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South Africa and ArcelorMittal forge steel pricing agreement

23 August 2016 Comments (0) Business, Economy, Latest Updates from Reuters

CAPE TOWN (Reuters) – ArcelorMittal’s South African business and the country’s government have agreed a new pricing model aimed at bolstering the domestic steel sector and reviving the economy.

The company was fined a record 1.5 billion rand ($111 million) on Monday for setting prices at the level consumers would have to pay for imported steel, but Trade and Industry Minister Rob Davies told parliament on Tuesday that it had agreed on a mechanism that would provide transparent pricing based on domestic prices in a number of other countries.

The government of Africa’s most industrialised country formed a team six years ago to find ways to lower domestic steel prices after consumers complained that the European group’s South African subsidiary was charging high prices.

“This has been the concern that we’ve had for a long time, that the price of domestically produced steel has been supplied in the market on the basis of what the import parity price would be,” Davies said.

The local price for flat steel products will now be calculated through a formula using the weighted average of domestic prices in countries such as Germany, the United States and Japan, but excluding China and Russia, Davies said.

In future, when ArcelorMittal South Africa changes its flat steel prices, it will have to use a transparent mechanism based on the forecast basket prices of fabricated metal products, machinery and equipment, as well as vehicle and other transport equipment, Davies added.

“The basket aims to provide a fair price during boom and bust periods,” he said.

ArcelorMittal South Africa officials were not available to comment.

South Africa, which has the only primary steel mill in sub-Saharan Africa, imposed a 10 percent import tariff last year to protect an industry hurt by cheaper Chinese imports.

($1 = 13.4800 rand)

 

(Reporting by Wendell Roelf; Editing by James Macharia and David Goodman)

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The 10 best African airlines

23 August 2016 Comments (1) Africa, Business, Featured

Kenya Airways

African airlines have worked to improve safety and reliability to obtain eight spots in the top 100 global airlines, according to rating agency Skytrax.

Skytrax has published its latest survey, with 8 African Airlines falling into the “Top 100” global airlines. This is progress in a continent hardly known for its aviation prowess. Although Africa is the second largest continent, with the second largest population, it only accounts for 3% of all air traffic. High poverty rates with poor infrastructure and investment has typically stifled Africa’s air industry. Dire safety records, exorbitant fuel taxes and uncooperative governments have also compounded the problems for those who want to travel around Africa and internationally.

Fortunately for frequent flyers, there is a growing market for air travel in Africa. This is driven in part by increased business, trade and tourism along with a rising number of business “hubs” driving a demand for affordable and reliable flights routes. Back in 2012, African air traffic only accounted for 1% of all air travel and only 5 African airlines made it into the top 100 list.

Skytrax Awards: the pinnacle of safety and excellence in aviation

The Skytrax awards are a global benchmark in quality and safety and are widely known as the “Passenger’s Choice Awards” due to their selection process. Consumers from across the globe take part in a satisfaction survey to determine the winners; no external sponsorship, payment or influence alters the results.

Clear winners of the Skytrax awards are the South African airlines. Heading up the country’s list is South African Airways, a consistently well-rated airline that flies to 38 destinations and is a premier international aviation leader. Mango also made the list at number eight, a subsidiary of South African Airlines and a low-budget alternative with well-rated services and safety records. Finishing off the South African contingent is Kulula at number seven, another “no-frills” airline, operated as a franchisee of British Airways. South Africa’s reputation for business and status as a regional trading hub, coupled with its higher than average economic statistics can account for its prominent position in Africa’s aviation industry.

Luxury islands and South Africa coming out on top

Kenya Airways upsets the status quo by winning Africa’s Leading Airline at the 2016 World Travel Awards. In doing so it unseated South Africa Airways as Africa’s best airline, an award they had taken home for 22 years in a row. They also won the “Best in Business Class” award, clinching both the overall and luxury travel recognition, something many airlines struggle to do. Kenya airways has recovered spectacularly from its problematic history. Dogged by accidents in the early 2000s, “The Pride of Africa” has made great safety improvements to become a world-class airline. Kenya Airways Marketing Director, Chris Diaz explained, “This is sign enough that we are putting the dark clouds behind us to cruise unimpeded as Africa’s most respected airline.”

Air Mauritius and Air Seychelles are beaten only by South African Airways on Skytrax’ list. Their prominence as travel leaders is unsurprising due to their luxury locations and high levels of international tourism which drives expectations and assures quality. Air Mauritius has code sharing agreements with Emirates and other world class airlines, which is a certain sign of excellence, due to Emirates’ notoriously high standards in partnerships. Air Seychelles boasts Etihad as a stakeholder and was recently awarded a 4 star rating at the Skytrax awards.

All-Boeing fleets and drastic turnarounds

Ethiopian airlines

Ethiopian airlines

Also highly rated was Ethiopia Airlines, coming in at number four on Skytrax’ list. The firm also won Best Airline in Economy award at the World Travel Awards 2016. Ethiopia Airlines is the flag carrier of Ethiopia and has a strong reputation for cargo travel as well as its popular passenger air travel. TAAG Angola Airlines successfully made 2016’s list, real progress after a 2007 European travel ban and subsequent re-haul of the entire fleet and board. Now, it is has a Boeing-only fleet and has agreements with Emirates and other top-class airlines.

The airlines rounding off the top 10 are Royal Air Maroc and Air Austral. Air Maroc is fully owned by the Moroccan government and has its headquarters in Casablanca. It was formed in 1953 and also operates an all-Boeing fleet; it has now become a formidable force in African air travel. Taking risks, they were the only airline to continue flying to Sierra Leone, Guinea and Liberia amid the Ebola outbreaks, becoming an essential part of the fight against the disease and supplying the region with resources and medical staff. The last airline is Reunion Island’s Air Austral who has a particularly young fleet for African aviation, with an average age of 5.2 years. The success of these airlines demonstrates that the industry has come a long way in recent years, drastically changing the perception of African air travel.

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Starting up in Nigeria: a challenging environment

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

Nigeria startups

Nigeria has massive potential for innovative tech start-ups, although there are numerous obstacles in their way.

While it is officially Africa’s biggest economy, the Nigerian nation is struggling. Talk of a recession has darkened the horizon for over a year. The slump of global oil prices has been a hammer blow to the country, while terrorism and oil refinery problems have worsened the situation. Nigeria is currently beholden to oil for 70% of its revenues; it must rebalance its economy to unbind itself from market volatility. The country realizes this, and is making an effort to diversify its revenue sources. Many are starting to look toward innovative start-ups to take the country in a new direction.

Big tech potential in Nigeria, Konga leads the way

The conditions in Nigeria are rife for daring tech start-ups to create new solutions and drive growth. Unlike other regions on the continent, Nigeria has high rates of mobile penetration with approximately 75% percent of its 175 million people using mobile phones and data services, making it the largest mobile market in Africa. However, this market is currently woefully underexploited. According to a 2013 report by consultancy firm McKinsey, only 1.5% of the country’s $500 billion economy took place online. This void presents a glaring opportunity for tech start-ups to create revolutionary new services.

Konga, is one such start-up that seized the initiative. Launched in 2012, Konga was an early pioneer in Nigeria’s tech space, offering online retail services. Today the company is thriving, offering a range of original solutions, which have connected all manner of suppliers and manufacturers to consumers across the country. Other innovators are also following Konga’s lead, carving out their own niche in Nigeria. However for every success, many start-ups struggle to overcome barriers in their way.

Unusual obstacles: reluctance and electricity

The issues facing start-ups vary. Some are complicated while some are frustratingly mundane. One simple yet formidable roadblock that start-ups face is the availability of electricity. For a new business trying to carve its own niche in the ecommerce space, a reliable energy supply is essential. However, when energy supply is unreliable, as it often is in Nigeria, a start-up has to generate its own power and purchase alternative fuel sources in order to consistently operate. Ultimately, this can lead to greatly increased costs which squeeze margins, snuffing the life out of promising but cash-strapped startup ventures.

KongaPay launch

On the whole, Nigerians are still very wary about parting with their money over the internet, for fear of their capital or financial information being stolen. This paranoia is not entirely without merit, as Nigeria is a hotspot for online scamming and phishing schemes. In order to accommodate these fears, some successful start-ups such as Konga and Jumia have built cash-only payment methods into their business. Konga has also recently created a payment system called KongaPay whereby money is held securely until orders are delivered. Despite these efforts, reticence remains. While some start-ups have survived, this reluctance has certainly deterred some consumers from using new services, reducing the customer base that new start-ups rely on for growth. Tech firms must realize they need to foster a safe and reliable online payment environment, and convince the masses to use it.

Investment is needed, although so is caution

New accelerator programs sponsored by large foreign entities are helping more start-ups get off the ground, especially in the Fintech space. However, Nigerian banks aren’t traditionally interested in providing loans to risky start-up ventures, and encourage start-ups to attract private equity investors instead. Fortunately, foreign private equity is really starting to pick up in Africa, with more and more investors willing to take a punt on a good idea. Regrettably, these investors sometimes undervalue Nigerian enterprises, and strong-arm inexperienced Nigerians into unfavorable deals.

Other issues such as the country’s poor logistics system can bring woe to start-ups who rely on delivering a physical product. Sometimes the lack of skills in critical areas such as accounting and marketing can kill a promising tech business before it can get off the ground. In other instances, eager entrepreneurs try to make an idea that has worked elsewhere work in Nigeria; without analysis and adaptation this often leads to the graveyard.

A veritable gauntlet of obstacles faces Nigerian start-ups. However, those that have survived are serving as a shining example to those that wish to follow. Success is more likely if a fledgling firm is aware of the pitfalls ahead, provided they have a great idea, a solid business plan and the business acumen to make it all come together.

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Gauteng Emerging as South Africa’s App Development Hub

19 August 2016 Comments (0) Africa, Business, Featured

South Africa app

Gauteng province in South Africa is fast emerging as a center for app development on the continent.

It wasn’t long ago that finding an Internet connection in Sub-Saharan Africa was next to impossible. Today, the scene couldn’t be more different: millions of young Africans are as connected to the Internet as their European or American counterparts. Through mobile phones and devices, many of the logistical challenges surrounding Internet infrastructure have been avoided. African businesses have been particularly aware of the potential of the Internet. Many small businesses are taking full advantage of the options available to them through app creation, and certain areas are fast emerging as app development hubs. According to Cassie Lessing, the Managing Director of the Strato IT Group, Gauteng Province, where both Pretoria and Johannesburg lie, is leading the way in app development.

In the Middle of it All

It comes as no surprise, then, that the province that is home to South Africa’s de facto and legal capitals should be a hub for innovation. As new businesses make their way into the market, app developers are highly sought after: the app economy is expected to create trillions of dollars of direct and indirect opportunities around the world, and Africa is no exception. The African Internet population is so mobile that they are poised to leapfrog directly into the era of apps, bypassing the cumbersome online experience. There are numerous websites where businesses can look for app development companies and individual developers, a fascinating look at the truly online nature of the future.

Already the country’s economic powerhouse, Gauteng provides app developers with more resources than they would have elsewhere. With a plethora of cool hang-outs and co-working spaces, young thinkers are able to learn from one another in informal environments, thus enriching each individual’s skill set. The apps that are being developed are varied and seem to span across nearly every field: news, government information, entertainment, healthcare services, mining, logistics, shopping and banking are just a few of the numerous industries in which apps have recently emerged.  “Economies rely on information to function effectively and the app economy represents a leap forward towards the goal of an informed and efficient knowledge-based society. Organizations that do not adopt and utilize the emerging technologies like mobility, digitization and cloud will be disadvantaged and lose out to the early adopters,” Lessing says.

Piloting the Future

Lessing’s company, the Strato IT Group, has been quick to capitalize upon the growing app market. Strato boasts an impressive “satisfied clients” portfolio, with big names such as Toyota, Deloitte and Babcock, to name a few. Unlike other companies in their field, Strato claims it prioritizes face-to-face relationships rather than the faceless services provided by mainstream IT companies. Ironic, given that a common side effect of mobile apps is to reduce the time users spend making face-to-face interactions with the world around them.

With a reputation built upon excellence, Strato has long been the go-to company for businesses looking to enhance their online presence. They now provide clients with app management, app development and consulting, as well as the newer “Application Management Outsourcing” (AMO) whereby Strato finds developers with the required “scarce skills” to handle a client’s needs.

The Strato IT Group has begun a pilot project whereby consumers (companies in need of apps) are able to connect with developers and be a part of the app creation process. This allows consumers to access experts while maintaining their company’s identity. “This approach not only serves to test and enhance product, but also provides valuable raw material for proof of concept and proof of value exercises,” says Lessing of the project.

The Future is Now

Strato exemplifies the opportunities available for businesses from any sector: connecting businesses with app developers not only increases the visibility of both parties, but provides users with services that increase ease of access. Apps developed through the Strato IT Group and elsewhere have already increased the efficiency with which South Africans can go about their daily lives: the recent launch of an app-accessible stock market, the creation of cheap fuel finding apps and app-based coupons have all made life a little easier and a little cheaper for South Africans.

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Mauritius raises 2016 tourism earnings forecast by 1.8%

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

PORT LOUIS (Reuters) – Mauritius said on Friday that tourism revenue in 2016 will be 1.8 percent higher than it had previously forecast, after a surge in visitors during the first half.

Tourism is a valuable source of foreign exchange for the tiny Indian Ocean country known for its luxury spas and beaches.

Earnings from the sector are now expected to reach 56 billion rupees this year, up from an earlier forecast of 55 billion in May, according to Statistics Mauritius, an official body.

Last year, tourism earnings totalled 50.2 billion rupees.

The statistics agency also raised its forecast for 2016 arrivals to 1,250,000 tourists from 1,240,000. Visitors in 2015 numbered 1,151,723.

In the first half of 2016, Mauritius attracted 586,464 tourists, up 9.9 percent from a year earlier.

 

(Reporting by Jean Paul Arouff; Editing by Aaron Maasho and Dominic Evans)

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Beijing Automobile Intl Corp to invest $800 mil in S.African industrial zone

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

JOHANNESBURG (Reuters) – Chinese state-owned Beijing Automobile International Corporation (BAIC) has signed a deal to invest 11 billion rand ($823.30 million) in an industrial zone in South Africa’s Eastern Cape province, the operator of the zone said on Thursday.

The deal will see BAIC open an automotive manufacturing plant in the Coega Industrial Development Zone near South Africa’s Nelson Mandela Bay, the Coega Development Corporation said in a statement.

($1 = 13.3608 rand)

 

(Reporting by TJ Strydom; Editing by Alexandra Hudson)

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South Africa’s Truworths posts 12% rise in FY profit

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

(Reuters) – South African clothing retailer Truworths International reported a 12 percent increase in full-year profit on Thursday, boosted by cash sales at its British unit Office Holdings, but falling short of estimates.

* Group retail sales for the 52-week period ended 26 June2016 increased by 46.1 percent to 17.0 billion rand ($1 billion)versus comparable period. * Headline and fully diluted headline earnings per share for52 weeks ended June 26 up 12 percent to 667 cents, but short of702 cents estimate by Thomson Reuters Smart Estimates. * Shares in Truworths down 6.7 percent at 85.34 rand by 1450GMT. * Cash sales outpaced sales on in-store credit as Britishfootwear chain Office sells only in cash and new rules in SouthAfrica hamper credit extension. * “Credit retail sales were significantly impacted by theintroduction of new affordability assessment regulations inSeptember 2015, which management estimates resulted in a loss ofbetween 200 million rand to 250 million rand in sales,” thecompany said. * Annual dividend per share up 12 percent. * “We expect the South African trading environment to remainchallenging during the 2017 financial period, with slow economicgrowth and rising inflation putting pressure on consumers,” thecompany said. * The trading environment in United Kingdom is also facedwith uncertainty after decision to withdraw from European Union,but is likely to be less uncertain as more clarity regardingBrexit emerges, the company said.

 

($1 = 13.3300 rand)

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Three-week South African fuel strike ends as union signs new pay offer

17 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – South Africa’s petroleum industry and striking workers agreed to a new two-year wage deal on Wednesday, ending a three-week strike that caused limited supply disruptions, an official representing employers said.

Around 15,000 striking workers affiliated to Chemical, Energy, Paper, Printing, Wood and Allied Workers union (CEPPWAWU) agreed a 7 percent wage increase this year and an April CPI plus 1.5 percent hike in the second year, said Zimisele Majamane, the deputy chairman of the National Petroleum Employer’s Association.

 

(Reporting by Wendell Roelf; Editing by James Macharia)

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Egypt’s telecom regulator approves revised terms for 4G licences

17 August 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s telecoms regulator has approved revised terms for 4G mobile broadband network licences, and said it will send them out to operators on Sunday.

The government offered four 4G telecom licences in June, to Telecom Egypt and to the country’s three mobile services providers – Orange Egypt, Vodafone Egypt and Etisalat – but only Telecom Egypt accepted the terms. The regulator, keen to prioritise existing carriers, decided to revise them.

A senior official at the Telecommunications Ministry told Reuters on Wednesday that the revised terms include additional frequencies but there is no change in the pricing or the condition that 50 percent of the payment for the licences must be made in U.S. dollars.

“The telecom regulator approved the final terms of the 4G licences yesterday,” the official said, adding that companies would have until midday on Sept. 22 to accept them.

The National Telecom Regulatory Authority later issued a statement confirming it approved the final terms and that the companies had until Sept. 22 to accept.

The government, which is grappling with a shortage of hard currency as economic and political turmoil in Egypt in the past few years has deterred foreign investment, has said it hopes to raise 22.3 billion Egyptian pounds ($2.5 bln) in total in licence fees.

 

(Reporting by Ehab Farouk; Writing by Ola Noureldin; Editing by Greg Mahlich and Susan Fenton)

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South African court sets aside Eskom’s electricity tariff hikes

17 August 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – A South African court on Tuesday struck down some of the tariff increases granted to Eskom this year, saying the power utility had not followed the correct procedure when applying for a special claw-back, local media reported.

National energy regulator (Nersa) in March allowed Eskom a total tariff hike of 9.4 percent, of which part was an interim increase for running expensive diesel generators to keep the lights on in Africa’s most industrialised economy.

A court in Johannesburg on Tuesday granted the application by business organisations to set the regulator’s decision aside.

Had the interim increase not been granted, the tariffs would have risen by 3.5 percent from April 1, Moneyweb reported.

Eskom would not comment on the court’s decision directly, saying in a statement it would await a decision by the regulator.

 

(Reporting by TJ Strydom)

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