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South Africa’s finmin says robust institutions will help avert credit downgrade

10 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa has robust institutions to help it avert a credit downgrade, Finance Minister Pravin Gordhan said on Friday, days after Fitch became the third major rating agency to uphold its investment grade status.

But he said that South Africa’s government must stick to its fiscal targets in the next five months and could not risk any pressure on the budget from debt-ridden state firms.

South Africa has also dodged cuts from Moody’s and S&P, but analysts said that downgrades could be in the pipeline by December amid an economic meltdown critics partly blame on mismanagement by President Jacob Zuma.

Speaking at a business forum, Gordhan said he had nothing to hide or worry about in relation to an investigation into a surveillance unit formed at the South African Revenue Service (SARS)‚ when he was its commissioner between 1999 and 2009.

Gordhan spoke two days after Fitch affirmed South Africa’s BBB- rating on Wednesday, a notch above “junk” status, but said low GDP growth posed a risk. [nL8N1901CW]

“Confidence plays a big part in whether we get investments going and business activity going in our country,” Gordhan said at online publication Daily Maverick’s “The Gathering”, a forum also addressed by a cross-section of political leaders.

“Confidence is also about building trust and building understanding and having a shared idea of where we want to take this country.”

Zuma rattled investors in December by changing finance minister twice in less than a week, triggering a run on the rand and bonds.

To calm markets, the president reappointed Gordhan to the post he held from 2009 to 2014.

An investigation by the elite police unit Hawks into the surveillance unit at SARS has however led to speculation that Gordhan does not enjoy Zuma’s political support. On Friday Gordhan said Zuma and the ruling African National Congress had issued statements assuring him and the National Treasury of their support, but hinted that it would not be easy to rebuild dented confidence in South Africa.

Gordhan’s comments did little to cheer the rand, which fell more than 2.1 percent against the dollar on Friday in what traders and analysts said was partly a correction after rallying to five week highs following the Fitch review.

Gordhan stressed the need to put policies in place that would support sectors like mining and boost the economy, which Treasury estimates would grow at most by 0.9 percent in 2016.

Data from the statistics agency this week showed GDP contracted by 1.2 percent in the first quarter, mainly due to an 18-percent slide in mining during the quarter.

“We need to stabilise sectors of the economy that find themselves in trouble, like mining,” Gordhan said.

 

(By Mfuneko Toyana. Writing by Stella Mapenzauswa; Editing by James Macharia)

 

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Mozambique president dismisses finance minister

10 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

MAPUTO (Reuters) – Mozambique President Filipe Nyusi on Thursday fired Finance Minister Adriano Maleiane, who has been embroiled in more than two weeks of negotiations with Russia’s VTB Bank over a late $178 million loan repayment.

A statement from Nyusi’s office gave no reason for the dismissal and did not say who would be replacing Maleiane.

Mozambique Asset Management (MAM) borrowed $535 million from VTB to build shipyards in the capital Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector but missed a May 23 deadline for its first loan repayment.

Restructuring the loan, updating business plans and bringing strategic partners on board were all possible ways to avoid a default on the debt, Maleiane said on Wednesday.

Delays to gas projects and at least $1.35 billion of secret government borrowing have created a foreign debt burden that threatens to plunge one of the world’s poorest countries into economic crisis.

Financial watchdogs from Switzerland and Britain are investigating Credit Suisse and VTB Bank for arranging the heavy undisclosed sovereign borrowing.

 

(Reporting by Manuel Mucari; Writing by Ed Cropley and Ed Stoddard; Editing by Andrew Roche)

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Kenyan finance minister raises budget deficit forecast

9 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

NAIROBI (Reuters) – Kenya is aiming for a budget deficit of 9.3 percent of GDP in fiscal year 2016/17 and plans to borrow 150 billion shillings ($1.48 billion) from external sources, probably by selling international bonds, officials said on Wednesday.

Finance Minister Henry Rotich said in a budget speech the deficit would be 691.5 billion shillings ($6.9 billion).

Kamau Thuge, the principal secretary at the ministry of finance, later told Reuters that figure would be equivalent to 9.3 percent of GDP.

Rotich gave the 150 billion shilling borrowing figure at a post-budget news conference. “We are still looking at accessing capital markets by way of sovereign bonds, we are looking at export credit arrangements and also bilateral and syndicated loans,” he said.

In April the finance ministry said the actual deficit in fiscal year 2016/17, which starts on July 1, would probably be around 6.9 percent of GDP, because ministries often struggle to spend their allocations.

“The failure to consolidate the fiscal balance any faster will be of some concern to markets,” Standard Chartered economist Razia Khan said. “Kenya’s accumulation of external debt has outpaced its ability to generate faster export growth to repay this debt.”

But Rotich said Kenya’s public debt “remains sustainable”, with the net present value of public debt to GDP below 50 percent and posing a “low risk of debt distress” based on assessments by the government, World Bank and International Monetary Fund.

“We remain committed to bringing the fiscal deficit down gradually to below 4 percent of GDP in the medium term,” he added. In the 2015/16 fiscal year ending this month, the forecast deficit was 8.7 percent of GDP, but has since been revised down.

“Our target to generate 1 million new jobs remains,” Rotich said, adding that he expected the economy to grow 6 percent in calendar year 2016 and by 7 percent in the medium term, compared with 5.6 percent growth last year.

The minister also outlined measures to boost revenue collection, including the potential introduction of a presumptive tax for those in the informal sector, who usually fall under the radar of the revenue authority.

“If everybody paid their fair share of taxes we would be in a better position to lower tax rates,” Rotich told lawmakers.

Thuge told Reuters local borrowing would remain nearly constant at 3 percent of GDP, ensuring local interest rates would not be under pressure.

 

($1 = 101.0000 Kenyan shillings)

 

(Reporting by Duncan Miriri. Editing by Elias Biryabarema and Catherine Evans)

 

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South Africa needs to “reduce noise” in its political system: Treasury official

27 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa has to reduce the “noise” in its politics in order to attract investment and improve confidence, a senior Treasury official said on Friday.

“We have got to reduce the amount of noise in our political system, especially as it pertains to various policies that are under consideration so that we can improve confidence and make our country an attractive investment destination,” Director General Lungisa Fuzile said at a conference in Johannesburg.

Africa’s most industrialised country has been gripped by political upheavals ranging from a failed impeachment attempt against President Jacob Zuma for breaching the constitution to media reports that he is at “war” with Finance Minister Pravin Gordhan in the past few weeks.

 

(Reporting by Mfuneko Toyana; Writing by Nqobile Dludla; Editing by James Macharia)

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Muhammadu Buhari rebukes Cameron for corruption remarks

27 May 2016 Comments (2) Africa, Featured, Politics

Nigerian President Muhammadu Buhari

Muhammadu Buhari, the Nigerian President, aimed a subtle attack on David Cameron’s hypocrisy after the British PM’s comments on Nigerian corruption.

Muhammadu Buhari, the Nigerian President, was in London this month for a multinational conference on tackling corruption. The summit was being held at the Commonwealth Secretariat, in the UK’s capital city, and played host to numerous world leaders as well as the US Secretary of State, John Kerry.

While the event was a positive move by different nations to discuss strategies for breaking down corruption, it was preceded by an embarrassing leak regarding the British Prime Minister.

Only days before the scheduled meeting, Cameron was overheard talking to the British Queen and saying, “We’ve got some leaders of some fantastically corrupt countries coming to Britain … Nigeria and Afghanistan, possibly the two most corrupt countries in the world.”

Buhari’s balanced retort

As Mr. Cameron’s comments were widely reported, President Buhari’s office released a statement to say that the President was “deeply shocked and embarrassed” by the Prime Minister’s remarks.

However, there was a much more subtle retort about to come. A retort in which Buhari accepted the issues that his country faces with corruption, but also shone a light on the vein of hypocrisy, that some might see, within Cameron’s words.

When asked by the BBC whether Nigeria was indeed “fantastically corrupt,” Mr Buhari responded “yes,” and then elaborated on Cameron’s remarks by saying, “He was telling the truth. He was talking about what he knew.”

But the real riposte came when Mr Buhari explained that he was not demanding “any apology from anybody,” adding, “I am demanding a return of assets. What would I do with an apology? I need something tangible.”

This was a reference to the billions of dollars of money stolen from Nigeria by corrupt officials, who then took their ill-gotten gains to the UK. The most recent example of this involves former Nigerian state governor Diepreye Alamieyeseigha, who fled Nigeria as he faced corruption charges, and arrived in Britain with $1.8 million in cash. While Alamieyeseigha was arrested in the UK, and charged with money laundering. £1 million of this money was eventually returned to Nigeria through the Metropolitan Police.

Moreover, this was not an isolated case, or even close to being the largest amount. Funds stolen from Nigeria and siphoned to the UK are nothing new. Almost 20 years ago, the former military head of state, Sani Abacha, was shown to have stolen approximately $5 billion from Nigeria’s coffers, and half of this is estimated to have been laundered in the UK. None of this money was ever recovered by Nigeria, and the incumbent President wonders just where it is and when it will be returned.

The former governor of Nigeria’s Delta State, James Onanefe Ibori, is also estimated to have stolen $250 million from his homeland. Ibori is serving jail time in the UK, but his multitude of British properties has not been processed in order to ensure that the laundered money is sent back to its rightful home.

The reality for both nations

It is of course clear that Nigeria’s corruption problem outweighs Britain’s. However, perhaps one of the largest issues is that Nigeria’s corruption adversely affects its own people, while Britain’s corruption often allows a small number to benefit from theft outside its own shores.

Transparency International’s Corruption Index ranked Nigeria 136th out of 168 nations, and the UK was ranked 10th. However, Transparency International criticized Prime Minister Cameron’s comments, saying that the UK was a key part of the global corruption problem by “providing a safe haven for corrupt assets” and being “by far the most important part of the global offshore system of tax havens and secrecy jurisdictions.”

The recent scandal around the Panama Papers, and the naming of Mr. Cameron’s father in them, is a timely reminder that corruption is not simply a problem in the developing world.

The presence of the various world leaders in London is a positive step, but Nigeria could justifiably argue it is doing more than most to address its problems.

The Nigerian Economic and Financial Crimes Commission has only been operating since 2003, and yet by 2013 it had thousands of convictions. Nigeria appears to be taking corruption seriously, and “embarrassing” comments put to the side, it must be hoped that all the nations at the anti-corruption talks can work together for sustained progress.

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Nigeria finmin says gov’t revenues fall in April due to oil

26 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

ABUJA (Reuters) – Nigeria’s distributable revenues to the three tiers of government fell in April to 281.5 billion naira ($1.42 billion), down 18.25 billion naira from March due to low oil prices, the West African country’s finance minister said on Wednesday.

The fall in revenue was caused by the “drop in the average price of crude oil,” Finance Minister Kemi Adeosun told journalists.

“A marginal drop in income was recorded from oil and gas royalties and import duties,” she added.

Nigeria, a member of OPEC, relies on crude sales for about 70 percent of its government revenues.

But with Africa’s largest economy now contracting, uncertainty around a foreign exchange policy shift that was announced without full details being provided and a new Niger Delta insurgency sending oil output to a 20-year low, it is a plight that gets worse by the day. [nL5N18K2X9]

The sharp fall in global crude prices since mid-2014, has hurt the country’s public funds and left many states unable to pay public salaries on time or fund infrastructure projects and other state services.

($1 = 198.8000 Nigerian naira)

 

(Reporting by Camillus Eboh, writing by Alexis Akwagyiram, editing by G Crosse)

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African governments seek bailouts as commodity prices fall

19 May 2016 Comments (0) Africa, Featured, Politics

angola imf

Angola is the latest nation to seek an aid package from the International Monetary Fund as its oil-dominated economy falters.

As its economy buckles under the weight of falling oil prices, Angola is turning to the International Monetary Fund (IMF) for a bailout.

By one estimate, the West African nation faces a shortfall of $8 billion, or 9 percent of its gross domestic product, this year. Angola last borrowed from the IMF in 2009.

Angola is one of several cash-strapped African countries that are turning to the IMF for financial help as prices drop for commodities such as oil and minerals.

Ghana agreed to an aid package in 2015, it’s first from the IMF in six years. Zambia is also in talks for IMF aid, which would be its first since 2008. Zimbabwe has also asked the IMF for its first loan in nearly two decades.

Meanwhile, the IMF stopped a $55 million loan to Mozambique – part of a bailout approved last year – after discovering the country had failed to report $1 billion in unreported loans it owes.

South Africa and Nigeria may also be forced to turn to the IMF as their economies struggle.

Angola faces shortfall

Angola’s request was an about-face after the nation repeatedly said it would not turn to the IMF for help in the current crisis because the aid would come with too many conditions.

But the country’s reserves have fallen as oil prices stayed below $45 a barrel and the government is reluctant to cut services in advance of elections in 2017.

Oil accounts for 95 percent of Angola’s exports and about half of the government’s revenue. In addition to slumping oil revenues, the country has suffered a retrenchment by China, which has its own economic problems.

Monetary agency requires transparency

In exchange for IMF aid, the Angolan government is likely to be forced to be more transparent about its financial dealings as the international agency typically scrutinizes the finances of countries it assists.

One criticism of Angola’s economy is the extent to which it is controlled by President José Eduardo dos Santos, who has ruled the country for more than three decades. While nearly half of the country’s population subsists on just over $1 per day, dos Santos’ daughter, Isabel dos Santos, is the richest woman in Africa, raising questions about the source of her wealth. Isabel dos Santos has denied using state money to enrich herself.

“The IMF stands ready to help Angola address the economic challenges it is currently facing by supporting a comprehensive policy package to accelerate the diversification of the economy, while safeguarding macroeconomic and financial stability,” Min Zhu, IMF deputy managing director, said in a statement.

One expert urged caution. Ricardo Soares de Oliveira, an Angola expert at Oxford University, noted that a study in 2011 by IMF staff found that the government could not account for $32 billion between 2007 and 2010.

“The IMF should use the leverage it has to extract serious concessions and tangible reforms from the government,” de Oliveira said.

Ghana receives bailout

Angola is the not the only country turning the IMF.

Ghana, an oil and gold producer, received a three-year, $918 million bailout in 2015. The country saw the value of its crude exports cut in half between 2014 and 2015, falling to $1.5 million in the first three quarters of last year as both prices and demand fell. Gold exports fell by nearly one third to $2.4 million.

In December, the IMF also agreed to a $283 bailout loan package for Mozambique that required the southern African nation to disclose all of its borrowing. In April, the IMF said it stopped a disbursement of $55 million after learning the country had not reported millions in loans by Credit Suisse Group and the Russian VTB Group.

Mozambique, a natural gas producer, saw exports fall by 14 percent in 2015.

Zambia, Africa’s second largest copper producer, saw a shortfall of 8 percent of gross domestic product in 2015 and is also seeking IMF assistance in 2016. Zimbabwe also expects an IMF loan in the third quarter of this year.

In addition to the IMF aid, the World Bank said it expects to lend up to $25 billion this year to countries reeling from falling commodity prices.

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Angola president continues central bank shakeup, replaces deputy governors

12 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angolan President Jose Eduardo dos Santos replaced two deputy central bank governors on Wednesday, his office said in a statement, the latest round of shake-ups at the bank as the oil-rich African country seeks assistance from the IMF.

Dos Santos in March appointed little-known Valter Filipe da Silva as Angola’s new central bank governor after José Pedro de Morais resigned.

His office said Gualberto Manuel Amaro Lima Campos and Cristina Florencia Dias Van-Dúnem had been dismissed and replaced by António Manuel Tiago Dias and Suzana Maria de Fátima Monteiro Camacho.

The economy of Angola, Africa’s second-largest oil exporter after Nigeria, has been hammered by the oil price fall, and the government is in talks with the World Bank and International Monetary Fund about possible financial assistance.

Three directors of the bank’s board were also dismissed and replaced.

 

(Reporting by Herculano Coroado; Editing by Ed Stoddard and Dominic Evans)

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Nigeria’s Buhari signs delayed 2016 record budget into law

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

ABUJA (Reuters) – Nigeria’s President Muhammadu Buhari signed the delayed 2016 budget into law on Friday, ending weeks of wrangling with lawmakers and tripling capital expenditure as Africa’s biggest economy contends with its worst crisis in years.

The 6.06 trillion naira ($30.6 billion) budget is an attempt by Africa’s top oil exporter to stimulate an economy hammered by the fall in crude oil prices. Oil sales make up about 70 percent of national income.

The budget assumes oil production of 2.2 million barrels per day at 38 dollars a barrel, Budget Minister Udoma Udo Udoma told reporters shortly after the signing.

Growth last year fell to its slowest rate since 1999 at 2.8 percent and inflation rose to a near four-year high of 12.8 percent in March while capital imports declined by 74 percent year-on-year in the first quarter of 2016. [nL5N1817H4]

In a speech given after the signing, Buhari said the current period was “probably the toughest economic times in the history of our nation”.

“In designing the 2016 budget, we made a deliberate choice to pursue an expansionary fiscal policy despite the huge decline in government revenues from crude oil exports,” he said.

The president said 350 billion naira would be spent on capital projects, and he compared the 200 billion allocated to road construction with the 18 billion earmarked for that purpose in the 2015 budget.

Buhari withdrew his original budget bill in January because of an unrealistic oil price assumption. Parliament approved an amended proposal in March but only submitted highlights, prompting Buhari to say he would only sign the bill after it was resubmitted.

The lack of a budget, almost a year after Buhari took office, meant ministries were unable to allocate funds to projects in various sectors.

“The passage of the budget has been a long journey, and it has been as much about process as content,” Nigeria-focused PM Consulting’s Antony Goldman, said.

The government plans to generate 3.38 trillion naira this year from non-oil sources, up 87 percent from 1.81 trillion in 2015 [nL5N17E2KU]. But, with the heavy reliance on oil sales, it is unclear how this will be achieved.

Finance Minister Kemi Adeosun has said Nigeria is expected to post budget deficits for the next two to three years [nL5N17E17G]. In 2016, the deficit is seen at 2.2 trillion naira compared with a previously estimated 3 trillion.

She has said Nigeria plans to borrow a total of 1.8 trillion naira from abroad and at home.

($1 = 199.0000 naira)

 

(By Felix Onuah. Writing by Alexis Akwagyiram; Editing by Louise Ireland)

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Zimbabwe economy ravaged by drought, needs bold reforms

4 May 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

HARARE (Reuters) – Zimbabwe’s economic difficulties have deepened after drought weakened agricultural production and disrupted hydro power generation and the southern African nation needs bold reforms, the International Monetary Fund said on Wednesday.

“Unless the country takes bold reforms, the economic difficulties will continue in (the) medium-term,” the fund said in a statement after a consultation with Zimbabwean officials.

 

(Reporting by MacDonald Dzirutwe; Writing by TJ Strydom; Editing by James Macharia)

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