JOHANNESBURG (Reuters) – Investment company Allan Gray said on Friday its 16 percent stake in Net1 allowed it to call a shareholders’ meeting over the payment technology provider’s handling of the scandal over a South African welfare contract.

South Africa’s Constitutional Court was set to rule on Friday in a case concerning the unlawful tender of a contract to Net1 unit Cash Paymaster Services (CPS) to manage welfare benefits to 17 million people.

The stakes are high as the welfare system is a lifeline for South Africa’s most vulnerable and includes more than 11 million child support grants, many of whom would go hungry without the monthly payment.

Allan Gray could push for the removal of the Net1 board, Chief Investment Officer Andrew Lapping was quoted in the Business Day newspaper.

“Sixteen percent allows us to call a shareholders’ meeting,” Allan Gray Chief Operating Officer Rob Dower told Talk Radio 702.

Friday’s looming judgment by the country’s top court stems from a case brought by applicants who want it to take oversight of a new contract.

South African President Jacob Zuma said in parliament on Thursday there was no “crisis”. Earlier this week the country’s chief justice placed the blame for the debacle squarely on the shoulders of Social Development Minister Bathabile Dlamini, calling her inaction incomprehensible.

The creation of a welfare safety net which supports one in three South Africans has been one of the signature achievements of the ruling African National Congress (ANC), in power since the end of white apartheid rule in 1994.

The chaos in South Africa’s social security agency comes three years after the Constitutional Court ruled that the tender won by CPS was illegal.

The government was given time until April 1 to take responsibility for social service payments or find a new provider, but it has so far failed to do so, raising concerns that grants may not be paid on time next month.

(Reporting by Ed Stoddard; Editing by James Macharia)

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By Felix Onuah

ABUJA (Reuters) – Nigerian lawmakers aim to pass the 2017 budget by the end of March, the president of the upper house of parliament said on Tuesday, following a meeting with President Muhammadu Buhari.

The budget lays out plans to pull Africa’s largest economy out of its first recession for 25 years, largely prompted by low global prices for the oil it produces and by attacks on energy facilities in the OPEC member’s Niger Delta oil hub last year.

Buhari, a 74-year-old former military ruler who has faced rising disenchantment over his handling of Nigeria’s economy, presented his record 7.298 trillion naira ($23.21 billion) budget to lawmakers in December.

“This month is our deadline to finish work on the budget and return it to the executive,” Senate President Bukola Saraki said after the meeting with Buhari and the head of parliament’s lower house. “We are working very hard to ensure we meet that deadline.”

The budget must be agreed by lawmakers before the president can sign it into law.

The 2016 budget became law in May last year after being delayed by several weeks of wrangling between the government and the Senate.

Saraki said he had also briefed Buhari at their meeting on the activities of parliament during the president’s lengthy absence due to illness.

Buhari resumed his presidential duties on Monday after spending seven weeks in Britain on medical leave for an undisclosed ailment.

Saraki said the issues discussed with Buhari had included “stability in the Niger Delta” and the $1 billion Eurobond issued by Nigeria last month.

Vice President Yemi Osinbajo drove policy implementation in Nigeria, Africa’s most populous nation, during Buhari’s absence.

($1 = 314.5000 naira)

(Writing by Alexis Akwagyiram; Editing by Gareth Jones)

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JOHANNESBURG (Reuters) – S&P Global Ratings reiterated its concerns on Tuesday about weak economic growth, political tensions and policy reform in South Africa, which faces the prospect of downgrades to its sovereign credit ratings which would raise the cost of borrowing.

The political temperature has been rising in Africa’s most industrialised economy ahead of the ruling African National Congress (ANC) party’s key policy and leadership conferences this year, to chart the country’s economic and political course. A successor to President Jacob Zuma as head of the party is due to be elected at the ANC’s conference in December.

“If we see a lot increasing political tensions, infighting in state institutions which could derail the government’s plans in boosting economic growth then that can impact on our forecasts on growth,” Gardner Rusike, S&P associate director told a conference.

S&P has cited “political turmoil and tension” before and the issue clearly remains high on the investment radar screen.

Growth has also been a persistent concern. South Africa’s economy grew by 0.3 percent in 2016 versus 1.3 percent in 2015, well short of the government’s target of 5 percent.

(Reporting by Olivia Kumwenda-Mtambo; Writing by Ed Stoddard; Editing by James Macharia)

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By Camillus Eboh and Chijioke Ohuocha

ABUJA/LAGOS (Reuters) – Nigeria’s telecoms regulator and central bank governor intervened on Thursday to try and help Etisalat Nigeria resolve debt restructuring talks with its lenders, after the company missed a payment on a $1.2 billion loan.

A banking source told Reuters on Wednesday that the Nigerian affiliate of Abu Dhabi-listed telecoms company Etisalat, had given notice to its Nigerian lenders that it would miss a payment in February. Debt talks were triggered 10 days ago but the two sides have not been able to agree on terms.

One of the lenders, Access Bank said on Thursday that it was owed 40 billion naira ($131 million) by Etisalat Nigeria.

The consortium of 13 banks had asked Etisalat to convert loans from its parent into equity and inject fresh capital into its Nigerian unit.

The Nigerian Communications Commission (NCC) said in a statement that it was worried about the negative impact the issue could have on Eitisalat subscribers and the industry, and wanted to prevent a possible takeover of Etisalat by the banks.

NCC Chairman Umar Danbatta met with central bank Governor Godwin Emefiele to try and find a solution and ordered Etisalat Nigeria and the banks to meet again on Friday. It gave no details.

“NCC was worried about the fate of the over 20 million Etisalat subscribers and the wrong signals this may send to potential investors in the telecom industry,” it said in the statement.

LEASE PAYMENT AT RISK

Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 percent of the group’s revenue in 2013.

Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.

Banks involved in the loan deal include: Zenith Bank , GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

Access Bank’s Chief Executive Herbert Wigwe told an analysts’ call on Thursday that Etisalat had converted a shareholder loan to the Nigerian arm to equity to free up cashflows and that it may need to bring in fresh equity.

As well as the loan from banks, Etisalat also entered into a sale and lease-back of its phone towers with tower firm IHS Nigeria to free up cash. Analysts worry that IHS, which has Etisalat as its second-biggest customer, may be affected too.

JP Morgan analyst Zafar Nazim said in a note on Thursday that on Wednesday it downgraded IHS bonds due 2021 because of Etisalat Nigeria as it was uncertain whether the company could keep up with lease commitments.

Nazim also said it was unclear whether Etisalat’s parent firm would recapitalize the Nigerian operations given its small market share in the country, but added that a quick resolution to the loan issue would boost IHS bonds.

(Additional reporting by Andrew Torchia in Dubai; Writing by Chijioke Ohuocha and Ulf Laessing; Editing by Mark Potter and Susan Fenton)

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CAIRO (Reuters) – Egypt’s annual urban consumer price inflation soared to its highest level in more than three decades, hitting 30.2 percent in February, the statistics agency CAPMAS said on Thursday.

It was the fourth consecutive jump in inflation since the central bank abandoned its currency peg to the U.S. dollar on Nov. 3 in a dramatic move that has since seen the currency depreciate roughly by half.

Urban consumer price inflation had reached 28.1 percent in January year-on-year. The February number is the highest level since November 1986, when it reached 30.6 percent, according to Reuters data. (for chart click on http://reut.rs/2mExYx8)

Monthly urban consumer inflation eased to 2.6 percent in February from 4.07 percent in January.

The central bank accompanied the float with a 3 percent interest rate hike to fight price pressures but inflation has jumped over the past four months and is expected to climb further this year as the government pushes on with economic reforms, including fuel subsidy cuts.

“We expect headline inflation to remain elevated at similar and higher levels until Q4 2017, at least, as the pass-through effect from the higher FX rate continues, albeit at lower levels,” said Reham ElDesoki, senior economist at Arqaam Securities.

The economic reforms helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November.

President Abdel Fattah al-Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.

On Tuesday hundreds of Egyptians protested around the country, blocking roads and surrounding government offices, after a change to the way bread rations are managed raised fears that the government was cutting food subsidies by the back door.

In cities and towns food and beverage inflation reached 40.5 percent year on year in February. Clothing and footwear inflation reached 23.4 percent while transport inflation reached 28.8 percent annually, the statistics agency said.

“The prices are very expensive, nothing is getting cheap. People are buying much less, instead of 2 kilos, they get 1.5, tightening the belt until things get better,” Abdullah Mohsen, a vegetable seller at a market in Cairo on Thursday.

“Traders have hiked up the prices of the vegetables we buy in bulk, and it’s unimaginable. I’ve never heard of aubergines or beans selling for these prices,” he added.

Some economists expect the rising inflation to erode spending power, hit economic growth and prompt further hikes to interest rates, which are already up to 15.75 percent.

Egypt’s central bank has held interest rates steady at three monetary policy meetings since the flotation and some economists expect further rate hikes this year. The central bank’s monetary policy committee is due to meet on March 30 to decide on its key rates.

IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017.

(Reporting by Asma Alsharif, additional reporting by Nadine Awadalla; Editing by Richard Borsuk and Toby Chopra)

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By Tiisetso Motsoeneng

JOHANNESBURG (Reuters) – Africa’s biggest mobile phone operator MTN Group promised to pay a dividend in 2017 on Thursday, sending its shares surging as investors shrugged off a loss that underscored its risks in investing in frontier markets.

Founded with the help of Pretoria at the end of white rule in 1994, MTN is seen as one of post-apartheid South Africa’s biggest commercial successes but clashes with regulators in recent years have raised questions about governance and hobbled growth.

MTN reported a $108 million annual loss, its first in two decades, hit by a regulatory fine in Nigeria and unfavourable currency moves.

MTN agreed to pay a fine of 330 billion naira ($1.1 billion), reduced from $5.2 billion, in June last year after a prolonged legal battle to end a dispute in Nigeria over missing a deadline to cut off unregistered SIM cards.

The fine claimed by Nigeria, MTN’s most lucrative but increasingly problematic market, wiped 10.5 billion rand ($770 million) from 2016 earnings.

Shares in MTN jumped more than 10 percent to 129.11 rand as its chairman said the losses would not be repeated and promised to keep dividends flowing.

MTN, held by many investors for its dividends, said it would pay 700 cents per share this year after declaring a similar amount for 2016.

“If you strip out the Nigerian fine, which is a once off thing, and forex moves, this company is not in a such bad shape operationally,” said Momentum SP Reid Stockbrokers’ analyst Sibonginkosi Nyanga.

Without one-off and non-operating items, which include about 6 billion rand in forex losses, MTN would have managed a profit, albeit 14 percent lower than 2016’s earnings.

MTN’s executive chairman Phuthuma Nhleko called the loss, at 77 cents per share, a “black swan event”.

“For even the most successful companies, you do have black swan events in your history and this was it. We hopefully are not going to see something like this again,” Nhleko told Reuters on the sidelines of the company’s results presentation.

However, MTN also faces an investigation by Nigerian lawmakers on whether it illegally repatriated $14 billion between 2006 and 2016.

MTN has denied any wrongdoing and Nhleko dismissed the allegations on Thursday as baseless.

The crux of the latest Nigerian allegations is that MTN did not obtain certificates declaring it had invested foreign currency in Nigeria within a 24-hour deadline stipulated in a 1995 law, and therefore the repatriation of returns on those investments was deemed illegal.

($1 = 13.0003 rand)

(Additional reporting by TJ Strydom; Editing by James Macharia/Ruth Pitchford)

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By Chijioke Ohuocha and Ulf Laessing

LAGOS (Reuters) – Nigeria’s economy contracted 1.5 percent in 2016 due to lower oil revenues and a shortage of hard currency, the National Bureau of Statistics said on Tuesday, its first annual contraction in quarter of a century.

Africa’s largest economy slid into recession in the second quarter of 2016 as a slump in crude prices hammered the OPEC member’s public finances and battered the naira currency. Crude sales make up two-thirds of government revenue.

“This contraction reflects a difficult year for Nigeria, which included weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency,” the statistics office said in a report.

The International Monetary Fund had predicted Nigeria’s economy would shrink 1.8 percent in 2016. A Reuters poll forecast a 1.2 percent contraction..

Fourth-quarter national output shrunk by 1.3 percent, it said. However, non-oil sector production fell by only 0.33 percent during the three months to end-December.

Oil production – Nigeria’s economic mainstay – fell to 1.833 million barrels a day last year after 2.13 million bpd in 2015, it added, blaming militant attacks in the Niger Delta oil hub.

Vice President Yemi Osinbajo said in a statement the GDP data suggested Nigeria was “well on its way out of recession”.

“The expectation is that this trend and the slowing down of month-on-month inflation will enable an early return to positive growth in the economy,” the statement said.

DOLLAR RESERVES RISING

Nigeria has been running short of dollars as a result of lower foreign exchange earnings, which has weakened the local currency on the black market, where it trades far lower than the official interbank rate of 305 naira.

Foreign exchange reserves rose to a more than 19-month high of $29.45 billion as of Feb. 24, central bank data showed on Tuesday, but still remain far off their peak of $64 billion in August 2008.

Though the central bank has stepped up dollar supply in recent days after effectively devaluing the naira for private individuals, the currency still trades at a more-than 30 percent premium on the black market.

A Reuters poll last week showed analysts expect policymakers may devalue the naira soon, but won’t fully relinquish control over it.

Cobus de Hart, senior economist at NKC, said he expected the economy to recovery slowly, driven by higher government spending on infrastructure and increased oil production.

The government targets an annual growth rate of 7 percent GDP by 2020, as part of its medium-term economic recovery.

But the strength of the recovery will depend on the pace at which authorities can put in place much-needed reforms, said Razia Khan, chief economist for Africa at Standard Chartered Bank.

“The very shallow contraction in non-oil GDP growth in Q4 2016, raises hope of a more meaningful recovery in non-oil GDP in Q1 2017, buoyed both by improved budget spending and some improvement in FX availability.”

(Additional reporting by Felix Onuah and Oludare Mayowa; Editing by Richard Lough)

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LAGOS (Reuters) – Nigeria wants to borrow at least $1 billion from the World Bank, Finance Minister Kemi Adeosun said on Tuesday.

Adeosun also told CNBC that Nigeria hoped to sign in the next few months a loan worth $1.3 billion from China’s Export-Import Bank (Exim) to fund railway projects in the West African nation.

(Reporting by Ulf Laessing and Oludare Mayowa; Editing by Gareth Jones)

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LAGOS (Reuters) – Nigeria sees no need to apply for an International Monetary Fund programme as it is pursuing its own economic reform plan, Finance Minister Kemi Adeosun said on Tuesday.

Sharp falls in the price of crude oil, its main export, have tipped Africa’s biggest economy into its first recession for 25 years and hammered the naira currency, prompting speculation it might need IMF funding to cover a growing budget deficit.

“For us the IMF is really a lender of last resort when you have balance of payments problem. Nigeria doesn’t have balance of payments problems per se, it has a fiscal problem,” Adeosun told CNBC in an interview.

“We are already doing as much reform as any IMF programme would impose on Nigeria,” she said. “Nigerians want to take responsibility for their future. We must have our home-grown, home-designed programme of reform.”

Adeosun said non-oil revenues were improving while the government was fine-tuning an economic reform plan needed to support an application for a loan of at least $1 billion from the World Bank. It is also seeking further funds from the African Development Bank.

“Non-oil revenue is improving very steadily. All the measures we have put in place are beginning to yield fruits,” she said, without giving numbers.

“Oil production is back up, we are very grateful for that, but we should be careful for getting excited about that.”

Diplomats and officials have told Reuters the Nigeria, Africa’s leading crude producer, which relies on oil revenues for most of its income, plans to finalise its proposal to the World Bank this month.

The country needs to plug a gap in its record 7.3 trillion naira ($23.17 billion) 2017 budget, which contains a number of measures aimed at stimulating the economy.

It had initially promised to submit an economic plan to the World Bank by the end of December but did not do so, sources told Reuters last month.

Nigeria will also present its economic proposal to the African Development Bank to help release a second loan tranche worth $400 million to support the budget, officials have said.

($1 = 315.0000 naira)

(Reporting by Ulf Laessing and Oludare Mayowa; Editing by Catherine Evans)

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By Nqobile Dludla

JOHANNESBURG (Reuters) – South Africa-based MTN Group expects to report a full-year loss due to a $1 billion regulatory fine in Nigeria and underperformance there and at home, it said on Wednesday, sending its shares to a two-month low.

Africa’s most populous nation and biggest economy Nigeria is MTN’s most lucrative but increasingly problematic market, hobbling its growth outlook.

But the appointment of banker Rob Shuter, who starts next month, as chief executive is expected to bring operational strength and step up Africa’s biggest telecoms company’s hunt for returns, possibly in financial services.

“We hope that this new CEO with a stability mentality will be able to stabilize MTN and not venture into all these risky operations,” said Momentum SP Reid analyst Sibonginkosi Nyanga.

MTN, which makes a third of its revenue in Nigeria, said it expects a headline loss, and will issue a further trading statement on the likely range within which its headline loss is expected. Eight analysts polled by Reuters had expected the company to post a 39 percent fall in headline earnings per share to 455 cents.

MTN agreed in June to pay Nigeria a 330 billion naira ($1.05 billion at the time) fine for missing a deadline to cut off unregistered SIM cards from its network.

The fine, which was originally set at $5.2 billion, shaved off 474 cents per share from headline earnings per share, a primary profit gauge that strips out certain one-off items.

In the mix of paying the fine, MTN is being investigated by Nigerian lawmakers for illegally repatriating $14 billion between 2006 and 2016, the second major dispute analysts have said exposes the inherent risk of investing in frontier markets.

Shares in MTN, which fell more than 4 percent at market open, were 2.18 percent lower at 115.16 rand at 1043 GMT, the lowest level since December.

Underlying operational results for full-year 2016 were also affected by fees incurred for a planned listing in Nigeria and under performance of its unit there and in South Africa in the first half of 2016.

MTN has said it aims to list its Nigerian operations on the local bourse during 2017, subject to market conditions. However, the unit has been battered by the weak economy, depreciation of the naira and the disconnection of l4.5 million subscribers in February last year.

(Reporting by Nqobile Dludla; editing by Susan Thomas)

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