.

“We can complement each other as African countries. We should work together to develop our institutional capacity and human resources to take it on the international level. So this is one of the areas we need to work on,” Elham Mahmoud Ahmed Ibrahim said.

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