PRETORIA (Reuters) – South Africa’s finance minister dismissed calls from one of his own advisers for the nationalisation of banks and mines on Wednesday, and acknowledged that investors had been unsettled by turmoil surrounding his ministry.

Malusi Gigaba, appointed in an abrupt resuffle late last month that shook markets and prompted two ratings downgrades, told journalists he needed to reassure investors as he prepared to fly out to an IMF meeting in the United States.

President Jacob Zuma’s decision to sack Gigaba’s respected predecessor Pravin Gordhan hammered the rand and triggered protests by pro-democracy activists and opposition parties.

Uncertainty over the government’s fical policy rose again over the weekend when one of Gigaba’s advisers, Chris Malikane, wrote an opinion piece in South Africa’s Sunday Times backing the nationalisation of mines, banks and insurance firms.

Gigaba said the article by the economics professor at Johannesburg’s University of the Witwatersrand did not represent government policy.

“The technical advice he provides will never detract from the policies of the (ruling) African National Congress which don’t entail the wholesale nationalisation of the mines, the insurance industries and the land,” Gigaba told journalists.

“The changes in the national executive announced on the 30th of March has left some of them (investors) concerned and we need to give that reassurance in terms of government policy. It was only changes in the national executive and not changes in government policy,” he added.

Fitch and S&P Global Ratings both downgraded South Africa to junk after Gordhan’s sacking. Gigaba reiterated on Wednesday that he would meet Moody’s to give the ratings agency assurances about government policy in a bid to avoid a third downgrade.

Some political figures in the opposition have called for nationalisation of mines, saying private companies have failed to spread wealth and control of the economy beyond a small black elite and the white minority that ran the country under apartheid.

(Reporting by Olivia Kumwenda-Mtambo; Writing by James Macharia; Editing by Andrew Heavens)

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By TJ Strydom and Wendell Roelf

CAPE TOWN (Reuters) – Africa’s biggest grocery retailer Shoprite is considering a push into Eastern Europe, where it hopes to use knowledge gleaned from former suitor Steinhoff International, its new CEO told Reuters.

The move signals a change in strategy for Shoprite under Chief Executive Pieter Engelbrecht, 47, as sovereign rating downgrades and a weak economy cloud prospects at home. It also leads it down a competitive path crowded with established retail giants such as Tesco, Carrefour, Lidl and Aldi .

Engelbrecht, who took over from 37-year veteran Whitey Basson in January, said the company wants to enter markets in Eastern Europe that either “have low competition or high economic growth”.

Shoprite has grown rapidly over the past two decades as shoppers from Lagos to Luanda increasingly shunned street markets and spent more of their wages in formal retail stores, but still less than 20 percent of its sales are outside its home market.

“We will look at other developing countries. That is also something that came out with our Steinhoff discussions and they’ve got good presence there, so we would like to leverage off that knowledge and definitely have a look at the East Bloc countries,” he said in an interview at the company’s head office outside Cape Town.

Steinhoff in February called off a plan to merge its African clothing and furniture assets with Shoprite’s stores, a deal bankers had said could create a giant valued at more than 180 billion rand ($13 billion).

“The two types of entry countries that you look at is either one with low competition or you look at one with high economic growth,” he said, adding that a trip to the region was planned although he did not say which countries he was considering.

“We will go slow. We are not going to over commit ourselves to learn if the market accepts us. So we will first establish a couple of stores and make sure the market likes us, and if we find acceptance then one can look at a merger or acquisition.”

However, a move to Eastern Europe would be fraught with risks and would not likely provide the profits necessary to offset the impact of reducing its exposure to the impact of credit ratings downgrade on South Africa, analysts said.

“So whatever ratings uplift one can expect from reducing South African exposure, might well be given up on lower profit margins and execution risk from such an acquisition,” said Unathi Loos, an Investec Asset Management retail analyst.

But Shoprite’s experience in selling to low income earners in far-flung cities across Africa could help it mount a strong challenge.

The company is also pondering a move into the South American market, Engelbrecht said.

SOUTH AFRICA

Engelbrecht, a chartered accountant who – before a serious neck injury – had dreams of playing rugby professionally, said Shoprite was maintaining sales and customer growth in South Africa and should reach its profit targets this year, but was concerned that a weaker rand currency could hurt consumers.

South Africa’s rand was the worst performing emerging market currency this month, retreating more than 10 percent against the greenback, as the shock of a midnight cabinet reshuffle and subsequent credit ratings downgrade weighed on sentiment. [

Engelbrecht said Shoprite had a strong balance sheet to help weather the volatile rand and was talking to banks to raise between 10 billion and 15 billion rand for its capital requirements over the next six years.

Though raising funds in South Africa is likely to be more costly due to the downgrades, Shoprite can still tap foreign markets through its structures in Mauritius.

And raising funds in Eastern Europe could be significantly cheaper than in South Africa, analysts said.

($1 = 13.6146 rand)

(Editing by Louise Heavens and Susan Thomas)

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JOHANNESBURG (Reuters) – South Africa’s new Finance Minister Malusi Gigaba said on Wednesday Treasury is committed to fiscal consolidation plans outlined in the 2017 budget after S&P and Fitch downgraded the country to sub-investment grade.

Speaking to local investors at the Development Bank of South Africa, Gigaba said the Treasury aims to stabilise the government’s net debt over the next three years at 50 percent of gross domestic production (GDP).

“To accomplish this we are tightly controlling expenditure,” Gigaba said.

“Fiscal sustainability is a prerequisite for inclusive development … we are therefore committed to the fiscal consolidation plans as outlined in the February budget.”

Last week Fitch downgraded South Africa’s foreign and local currency debt to speculative grade, while S&P Global Ratings cut the hard currency borrowing to “junk”. Both cited likely changes in economic policy after a cabinet reshuffle.

Gigaba reiterated that South Africa’s controversial nuclear-build programme will be implemented “at a pace and scale that the country can afford” in brief remarks to reporters.

“Any procurement of nuclear energy will follow due process,” Gigaba said.

Critics of the expansion plan have raised questions about environmental risks and costs, estimated at 1 trillion rand ($73 billion), saying the country can ill afford the project.

State-utility Eskom said on Sunday if all processes go well, it will issue a request for proposals around June.

South Africa, which has Africa’s only nuclear power station, wants atomic power to play the leading role in expanded power generation, easing the country’s reliance on an ageing fleet of coal-fired plants. It has asked Eskom to procure an additional 9,600 megawatts (MW) of capacity.

($1 = 13.7435 rand)

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

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JOHANNESBURG (Reuters) – Miner Anglo American will sell its Eskom-linked thermal coal operations in South Africa for $166 million, it said on Monday, part of a strategic overhaul announced a year ago to cope with a slump in commodity prices.

The mines, along with four closed collieries, have a supply agreement with Eskom under which South Africa’s sole power utility paid for their running costs in exchange for coal supply at a pre-set price.

The company said it will sell the assets — New Vaal, New Denmark and Kriel collieries — to Seriti Resources Holdings – a company led by Mike Teke, the president of the local mining industry lobby group, Chamber of Mines.

Anglo was hit hard by a slump in commodity prices in 2015, prompting it to launch a sweeping overhaul to slim down its portfolio and focus on diamonds, platinum and copper.

“This transaction forms part of our ongoing commitment to reshape and upgrade our global asset portfolio,” Anglo Chief Executive Mark Cutifani said in a statement.

($1 = 13.8200 rand)

(Reporting by Rahul B in Bengaluru and Tiisetso Motsoeneng in Johannesburg; Editing by Louise Heavens/Keith Weir)

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By Mfuneko Toyana and Sujata Rao

JOHANNESBURG/LONDON (Reuters) – South African President Jacob Zuma asked Finance Minister Pravin Gordhan on Monday to return home “immediately” from an investor roadshow abroad, reviving talk of a cabinet reshuffle and unnerving investors who see Gordhan as an emblem of stability.

The rand fell more than 3 percent against the dollar, its biggest one day fall since Nov. 10, South African bonds tumbled and banking shares slid more than 3 percent after Zuma’s office said Gordhan had been recalled. It did not give a reason, but a government source said the presidency had not given permission for the trip.

The decision comes a day before a court is due to rule on a request by Gordhan for a declaratory judgment that he cannot interfere with decisions by banks to cut ties with businesses owned by the Gupta brothers, who are friends of Zuma.

“Zuma has instructed the Minister of Finance, Mr Pravin Gordhan, and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately,” a statement from the president’s office said.

Business executives and union leaders had accompanied Gordhan to London to woo potential investors for whom he is a reassuring figure given South Africa’s weak economic growth and tensions within the ruling African National Congress (ANC) that have put its investment-grade credit rating at risk.

Fraud charges brought against Gordhan and then dropped last year, prompting accusations of a political “witch-hunt”, badly rattled financial markets, as did rumours before last month’s budget speech that he might be moved from the Treasury.

Speaking in London, Gordhan — who the Treasury said will return to South Africa on Tuesday — said he was “just asked to come back”. Asked if he expected a cabinet reshuffle, Gordhan said: “That’s the boss’s prerogative.”

Koon Chow, emerging debt strategist at Swiss asset manager UBP, said Gordhan was jovial and relaxed at Monday’s roadshow.

“He knows investors like him and he likes us,” said Chow. Asked why he was being called back to South Africa, “he said ‘I do what my boss tells me'”, Chow added.

UNCERTAINTY

The main opposition Democratic Alliance said the decision to recall Gordhan “is so bizarre that it appears, at best, calculated to humiliate the minister or, at worst, to suggest that the minister is about to be fired”.

The ruling ANC meanwhile said the decision had not been discussed at its weekend meeting.

South Africa’s banking industry association said Zuma’s order risked a sovereign credit rating downgrade, while the cost of insuring South African government debt against default hit its highest level in nearly seven weeks.

Jabulane Mabuza, head of Business Unity South Africa and chairman of Telkom, who was with Gordhan in London, said in a text message: “At this point only presidency can give clarity on the why.”

Mabuza said Gordhan and his team had met about 60 asset managers in London and had planned to meet some 200 investors with a total $10 trillion in assets under management during the non-deal roadshow.

Gordhan first served as finance minister from 2009 to 2014 and was reappointed by Zuma in December 2015 to calm markets spooked by the president’s decision to replace respected finance minister Nhlanhla Nene with a little-known politician.

But South African media reports suggest Zuma and Gordhan have an uneasy relationship, though the president has denied suggestions he is “at war” with his finance minister.

“I believe today could be a test of the water to undertake a reshuffle,” said Peter Attard Montalto, an emerging markets analyst at Nomura in London.

Some pundits say Gordhan is the target of political pressure from a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates and also rapped his running of the tax agency. Gordhan has wrangled for months with the head of the agency.

MARKET MOVES

A Pretoria court is due to hear on Tuesday Gordhan’s request for a declaratory judgment that he cannot interfere with decisions by South Africa’s major banks to cut their ties with businesses owned by the three Indian-born Gupta brothers.

Gordhan has said the brothers have repeatedly asked him to intervene to have their accounts reopened.

Allegations that the Guptas wielded undue influence over Zuma were investigated last year by the Public Protector, a constitutionally mandated anti-corruption watchdog. Zuma has said the Guptas are his friends, but denies anything improper about the relationship.

Africa’s most industrialised economy faces credit rating reviews in April and June that could see it slip into “junk” territory because of sluggish growth and political uncertainty.

“Today’s market moves underline the importance of Mr. Gordhan to investor confidence in South Africa,” Capital Economics Africa economist John Ashbourne said in a note.

“And even if the minister is not removed, today’s events show that President Zuma is totally unconcerned with the effect that his often erratic policymaking style has on markets.”

(Additional reporting by Ed Cropley, Ed Stoddard, Olivia Kumwenda-Mtambo, Joe Brock in Johannesburg, Wendell Roelf in Cape Town, Marc Jones and Karin Strohecker in London; Writing by James Macharia; Editing by Catherine Evans)

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By Chijioke Ohuocha

LAGOS (Reuters) – The Nigerian central bank has weakened the naira by 0.6 percent in the last two weeks through dollar interventions on the official market aimed at narrowing the spread with the black market, traders said on Tuesday.

The naira was trading at 307.50 on the interbank market on Tuesday, almost 30 percent weaker than on the unapproved retail market where it was quoted at 435 per dollar.

The central bank had been selling dollars at 305 levels since August to support the Nigerian currency. However it devalued the naira last month for individuals, paving the way for a possible broader move to narrow black market rates.

“The central bank is depreciating the currency. It’s a deliberate effort to narrow the gap with the black market,” one trader at a major local bank told Reuters.

The central bank, which declined to comment, is due to announce its decision on interest rates at 1330 GMT with markets watching for signs of a more relaxed foreign exchange rate regime after the government this month called for “market-determined” rate.

A Reuters poll expects the bank to leave its benchmark interest rate unchanged at 14 percent to tackle high inflation.

The West African country has tried to make the exchange rate more flexible before, leading to a 30 percent devaluation last year, only to reimpose a quasi currency peg, creating multiple exchange rates.

Two weeks ago Nigeria unveiled an economic recovery plan, including measures to relax foreign exchange restrictions, in a drive to pull Africa’s largest economy out of its first recession in 25 years.

It said the central bank will aim to achieve a market-determined exchange rate regime, but did not specify whether this would mean allowing the naira to float freely or keeping the current system of dollar injections to address shortages.

The bank’s governor later said he was not convinced about a currency float due to its effect on inflation, which fell for the first time in 15 months in February.

Instead the bank has sold millions of dollars via currency forwards on the official market in recent weeks to try to clear a backlog of demand and narrow black market rates which traded as weak as 520 last month.

(Editing by Alexander Smith)

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CAIRO (Reuters) – The World Bank has disbursed another $1 billion in financial assistance to Egypt out of its $3 billion loan programme with the country, the bank said in a statement on Monday.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy hit by political upheaval since a 2011 revolt and to ease a dollar shortage that has crippled imports and hampered its recovery.

“The government has taken important steps in implementing key policy and institutional reforms that are laying down the foundations for accelerated job creation and inclusive growth,” said Dr. Asad Alam, World Bank Country Director for Egypt, Yemen and Djibouti in the statement.

The World Bank issued the first $1 billion tranche of the loan in 2015, with two more instalments of the same size to follow, linked to additional reforms that the government planned.

Faced with a gaping budget deficit, Egypt began a series of painful economic reforms and has taken steps to lower fuel subsidies, introduced a new value-added tax (VAT) and let its currency float freely in the foreign exchange market in November to attract foreign inflows.

Sahar Nasr, Egypt’s minister of investment and international cooperation, said in a statement that the second tranche will help spur private sector investment and development projects and services, which should help improve people’s standard of living.

Hafez Ghanem, the World Bank’s vice president for the Middle East and North Africa, told Reuters this month that Cairo’s next set of economic reforms should focus on making its bureaucracy more transparent for investors.

Egypt expects to receive the second tranche of a $12 billion International Monetary Fund loan in May or June, Finance Minister Amr El-Garhy told Reuters last week.

(Reporting by Lin Noueihed; Additional reporting by Ehab Farouk; Writing by Amina Ismail; Editing by Hugh Lawson)

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DAR AS SALAAM (Reuters) – The World Bank will lend Tanzania $2.4 billion over the next three years to finance infrastructure projects, the bank’s president Jim Yong Kim said on Monday.

Tanzania is seeking financing for infrastructure projects as part of its plans to transforming the country into a regional transport and trade hub.

“Tanzania will be able to access an estimated $2.4 billion in concessional financing, an increase of half a billion dollars over the past three-year period,” Kim said during a visit to Tanzania’s commercial capital Dar es Salaam.

Kim and Tanzania’s President John Magufuli also attended the signing of documents on three World Bank-funded projects worth $780 million aimed at improving public infrastructure.

East Africa’s second-biggest economy wants to profit from its long coastline and upgrade its rickety railways and roads to serve the growing economies in the land-locked heart of Africa.

Big gas finds in Tanzania and oil discoveries in Kenya and Uganda have turned east Africa into an exploration hotspot for oil firms, but transport infrastructure in those countries has suffered from decades of under-investment.

(Reporting by Fumbuka Ng’wanakilala; Editing by Aaron Maasho and Hugh Lawson)

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By Jessica Resnick-Ault and Florence Tan

NEW YORK/SINGAPORE (Reuters) – China’s Sinopec is nearing a deal to buy Chevron’s South African oil assets for up to $1 billion to secure its first major refinery on the continent, several people familiar with the matter said.

China Petroleum and Chemical Corp, or Sinopec, Asia’s largest oil refiner, was the last bidder remaining, and close to a deal with Chevron after an auction that spanned more than a year for its refinery, retails business and storage terminals.

French oil firm Total and commodity traders Glencore and Gunvor looked at the assets, Reuters reported last year.

The South Africa government’s desire to keep the refinery operating has nevertheless proven to be a major stumbling point for buyers who would prefer to convert the site into a more profitable storage terminal, sources said.

Sinopec is in discussions with the government on ways to keep the 110,000 barrels per day refinery in Cape Town running, but talks could still fail, sources said.

The sources declined to be identified because they were not authorised to discuss the matter publicly.

Chinese oil companies and merchant traders have become more visible in chasing refinery assets that come on the market as oil majors reshape asset portfolios.

Sinopec declined to comment.

Chevron spokesman Braden Reddall said “the process of soliciting expressions of interest in the 75 percent shareholding is ongoing”. Plans to sell the stake in the South African business, including the Cape Town refinery, were first announced in January 2016.

Besides the refinery, Chevron has interests in a lubricants plant in Durban on the east coast, storage tanks and a network of Caltex service stations, making it one of South Africa’s top five petroleum brands.

Financial advisor Rothschild & Co is helping Chevron on the sale of the assets.

The remaining 25 percent interest is held by a consortium of Black Economic Empowerment shareholders and an employee trust.

(Additional reporting by Ron Bouss and Dmitry Zhdannikov in London, Joe Brock in Johannesburg and Chen Aizhu in Beijing; writing by Anshuman Daga; editing by Kenneth Maxwell and Susan Fenton)

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