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South Africa’s rand firms to 2-1/2-month high after ECB cuts rates

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand rallied to its firmest since December in afternoon trade on Thursday after the European Central bank cut interest rates and stepped up its stimulus program.

By 1305 GMT the rand had firmed 1.12 percent to 15.0300 per dollar, its strongest level since Dec. 21.

“This means there is more cheap money going around and the risky assets are loving it,” said chief currency at Bidvest Bank Ion de Vleeschauwer.

 

(Reporting by Mfuneko Toyana; Editing by Tiisetso Motsoeneng)

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Zimbabwe needs up to 8% growth in next decade to revamp economy

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HARARE (Reuters) – Zimbabwe needs an annual growth rate of up to 8 percent over the next 10 to 15 years to revamp its economy, Finance Minister Patrick Chinamasa said on Thursday, in addition to other reforms agreed with an International Monetary Fund delegation.

On Wednesday, Chinamasa said President Robert Mugabe had agreed to major reforms, including compensation for evicted white farmers and a big reduction in public sector wages as the government tries to woo back international lenders.

Chinamasa said that new loans from international lenders will only come if the drought-stricken Southern African nation showed the capacity to introduce a raft of economic reforms.

“Any reform agenda is painful. The journey we have travelled has been difficult and will remain difficult,” Chinamasa told a forum discussing Zimbabwe’s future prospects.

Chinamasa and Reserve Bank governor John Mangudya are leading Zimbabwe’s re-engagement with international lenders and the finance minister has previously said he has had to overcome divisions within Mugabe’s cabinet to pursue that process.

Zimbabwe is trying to emerge from more than a decade of isolation that saw the IMF, World Bank and African Development Bank freeze lending in 1999. Western powers imposed sanctions on Mugabe’s government over allegations of vote rigging and human rights abuses. Mugabe rejects the charges.

The IMF executive board will on May. 2 consider Harare’s plan to repay $1.8 billion in arrears. Chinamasa said he was seeking clear commitments from the IMF that clearing the arrears would trigger new financial aid.

“As I stand before you I am in buoyant spirits because I know that the measures that we are taking will exploit and realize the full potential of this country. We just need an uninterrupted process of reform,” said Chinamasa.

 

(Reporting by Macdonald Dzirutwe; Editing by James Macharia)

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African telecom towers firm IHS to buy Nigerian rival

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LAGOS (Reuters) – Pan-African mobile telecoms infrastructure group IHS has agreed to buy Nigerian rival Helios Towers Nigeria (HTN) for an undisclosed sum, its chief executive said on Thursday.

Issam Darwis, who founded IHS, said Africa’s largest tower company, which builds and leases mobile telecoms towers in five countries across the continent, will acquire 1,211 towers spread across 34 of Nigeria’s 36 states.

IHS will acquire the entire issued share capital of HTN, IHS said in a statement.

“IHS will have full operational control of the underlying business and will market independent infrastructure sharing services to mobile network operators and internet service providers in Nigeria,” it said.

The deal is expected to close in the second quarter of 2016, it said.

IHS already has around 23,000 towers across Nigeria, Ivory Coast, Cameroon, Zambia and Rwanda. It has around 15,000 towers in Nigeria, its biggest market and Africa’s most populace nation.

“We remain committed to the Nigerian tower market where coverage levels are yet to mature and explosive data growth continues,” Darwis said. “This is a statement of how confident we are in the Nigerian economy.”

Africa’s biggest economy and top oil producer is flagging due to the fall in crude prices and restrictions imposed by the central bank to defend its currency.

Building and maintaining mobile communications towers in Africa tends to be more expensive than in other regions because of security costs and electricity shortages, while revenue per user is often lower.

These costs have prompted many mobile operators to sell or lease towers to specialist companies such as IHS, which can reduce building and maintenance costs by hosting multiple tenants — mobile operators and internet providers — on the same towers.

 

 

(By Alexis Akwagyiram. Editing by Susan Thomas)

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Ghana consumer inflation slows to 18.5% in February

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ACCRA (Reuters) – Ghana’s annual consumer price inflation fell to 18.5 percent in February from 19.0 percent the month before, helped by the stability of the local currency, the statistics office said on Wednesday.

Consumer prices could fall further if the cedi holds steady and in the absence of any external shock, deputy government statistician Anthony Amuzu told reporters in Accra.

After weakening nearly 4 percent in January on seasonal high corporate dollar demand, the cedi, has remained firm in recent weeks. It was trading at 3.8500 to the greenback on Wednesday, down 1.3 percent year-to-date.

“The stability of the cedi was the major driver in February,” Amuzu said, adding that it drove down prices of imported items.

The commodities exporter is implementing a three-year aid programme with the International Monetary Fund (IMF) in an attempt to remedy fiscal problems including inflation persistently above government targets.

The IMF projects that inflation will peak before slowing to around 10 percent at the end of the year and the central bank has been tightening monetary policy in order to contain it.

Analyst say the easing in February CPI showed that the central bank’s tight monetary policy had been effective.

“The deceleration in year-on-year inflation also relieves the pressure on the Bank of Ghana to raise interest rates in the near term,” said Standard Chartered’s head of Africa research Razia Khan.

Year-on-year non-food inflation for February, which comprises imported goods, was 24.5 percent, compared with 25.5 percent the month before. Food inflation was 8.3 percent, from 8.2 percent in January.

 

(Reporting by Kwasi Kpodo; Editing by Matthew Mpoke Bigg and Toby Chopra)

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Moody’s to visit South Africa next week to decide on ratings

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JOHANNESBURG (Reuters) – Ratings firm Moody’s will visit South Africa next week to decide whether to downgrade the credit status of Africa’s most industrialised economy to just one notch above sub-investment grade, the Treasury said on Wednesday.

South Africa’s Finance Minister Pravin Gordhan told local station Radio 702 that Moody’s informed him of their decision during his stop in London on an overseas roadshow to meet with investors and convince them the economy could be turned around.

“They will be in South Africa and meet with various stakeholders and get relevant information that will influence them either not to downgrade us or not to downgrade us,” Gordhan said.

The Treasury said in a statement that the “review visit will primarily serve to either affirm the current ratings or downgrade them.”

Gordhan is battling to boost South Africa’s growth and to persuade ratings agencies not to cut the country’s credit rating to junk following his appointment last December.

Late on Tuesday, Moody’s said it was placing South Africa’s Baa2 ratings on review for downgrade, citing the economy’s weak growth prospects and worsening fiscal position. [nFWN16G023]

“The review will allow Moody’s to assess to what extent government policy can stabilize the economy and restore fiscal strength,” the agency said in a statement.

Moody’s put South Africa’s Baa2 credit rating on a negative outlook in December, and is the only agency that does not have South Africa a step away from junk status.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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Algeria’s Sonatrach to invest $3.2 bil in pipelines

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SIDI REZINE, Algeria (Reuters) – Algerian energy company Sonatrach will invest $3.2 billion over four years to increase pipeline capacity as natural gas output rises from new and existing fields, a top company official said on Tuesday.

OPEC member Algeria has been hurt by a 70-percent fall in oil prices since mid-2014. Its revenue from energy fell by half last year, forcing the government trim spending and freeze some infrastructure projects.

But the government, despite struggling to attract foreign oil companies in recent energy bidding rounds, is determined to increase oil and gas production to keep up exports and meet growing local demand.

“Sonatrach will invest $3.2 billion from 2016 to 2020 to boost its transport capacity, including $530 million in 2016,” Arbi Bey Slimane, Sonatrach’s vice president for pipeline transportation, told Reuters at the company’s Sidi Rezine office east of Algiers.

He said the company wanted to guarantee increased supplies to European clients. The additional transport capacity aims to deliver more volume as new fields in southeast and southwest add production soon. He did not give specifics on amounts or timing.

Algeria produces 1.1 million barrels per day of oil, and 27.44 billion cubic metres of gas, according to official figures.

Sonatrach’s CEO Amin Mazouzi has pledged a “sizeable increase in production” in 2016 as Algeria looks to end more than a decade of stagnation in energy production.

“We will build 1,650 km of pipeline, and six compression and pumping stations by 2020. Our goal is to transport output from new fields located in the south east and south west,” Slimane said.

Algeria is in talks with the European Union as the EU looks to diversify its energy sourcing away from Russia, which supplies around 30 percent of the EU’s gas.

Slimane said Algeria would remain a stable gas supplier for southern Europe.

“The volume exported in 2015 increased by 2 million tonnes equivalent oil (TEP) to reach 99 million TEP. The 2 million were delivered to southern Europe,” he said.

 

(By Lamine Chikhi. Editing by Patrick Markey and Jason Neely)

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Japan, South Korea firms win contract to build $800 mil Botswana power plant

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GABORONE (Reuters) – A joint venture by Japan’s Marubeni Corporation and South Korea’s Posco Energy has won an $800 million tender to expand Botswana’s Morupule B power plant by an extra 300 megawatt (MW), a government notice said on Tuesday.

The new coal-fired plant would be an extension of the troubled Chinese built 600 MW power plant.

The firms will recover their costs by selling the power to the Botswana Power Corporation (BPC) through a 30-year power purchase agreement at a cost of 812.56 pula per MegaWatt hour.

Construction of the new plant is expected to start late this year with the first power produced added to the national grid by May 2020, lifting power generation to more than 1,000 MW. Current national power demand stands at 610 MW.

 

(Writing by Zandi Shabalala; Editing by James Macharia)

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South Africa’s Q4 current account deficit widens to 5.1% of GDP

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PRETORIA (Reuters) – South Africa’s current account deficit widened to 5.1 percent of gross domestic product in the fourth quarter of 2015 from a revised shortfall of 4.3 percent in the third quarter, the central bank said on Tuesday.

Economists surveyed by Reuters had expected a 4.35 percent gap for the fourth quarter.

Year-on-year, the current account deficit shrunk to 4.4 percent of gross domestic product compared to a 5.4 percent deficit in 2014.

Exports slumped while imports rose during the quarter, leading to a sharp increase in the trade balance deficit to 57 billion rand ($4 billion) compared with a revised 22 billion rand gap in the third quarter, the reserve bank said in its quarterly bulletin.

“The bank has officially identified November 2013 as the upper turning point in the business cycle, implying that the South African economy is now officially in a downward phase,” the central bank noted.

($1 = 15.3384 rand)

 

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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Time short to protect Africa’s food supply from climate change

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BARCELONA (Thomson Reuters Foundation) – Without action to help farmers adjust to changing climate conditions, it will become impossible to grow some staple food crops in parts of sub-Saharan Africa, with maize, beans and bananas most at risk, researchers said on Monday.

In a study of how global warming will affect nine crops that make up half the region’s food production, scientists found that up to 30 percent of areas growing maize and bananas, and up to 60 percent of those producing beans could become unviable by the end of the century.

Six of the nine crops – cassava, groundnut, pearl millet, finger millet, sorghum and yam – are projected to remain stable under moderate and extreme climate change scenarios.

“This study tells where, and crucially when, interventions need to be made to stop climate change destroying vital food supplies in Africa,” said Julian Ramirez-Villegas, the study’s lead author who works with the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS).

“We know what needs to be done, and for the first time, we now have deadlines for taking action,” he added in a statement.

For example, the study warns that around 40 percent of maize-growing areas will require “transformation”, which could mean changing the type of crop grown, or in extreme cases even abandoning crop farming.

Sorghum and millet, which have higher tolerance to drought and heat, could replace maize in most places under threat.

But for 0.5 percent of maize-growing areas – equal to 0.8 million hectares in South Africa that now produce 2.7 million tonnes – there is no viable crop substitution, the study said.

In a few places, the need to adapt to climate change is already urgent, the researchers said. Those include pockets in highly climate-exposed areas of the Sahel in Guinea, Gambia, Senegal, Burkina Faso and Niger.

Banana-growing regions of West Africa, including areas in Ghana and Benin, will need to act within the next decade, as the land is expected to become unsuitable for bananas by 2025.

And maize-growing areas of Namibia, Botswana, Zimbabwe and Tanzania also have less than 10 years left to change tack under the most extreme climate change scenarios, the study added.

“If we don’t do anything now, farmers are no longer going to be able to grow certain crops in certain sites,” Ramirez-Villegas told the Thomson Reuters Foundation from Colombia.

“But we know there are several adaptation options … with which farmers should be able to carry on growing these crops for a longer period of time than we project.”

 

TIME ‘RUNNING OUT’

Those options begin with shorter-term actions like improving irrigation and weather information services for farmers, and developing new varieties of maize and beans that can better tolerate heat and drought.

Such measures are already underway in parts of Africa, including the “Drought Tolerant Maize for Africa” initiative that has released 160 varieties, benefiting up to 40 million people in 13 countries.

But governments will still need to re-assess agricultural and food security policies to see whether bigger transformations are needed, such as switching to different crops or livestock.

If so, they will need to help farmers access markets or build processing and storage facilities for new crops.

CCAFS researcher Andy Jarvis, a co-author of the paper published in the journal Nature Climate Change, noted adjusting national policies can take decades.

“Our findings show that time is running out to transform African agriculture. This will require not only increased funding but also a supportive policy environment to bring the needed solutions to those affected,” he said.

A separate study released on Monday, by researchers from Brown and Tufts universities, suggested scientists have overlooked how two important human responses to climate will impact food production in the future: how much land people choose to farm, and the number of crops they plant.

Looking at Mato Grosso, a key soy-producing state in Brazil, they found a temperature rise of 1 degree Celsius was tied to substantial decreases in crop area and double cropping, accounting for 70 percent of the overall loss in production. Only 30 percent was attributable to falling crop yield.

“If you look at yields alone, you’re not looking at all of the information because there are economic and social changes going on as well,” said Leah VanWey, professor of sociology at Brown and one of the study’s senior authors. “You’re not taking into account farmers’ reactions to climate shocks.”

 

(Reporting by Megan Rowling; editing by Ros Russell. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women’s rights, trafficking, corruption and climate change. Visit http://news.trust.org)

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Telecom Egypt net profit jumps 111% after tax changes

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CAIRO (Reuters) – Telecom Egypt reported a 111 percent jump in 2015 net profit after corporate tax changes, the state-owned landline monopoly said in a statement on Monday.

Net profit rose to 2.999 billion Egyptian pounds ($383 million) from 1.419 billion, it said.

The company said it was helped by a fall in the corporate income tax rate to 22.5 percent from 30 percent retroactively as of January 1, 2015, and changes to the taxation of dividends.

“Additionally the increase of income from investment by 35 percent year on year contributed positively to the bottom line,” the company said.

Revenue reached 12.184 billion pounds, up from 12.157 billion the previous year.

($1 = 7.8300 Egyptian pounds)

 

(Reporting by Ehab Farouk; writing by Asma Alsharif; editing by Jason Neely)

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