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

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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South African Firms Look to Invest in Greater Africa

Comments (1) Africa, Business, Featured

House of coins

South African real-estate investors are looking for high returns in the African market, despite the myriad challenges of investing within the continent.

South Africa is, in some ways, akin to the neighborhood misfit: its historical and contemporary socio-economic environment, such as world class universities and medical schools, a fabulously lucrative niche safari sector and a diverse population set it apart from its regional and continental neighbors. As the non-African international community begins to increase its interest in Africa’s property market, so too are South African property developers. During a recent South African Property Owners Association (SAPOA) Convention, speakers suggested that property markets around the continent are ripe for investment.

Research, Research, Research

At the Johannesburg Sandton Convention Centre, speakers suggested that investors need to treat African property markets with respect: not only do investors need to know their individual markets, but they need to treat the African market as a long game, just like the American, Asian and European markets are treated. Bronwyn Corbett, head of Mara Delta investment group, the only pan-African listed fund, urged investors to see the trees within the forest: “each African country is different. Each is a challenge, and it wouldn’t be worth doing this if it wasn’t a challenge.”

Speakers meeting at the Johannesburg Sandton Convention Centre

Speakers meeting at the Johannesburg Sandton Convention Centre

That kind of optimism may be the key to successful investment choices. Property investment is full of obstacles regardless of the location but, speakers noted, Africa has some obstacles that may prove larger than in other markets further afield.

Getting a Bang for your Buck

Among the top cited concerns, some are universal and some are uniquely African. Volatile political climates, rapidly fluctuating currencies and changing rules and regulations surrounding the real estate markets were just a few of the concerns discussed by Corbett. “I appreciate that investors want us to make good deals. We are starting to find things but we have to learn as we go along. Many South African investors don’t actually know what happens on the ground in Africa and may expect things to happen more quickly,” Corbett said.
What happens “on the ground” in Africa is, Corbett insinuates, very different from what happens in the realm of South African investors. Deal brokering and relationships are very different for the elite of South Africa. These individuals entrust their capital to firms like Mara Delta to avoid the nitty-gritty of the day-to-day wheeling and dealing required to obtain high quality assets in Africa and elsewhere. Corbett cautions that it is the firm’s responsibility to have an understanding of the potential obstacles in African markets outside of South Africa. Their customers cannot be expected to have an understanding of property markets and thus, investment funds must do their homework into each potential investment market.

Mara Delta, a substantially black-owned and primarily black-managed investment firm with properties on the Johannesburg stock exchange since 2012, has an impressively broad portfolio that includes private and industrial properties in Morocco, Mozambique, Zambia, Mauritius, Kenya and Nigeria. With this geographically diverse set of investments, Mara Delta is a reliable advisor for potential investors. Corbett touched upon perhaps the primary concern for future international investors: the currency market. There are more than 40 different currencies used in Africa, and extracting funds from these countries can take time, both due to the exchange process and due to the sluggish bureaucratic process of African banks. In addition to currency-related challenges are the limited debt and credit lines available through African banks.

Worth the Price?

Some fund managers voiced their concern that African properties are significantly more expensive when compared to more developed properties in Asia, Canada and Central and Eastern Europe. “Our research indicates that prices per square meter have been significantly higher (in Africa) than similar investments in developed markets,” said Alternative Real Estate Capital Management’s Garreth Elston.

Real estate investments are, Corbett urged, worth the trouble. She cited the South African market as a symbol of endurance even in challenging times as long as quality assets are purchased, for the right price. Given the uncertainty of the global economy in light of Britain’s imminent exit from the European Union, real estate may once again become the safest bet.

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South Africa’s Astral weighs job cuts as drought, imports hurt poultry producers

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

JOHANNESBURG (Reuters) – South African poultry producer Astral has to cut jobs, it said on Wednesday, under pressure from high feed prices due to drought and from an over-supplied domestic market.

Maize prices in South Africa have hit record highs as an El Nino triggers the largest rainfall shortages in over a century, while cheap chicken imports flood in with the ending of punitive duties on U.S. chicken imports in 2015.

Analysts said production cuts were likely to be accompanied by mergers and acquisitions as companies across the food sector scramble to offset falling revenues.

“A lot of producers are suffering under current conditions and a lot them will be forced to become very, very competitive,” said Global Trader equities analyst Paul Chakaduka.

Shares in Astral slipped more than 4 percent on Wednesday after the firm delivered its operational update.

It said the impact of rising feed costs, record poultry imports and a weak consumer market was more severe than it had originally anticipated.

“The impact of the planned production cutbacks will unfortunately negatively impact on the labour force due to the reduction in hours to be worked,” Astral said.

The company employs about 13,000 people across operations in South Africa, Zambia, Mozambique and Swaziland, with a combined processing capacity of nearly 5 million broiler chickens a week.

Astral said it had implemented an import strategy to hedge against maize shortages and high prices, but if conditions did not improve it would have to consider further cuts to production and jobs.

Government expects the 2016 maize harvest to come in 28 percent lower at 7.16 million tonnes, with an improved harvest only in 2017 with a return of more rainfall.

Astral’s fellow poultry producers RCL Foods and Quantum Foods have also struggled in 2016, both citing the effect of drought, costlier raw materials, and lower demand made worse by high unemployment and climbing food inflation.

In May, Quantum reported headline earnings per share at 14.8 cents versus 26.3 cents in 2015. RCL reported HEPS up 25 percent to 87.2 cents, higher due to its diversified products.

Astral previously said it saw HEPS falling around 30 percent to between 801 cents and 701 cents per share for the six months to end March.

Share prices in all three of the poultry producers are lower compared to a year ago.

“These stocks may continue to become cheaper but it doesn’t mean they’re in buy territory. It only means they’ve become extremely uncompetitive or that you could see further mergers and acquisitions in the sector,” Chakaduka said.

 

(By Mfuneko Toyana. Reporting by Mfuneko Toyana; Editing by Ruth Pitchford)

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South Africa leads university rankings

Comments (0) Africa, Featured, Politics

University of Cape Town, in South Africa

Eight of the top 10 institutions of higher education in sub-Saharan Africa are located in a single country, according to new rankings.

South Africa wins the university sweepstakes according to new rankings: Eight of the top 10 institutions of higher education in sub-Saharan Africa are in that country while the other two are located in Kenya and Tanzania.

According to the 2016 University Web Rankings & Reviews by 4International Colleges & Universities, the University of Cape Town is the top university in Africa.

The 187-year-old public institution in the suburbs of Cape Town has an enrollment of more than 20,000 students.

Second in the rankings is the University of South Africa, in Pretoria with an enrollment of more than 45,000 students, followed by the Universiteit Stellenbosch (enrollment 25,000) and the University of Pretoria (enrollment 60,000), with the University of Witwatersrand in Johannesburg (enrollment 25,000) rounding out the top five.

The other South African universities on the list are: Rhodes University in Grahamstown with an enrollment of 7,000-8,000, the University of the Western Cape in Bellville with more than 15,000 students, and the University of KwaZulu-Natal in Durban with more than 40,000 students.

In Tanzania, the University of Dar es Salaam in that city also made the top 10 list. It has an enrollment of more than 15,000 students.

The University of Nairobi in Kenya rounded out the top rankings for the southern continent. With more than 45,000 students, the university also has branch campuses in Kikuyu, Parklands, Lower Kabete, Upper Kabete, Chiromo and Kismu.

Ratings favor graduate, research programs

Experts said South African Universities tend to do well on university rankings because the ratings tend to favor institutions that have significant numbers of doctoral students and faculty with doctoral degrees, and are recognized research centers.

University of Cape Town, for example, has made a point of becoming a “research-led flagship” university, according to Nico Cloete, director of the Centre for Higher Education Trust and coordinator of the Higher Education Research and Advocacy Network in Africa.

Students in a classroom at University of Cape Town

Students in a classroom at University of Cape Town

In a 2014 study, Cloete found that nearly a third of all students at the University of Cape Town in 2011 were postgraduate students and nearly two-thirds of the faculty had doctoral degrees.

In contrast, he found that institutions of higher education outside South Africa typically had low enrollments of graduate students and operated professional master’s degree programs rather than developing potential research leaders.

South African universities torn by protests

While South Africa’s universities receive high academic ratings, they have come under fire in recent years with students and faculty complaining about high fees and predominantly white faculties.

Violence erupted at several South African universities, including the University of Cape Town, earlier this year as students protested housing conditions and complained that white international students were given preference in accommodations. Several Cape Town students were arrested after protesters torched vehicles, burned artwork, invaded residences and petrol-bombed a vice chancellor’s office.

Leaders seek to increase participation

The rankings come against the backdrop of efforts to improve participation in higher education in Africa.

Higher education leaders have set a goal of 50% enrollment by 2063, the same level that is projected globally.

Currently, only 8% of sub-Saharan Africans of college age are enrolled, compared to 26% in the Middle East and 32% globally. In the developed world, the rate is more than 75%, according to 2012 data.

In setting the 50% target last year, the African Higher Education Summit called for a large increase in African investment in university education, greater research spending and stronger links to scholars in the African diaspora.

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Corruption in South Africa stunting reforms: IMF

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

JOHANNESBURG (Reuters) – Corruption in South Africa is hampering reforms needed to boost economic growth and greater transparency is needed at state-owned companies, a senior International Monetary Fund (IMF) official said on Tuesday.

IMF First Deputy Managing Director David Lipton said that cutting taxes and increasing government spending would not solve the problem of sluggish growth in Africa’s most sophisticated economy.

The IMF recently cut its growth forecast to only 0.1 percent for 2016 versus a previous estimate of 0.6 in May, citing the impact of severe drought and ineffective fiscal policy.

President Jacob Zuma’s unexplained decision to change finance ministers twice in four days in December and a series of political upheavals that followed had also hurt the economy’s prospects, Lipton said.

“The leadership changes at the National Treasury last December and other political developments have had an adverse impact,” he told a public lecture in Johannesburg.

“They have heightened concerns about governance, deepened political uncertainty and shaken investor confidence.”

Lipton also alluded to investors’ lack of faith in the management of South Africa’s 300-odd state-owned enterprises, many of which are over-staffed and under-productive.

A team commissioned by Zuma to review the firms recommended that some should be sold but nothing has happened.

“Support for money-losing companies is a growing drain on government coffers,” Lipton said.

As a solution, he suggested South Africa centralise the formulation of fiscal policy, reduce labour regulation uncertainty and root out public sector corruption.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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South Africa’s Eskom expects increase in export sales

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

JOHANNESBURG (Reuters) – South Africa’s state power utility Eskom expects a significant increase in export sales in the near future, its chief financial officer said on Tuesday.

“We foresee quite a significant increase in export sales,” chief financial officer Anoj Singh told a news conference, adding that in 2015 Eskom achieved a 12 percent rise in export earnings.

 

(Reporting by TJ Strydom; Writing by Nqobile Dludla; Editing by Joe Brock)

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South Africa’s rand retreats as lower gold price dampens risk-on rush

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

JOHANNESBURG (Reuters) – South Africa’s rand backtracked a touch on Tuesday, reversing the previous session’s strong gains with demand dampened by lower gold prices as investors held bets ahead of a local interest rate decision later in the week.

* Rand at 14.2725 at 0700 GMT, 0.3 percent weaker than New York close. Gained nearly 2 percent in previous session, testing 14.2000 resistance before retreating slightly.

* Global demand for risk assets moderating after Monday’s rush, but traders see emerging assets remaining on front foot as investors continue search for yield.

* Gold flat on Tuesday, holding on to its losses from the previous session as appetite for risk assets caps safe haven demand.

* All 31 economists surveyed by Reuters last week expect central bank to keep repo rate on hold at 7.0 percent on July 21.

* Government bonds firmer, yield on benchmark 2026 paper cuts 1 basis point to 8.83 percent.

* Stocks open weaker, blue chip index down 0.74 percent at 46,099 points, All Share slips 0.7 percent to 52,670 points.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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South Africa’s rand bounces as emerging markets shake off Turkey coup worries

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

JOHANNESBURG (Reuters) – South Africa’s rand gained nearly two percent early on Monday as emerging markets set aside concerns about a failed coup in Turkey over the weekend and investor focus shifting back to the timing of rate hike in the United States.

* Rand at 14.2900 at 0645 GMT, 1.85 percent firmer than New York close. The rand trended firmer for most of the previous week as investors globally favoured high yield assets.

* Risk appetite could drop later in week after strong economic data from United States suggest higher interest rates soon.

* Stocks due to open flat at 0700 GMT, futures index up 0.11 percent.

* Government bonds softer, yields up 4 basis points to 8.77 percent.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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South Africa’s mines minister calls for quick platinum wage deal

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

CARLETONVILLE, South Africa (Reuters) – Platinum mining firms and South African trade unions should conclude wage talks quickly to avoid the protracted disputes that led to a five-month strike two years ago, mines minister Mosebenzi Zwane said on Friday.

“I wish that everybody can negotiate with cool heads and avoid a strike and speedily resolve these negotiations,” he told reporters at a Sibanye Gold mine.

Talks between unions and the mining companies started this week.

The Association of Mineworkers and Construction Union (AMCU), the biggest union in the sector, is demanding pay hikes of more than 50 percent, while a smaller union, the National Union of Mineworkers, is seeking a 20 percent increase.

The demands are well above inflation at 6.1 percent. Africa’s most developed economy is struggling due to lower commodity prices and drought. The International Monetary Fund estimates almost zero growth this year.

South Africa has the biggest and most lucrative platinum reserves but labour unrest and regulatory uncertainty have dampened investor appeal.

The strike in 2014, which was led by AMCU, hit Anglo American Platinum , Impala Platinum and Lonmin, forcing them to cut jobs, sell mines and, in some cases, make cash calls to investors.

 

(Reporting by Nqobile Dludla; Writing by Tiisetso Motsoeneng; Editing by Joe Brock)

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South Africa’s May retail sales beat expectations

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

JOHANNESBURG (Reuters) – South African retail sales rose more than expected in May to their strongest level in more than two years, signalling the economy may be on the mend after contracting in the first quarter of this year.

Retail sales in Africa’s most industrialised economy rose by 4.5 percent year-on-year in May, its strongest rise since early 2014 after expanding by a revised 1.6 percent in April, Statistics South Africa said on Wednesday.

Analysts polled by Reuters had forecast a 1.6 percent year-on-year increase in May.

On a month-on-month basis, sales rose by 3.4 percent and were up 3 percent in the three months to May compared with the same period last year.

The South African economy, beset by high and persistent unemployment, has been hobbled by low commodity prices and a severe drought.

“Second quarter 2016 saw commodity prices recover, with tentative signs to date that the industrial sector has pulled out of recession on a stronger performance from manufacturing production,” Investec economist Annabel Bishop said in a note.

“The economy could just manage to avoid recession in the first half of this year, potentially recording a small fractional positive for the second quarter instead.”

Manufacturing data on Tuesday showed output rose more than expected in May to its strongest level in nearly a year.

Overall economic output fell by 1.2 percent in the first quarter of 2016 mainly due to a slide in the mining sector, putting South Africa on course for its first recession in seven years.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Ed Cropley)

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