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South Africa’s PPC shareholders pave way for proposed rights issue

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

JOHANNESBURG (Reuters) – Shareholders in South Africa’s PPC on Monday overwhelmingly approved a proposal to issue additional shares for a planned 4 billion rand ($289 million) rights issue as the loss-making cement maker seeks cash to reduce debt.

PPC, which has pushed deeper into the rest of Africa as profit has slumped in its domestic market, is raising funds after a credit rating downgrade to “junk” status by ratings agency S&P.

The company proposed five resolutions, including the issuance of new shares, which were approved by virtually all shareholders who cast their votes at a special meeting.

Chief executive officer Darryll Castle said the approval from shareholders had prepared the ground work to make the rights offer possible.

“I think there’s reasonably high level of support for what we’re doing and for the need and necessity of it, and that’s what came through today,” Castle told Reuters.

PPC expects to complete the rights issue process during September, Castle added.

(Reporting by Nqobile Dludla; Editing the Tiisetso Motsoeneng and David Goodman)

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Finance minister: Egypt’s external debt to reach $53.4 billion with IMF loan

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

CAIRO (Reuters) – Egypt’s finance minister said in a television interview on Sunday that Egypt’s external debt would reach $53.4 billion if his country receives an International Monetary Fund (IMF) loan.

Last week Egypt said it was seeking $4 billion a year over three years from the IMF to help plug a funding gap. The government hopes to finalise the deal in August.

A two-week IMF mission arrived in Cairo over the weekend to negotiate an IMF loan package.

 

(Reporting by Ali Abdelatti; Writing by Amina Ismail; Editing by Sandra Maler)

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South Africa’s growth outlook dilemma for central bank, treasury

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

JOHANNESBURG (Reuters) – South Africa’s central bank could resume its rate hiking cycle despite a poor growth outlook, its head said on Friday, while its treasury reined in state companies to avoid ratings downgrades and a long economic slowdown.

Africa’s most industrialised country is on the brink of its first recession after contracting 1.2 percent in the first quarter as key sectors shrunk due to severe drought and falling commodity prices.

Governor Lesetja Kganyago said the central bank’s monetary policy committee (MPC) would raise rates if inflation, fuelled in part by a weaker rand, remained elevated.

The rand has weakened nearly 20 percent against the dollar in past 12 months as looming rate hikes in the United States, the threat of a downgrades to “junk” status and diminished business and consumer activity locally weighed on its value.

“Although the MPC remains ready to respond to renewed inflation pressures, it remains mindful of the weak state of the economy,” Kganyago said.

Headline inflation has been higher than the Reserve Bank’s (SARB) upper target of 6 percent since January, prompting it to lift lending rates by 200 basis points from early 2014 despite poor growth.

The bank sees growth averaging zero percent in 2016.

“The rand exchange rate has been sensitive to these developments, with elevated levels of volatility,” said Kganyago said, adding the next round of rating reviews in December were key.

South Africa is also in a fiscal bind, with government’s plan to boost growth to an annual 4 percent to tame widespread unemployment, poverty and the growing cost of borrowing facing a number of obstacles.

Finance Minister Pravin Gordhan on Friday warned state firms that they would have to live without state bailouts of around $35 billion as treasury focused on achieving the deep spending cuts it promised in the February budget.

“The key concern that ratings agencies and others would have is that as a result of levels of mismanagement, those guarantees shouldn’t be called out at any stage,” he said.

On Monday, Fitch announced it had downgraded South Africa’s local currency debt. Fitch and S&P Global Ratings now both have South Africa’s local and foreign currency debt ratings a step away from subinvestment.

Maya Senussi of Roubini Global Economics said local government elections on Aug. 3, where the ruling African National Congress is expected to face a stern test, could worsen the dilemma for government before the general election in 2019.

“The big danger is that fears about the 2019 general election will prompt populist measures from the ANC, exerting more pressure on the stretched Treasury and further delaying much-needed reforms,” the economist said.

($1 = 14.1600 rand)

 

(By Mfuneko Toyana. Additional reporting by Stella Mapenzauswa; Editing by James Macharia and Tom Heneghan)

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Nigeria says it paid contractors to finish economy-boosting projects

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

LONDON (Reuters) – A Nigerian minister said on Friday the government had paid contractors 63.16 billion naira ($200 million) to finish delayed infrastructure projects, in an apparent bid to ease fears over the future of the schemes meant to boost the struggling economy.

Work on a series of road, power and other programmes had slowed or halted as the government struggled to make payments, amid delays in passing the national budget and foreign currency shortages.

Power, Works and Housing Minister Babatunde Fashola told an infrastructure conference in London that “63.16 billion naira have been paid out to contractors to finish infrastructure projects since the budget” was passed in May.

He did not say whether that covered all the outstanding payments. But the comments will come as a relief to contractors, many of whom were not paid for months.

They will also signal to foreign investors that there is some movement in the supply of money, which has been problematic over much of the last year due to foreign currency curbs introduced to conserve forex supplies.

The 6.06 trillion naira ($19.24 billion) budget tripled capital expenditure from the previous year in a bid to stimulate Africa’s biggest economy which is going through a crisis caused by low oil prices.

Nigeria’s economic development has been held back by erratic electricity provision and a poor road network, all of which falls under Fashola’s remit.

It was not clear whether the funds referred to by Fashola were part of the budget allocation.

Earlier this month the budget minister said Nigeria’s first quarter revenues reached only 55 percent of the government’s target due to recent attacks on oil and gas facilities in the southern Niger Delta energy hub.

 

($1 = 315.0000 naira)

 

(By Karin Strohecker. Writing by Alexis Akwagyiram; Editing by Andrew Heavens)

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South African unemployment still more than one in four

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

By Mfuneko Toyana

PRETORIA (Reuters) – South Africa’s unemployment rate dipped slightly in April-June from the previous quarter’s record high but 26.6 percent of the labour force — more than 5.6 million people — remained without work.

A quarterly labour force survey published by the statistics office on Thursday showed a small decline in the jobless rate from 26.7 percent in the first quarter.

Statistics South Africa said that equated to 5.634 million people compared with 5.723 million who were out of work in the January-March quarter. Unemployment is now the largest driver of poverty in South Africa, the statistics office said.

The number of people without jobs increased by 403,000, or 1.6 percent, from a year earlier.

“Indications are that we are in a quite difficult economic situation,” said Statistician-General Pali Lehohla. “There are a huge number of job losses.”

Africa’s most advanced economy — though no longer its biggest — is on the brink of recession after contracting 1.2 percent in the first quarter as manufacturing and mining activity shrank.

“It’s a reflection of a weak economic climate,” said Nedbank economist Johannes Khoza.

“We didn’t expect much of an improvement in employment given the weak business and consumer confidence lately. A recession is still very likely.”

The central bank said last week it expected zero growth in 2016.

Under an expanded definition of unemployment which includes people who have stopped looking for work, the jobless rate rose to 36.4 percent in the second quarter, from 36.3 percent in the first three months of 2016, Statistics South Africa said.

The largest quarterly employment losses were seen in the public administration and social services sector, where 127,000 jobs were shed. Some 44,000 jobs were lost in agriculture due to a decline in the growing of crops and animal husbandry, with significant losses also seen in the transport sector.

“The high rate of unemployment contributes to much of the social tension and anguish experienced in South Africa on a daily basis, especially among the youth,” Stanlib chief economist Kevin Lings said.

South Africa’s financial hub of Gauteng, which includes the city of Johannesburg and the capital Pretoria, both set to be hotly contested in upcoming elections, had the country’s second-highest rate of unemployment at 29.5 percent.

(Editing by Catherine Evans)

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China, Africa ink $17 bil preliminary cooperation pacts

28 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

BEIJING (Reuters) – Chinese companies and banks agreed preliminary deals with African counterparts on $17 billion worth of cooperation in sectors including infrastructure, energy, pharmaceuticals and information technology, the official Xinhua News Agency reported on Thursday.

Companies and financial institutions signed letter of intent for 39 cooperations pacts at a China-Africa economic and trade event in Beijing attended by more than 400 delegates.

Xinhua did not give further details.

Last year, Chinese President Xi Jinping announced a $60 billion development initiative at a summit in South Africa, saying it would boost agriculture, build roads, ports and railways and cancel some debts.

Such an initiative would proceed despite China’s slowing economy, Chinese officials have said.

 

 

 

 

 

(Reporting by Chen Aizhu; Editing by Catherine Evans)

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MTN Nigeria on track to list on local stock exchange in 2017

28 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Africa’s biggest mobile phone operator MTN Group said on Thursday its Nigeria unit is on track to list on the Nigerian Stock Exchange (NSE) in 2017 as part of an agreement with the Federal Government.

MTN had said in June its local unit would list on the NSE after agreeing to pay a reduced fine of $1.7 billion in a settlement with the Nigerian government of a long-running dispute over unregistered SIM cards.

MTN Nigeria aims for the listing to take place during 2017, subject to market conditions.

MTN is the largest mobile phone operator in Nigeria with 57 million subscribers, and the country accounts for about a third of its revenue.

MTN Nigeria appointed Stanbic IBTC Capital, Standard Bank of South Africa and Standard Advisory London, and Citigroup Global Markets, as joint transaction advisors and global coordinators, with Stanbic acting as lead issuer.

 

(Reporting by Nqobile Dludla; Editing by David Holmes)

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South Africa’s PIC in talks with SABMiller over improved offer by AB Inbev

27 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Public Investment Corporation (PIC) is in talks with SABMiller over an improved offer from Anheuser-Busch Inbev, the state pension fund said on Wednesday.

“We are in discussions with SABMiller on the offer price and would not like to make our view public at this point in time,” PIC Head of Corporate Affairs Deon Botha said in response to emailed questions.

The PIC is SABMiller’s fourth largest shareholder.

AB InBev raised its $100 billion-plus bid for rival brewer SABMiller on Tuesday in an attempt to quash investor dissent over an offer made less attractive by a post Brexit vote fall in the pound.

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Nigerian naira hits all-time low of 334.50 per dollar

27 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria naira weakened to an all-time low of 334.50 against the dollar on the interbank market on Wednesday, a day after the central bank hiked interest rates to try to lure foreign investors back into local assets, traders said.

The naira fell 5.8 percent on Wednesday from its opening rate, and $10 million was traded at the new record low.

Traders said investors were pushing the currency lower to test the limit of how far it can fall, given a spread of almost 12 percent between the official and black market naira rates.

“If we have more people trying to buy the naira then it should strengthen. I think we will keep seeing the trickles … I don’t think we will see large inflows until the fundamentals of the economy improves,” one trader said.

 

(Reporting by Chijioke Ohuocha; editing by John Stonestreet)

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Egypt says close to securing 3-year IMF loan programme

27 July 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt said on Tuesday it was close to agreeing an International Monetary Fund (IMF) lending programme to ease its funding gap and restore market stability and was seeking to secure $7 billion annually over three years.

Prime Minister Sherif Ismail ordered the central bank governor and minister of finance to complete negotiations for the programme with an IMF team that will visit Egypt in the next few days, the cabinet said in a statement.

“We are resorting to the IMF because the budget deficit is very high, between 11 and 13 percent within the past six years,” finance minister Amr el-Garhy, said in a phone interview with presenter Lamis El-Hadeedi on a private TV channel late on Tuesday.

In Washington, the IMF welcomed Egypt’s request for financial support and said it would send a mission to Egypt for about two weeks from July 30.

The cabinet statement, after a five-hour meeting, was the first official confirmation that talks with the IMF were under way. The statement said talks had been ongoing for three months.

“The prime minister stressed the need to cooperate with the IMF through the support program to enhance international confidence in the economy and attract foreign investment, and therefore achieve monetary and financial stability … targeting $7 billion annually to fund the program over three years,” the cabinet statement said.

The government is seeking $12 billion from the IMF, $4 billion a year, which will carry an interest rate of 1 or 1.5 percent, el-Garhy said. The package includes issuing $2-3 billion in international bonds which will be offered as soon as possible, between September and October, he added.

Economists welcomed the news, which came after a turbulent few weeks for Egypt’s currency, the pound, which has plummeted to new lows on the black market as confusion mounted over the direction of monetary policy.

“It’s great. Finally,” said Hany Genena, head of research at Beltone Securities Brokerage. “Confidence will be restored in the government and central bank. Secondly, we will see flotation of the pound, if not tomorrow, next week, the week after.”

Genena said he expected the Cairo stock market to surge after the news and for the currency to strengthen on the black market. The black market had already strengthened slightly from lows near 13 to the dollar on Monday.

Two black market traders contacted by Reuters said they were selling dollars at about 12.80 to 12.85 pounds after the IMF deal was announced.

“I think the stock index will hit 8,000 in the next couple of days,” Genena added. The benchmark EGX30 <.EGX30> closed up 0.3 percent at 7,540 on Tuesday.

Egypt’s economy has been struggling since a mass uprising in 2011 ushered in political instability that drove away tourists and foreign investors, both major earners of foreign currency. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth, while the value of the Egyptian pound has plummeted on the black market in recent weeks as expectations of a second devaluation this year mount.

The government has pushed ahead with its reform programme, including plans for a value added tax (VAT) and subsidy cuts that were put on hold when global oil prices dropped.

A VAT bill is in its final stages of preparation but has faced resistance in parliament due to concerns over inflation, which has touched seven-year highs since the currency was devalued by 13 percent in March.

Egypt’s ambitious home-grown fiscal reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed since the World Bank is waiting for parliament to ratify economic reforms including VAT.

A cabinet minister told Reuters last month that Egypt had started negotiations with the IMF and that the central bank was leading the talks.

A statement released by Capital Economics, an independent economic research company, also welcomed the news.

“If approved, this would help to plug Egypt’s external financing requirement and improve the economy’s growth prospects,” it said. “This would make a sizeable dent in Egypt’s gross external financing requirement, which we estimate to be around $25 billion over the coming year.”

 

(Reporting by Amina Ismail and Lin Noueihed; Additional reporting by David Lawder in Washington; Writing by Lin Noueihed; Editing by Tom Heneghan and James Dalgleish)

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