MENU

Latest Updates from Reuters
Category

Africa’s major central banks embarking on policy easing cycle ride

20 July 2017 Comments (0) Latest Updates from Reuters

By Vuyani Ndaba

JOHANNESBURG (Reuters) – Africa’s major central banks are entering an easing cycle as they try to stimulate growth after months of drought, austerity drives and confidence issues across the continent, a Reuters poll found on Thursday.

Much of southern and eastern Africa is still recovering after an El Niño-related drought wilted crops last year. Poor business confidence in South Africa and foreign exchange restrictions in Nigeria have also hampered growth.

“We expect that African monetary policy is entering a widespread and protracted period of policy easing. This will provide a boost to growth,” said John Ashbourne, Africa analyst at Capital Economics.

Ghana, which agreed a three-year fiscal discipline deal with the International Monetary Fund in exchange for aid in 2015, cut 100 basis points from its benchmark interest rate in May and is expected to do the same on Monday, putting it at 21.50 percent.

Medians in the poll predict South Africa will make a first quarter trim of 25 basis points to 6.75 percent and while Kenya will hold steady on Monday it is expected to cut 100 basis points to 9.00 percent in the second quarter of next year.

Nigeria is expected to hold rates at 14.0 percent on Tuesday, and through this year, but will reduce borrowing costs by 175 basis points across 2018.

BATTERED CONFIDENCE CHIPS AT GROWTH

Aly-Khan Satchu, CEO of Nairobi-based Rich Management said policymakers in Africa’s biggest economies have lost credibility and it would be difficult to regain that.

To try to reduce demand for dollars, Nigeria banned the importing of 41 items, but that only fuelled the gap between the official and black market rates for its naira currency.

The policy, alongside a commodity price slump that hurt oil exports, has since 2015 forced its central bank to hike the benchmark rate 300 basis points to 14 percent as it tried to deal with much faster inflation and restore the currency’s strength.

Nigeria — Africa’s biggest economy — fell into recession for the first time in 25 years in 2016 but is expected to turn in growth of 1.0 percent this year and 2.5 percent the following.

South Africa is expected to expand 0.7 percent this year after escaping a six-month recession last quarter that was partly due to weak confidence and drought.

Confidence in South Africa’s economy has been sapped by the chopping and changing of finance ministers four time since the end of 2015 by President Jacob Zuma. The last change in March triggered a credit rating downgrade to “junk” status.

Kenya is expected to grow 5.2 percent this year and 5.9 percent next.

Growth slowed to 4.7 percent in the first quarter, hit by a credit slow down after authorities late last year capped the interest banks could charge on loans.

However, Ghana is expected to fare better than most, growing 6.1 and 6.8 percent in 2017 and 2018 respectively, supported by the IMF programme, recovering from 3.5 percent last year.

On Tuesday, President Nana Akufo-Addo said Ghana would not extend its three-year aid programme with the IMF beyond April 2018, but the fund urged it to do so to allow time to complete the programme’s goals.

 

 

(Editing by Jonathan Cable/Jeremy Gaunt)

 

Read more

Former Etisalat Nigeria, 9mobile, is open to new investors: CEO

20 July 2017 Comments (0) Latest Updates from Reuters

By Chijioke Ohuocha

LAGOS (Reuters) – Telecoms group 9mobile is open to new investors but will continue to manage the business in the meantime, its chief executive said on Wednesday at an event to officially announce the company’s new name to replace Etisalat Nigeria.

UAE’s Etisalat terminated its management agreement with its Nigerian business in June and surrendered its 45 percent stake to a trustee following regulatory intervention to save the local company from collapse due to debt.

9mobile CEO Boye Olusanya said the company had retained its workforce and that Etisalat’s withdrawal had not led to a loss of business opportunities.

“Like any business we are always available for someone with a good offer … but we are prepared to manage this business for the long haul,” Olusanya said at the event in Lagos.

“This brand was not developed with the mindset that it’s a three-month brand.”

He declined to say how much the re-branding cost.

9mobile has 20 million subscribers, making it the country’s number four mobile operator with a 14 percent market share. South Africa’s MTN has 47 percent, Globacom 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 percent.

Etisalat Nigeria had been in talks with its lenders to restructure a $1.2 billion debt after it missed repayments, but the discussions failed to produce a deal, forcing the banks to step in and order shareholders to transfer their shares to a loan trustee.

Lenders have now taken control and appointed a new team to manage the company with a focus on getting it back to profitability while working to eventually raise new capital.

“If at any point in time someone does come in with an offer that is attractive then that person will have the right to do whatever they want to do with the brand,” Olusanya said.

The telecoms regulator, Nigerian Communications Commission (NCC) approved the brand name change on Tuesday.

Under Nigeria’s telecoms law, the regulator has to also approve a transfer of telecoms licences or any new investor in a telecoms company with more than 10 percent of the shares.

NCC spokesman Tony Ojobo told Reuters that the brand name change did not affect the terms of the license which was granted to a Nigerian entity known as Emerging Markets Telecommunication Services (EMTS). He said it was a change to its trading name.

 

(Editing by Susan Thomas)

Read more

Guinea Bissau reaches $47 mln deal on submarine cable

20 July 2017 Comments (0) Latest Updates from Reuters

BISSAU (Reuters) – Guinea Bissau has agreed a memorandum of understanding with the World Bank, Orange and MTN for a $47 million project to link the country to a submarine telecoms cable connecting Africa with Europe, the government said on Wednesday.

Under the agreement, French telecoms company Orange and South Africa’s MTN Group will form a consortium with the government of the West African country, the statement by the finance and transport ministries said.

“The World Bank unlocks $31.596 million in the form of a loan to connect Bissau to the international fibre optic cable,” said the finance and transport ministries in a joint statement.

Guinea Bissau will be hooking up to the ACE (Africa Coast Europe) cable, the statement said, one of five linking countries in West Africa to Europe. Guinea Bissau will the be last coastal country in the region to link to a submarine cable.

Orange and MTN will provide about $8 million each over a five-year period, the statement said.

The project is due to be completed in 18 months and officials said it would improve internet speeds and reduce communication costs in the poor, Portuguese-speaking country.

Only 3.8 percent of individuals in the country of 1.8 million are internet users, according to the U.N.’s International Telecommunication Union.

 

(Reporting by Alberto Dabo; writing by Emma Farge; editing by David Clarke)

Read more

Ghana president says will not extend three-year IMF aid programme

19 July 2017 Comments (0) Latest Updates from Reuters

ACCRA (Reuters) – Ghana will not extend its three-year aid programme with the International Monetary Fund beyond April 2018, President Nana Akufo-Addo said on Tuesday, despite continuing fiscal difficulties.

The president’s announcement is a surprise turnaround after government officials said last month that Ghana was considering a request by the Washington lender to extend the programme to December 2018.

An extension would have reassured markets of the government’s commitment to fiscal discipline, analysts say.

Akufo-Addo said, however, the government was on target with its policy to restore growth and create private sector jobs.

“There is no question about the IMF programme being extended beyond April 2018. We want to complete it and move on,” Akufo-Addo told reporters.

The $918-million agreement was signed in April 2015 to address problems of slow growth and high public debt.

The IMF said in May that an extension was needed after Ghana failed to meet certain deal requirements on schedule.

 

(Reporting by Kwasi Kpodo; Editing by Edward McAllister and Alison Williams)

 

Read more

Ethiopia plans to offer firms shares in road projects: finance minister

19 July 2017 Comments (0) Latest Updates from Reuters

By Aaron Maasho

ADDIS ABABA (Reuters) – Ethiopia plans to offer shares in its road-building and maintenance projects to private investors, its finance minister said on Tuesday, the latest step to open up and modernise the state-led economy.

The Horn of Africa country has over 113,000 kilometres (68,0000 miles) of paved roads and plans to increase that to 220,000 kilometres by 2019/20, official data showed.

“We do not have private-run roads. Through public-private partnerships, the private sector is interested to develop roads,” Minister of Finance and Economic Development Abraham Tekeste told Reuters in an interview.

“Through this arrangement, we could work to share the risks and create an environment whereby the private sector can recoup returns on its investment.”

The move to partly liberalise the sector follows Ethiopa’s decision to offer foreign companies stakes in the government-operated Ethiopian Shipping and Logistics Services Enterprise early this year and its energy sector in 2013.

Ethiopia is one of the fastest-growing economies in Africa, but the expansion has mainly been fuelled by huge public investment. The spending has gone into roads, schools, new highways and dams for hydroelectric power.

It opened an electrified railway linking the landlocked nation to a port in neighbouring Djibouti this year.

Abraham said the government expected gross domestic product to grow 11 percent in the 2016/17 fiscal year, up from 8 percent the previous period.

Earlier this month, Ethiopia’s parliament passed a 320.8 billion-birr ($13.9 billion) budget for the 2017/18 financial year (July 8-July 7), an increase of nearly 17 percent on the previous year. About a quarter of that amount is set to be spent on roads.

The International Monetary Fund has said Ethiopia needs to attract more private investment to maintain growth. But the government has in the past tended to brush off such advice and said it would keep charge of key sectors.

“Why do we continue to invest in infrastructure? To make private investment feasible. With no roads, private investment will not be worthwhile,” Abraham said.

Though starting from a low base, foreign investment has also been rising the last five years, including for farms producing flowers and other horticultural products for export and in textiles.

Abraham said Ethiopia took in over $3 billion in foreign direct investment last year and expected that number to rise by the end of this year.

 

 

(Editing by Duncan Miriri, Larry King)

Read more

South Sudan’s president declares state of emergency in home state

18 July 2017 Comments (0) Latest Updates from Reuters

NAIROBI (Reuters) – South Sudan’s President Salva Kiir has declared a three-month state of emergency in his home state, where clashes have raged for months between clan-based militias, the government spokesman said on Tuesday.

Michael Makuei, who is also the information minister, said the army would be given powers to stop the fighting in Gogrial state, and that citizens’ rights would be suspended, though the presidency has not announced which rights will be curtailed.

Local media said dozens of people had been killed in the fighting in the state in the country’s north, though Reuters could not independently verify the number of those killed.

Makuei said the state of emergency also applied to the neighbouring areas of Tonj, Wau, and Aweil East.

Wau has experienced fighting this year between government forces and rebels under former vice president Riek Machar, an ethnic Nuer, who is waging an insurgency in much of the country.

South Sudan descended into civil war in December 2013, largely between soldiers and militia from the Dinka and Nuer ethnic groups. The war has killed tens of thousands of people and displaced nearly 4 million people from their homes.

The clashes in Gogrial have been between militiamen from the Apuk and Aguok clans of the Dinka group, which Kiir belongs to.

“The president declared a state of emergency in order to bring this situation under control,” Makuei told Reuters by telephone.

“These are tribal fights which are connected to issues of land, grazing areas,” Makuei said.

Separately, 36 people were killed over the weekend in an attack on a village near Bor town in the Dinka-dominated central Jonglei state, the United Nations said Tuesday.

The United Nations said its peacekeepers were treating some of the 24 people injured in the attack.

Makuei, who is from Bor, blamed militia from the Murle tribe from neighboring Boma state for committing the attack and stealing thousands of cattle. Bor Dinka and Murle militia clashed earlier this year before signing a cessation of hostilities in May.

The minister said the Boma governor was summoned to a security council meeting and directed to apprehend those responsible for the attack.

Deadly cattle raids are common in South Sudan, an impoverished country awash in automatic weapons where livestock are used as money.

 

(Editing by Duncan Miriri and Alison Williams)

 

Read more

Holcim to wind up Nigerian company next month

18 July 2017 Comments (0) Latest Updates from Reuters

LAGOS (Reuters) – Holcim Nigeria plans to pass a resolution next month to dissolve the company after its Swiss-based parent firm merged with French rival Lafarge two years ago, the cement maker said on Tuesday.

Holcim Nigeria is now part of Lafarge Africa following a mega-merger in 2015 to create the world’s biggest cement maker LafargeHolcim.

LafargeHolcim Chairman Beat Hess has said the company was still adjusting its structures in big markets where both Lafarge and Holcim are present following the merger.

The cement maker said it will present the final accounts of Holcim Nigeria as part of the voluntary winding up process at a meeting of shareholders on Aug. 21.

Lafarge Africa expects to generate cost saving synergies of 9 billion naira ($46 million) by 2018 in Nigeria, following the merger, it has said.

The Nigeria-based business of the Franco-Swiss cement group is in the market to raise 140 billion naira in fresh equity and convert some loans into shares as part of a planned rights issue after it reported losses last year.

LafargeHolcim has said it will take part in a capital increase of the Nigerian unit to avoid diluting its nearly 73 percent stake, in a move which would also help simplify the ownership structure in Nigeria.

 

(Reporting by Chijioke Ohuocha, editing by David Evans)

 

Read more

Cash-strapped Zimbabwe needs $274 million for 2018 election

18 July 2017 Comments (0) Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe’s election agency said on Tuesday it needs $274 million to finance next year’s presidential and parliamentary elections, in which President Robert Mugabe plans to contest aged 94.

Zimbabwe is suffering severe cash shortages and Mugabe’s government is struggling to pay its workers on time while many businesses can’t fund the imports they need.

But Rita Makarau, the Zimbabwe Electoral Commission chairperson, told a parliamentary committee that she was confident the national treasury would make the money available.

“A consolidated budget requirement has since been submitted to treasury for funding in the sum of $274 million,” said Makarau, adding that a new voter register would be completed by December.

Mugabe, Africa’s oldest leader, has been in power since Zimbabwe gained independence from Britain in 1980 and is bidding for another five-year term, his last allowed under the constitution.

Elections should be held not more than 30 days before Aug. 22, 2018 unless parliament elects to dissolve itself, which would trigger an early vote, the constitution states.

Last week, Zimbabwean police sprayed tear gas and fired water cannon at opposition supporters protesting against what they say is the slow pace of electoral reforms ahead of 2018 polls.

 

(Reporting by MacDonald Dzirutwe; Editing by Joe Brock)

 

Read more

‘Chill’, Kenya central bank tells shilling speculators as election nears

18 July 2017 Comments (0) Latest Updates from Reuters

By Duncan Miriri

NAIROBI (Reuters) – Speculators against Kenya’s shilling in the run-up to national elections should “chill”, and a fall in its foreign exchange reserves is no cause for alarm, the head of its central bank said on Tuesday.

The bank’s hard currency reserves dropped to $7.80 billion – or 5.2 months of imports – last week, and traders said the central bank had sold dollars in the market at least twice since Thursday to support the local currency.

“We believe that our (reserves) cover is adequate,” Njoroge said, adding that some of the recent pressure on the shilling was due to bets on the outcome of the election, which takes place on Aug. 8.

“There is a lot of speculation out there… and frankly some of those speculators need to chill,” he told a news conference at the central bank.

Elections can be fraught and tense occasions in Kenya. The most recent one in 2013 passed relatively peacefully, but violence following the previous ballot in 2007 killed around 1,200 people.

At 10:10 GMT on Tuesday, the shilling was little changed at 103.80 per dollar.

Central bank currency reserves reached at record $8.27 billion at the end of May, central bank data showed. Given the drop since then, traders have expressed concerns about the bank’s ability to intervene further to support the shilling should the need arise.

The Kenyan currency has been broadly stable against the dollar this year and Njoroge said this trend should continue as inflation eased.

He said he expected annual inflation to drop into the government’s preferred band of 2.5-7.5 percent within two months as food prices continued to fall.

Headline inflation raced to a five-year high of 11.7 percent in May following a drought, but it fell to 9.21 percent last month after rains boosted supplies.

“We expect (inflation) to breach 7.5 (percent) within this quarter,” the central bank head said.

He linked the fall in currency reserves to government payments of just over half a billion dollars that were included in the budget.

Njoroge said concerns about the recent closures of at least 10 bank branches by Barclays Kenya and other lenders was “overblown,” saying technological innovations such as mobile phone banking were reducing the need for physical branches.

“We cannot just be stuck on brick and mortar,” he said.

 

(writing by John Stonestreet)

 

Read more

Mazda recalls additional 19,000 vehicles in South Africa over airbag scare

17 July 2017 Comments (0) Latest Updates from Reuters

CAPE TOWN (Reuters) – Mazda Motor Corp. is recalling 19,000 cars in South Africa due to airbag safety concerns as the Japanese carmaker extends a global recall to cover a wider manufacturing period, its local unit said on Monday.

The recall was prompted by investigations in Japan and North America for three different types of Takata Corp manufactured airbags over safety concerns that inflators were defective.

The U.S. National Highway Traffic Safety Administration said in July that new testing was prompting Takata Corp to declare 2.7 million air bag inflators defective in Ford Motor Co, Nissan Motor Co and Mazda vehicles.

Takata air bag inflators have been linked to 17 deaths and more than 180 injuries worldwide, and the recalls will eventually cover about 125 million inflators.

 

(Reporting by Wendell Roelf, editing by Louise Heavens)

 

Read more