By Paul Carsten, Ulf Laessing and Chijioke Ohuocha

ABUJA/LAGOS (Reuters) – Nigeria wants to borrow at least $1 billion from the World Bank to help haul it out of recession and plans to present the required economic reform proposals to the lender this month, officials and diplomats told Reuters.

The oil producer, which has been hit hard by a sharp fall in crude prices since 2014, has been in talks with the Washington-based lender for a year to secure a loan to help plug a yawning budget deficit and fund badly needed infrastructure projects.

But the government has not specified how much money it was looking to borrow from the World Bank, saying only that it aimed to raise $5 billion abroad. It was previously also unclear when Nigeria planned to present its proposed reforms to the lender – which will not consider a loan before it reviews the plans to make the economy more resilient and attractive to investment.

The government now plans to present its economic reform proposals by the end of February, according to government officials and Western diplomats who declined to be named as they are not authorised to speak publicly.

One senior government official said Nigeria would seek a loan of $1 billion from the World Bank, while a second senior official said it could seek as much as $2 billion.

The Nigerian finance ministry declined to comment on the size of the loan being sought or the timing of the submission of the reform proposals.

The World Bank also declined to comment on those matters. A spokeswoman said Nigeria’s economic proposals would be the “basis of which the World Bank will determine with the government the most appropriate lending instrument to support the implementation of the reform plan”.

It was unclear what the government’s economic reform programme would contain.

NEW ROADS

Nigeria, which relies on oil revenue for most of its income, is struggling to drag itself out of its first recession in 25 years. It needs money to help plug a budget deficit of 2.2 trillion naira ($7 billion) for 2016 and help fund a record budget of 7.3 trillion naira for 2017 aimed at stimulating the economy.

It had planned to apply for a World Bank loan last year but the process had ground to a halt because it failed to submit its economic recovery plans by the end of December as initially promised, sources told Reuters last month. [nL5N1F81XP]

The African Development Bank (AfDB), meanwhile, is holding back the second, $400 million, tranche of a $1 billion loan because it is also awaiting the reform plans.

Nigeria will present its economic proposals to the AfDB at the same time as the World Bank, according to the government officials.

A spokeswoman for the Abidjan-based AfDB declined to comment.

It is unclear why the government has not previously submitted its reform plans to the two international lenders. A funding deadlock could throw into doubt badly needed projects planned for this year, including new roads and improvements to power infrastructure.

The government is selling $1 billion of Eurobonds this week but this falls short of the $5 billion Nigeria said a year ago it wanted to borrow abroad including the World Bank.

‘CRITICAL REFORMS’

Nigeria’s government has butted heads with investors over the best course for the economy.

A reluctance by Nigerian authorities to apply a more flexible foreign exchange rate policy and other macroeconomic reforms to stimulate foreign investment has hampered talks to secure loans abroad.

The AfDB has criticised Nigeria’s central bank’s decision to curb access to hard currency, which has forced the closures of manufacturing plants unable to import raw materials.

The World Bank says it supports “critical reforms for restoring macroeconomic resilience”. Western diplomats say the bank wants to see how Nigeria plans to lower its dependence on oil revenues and boost investment, which has been hit by a high official exchange rate for the naira currency.

Nigeria’s central bank, backed by President Muhammadu Buhari, has kept the naira rate to the dollar at 40 percent above the unofficial – or parallel – market rate, which has dried up dollar supplies on official channels.

The policy has also made investors reluctant to commit new projects as they expect the central bank will have to devalue the naira eventually.

($1 = 315.0000 naira)

(Additional reporting by Felix Onuah, Oludare Mayowa and Joe Bavier; Writing by Ulf Laessing; Editing by Pravin Char)

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By Ed Stoddard

CAPE TOWN (Reuters) – The expected demise of transparency regulations for minerals and oil companies listed in the United States will not cloud the global drive for financial clarity in extractive industries, company executives told Reuters at an Africa mining conference.

Efforts to shine a light on payments such companies make to foreign governments are considered key to eliminating graft, conflict and the so-called resource curse – the distressingly common failure of less developed countries to translate mineral wealth into wide prosperity.

The administration of U.S. President Donald Trump, however, has begun dismantling such transparency requirements.

Republican-controlled Congress last week repealed one such rule and Trump also plans to issue a directive ordering suspension of another that requires companies to disclose whether their products contain “conflict minerals” from a war-torn part of Africa.

But companies with European Union and Canadian listings – or which work in countries that have signed up to the voluntary Extractive Industries Transparency Initiative (EITI) – still have to abide by strict disclosure rules, executives say.

“Over half of our members would fall into this category,” the chief executive of the International Council on Mining and Metals (ICMM), which represents 23 leading mining companies, told Reuters.

Companies in this category include goliaths such as Rio Tinto and Anglo American, ICMM chief Tom Butler added.

‘SOCIAL LICENCE’

Butler was critical of the Trump administration’s actions, but said they would not derail the broader global push for increased transparency.

“It’s disappointing because overall the global trend is in the other direction. The train has left the station,” said Butler.

“It is driven by investors and other stakeholders and the desire of the industry to maintain its social licence to operate. One way to maintain that is for everyone to see that the taxes and other payments the mining industry makes are applied sensibly to the development of the country.”

Nick Holland, chief executive of South African bullion producer Gold Fields, which has a secondary U.S. listing, said that companies are not about to start altering their behaviour.

“We’re going the other way irrespective of the legislation. We’re not going to suddenly start doing deals with illegal miners to buy their gold,” he said.

That view is also supported by Vedanta Chief Executive Tom Albanese, who said that transparency builds trust.

“It allows for Vedanta to have a richer conversation with host governments around the world and makes the job of the chief executive easier in terms of engaging with host governments and stakeholders, which is one of the biggest challenges a mining CEO faces right now,” he said.

(Additional reporting by Barbara Lewis; Editing by James Macharia and David Goodman)

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By Alexander Cornwell

DUBAI (Reuters) – Dana Gas will not make new investments in Egypt because of delays in obtaining payments owed to it there, the chief executive of the United Arab Emirates company said.

Political and economic turbulence in Egypt and Iraqi Kurdistan mean Dana has struggled to secure revenues in either country, once again hitting its profit on Thursday.

Dana posted a $7 million net profit in the three months to Dec. 31, versus $134 million in the same period of 2015 when it benefited from a one-off legal settlement. Shares in Dana fell 3.7 percent following the results.

The amount owed by Egypt was $265 million as of Dec. 31, up from $221 million at the end of 2015, Dana said. Unpaid receivables from the Kurdistan Regional Government were $713 million, down slightly from $727 million in 2015.

“As uncertainty remains we must therefore be rigorous in balancing any additional capital investment in Egypt with actual collections,” CEO Patrick Allman-Ward told reporters.

Dana will complete current Egyptian investments in critical health, safety, security and environmental areas and all of its up-and-running projects, but all non-critical projects have been paused since the start of the year, he said.

The Egyptian government has been seeking to draw foreign investors back to its energy sector to boost shaky public finances, but it has failed to meet self-imposed deadlines for paying back international oil companies.

Dana had thought that part of a $12 billion loan from the International Monetary Fund loan agreed with Egypt in November would be used for payments to the petroleum sector, but the money had been “used for other purposes”, Allman-Ward said.

He now hoped part of a combined $5.5 billion that Egypt has secured through an international bond issue and loans from the World Bank and African Development Bank would be used to meet outstanding petroleum debts.

Dana’s investment freeze would be reviewed once it had been paid by the Egyptian government, Allman-Ward said, adding that the company wanted to continue developing its assets there.

Production from Egypt in the fourth quarter rose to 40,500 barrels of oil equivalent per day (boepd), up 31 percent on the year-ago period, Dana said, although it took a $20 million charge last year because of currency depreciation.

(Editing by Andrew Torchia and Alexander Smith)

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CAPE TOWN (Reuters) – South Africa will introduce a national minimum wage of 3,500 rand ($261) per month in 2018, Deputy President Cyril Ramaphosa said on Wednesday, following protracted negotiations between the government and labour unions.

Supporters of a minimum wage say it can stimulate growth as workers can spend more, as well as reducing inequality. Critics say it could lead to increased unemployment as employers will be unable to afford higher wage bills.

Credit ratings agencies have said agreeing a minimum wage would help Africa’s most industrialised economy hold onto its investment-grade rating by stabilising the labour market and reducing the number of strikes.

“The balance we have sought to strike is that it must not be too low, so that it doesn’t affect the lowest paid workers, but not too high that it leads to massive job losses,” Ramaphosa told a news conference.

Ramaphosa said the national minimum wage, which equates to 20 rand ($1.50) per hour, would come into effect in May 2018.

Businesses that are unable to afford the minimum wage would be permitted to apply for an exemption of up to 12 months, Ramaphosa said.

The Treasury had also thrown its political weight behind the policy initiative.

Chief economist at Nedbank Dennis Dykes said the agreement was a sign of an improving relationship between labour, business and government, but warned that its implementation needed to be monitored.

“It is by no means certain this will lead to job creation. It needs to be watched carefully for any negative effects,” Dykes said.

Monthly earnings for employees averaged 18,045 rand ($1,200) per month in May 2016, according to Statistics South Africa. But many workers earn far less than that, with domestic workers and farm labourers among the lowest paid.

Some unions had asked for a minimum wage of as much as 4,500 rand.

South Africa’s mining sector was brought to its knees by a crippling five-month stoppage over pay in 2014, pushing the economy to the brink of a recession.

South Africa’s unemployment rate hit its highest level on record, 27.1 percent of the workforce, in the third quarter of 2016, and it remains amongst the world’s most unequal societies.

($1 = 13.4200 rand)

(Writing by Mfuneko Toyana; Editing by James Macharia and Catherine Evans)

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By Clyde Russell

CAPE TOWN (Reuters) – It should be a match made in heaven. Developing Africa’s vast mineral resources to meet the needs of the resource-hungry economies of China and the rest of Asia.

But if there is one message to take away from this week’s Mining Indaba conference in Cape Town, it’s that there remains a large gap between hopes and reality, and that in much of sub-Saharan Africa mining investment remains challenging, if not in the too-hard basket.

In many cases, it appears that the various stakeholders in mining simply talk past each other, with mining companies pleading for regulatory certainty, preferably on favourable terms, and government leaders pushing their agenda that the industry must benefit all.

The main problem is that many African countries have what are effectively incompatible goals when it comes to developing their natural resources.

They want mining companies to invest billions of dollars to provide jobs and tax revenues, but they also insist that the same companies meet high hurdles relating to empowering various groups in the host country.

South Africa, the continent’s mining powerhouse, is a case in point.

The country’s mining charter calls for companies to have a minimum of 26-percent ownership by investors from the black majority.

In itself this is perhaps a sensible and justifiable position for the government, given how black South Africans were largely excluded from participating in the economy under the white-minority government’s policy of apartheid, which ended in 1994 with the negotiated transition to democracy.

However, in practice it means that any company considering investing in South Africa will effectively be forced to contribute 100 percent of the capital for only 74 percent of the profits.

Obviously this adds to the cost of doing business, and may just be enough to deter mining investment, especially when companies have the option of taking their money to other jurisdictions with less onerous terms.

The mining charter has prompted legal challenges in South Africa, and much criticism from the mining sector, with some company representatives at the conference this week privately expressing fears that the 26-percent black empowerment rule is likely only the beginning, and that the percentage that must be held by black investors may rise to something closer to 50 percent in coming years.

WIDER UNCERTAINTY

It’s not just South Africa that presents problems for mining companies, with other countries also shifting goal posts as they try to extract more benefits from their commodities.

The Democratic Republic of the Congo (DRC), the world’s largest producer of cobalt and a major producer of copper and diamonds, changed its mining code in 2012, doubling royalties and seeking larger free carry equity stakes, as well as local beneficiation quotas.

But opposition to these reforms meant the DRC government quietly abandoned them, but the fallout was that the country tarnished its reputation as a mining investment destination.

Ghana, a model for mining investment after its 2006 mining law attracted investors into its gold industry, decided in 2012 to raise a windfall tax on gold, but then didn’t follow through.

Other countries that have or are planning to change their mining laws include Zambia, Zimbabwe and Tanzania, reinforcing the continent’s image as a difficult place to do business.

The Fraser Institute survey of investor appeal tells the story, with the 2015 rankings placing South Africa 66th out of 109 jurisdictions, Zambia 68th and Zimbabwe 98th.

It’s not all bad news, with Botswana, a major diamond producer, ranking 39th and Ghana in 31st spot.

But the point is that African countries have to compete with Australia and Canada, which boast the top two jurisdictions of Western Australia state and Saskatchewan province.

While those are developed countries, other developing nations such as Chile, in 11th spot, and Brazil, in 56th place, offer stiff competition for mining dollars.

So what can African countries do to improve matters while still meeting the goals of getting mining to contribute more to the development of local economies and people?

The first step is to agree a regulatory framework and then stick to it, resisting the urge to tinker when commodity prices start to rally.

But it’s also important for governments and miners to recognise that what they have been doing simply isn’t going to work.

An example of innovative thinking could be that a government decides to raise the royalty rate on mining ore, perhaps to a level slightly higher than comparable jurisdictions, and then places the extra revenue in a sovereign wealth fund.

Such a fund could have a mandate to buy stakes in new projects, or to lend money to suitable local investors so that they might participate in mining ventures.

A well-managed and structured wealth fund would also go some way to cutting down on susceptibility to corruption, a problem that plagues the current systems of forcing companies to give equity stakes to local investors.

The risk for African nations is that if they don’t sort out their regulatory frameworks, they will continue to miss out.

Without improvement, it’s likely the only projects that will be developed will be either the absolute best, as they will be justifiable because of their superior economics, or the ones where dodgy deals can be secured through corruption or by mining without care for the environment.

(Editing by Joseph Radford)

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