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Nigeria wants to boost non-oil income by 87% to offset oil slump

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters on Monday.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70 percent of state income.

Funding of the budget with an expected deficit of 2.2 trillion naira has been so far unclear.

Detailing its plans, the government expects to generate 3.38 trillion naira ($17 billion) this year from non-oil sources, up 87 percent from 1.81 trillion naira in 2015, the presentation showed.

Corporate income tax collection is expected to exceed the 700 billion naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said.

The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33 percent.

On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget.

The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16 percent now, the presentation showed. Loan repayments will be stretched.

Buhari has asked the United States for help in returning stolen Nigerian assets stashed in U.S. banks. In March, the U.S. said it had frozen more than $458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3 billion of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects.

($1 = 198.0000 naira)

 

(Reporting by Chijioke Ohuocha; Editing by Ulf Laessing and Toby Chopra)

 

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Mauritius says tourist arrivals up 12.5% in Q1

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – The number of tourists visiting Mauritius rose 12.5 percent in the first quarter of 2016 from a year ago, thanks to increased arrivals from Europe and Asia, official figures showed on Monday.

Tourism is a key source of hard currency for the Indian Ocean island state, which like other long-haul destinations in the region has turned east in search of visitors to compensate for weak growth in its traditional European markets.

Arrivals in the first three months of 2015 increased to 327,836 from 291,329 a year earlier, Statistics Mauritius said.

Numbers from Europe, which accounts for two-thirds of visitors, rose 18 percent to 199,525 as arrivals from France, the island’s main market, increased by 4.7 percent.

The number of tourists visiting from Asia rose by 7.3 percent to 49,289, helped by an 11.1 percent increase in arrivals from India.

The statistics agency expects visitor numbers to rise 6.7 percent to 1,230,000 this year.

 

(Reporting by Jean Paul Arouff; Editing by Toby Chopra)

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Kenya central bank to help banks that face liquidity pressure

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s central bank will provide a facility to any bank or microfinance institution that faces liquidity problems through no fault of its own, starting on Monday, Governor Patrick Njoroge said on Sunday.

Njoroge said the facility, for which he did not give the amount but said had no upper limit, would be available for as long as necessary to provide a sense of calm and reiterated that the financial sector was stable.

“From Monday, we will avail a facility to any bank or microfinance institution that comes under liquidity for no fault of its own. We will avail this facility for as long as is necessary,” Njoroge told a news conference.

Last week, the central bank put Chase Bank Kenya into receivership after its gross non-performing loans rose sharply last year.

The mid-sized bank was the third lender to be taken over by the central bank in nine months, fuelling worries over the health of the sector.

On Saturday, President Uhuru Kenyatta said he supported central bank Njoroge’s actions to protect depositors’ money.

“We are really dealing with any fear, anxiety that is out there,” Njoroge said.

 

(Reporting by George Obulutsa; Editing by Alison Williams)

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South Africa’s dollar bond oversubscribed despite political cloud

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa has successfully issued a dollar bond overseas to help finance its medium-term foreign currency commitments, the Treasury said on Friday, touting this as a sign of investor confidence despite political upheaval.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

On Friday, the Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

“The South African government sees the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” it said.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he flouted the law by not heeding a directive to make payments for upgrades to his personal home.

Ratings agencies, most recently Standard & Poor’s, have warned they might downgrade South Africa if political issues divert the government’s attention from properly implementing policy.

S&P and Fitch both rate South African credit just one notch above junk, while Moody’s is two notches over sub-investment grade.

Analysts said South Africa had benefited from a general rise in demand for high-yielding emerging market assets after the U.S. Federal Open Market Committee (FOMC) signalled it might be a while before U.S. rates rise.

“There was clearly a window here for them to issue after the FOMC reprice and before a wall of downgrades from the ratings agencies,” Nomura analyst Peter Attard Montalto said.

“They have significant forex deposits already so they can probably wait until next year for the next issuance.”

The rand extended gains against the dollar after the Treasury’s statement, climbing to a session high of 15.0155, up 1.5 percent for Thursday’s close.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8.5 basis points to 9.19 percent.

The Treasury said the new foreign bond formed part of South Africa’s 2016/17 financing programme and would partly finance foreign currency commitments of $6.4 billion over the medium term.

The coupon for the bond represents a spread of 335 basis points (bps) above the 10-year U.S. Treasury benchmark, which analysts said was in line with South Africa’s current funding rate.

“I don’t think it’s too expensive,” said Rand Merchant Bank trader Gordon Kerr.

The price compares to initial thoughts of plus 350 bps and guidance of plus 335 bps, plus or minus 5 bps.

“There is always demand for our paper and there will always be demand for EM in general because of the nice yields that it provides,” Rand Merchant Bank trader Gordon Kerr said.

 

(By Stella Mapenzauswa. Additional reporting by Olivia Kumwenda-Mtambo in Johannesburg and Claire Milhench in London)

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Zimbabwe’s central bank says excessive demand causing cash crunch

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe’s banks are limiting withdrawals as an excessive demand for cash has lead to shortages, the central bank chief said on Friday.

Zimbabwe ditched its currency in favour of the U.S. dollar after hyper-inflation scaled 500 billion percent in 2008, leaving it unable to print its own money.

A shortage of notes surfaced at the beginning of March, which the Reserve Bank of Zimbabwe (RBZ) initially said was caused by financial institutions underestimating demand and failing to improve distribution to branches.

On Friday, RBZ Governor John Mangudya told a parliament committee that the government had injected $145 million worth of cash into the financial system between Jan. 1 and April 6, while banks had imported $118 million.

“We don’t think the money is circulating … that money is not there in the banks,” Mangudya said. “There is excessive demand for cash. The appetite for holding cash in this country is very high.”

Banks have been limiting withdrawals to as low as $200, causing frustration among customers and discouraging deposits.

Most Zimbabweans earn a living in the informal sector and prefer cash transactions. Confidence in banks was also dented after hyper-inflation effectively wiped out savings.

In February Mangudya said companies and individuals in Zimbabwe had illegally exported $1.88 billion last year. He capped daily withdrawals at $10,000, saying amounts above that would require central bank approval.

Besides the U.S. dollar, Zimbabwe also allows use of South Africa’s rand, pound sterling, the euro and China’s yuan.

 

(Reporting by MacDonald Dzirutwe; Editing by Stella Mapenzauswa and Janet Lawrence)

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South Africa’s Eqstra says receives offer, shares jump

8 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Shares in South Africa’s Eqstra surged as much as 15 percent on Friday after the leasing equipment firm said it had received a non-binding takeover offer.

Eqstra, which leases equipment to construction and mining companies, did not name the firm it was in discussions with.

Eqstra’s shares surged more than 15 percent after the announcement, before giving up some of the gains to trade 12 percent higher at 2.09 rand by 1133 GMT.

Eqstra is in a process of selling its non-core assets in the commodities and construction equipment division in order to improve its balance sheet as depressed commodity prices hurt mining companies, its major clients.

 

(Reporting by Nqobile Dludla and Zimasa Mpemnyama; Editing by Tiisetso Motsoeneng and Joe Brock)

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Glencore says South African coal strike violence worsens

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Glencore has laid arson charges against a South African mining union as a three-week coal strike turns increasingly violent, the mining company said on Thursday.

Workers from the Association of Mineworkers and Construction Union (AMCU) torched two trucks and offices at the Wonderfontein Mine on Wednesday night, taking the petrol bomb incidents to around 10 since the strike started, Glencore said.

Around 60 striking workers accused of intimidating other employees and damaging nearby farms have been arrested.

AMCU and the police were not available to comment.

Wonderfontein is a joint venture between Glencore and Shanduka Group, which was founded by Deputy President Cyril Ramaphosa. The mine produces 3.6 million tonnes annually.

Glencore said it was engaging with AMCU leadership over a wage dispute.

 

(Reporting by Zandi Shabalala; Editing by Joe Brock)

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South Africa’s February manufacturing output up 1.9% y/y

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Manufacturing output grew by 1.9 percent year-on-year in February after contracting by a revised 2.6 percent in January, Statistics South Africa said on Thursday.

On a month-on-month basis, factory production was up 1.3 percent, but was down 0.3 percent in the three months to February compared with the previous three months.

A Reuters poll of economists had expected the headline figure to show manufacturing shrinking by 2.1 percent.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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South Africa’s Eskom says Majuba rail line to be completed in 2017

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African electricity utility Eskom said on Thursday that construction of a railway line linking its Majuba power plant with the main coal line would be completed at the end of 2017.

The 68-kilometre corridor is the first large green field freight rail infrastructure project to be carried out in South Africa since 1986, Eskom said.

 

 

(Reporting by Tiisetso Motsoeneng; editing by Jason Neely)

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Angola to open loan talks with IMF as oil price bites

6 April 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angola will begin loan negotiations with the International Monetary Fund (IMF) this month as lower oil prices hammer the finances of Africa’s second-largest crude exporter, the Finance Ministry said on Wednesday.

Angola’s economy has grown rapidly since a 27-year civil war ended in 2002, peaking at 12 percent three years ago, but a sharp drop in oil prices has sapped dollar inflows, dented the kwanza and prompted heavy government borrowing.

Oil output represents 40 percent of gross domestic product and more than 95 percent of foreign exchange revenue. Brent crude traded below $39 a barrel on Wednesday, down more than 30 percent compared with a year ago. [O/R]

“The government of Angola is aware that the high dependence of the oil sector represents vulnerability for the public finances and the economy in an extensive way,” the Finance Ministry said in a statement.

“The government requested the support of the IMF for a supplementary programme … taking account of the decline in the price of petroleum.”

Finance Minister Armando Manuel told Reuters in March that Angola had no plans to approach the IMF for loans.

Angola will work with the IMF to design reforms aimed at improving fiscal discipline, simplifying the tax system and increasing transparency in public finances and the banking sector, as part of loan talks, the ministry statement said.

It added that the focus of its economic diversification efforts will be growing the agriculture, fisheries and mining sectors.

The ministry said the government was also implementing an ambitious programme of fuel subsidy reforms to shore up the country’s finances.

 

(Reporting by Herculano Coroado; Writing by Joe Brock; Editing by Alison Williams)

 

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