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Kenya’s central banker urges firms to invest after surprise rate cut

20 March 2018 Comments (0) Actualites, Africa, Economy

NAIROBI (Reuters) – Kenya’s central bank hopes its surprise interest rate cut this week will encourage firms to invest more to spur lagging economic growth, Governor Patrick Njoroge said on Tuesday.

Growth slid to an estimated 4.8 percent last year from 5.8 percent the year before, mainly due to a drought, a prolonged presidential election and a sluggish private sector credit growth.

The finance ministry expects growth to rebound to 5.8 percent this year but pressure to rein in the fiscal deficit could see the government scale back on ambitious infrastructure projects, weighing down economic output.

“It really has to be the private sector that picks that up,” Njoroge said. “We will have to re-balance away from public sector driven to private sector driven economic growth.”

Kenya’s total debt has risen to about 50 percent of GDP, from 42 percent in 2013, as it borrowed locally and abroad to build infrastructure including a new railway line from Nairobi to the port of Mombasa.

The government has pledged to cut the fiscal deficit to 7 percent of GDP at the end of this fiscal year in June, from 8.9 percent in 2016/17, and to less than 5 percent in three years.

Monday’s 50-basis-point cut in the benchmark lending rate to 9.5 percent took much of the market by surprise, with seven of 11 analysts polled by Reuters having forecast no change.

Njoroge said a cap on commercial interest rates could interfere with the aim of the easing stance of boosting credit, as banks lock out borrowers who are deemed too risky.

“We may have a perverse reaction, where indeed, the lowering of the CBR rate leads to a reduction in the level of credit,” he told a news conference. “We will stand ready to take any action to counter if it actually began to manifest itself.”

Private sector credit increased by 2.1 percent in the year to February, well below the central bank’s target of 12-15 percent.

Njoroge said the central bank is pushing commercial banks to be less careless in their lending and correctly asses the risk profiles of borrowers when writing loans.

“The point here is not just having low interest rates … the fundamental issue is to have risk-based pricing of loans,” Njoroge said.

 

(By Omar Mohammed; Additional reporting by George Obulutsa; Editing by Duncan Miriri and Andrew Heavens)

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Gold falls for fourth day as dollar stays firm ahead of Fed meeting

19 March 2018 Comments (0) Actualites, Economy, US

(Reuters) – Gold prices extended losses into a fourth session on Monday and hit a more than two-week low, with the dollar remaining supported as investors expect the U.S. Federal Reserve to raise interest rates this week.

Spot gold was down 0.2 percent at $1,310.03 per ounce at 0735 GMT. Prices fell to $1,307.51 earlier in the session, their lowest since March 1.

U.S. gold futures for April delivery dropped 0.2 percent to $1,309.40 per ounce.

“I think the overall economic recovery is good enough for the (U.S.) central bank to consider a faster pace of normalization of monetary policies,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

A two-day Federal Open Market Committee (FOMC) meeting begins on Tuesday, with the U.S. central bank expected to hike interest rates for the first time this year.

“It is somehow expected and is already priced in the market so I stick to my prediction that precious metals, with gold included, are going to have range-bound trading, unless something really surprising happens,” said To.

With a 25 basis point rate hike seen as a done deal, one key focus is on whether Fed policy makers forecast four rate hikes this year instead of the three they had projected at December meeting.

Gold is highly sensitive to rising U.S. interest rates, becoming less attractive to investors as it does not bear interest.

The dollar inched higher against a basket of major peers on Monday as traders braced for the Fed meeting and as the increased threat of trade protectionism kept markets on edge. [USD/]

The dollar index was up 0.1 percent at 90.302. On Friday, it hit a two-week high near 90.38, following strong U.S. economic data.

“Potential market headwinds from the underlying (susceptibility) to risk-appetite, heightened (geo) political tensions, inflation concerns, Russia tensions, to name a few, could help keep the floor on gold prices in check,” Stephen Innes, APAC trading head at OANDA, said in a note.

Gold speculators cut their net long position by 16,153 contracts to 145,659 contracts, according to the U.S. Commodity Futures Trading Commission (CFTC) data. This was the smallest net long position since early January.

Among other precious metals, silver was down 0.3 percent at $16.26 per ounce and palladium inched 0.1 percent lower to $993.90 per ounce.

Platinum was 0.5 percent lower at $938.49 per ounce after falling to its lowest since Jan. 3 at $936.50.

 

(Reporting by Eileen Soreng in Bengaluru; editing by Joseph Radford and Subhranshu Sahu)

 

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Nigeria and Kenya inching closer to interest rate cuts

15 March 2018 Comments (0) Actualites, Africa, Economy

JOHANNESBURG (Reuters) – Nigeria and Kenya will follow Ghana’s lead and cut rates in the third quarter, a Reuters poll found, as long as there is a monetary committee quorum in Abuja and an easier commercial lending policy in Nairobi.

A Reuters poll of 11 analysts for some of Africa’s major central banks, taken in the past four days, found the majority saying Nigeria and Kenya’s benchmark rates will remain at 14.0 and 10.0 percent respectively next week.

Eight of the 12 members still need to be appointed to Nigeria’s Monetary Policy Committee (MPC) – so there is unlikely to be a meeting next week – while Kenya remains hamstrung by a bill limiting commercial lending rates to 4 percentage points above its official rate.

Nigeria’s central bank was forced to cancel its January meeting as it was unable to reach a quorum. But the Senate plans to start screening new members for the interest rate committee after it held up some of President Muhammadu Buhari’s nominees in a political spat.

Inflation in both Nigeria and Kenya slowed recently, making both ripe for easier policy, and according to the poll there will be 200 and 100 basis points worth of cuts coming this year, respectively.

“There is a case for policy loosening in Nigeria and Kenya, but inflation in Nigeria has been stickier at least until February and the delay in appointing new members of the MPC has also held up policymaking,” said John Ashbourne, Africa economist at Capital Economics.

Nigeria has navigated several challenges in the past three years, dealing with dollar shortages and an economy that came out of its first recession in a generation in 2017.

But growth in the last quarter of 2017 rose to 1.92 percent compared to a 1.73 percent contraction in the same period of the previous year.

On Wednesday the International Monetary Fund approved a request by Kenya to extend by six months a stand-by loan that was due to expire at the end of March, giving it time to finish mandatory reviews.

Amending a bill on interest limits for commercial bank loans is one of the conditions the IMF needed to approve the “rainy day” loan facility and so an amendment could happen soon, said Aly-Khan Satchu, CEO of Rich Management in Nairobi.

The bill meant banks decided a large number of borrowers – mainly small traders and informal sector workers – were too risky to receive loans.

Unless the bill is scrapped or modified to take advantage of slower inflation and rates fall further, banks are likely to exclude yet more would-be borrowers from credit – effectively tightening rather than easing monetary conditions.

After 600 basis points worth of cuts in the past two years, Ghana is expected to press on and cut 100 basis points to 19.0 percent later this month and then continue chopping until it reaches 17.0 percent by end-year.

South Africa, Africa’s most industrialised economy, is also closer to cutting rates this year but it depends heavily on a decision by Moody’s ratings agency later this month. [ECILT/ZA]

(By Vuyani Ndaba)

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Spotify enters into the South African market

13 March 2018 Comments (0) Actualites, Africa, Business, Economy, Entertainment and Lifestyle, Technology

JOHANNESBURG (Reuters) – Global music streaming provider Spotify launched its services in South Africa on Tuesday, marking its entry into Africa, where there is a rapid uptake of smartphones and improving telecommunications infrastructure.

The Swedish company, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc, Amazon.com Inc and Alphabet Inc’s Google Play as its main rivals.

The South Africa launch comes as Spotify prepares for a direct listing of its shares on the New York Stock Exchange, which will allow investors and employees to sell shares without the company raising new capital or hiring Wall Street banks to underwrite the issue.

“We believe South Africa is a wonderful country to start in,” Spotify Managing Director in Middle East and Africa Claudius Boller told Reuters on the sidelines of the launch.

“We looked at the technology landscape, we looked at the maturity and actually South Africa is seen globally as a very important music market.”

Spotify also has aspirations to branch out into the rest of Africa, Boller said, without committing to timelines or geographies.

An increase in connectivity across South Africa, helped by higher investment in infrastructure, as well as a growing uptake in credit cards and bank accounts has drawn global video and music streaming providers.

Its music streaming market is dominated by players such as Apple Music, Google Play, France’s Deezer and Simfy Africa, with only a few local operators such as mobile phone operator’s MTN and Cell C with MTN Music+ and Black.

Internet and entertainment firm Naspers also recently launched music streaming platform Joox, from China’s Tencent, in which it holds a 33 percent stake.

In its filing to list its shares, Spotify said its operating loss widened to 378 million euros ($465.32 million) in 2017 from 349 million euros.

($1 = 0.8123 euros)

 

(Reporting by Nqobile Dludla; editing by Jason Neely and Pritha Sarkar)

 

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Nigeria increases excise duties on tobacco and alcohol

12 March 2018 Comments (0) Actualites, Africa, Economy, Health, Politics

ABUJA (Reuters) – Nigeria’s President Muhammadu Buhari has approved an increase in excise duties on tobacco and alcoholic beverages, the finance ministry said in a statement on Sunday.

The west African country, which has Africa’s biggest economy, fell into recession in 2016 largely due to low oil prices. It emerged from recession last year, mainly as a result of higher crude prices, and is trying to raise non-oil revenues.

In addition to a 20 percent tax on tobacco, the government will add an extra fixed tax per cigarette. A percentage tax on alcoholic beverages will be replaced by taxes of fixed amounts based on volume.

The finance ministry said the changes will take effect from June 4 this year.

The move would have “a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse,” it said in its statement.

The ministry said the new regime was in line with a directive from the Economic Community of West African States (ECOWAS) regional bloc on the harmonisation of member-states’ legislation on excise duties.

Raising duties in Nigeria for alcohol could further hit consumer demand amid fragile growth.

Anheuser-Busch InBev (AB InBev), the world’s largest beer maker, expects its new $250 million brewery being built in Sagamu, Nigeria, to start production in the middle of this year, its head of Africa head has said.

 

(By Camillus Eboh and Chijioke Ohuocha. Writing by Alexis Akwagyiram; Editing by Peter Graff)

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Ivory Coast to reduce cocoa output over next two years

10 March 2018 Comments (0) Actualites, Agriculture, Business, Economy

ABIDJAN (Reuters) – Ivory Coast’s Coffee and Cocoa Council (CCC) will suspend programmes for the 2018-19 season that boost cocoa output, it said on Friday, aiming to reduce production in the face of global oversupply.

The marketing board plans to halt distribution of higher-grade seeds and plants by chocolate makers, including Mars and Nestle, that develop hybrid species that they pass on to farmers to increase yields.

Those programmes helped to increase output in the world’s top grower to record highs last year but added to a supply glut that has depressed prices worldwide.

“Given the increase in global cocoa supply and falling prices since 2016/17, the CCC has decided to carry out a census of the coffee and cocoa orchards,” the CCC said in a statement. It did not say when the census would begin.

“Pending the finalisation of this census, we inform you of our decision to temporarily suspend any distribution of improved plant material, seeds, cuttings, etc, from the 18/19 season.”

Output in Ivory Coast has risen from 1.6 million tonnes 10 years ago to 2 million tonnes in the 2016-17 season because of higher yields, but global demand has failed to meet supply. The CCC expects production for the 2017-18 season to slip to 1.9 million tonnes, partly because of bad weather.

High-level sources at the CCC said the organisation wants to try to reduce output to between 1.7 million tonnes and 1.8 million tonnes over the next two years, affecting exporters and chocolate makers that also include Ferrero, Cargill, Olam, Cemoi and Cocoa Barry.

“Our goal is to control our production because these last 10 years, it is these programmes initiated by chocolatiers … that increased our production from 1.6 million to 2 million (tonnes),” a CCC source said.

Separately, the CCC has begun a three-year programme to uproot 300,000 hectares of cocoa infected by swollen shoot since January. The CCC source said that 25,000 hectares have been cleared already, which will also help to reduce growing capacity in the coming years.

 

(Reporting Ange Aboa; Writing by Edward McAllister; Editing by Jason Neely and David Goodman)

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South Africa’s RCL Foods expands in pet food to beat drought

2 March 2018 Comments (0) Actualites, Africa, Business, Economy, Environment

RANDFONTEIN, South Africa (Reuters) – South Africa’s RCL Foods has completed a 123 million rand ($10 million) expansion at its pet food plant to help reduce its exposure to a poultry business hit by drought and cheap imports.

Food companies in South Africa have been struggling with an El Niño-induced drought that drove up the price of ingredients such as maize, while poultry farmers have also faced competition from Brazil, the European Union and the United States.

RCL is aiming to tap into the country’s 5 billion rand ($418 million) a year pet food industry, which is less exposed to individual commodities, as part of a strategy to diversify, CEO Miles Dally said at a plant visit late on Thursday.

“Ideally we would like less impact from things like drought and dumping,” he said.

“Our vision has always been clear, to create a major food business,” he added, referring to the pet food division.

RCL’s expansion in Randfontein, west of Johannesburg, will boost its pet food production to 12,000 tonnes per month from 7,000 tonnes.

The company, which saw first-half profit plunge 54 percent last year, this week reported an increase for the first six months of its current financial year, boosted by a decline in input costs and higher chicken prices.

The firm cited lower poultry imports, which were reduced in part by an outbreak of bird flu in Europe.

RCL’s pet food business, which has annual revenue of around 1 billion rand, aims to grow by as much as 20 percent per year, Dally said, adding the firm would look for acquisitions to bolster the business.

The company currently produces over 20 brands including Rainbow chicken products, Nola mayonnaise, Yum Yum peanut butter, Bobtail dog food and Selati sugar products.

RCL cut 1,350 jobs and reduced production by 50 percent at its Hammersdale factory in the KwaZulu-Natal province in November 2016 as the chicken imports and drought took a toll.

($1 = 11.9204 rand)

 

(By Tanisha Heiberg; Editing by James Macharia and Mark Potter)

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IMF tells Ghana to adopt new revenue plan before April review

2 March 2018 Comments (0) Actualites, Africa, Economy, Politics

ACCRA (Reuters) – Ghana must legislate new measures to boost revenues by at least 0.5 percent of gross domestic product before the IMF reviews a $918 million credit deal next month, the Fund said.

The West African nation must also outline plans to clean up the financial sector and show stronger commitment to cut debt, including limiting its next Eurobond for budget support to $500 million, IMF said in a document seen by Reuters.

Finance Minister Ken Ofori-Atta said last week the government planned to issue up to $2 billion of sovereign issuance by June to pay down debt that hit 68.7 percent of GDP last November and help finance the 2018 budget.

Ghana is seeking a combined fifth and sixth review of the IMF programme in early April, government and IMF sources told Reuters. The fifth review, originally scheduled for December, had delayed pending implementation of benchmark structural reforms.

“Parliament to adopt revenue measures equivalent to 0.5 percent of GDP (one billion cedis) by March 31 and do more later,” the Fund said. The document, dated Feb. 26, formed the basis for talks between an IMF staff mission and the government this week.

The mission left Accra on Thursday after discussing the actions required for the next review, as well as other reforms needed to exit the programme early next year. It is unclear if the talks were conclusive.

Ghana, which exports cocoa, gold and oil, is in its final year of the programme, designed to stabilise an economy dogged by high inflation and debt, and low growth.

The Fund said the government must publish by end of March an agreement between the Finance ministry and Bank of Ghana to reinforce zero financing of the budget deficit, a core condition of the programme.

The government of President Nana Akufo-Addo, inaugurated in January 2017 said it inherited $2.3 billion in accumulated debt owed to power utilities and has launched long-term bonds for repayment. It is also probing unpaid contract arrears of around $1.6 billion.

The IMF said while the country made progress, the central bank must adopt a fully market-based foreign exchange management policy and cut non-performing loans.

The government aims to cut the budget deficit to 4.5 percent of GDP in 2018 from a revised 6.3 percent while inflation is projected to fall to 8.9 percent. It sees GDP growth at 6.8 percent from a projected 7.9 percent in 2017.

 

(Reporting by Kwasi Kpodo; editing by John Stonestreet)

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Barclays Africa lifts profit, looks to Nigeria for growth

1 March 2018 Comments (0) Actualites, Africa, Business, Economy, Leaders, Politics

By Ed Stoddard

(Reuters) – Barclays Africa Group, South Africa’s No.2 lender by market value, plans to extend its reach throughout the continent, it said on Thursday after posting annual profit up nearly 4 percent.

Chief Executive Maria Ramos said the bank, which is changing its name back to South African brand Absa after its split from former parent Barclays, aims to enter Nigeria as it seeks to lift its share of the African market to 12 percent from 6 percent over the medium term.

Finance Director Jason Quinn told Reuters that Nigeria has been in its sights for some time.

“We would have to think carefully about how and when to enter the Nigerian market and that is what we are going to start doing,” he said.

“We have to decide how we enter, whether we acquire or build.”

The bank had earlier reported normalised diluted headline earnings per share — the primary measure of profit in South Africa, stripping out one-off items — up 3.9 pct at 1,837.7 cents for the year to Dec. 31, helped by a 20 percent drop in credit impairments.

Net interest income, a gauge of lending profitability, rose by 1 percent to 42.32 billion rand ($3.56 billion), while its net interest margin was unchanged at 4.95 percent.

Growth in the United States was the positive surprise in the second half, even as Europe, Japan and China grew at or above consensus expectations, the bank said.

This more than made up for slow economic expansion in its main markets, which account for about 80 percent of group income.

Barclays Africa and its rivals have struggled to increase lending as slowing economic growth in many African markets tempers demand from corporate clients while retail clients in its home South African market feel the squeeze from rising interest rates.

However, confidence in its domestic market has been buoyed by the Cyril Ramaphosa’s elevation to the South African presidency last month, pledging to revitalise the economy.

Barclays Africa said it expects growth in loans and deposits to improve in 2018 and forecast stronger loan growth from the rest of Africa. It also forecast stronger loan growth in corporate and investment banking in South Africa.

($1 = 11.9025 rand)

(Additional reporting by Tiisetso Motsoeneng in Johannesburg and Esha Vaish in Bengaluru; Editing by Stephen Coates and David Goodman)

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