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Rising food prices push Tanzania inflation higher to 6.6% in Nov

8 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

DAR ES SALAAM (Reuters) – Rising food prices pushed Tanzania’s year-on-year inflation rate to 6.6 percent in November from 6.3 percent the previous month, the statistics office said on Tuesday.

The National Bureau of Statistics (NBS) said month on month inflation rose by 0.8 percent in November from an increase of 0.1 percent in October.

“The increase of the inflation rate in the year to November was mainly caused by faster rises in the price of food items such as rice, maize, meat, fish, beans… and sweet potatoes,” Ephraim Kwesigabo, a director at state-run National Bureau of Statistics, told a news conference.

The food and non-alcoholic beverages inflation rate increased to 11.2 percent in the year to November from 10.2 percent in October.

 

(Reporting by Fumbuka Ng’wanakilala; Editing by Drazen Jorgic)

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South32 to cut more than 400 jobs at South African manganese mine

7 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Australian-listed South32 plans to cut 447 jobs at a South African manganese mine, the National Union of Mineworkers (NUM) said on Monday, in the latest in a slew of layoffs in the embattled industry.

The union, which is the country’s largest mining labour body, said it had received notice from South32 that the company planned to cut the jobs and called on the mines ministry to “intervene to halt” to prevent the layoffs.

NUM said over 1,000 workers are employed at the Hotazel mine in Kuruman, about 550 km (341 miles) south east of Johannesburg.

South32 spokeswoman Lulu Letlape said the company was consulting with employees through unions on job cuts. Voluntary redundancies and early retirements were being considered to minimize the impact on workers, she said.

South32 produces manganese, silver, nickel and coking coal, some of the industrial mainstays that have been hardest hit globally in the wake of China’s economic slowdown.

South32, which was spun off from BHP Billiton in May, said its review of its South African manganese operations would be completed by December and said its mines were unlikely to restart until January.

Mining companies in South Africa are under pressure from rising costs and falling prices, forcing companies to close shafts and cut jobs to survive, angering unions, which have opposed the layoffs.

 

(Reporting by Zandi Shabalala; Editing by James Macharia and Louise Heavens)

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Nigeria naira reaches 250/$, recovering from Friday’s low, on unofficial market

7 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s currency traded at 250 naira on the unofficial market on Monday, just up from Friday’s low of 251, as dollar shortages hit bureaux de change operators, traders said.

Nearly half of 2,818 bureaux de change operators were denied access to the central bank’s dollar sale last week because of incomplete documentation, weakening the naira.

On the official market, the naira traded at 198.90 to the dollar at 1141 GMT, around a rate it has been pegged to since February.

Traders expect dollar allocation to bureaux de change agents to increase on Wednesday as companies update their records with the central bank. That should helping the naira.

“We expect more dollar supply this week,” Aminu Gwadabe, president of Nigeria’s bureaux de change association, told Reuters.

The central bank has asked all bureaux de change operators to submit accounts showing their dollar usage at the start of each week before they can gain access to future sales, a move traders said was aimed at curbing speculation.

The unofficial market accounts for less than 5 percent of total dollar trades in Nigeria. The bank sells around $30,000 to each operator every week.

 

(Reporting by Oludare Mayowa; Editing by Chijioke Ohuocha; Editing by Larry King)

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Kenyan shilling firm, offshore investors eye bond

7 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s shilling was steady in early trading on Monday, amid limited corporate appetite for dollars and helped by some foreign exchange inflows before a government bond auction.

By 0708 GMT, the shilling was quoted at 102.05/25 to the dollar, little changed on Friday’s close of 102.10/20.

The shilling has hovered in a range of roughly 102.00 to 102.50 since early November, after appreciating from September levels when it almost touched an all-time low of 106.80.

Traders noted some inflows of dollars ahead of the auction of a nine-year, government infrastructure bond on Dec. 9.

“We are still seeing some offshore interest,” said one trader at a commercial bank.

He said there was limited corporate demand for dollars, although he said that could pick up later in the week as energy firms seek foreign exchange to meet payment deadlines. However, he said the shilling was expected to hold its recent range.

 

(Writing by Edmund Blair)

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South African stocks fall to 3-1/2 month low, rand firms

6 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African stocks fell by more than 2 percent on Friday as investors priced in a possible downgrade from ratings agencies, while the rand rallied as the greenback failed to make meaningful gains.

Standard & Poor’s kept South Africa’s credit rating at BBB- on Friday but changed its outlook to negative from stable, saying this reflected the view that economic growth might be lower than expected.

Fitch, which was due to issue its rating statement later, rates South Africa at “BBB” with a negative outlook and warned of a possible downgrade in September.

The benchmark Top-40 index slipped 2.26 percent to 44,347 points while the broader All-Share index fell by the same margin to 49,284 points.

“The market pricing in a bit of weakness coming in from the expected downgrade from Fitch and S&P later today. We are seeing weakness across the board,” said Ryan Woods, a trader from Independent Securities.

Furniture retailer Steinhoff fell 7.23 percent to 77 rand after the company said it was being investigated by the German authorities for the accounting of certain transactions by its German unit.

MTN Group fell 3 percent to 135.74 rands after Nigeria’s telecoms regulator said it had cut a fine on Africa’s biggest mobile firm by 25 percent to $3.9 billion, and blamed a typing error for an announcement on Thursday it had reduced the penalty by 35 percent to $3.4 billion.

Trade was highly active, with 419 million shares exchanging hands – the highest since June 18 – compared with last year’s daily average of 187 million shares.

On the forex market, the rand inched up, having fallen briefly to 14.3500 to the dollar after S&P’s outlook downgrade.

By 1704 GMT the rand was at 14.3300 against the greenback, 0.24 percent up Thursday’s close of 14.3645.

The dollar was nearly flat against the euro despite stronger-than-expected U.S. monthly jobs data, as markets continued to digest Thursday’s unexpectedly small stimulus from the European Central Bank.

“It shows that there is a lot priced in this market and as a consequence when the data comes through there isn’t much follow through,” said Barclays Africa currency strategist Mike Keenan.

Government bonds were quoted weaker.

The yield for the benchmark instrument maturing in 2026 rose by 1.5 basis points to 8.650 percent, after touching its highest since late Fed 2014 in early trade.

 

(Reporting by Zandi Shabalala and Nqobile Dludla; Editing by James Macharia)

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S&P holds South Africa’s credit rating; downgrades outlook to negative

5 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Standard & Poor’s kept South Africa’s credit rating at BBB- on Friday but changed its outlook to negative from stable, saying this reflected the view that economic growth might be lower than expected.

In a statement, S&P said it expected GDP growth in 2016 to remain around 1.6 percent and only increase above 2 percent from 2017 as the capacity of electricity supply improved.

“The negative outlook reflects our view that GDP growth might be lower than we currently expect, or that fiscal flexibility might reduce owing to contingency risks from state-owned entities with weak balance sheets,” it said.

The Treasury did not immediately comment on the S&P move on Friday, with a spokeswoman saying it would issue a statement once the Fitch review was out.

The rand currency briefly turned weaker against the dollar after the statement, before recouping some of the losses.

“The decision to change the outlook … speaks volumes of the steady deterioration in credit metrics that has enveloped South Africa post-crisis,” Standard Chartered analyst Razia said, referring to the 2008/2009 crisis during which South Africa fell into recession.

“The potential loss of South Africa’s hard-won investment grade rating, should serve as a wake-up call to try even harder to arrest this deterioration.”

S&P had said in March Pretoria’s rating was unlikely to change in the next 24 months, but warned an electricity crunch would shave 0.3 percent off economic growth this year.

Africa’s most industrialised but struggling economy has seen its sovereign ratings by Moody’s and S&P gradually slip to just one notch above non-investment grade.

Fitch, which rates South Africa at BBB with a negative outlook, was also due to issue a review later on Friday.

The agency said in October that weakened economic growth compounded South Africa’s fiscal challenges.

The National Treasury cut its economic growth forecast for 2015 to 1.5 percent in October from the 2 percent predicted in February, citing domestic energy constraints and the impact of a global slowdown

 

(Reporting by Stella Mapenzauswa; Editing by James Macharia)

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Sudan’s central bank shifts liquidity tools to external fund

4 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

(Reuters) – Sudan’s central bank has phased out its main liquidity tool used by domestic lenders to an external fund, a move it hopes can serve as a model for other countries aiming to tackle a scarcity of sharia-compliant money market instruments.

Islamic banks have grown faster than conventional ones across the Middle East and southeast Asia, but they largely lack liquidity management tools which the industry views as essential for its long-term health and viability.

Demand for such tools is greater in markets like Sudan, which in 1983 became the first country to require its entire banking system to comply with Islamic principles, banning the charging of interest and outright monetary speculation.

There are 28 Islamic banks in Sudan which hold an estimated $10.7 billion in assets, according to Thomson Reuters data.

The central bank has issued Islamic certificates to address banks’ liquidity needs, with the ministry of finance issuing Islamic bonds of its own.

In 2011, however, the introduction of a real-time settlement system led Sudanese banks to accumulate large amounts of central bank certificates, said Mohamed Ismat Yahya, deputy manager of banking operations.

“There has been a staggering stockpile of these certificates,” Yahya said on the sidelines of an industry conference in Bahrain.

“It was important for us to find other solutions to help banks manage their liquidity management away from the central bank.”

To address this, a liquidity management fund was launched in September of last year, a special purpose vehicle jointly owned by Sudanese lenders and managed by Financial Investment Bank.

The fund has seen a 25 percent increase in capital since its launch to reach 1 billion Sudanese pounds, Yahya said, adding that the central bank is no longer involved in daily liquidity requirements of banks except as a lender of last resort.

“We feel that this experience should be carefully studied and be proposed in other jurisdictions.”

Member banks are required to put in capital with a minimum cash contribution of 40 percent, with the remaining 60 percent to be contributed in the form of securities.

Only a handful of countries have widely-used Islamic interbank tools, with Malaysia and Bahrain developing sharia-compliant alternatives to repurchase agreements.

In July, Islamic banks in Indonesia launched a standard contract template for similar interbank tools.

 

(By Bernardo Vizcaino. Editing by Shri Navaratnam)

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IMF says Zambia’s electricity price to attract investment in power sector

3 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Zambia’s electricity price hike will ease power shortages that have put pressure on the economy of Africa’s No. 2 copper producer, the International Monetary Fund (IMF) said on Thursday.

Zambia’s economy is likely to grow by less than 5 percent in 2015 due to the power crunch, which has hit output at mining firms, already grappling with a slide in global copper prices, the government of the southern African nation has said.

Zambia’s energy regulator allowed state power utility Zesco to raise the average price of electricity to 10.35 U.S. cents per kilowatt hour (KWh) from 6 U.S. cents per KWh. The new tariff became effective on Thursday.

However, mining companies were unaffected by the increase because most of them get their power from Zambian power supplier Copperbelt Energy Corp. which buys electricity from Zesco in bulk and sells it to mining companies including the local units of Vedanta Resources and Glencore.

“Today’s increase in electricity tariffs is a key part of laying the foundation for needed investments in new power generation,” IMF country representative Tobias Rasmussen told Reuters.

“The move, on its own, does not ensure full cost recovery in electricity provision, but this is an important step towards putting the power sector on a sustainable footing and overcoming the electricity shortages that have plagued the economy.”

Zesco Ltd had applied for the higher tariffs in October, saying it had to increase the price of electricity due to rising costs and a depreciation of the kwacha currency, which had pushed up import prices.

Zambia’s electricity deficit rose to 985 megawatts (MW) in September from 560 MW in March as water levels in reservoirs at its biggest hydropower station fell due to drought.

Zambia’s power generation capacity stands at 2,200 megawatts (MW), with the bulk of the electricity produced from hydropower, but supply is often erratic. Zambia’s output fell to 1,900 MW in March due to low water levels in dams.

 

(By Chris Mfula. Editing by James Macharia and Mark Potter)

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Kenya’s private sector activity picks up in November

3 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenyan business activity expanded at a faster rate in November than the previous month, driven by a rise in domestic demand, a survey showed on Thursday.

The Markit and CFC Stanbic Kenya Purchasing Managers’ Index (PMI) rose to 53.7 last month from 51.7 in October, climbing further above the 50-point line that denotes growth in business activity.

The PMI is one of the indicators watched by the central bank’s Monetary Policy Committee.

“After a tough couple of months of growth, the private sector rebounded quite impressively in November, buoyed by a recovery mainly from output and employment,” said Jibran Qureishi, regional economist for East Africa at CFC Stanbic.

A steady exchange rate for the shilling, which has stabilised at about 102 to the dollar after weakening to near a record low around 106 in September, reduced the cost pressures facing firms.

“The encouraging aspect of this month’s PMI report is the indication of growth being driven largely by domestic demand as suggested by the rise in new business orders despite new export orders stagnating,” Qureishi said in the statement.

The CFC Stanbic Kenya PMI was started in January 2014.

 

 

(Reporting by Duncan Miriri; Editing by Edmund Blair and Hugh Lawson)

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Nigeria cuts MTN fine by more than a third to $3.4 bil

3 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Nigeria has cut a fine imposed on MTN Group by more than a third to $3.4 billion and given the South African mobile phone operator until the end of the year to pay it, the company said on Thursday.

The Nigerian Communications Commission handed Africa’s biggest mobile phone company the penalty in October after MTN failed to cut off users with unregistered SIM cards from its network.

Nigeria, MTN’s biggest market, has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity in a country facing the insurgency of Islamic militant group Boko Haram.

The fine, originally $5.2 billion, prompted MTN to hold talks with the NCC over the past five weeks seeking a reduction.

“After further engagements with the Nigerian authorities, the NCC has reduced the imposed fine,” MTN said in statement.

The company, which makes about 37 percent of its sales from Nigeria, said it was considering the NCC’s decision.

“Executive Chairman Phuthuma Nhleko will immediately and urgently re-engage with the Nigerian authorities before responding formally,” it said.

Nhleko, who took charge for up to six months after the abrupt resignation last month of Sifiso Dabengwa, led the company for nine years before stepping down in 2011.

The fine came months after Muhammadu Buhari swept to power in Africa’s biggest oil producer, after a campaign in which he promised tougher regulation and a fight against corruption.

It also came after the kidnapping on Sept. 21 of Olu Falae, former Nigerian finance minister, by people whom the regulator said had used MTN phone lines to negotiate a ransom.

Some analysts have said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors. Others said the fine showed Africa’s biggest economy was keen to enforce the law.

Separately, MTN announced a shake-up of its senior management structure in an effort to strengthen oversight, governance and regulatory compliance across its operations in 22 countries in Africa and the Middle East.

MTN’s Nigeria head Michael Ikpoki and the head of regulatory and corporate affairs Akinwale Goodluck have resigned with immediate effect, MTN said.

The company named Jyoti Desai, a 14-year veteran of the Johannesburg-based firm, as chief operating officer with effect from Dec. 1. Desai’s replacement as Group Chief Technology and Information Officer will be announced soon, MTN said.

 

(By Tiisetso Motsoeneng. Editing by Miral Fahmy and Mark Potter)

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