JOHANNESBURG (Reuters) – South Africa’s rand firmed to near three-week highs against the dollar and yields on government bonds fell on Monday after rating agencies Fitch and Moody’s affirmed the country’s investment-grade credit ratings.

Africa’s most industrialised country, which is expected to see economic growth of around 0.5 percent this year, has been trying to avert a sovereign rating downgrade to junk status that would raise borrowing costs and deter investment.

Fitch and Moody’s affirmed South Africa’s investment-grade credit ratings late on Friday. Fitch rates South Africa one notch above ‘junk’, while Moody’s has the sovereign two levels above subinvestment grade.

At 0809 GMT, the rand was at 13.8900 per dollar, a gain of 1.49 percent from its New York close on Friday. The currency was trading at its firmest levels since Nov. 10, according to Thomson Reuters data.

The yield for the benchmark government bond due in 2026 fell 21 basis points to 8.895 percent.

“The rand has had a gap open this morning which is likely due to the combination of a weaker dollar but also the positive news from the rating agencies,” Standard Bank chief currency trader Warrick Butler said in a note.

Focus was also on scandal-plagued President Jacob Zuma, who is facing a vote of no confidence by the ruling party’s executive committee.

“The market should be cautious about expecting too much, having been disappointed so often in the past,” Rand Merchant Bank analyst John Cairns said.

On the stock market, the Top-40 index was flat while the broader all-share inched up 0.1 percent in early trade.

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

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PRETORIA (Reuters) – South Africa’s central bank kept its benchmark repo rate unchanged at 7 percent on Thursday in line with market consensus, but warned that risks to the inflationary outlook had increased.

Delivering the last scheduled rate decision for the year, the central bank Governor Lesetja Kganyago said food price inflation was expected to moderate at a slower pace than what the bank had previously forecast.

The bank has kept the benchmark rate on hold at its last four meetings. It has raised the rate by a cumulative 200 basis since early 2014 in a bid to rein in inflation.

The rand pared losses against the dollar after the central bank left the repo rate unchanged, and traded at 14.1800 at 1352 GMT compared with 14.2375 before Kganyago’s speech.

He said the moderately higher risks to the inflation outlook required continued vigilance.

“The MPC (Monetary Policy Committee) remains concerned that the inflation trajectory is uncomfortably close to the upper end of the target range,” Kganyago told a news conference.

“While the committee retains the view that we may be close to the end of the hiking cycle, there may be a reassessment of this position should upside risks transpire.”

The bank forecasts for inflation in 2016 remained unchanged from September’s meeting at 6.4 percent, he said.

It forecast consumer prices peaking at 6.6 percent in the fourth quarter before moderating in the second half of 2017 due to improved weather conditions.

The bank also kept its growth forecast’s unchanged, anticipating GDP at 0.4 percent in 2016 and 1.2 percent in 2017, the same as it’s last meeting in September, saying the low point of economic cycle had passed.

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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CAPE TOWN (Reuters) – South Africa’s government has slowed its nuclear power expansion plans, according to a draft energy paper, although state energy utility Eskom said the country should stick to its original plan of bringing a new plant online by 2025.

South Africa has the continent’s only nuclear power station and is seeking to expand its nuclear, wind, solar and coal power capacity in the coming decades as electricity output barely meets demand.

A draft blueprint of the government’s Integrated Resource Plan (IRP) said it now aimed to increase nuclear power output by just 1,359 megawatts (MW) by 2037, compared with a previous target of adding 9,600 MW of new nuclear power by 2030.

Under the new IRP, nuclear power output would rise more rapidly by 20,385 MW between 2037 and 2050.

The government cited additional generation capacity, lower demand forecasts and changes in technology costs among the reasons for scaling-back.

Eskom , which will procure, own and operate new nuclear plants, said it will still request proposals this year from companies looking to build plants given long lead times of around a decade when building reactors.

Energy analysts have said the 9,600 MW plan was ambitious on timescale and unnecessary, while opponents of President Jacob Zuma raised concerns about a lack of transparency in deals which could cost in the region of $80 billion.

Several meetings between Zuma and Russian President Vladimir Putin over the last two years led to speculation that Russian state-run nuclear firm Rosatom had secured the deal before the launch of the public tender. South Africa’s government and Rosatom denied this.

The new electricity-focused IRP includes plans to add a further 37,400 MW of wind and 17,600 MW of solar power by 2050.

“If I was an investor or project developer in the nuclear space, I would not pick up a pen before the IRP is finalised next year to submit any request for proposals, specifically considering the dark cloud hanging over the nuclear programme with alleged corrupt relationships,” said Johan Muller, programme manager for energy and environment at Frost & Sullivan consultancy.

The previous head of Eskom, Brian Molefe resigned after being implicated in a report by the anti-graft watchdog on allegations of influence peddling that has tarnished state-owned companies as well as Zuma himself.

The government’s nuclear programme also faces public opposition. South African Faith Communities Environment Institute (SAFCEI) and Earthlife Africa Johannesburg are in court next month in a bid to overturn the nuclear build programme.

($1 = 14.0847 rand)

(Reporting by Wendell Roelf; Writing by Joe Brock; Editing by Ed Stoddard and Alexandra Hudson)

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By Alexis Akwagyiram and Chijioke Ohuocha

LAGOS (Reuters) – Nigeria’s recession deepened in the third quarter and oil production fell, the National Bureau of Statistics (NBS) said on Monday, as a dollar shortage kept Africa’s biggest economy in a stranglehold.

Gross domestic product contracted by 2.24 percent year-on-year, the NBS said. That was even worse than the 2.06 decline in the second quarter, when Nigeria fell into recession for the first time in 25 years.

The data came on the eve of an interest rate decision, with analysts expecting the central bank to hold benchmark rates at 14 percent. Inflation hit 18.3 percent in October, the highest in more than 11 years. [nL8N1DF1YL]

Prices have been pushed up by the dollar scarcity in a country dependent on imports, which has been exacerbated by currency restrictions imposed by the central bank last year in an effort to defend the naira. Oil sales are the OPEC member’s main source of dollars to fund imports.

“The ramp up in fiscal spending has been slower than anticipated, and the policy response in general remains weak,” said Cobus de Hart, economist at NKC Economists.

The NBS said oil production fell to 1.63 million barrels per day, down from 1.69 million in the second quarter.

“We were expecting a more shallow contraction,” Standard Chartered Africa chief economist Razia Khan said. “Much of it seems to have been driven by the outsized contraction in the oil sector once again, with much lower levels of oil production than we had expected.”

She said FX reforms were needed to “restore positive momentum” to Nigeria’s economy.

FARM GROWTH

NBS said the non-oil part of the economy grew by 0.03 percent in the third quarter, compared with negative growth in the first two, which was “largely driven” by 4.54 percent growth in the farming sector.

The president’s special adviser on the economy, Adeyemi Dipeolu, said the growth in agriculture, which the government wants to boost to reduce its reliance on oil sales, was a sign of “green shoots of economic recovery”.

A statement issued by the vice president’s office said the figures pointed to the success of President Muhammadu Buhari’s economic policies, despite the recession. It blamed the latter on a series of attacks by militants on oil and gas facilities in the southern Niger Delta since January.

Attacks have ramped up in the last few weeks following a lull that lasted a few months while militants and community leaders, who want a greater share of Nigeria’s energy wealth to go to the region, held talks with the government. Crude oil sales account for two-thirds of government revenue.

In October, the NBS said the economy was likely to shrink 1.3 percent in 2016, a sharp downward revision of its estimates at the beginning of the year, prompted by dramatic falls in the currency. The International Monetary Fund has predicted a contraction of 1.8 percent this year.

A senior Moody’s analyst told Reuters that Nigeria’s economy could expand by 2.5 percent next year if it could produce 2.2 million barrels of oil per day – the level at which the government made its budget calculations.

(Additional reporting by Oludare Mayowa; Editing by Mark Trevelyan)

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JOHANNESBURG (Reuters) – South Africa’s Pioneer Food, Astral Foods and Rhodes Food expect the severe drought and weak economic growth to weigh on their businesses in the 2017 financial year, the companies said on Monday after reporting results.

An El Nino weather pattern, which ended in May, triggered drought conditions across the southern African region that hit the staple, maize, and other crops and dented economic growth.

Africa’s most industrialised country is only expected to expand by 0.5 percent this year, down from a target of 0.9 percent the Treasury set in February.

Shares in Pioneer Food rose 1.73 percent to 164.78 rand, while Rhodes Food increased 1.82 percent to 28 rand by 0812 GMT.

Poultry producer Astral, which is weighing job cuts, fell 0.66 percent to 120.50 rand.

“The weakened state of consumer spending is unlikely to improve due to poor economic growth and higher unemployment which will continue to constrain an increase in the per capita consumption of poultry,” Astral said in a statement.

“High maize and feed prices will continue for at least the first half of 2017 on the back of the severe drought.”

Pioneer, which makes foods such as maize meal, pasta and juices, said that high maize prices and a reduced raisin crop “will impact performance in the first half of the new financial year.”

Rhodes, which reported a 50 percent rise in normalised diluted headline earnings per share to 126.5 cents for the year ended September, said the drought could hurt its production costs and volumes in the year ahead “if there is no improvement in climatic conditions.”

“A lot of them have done reasonably well within the context and the environment in which they find themselves in, however we need a better crop coming in this year for these guys to survive and for them to remain relatively competitive,” said Global Trader equities analyst Paul Chakaduka.

“The environment remains very uncertain for these food producers.”

The government expects the 2016 maize harvest to be 28 percent lower at 7.16 million tonnes, with an improved harvest in 2017 when rainfall is expected to increase.

Pioneer Food Group said adjusted operating profit increased by 6 percent to 2.3 billion rand ($159 million), while Rhodes Food gross profit increased by 43.9 percent to 1.2 billion rand.

Astral reported a 50.1 percent decline in operating profit to 549 million rand.

(Reporting by Nqobile Dludla; Editing by Joe Brock and Louise Heavens)

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By TJ Strydom

JOHANNESBURG (Reuters) – South Africa’s Dis-Chem plans to double in size over the next five years its chief executive said on Friday, as the drug store chain made its debut on the Johannesburg bourse.

Founded in 1978 by CEO Ivan Saltzman and his wife Lynette, Dis-Chem has become a major retailer of health products, with annual sales of more than 15 billion rand ($1 billion).

The company braved uncertain equity markets in South Africa’s second largest listing this year after food services group Bidcorp, which made its debut in May at a valuation of around 90 billion rand.

In addition to global economic uncertainties, investors are concerned about unemployment of more than 25 percent and weak growth in Africa’s most industrialised country.

Dis-Chem’s shares opened at 23.26 rand, valuing it at around 20 billion rand $1.37 billion), as the firm looks to take on larger retail rival Clicks Group and retailers Shoprite and Pick n Pay, which also sell medicines.

The firm has 106 stores in South Africa and plans to expand this to more than 200, Saltzman told Reuters. It is still much smaller than Clicks which operates more than 700 outlets and has annual sales of about 23 billion rand.

“We will continue on the same trajectory… we’ve doubled since 2010 and we will double again in the next 5 years,” Saltzman said after shares representing 27.5 percent of the Dis-Chem began trading. They had fallen by 9.9 percent from their opening price to 20.95 rand by 1153 GMT.

The Saltzmans, both qualified pharmacists, started their first chemist south of Johannesburg in 1978. They took six years before opening a second store in the city and in 2004 started expanding to the rest of South Africa.

Their son Saul is also an executive at the firm and the family will continue to control it with a 53 percent stake.

MARGIN UPLIFT

Although consumers have cut back on some discretionary purchases such as clothing, hurting other retailers’ profits, Saltzman said drugs and cosmetics have been less affected by South Africa’s economic situation.

“The pharmacy space is resilient and we have very strong growth and brand in that space,” Saltzman said.

Around a third of Dis-Chem’s stores are less than three years old and could boost revenue and profit as they become more established, Sasfin Wealth equity analyst Alec Abraham said.

“Dis-Chem will see a margin uplift from these stores as they mature and reach optimal profitability,” he said. “They’ve got some good earnings momentum.”

Goldman Sachs, Investec Bank, and Standard Bank are the joint global coordinators and joint bookrunners alongside Bank of America Merrill Lynch on the listing.

($1 = 14.4772 rand)

(Editing by James Machariaa and Alexander Smith)

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JOHANNESBURG (Reuters) – South Africa’s deputy finance minister said on Thursday that patronage and corruption were undermining efforts for a credible government, a day after an audit showed the government had made $3 billion in irregular expenditure this financial year.

South Africa’s political elite has been involved in a slew of corruption scandals which have eroded the trust of investors and weighed on Africa’s most industrialised economy. Ratings agencies have warned of downgrades before the end of the year.

Mcebisi Jonas’ remarks in a speech at a labour congress came a day after the auditor-general said irregular expenditure by government departments swelled 80 percent to 43.4 billion rand ($3 billion) in the 2015-16 financial year.

“Leadership that looks beyond its own narrow confines is needed,” Jonas said, adding that “patronage and corruption had undermined efforts to build a credible government”.

Last week President Jabob Zuma survived a parliamentary no-confidence vote over allegations of influence-peddling, one of several scandals involving him since taking office in 2009. The 74-year-old has shown no intention of wanting to resign.

As deputy finance minister, Jonas has been an outspoken critic of government graft. In October he said “Corruption is real, it’s palpable, you can feel it.”

On Thursday he also said that ratings agencies were concerned about Pretoria’s ability to maintain fiscal targets but Treasury had “convinced them” that it could maintain caps on spending.

“We’ve done what could be done. My sense is that there is general acceptance of the constraints,” Jonas told reporters after his speech.

(Reporting by Mfuneko Toyana; Writing by Ed Stoddard; Editing by James Macharia and Raissa Kasolowsky)

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JOHANNESBURG (Reuters) – An Eskom board member implicated in a probe over influence-peddling in the South African government has left his post, the public enterprises department said, days after the state-owned power utility’s chief executive resigned.

A report by the Public Protector, a constitutionally mandated watchdog, has raised questions over coal deals between Eskom and a company controlled by the wealthy Gupta family, who are friends with President Jacob Zuma.

The report called for a judicial inquiry into the allegations of corruption in Zuma’s government. Zuma himself denies granting undue influence to the Gupta brothers who run a business empire ranging from media to mining.

A statement posted in the public enterprises department’s website and seen by Reuters on Wednesday did not give reasons for the departure of the Eskom board member, Mark Pamensky.

Pamensky is also a director of the energy unit of Oakbay Investments, which is owned by the Gupta family. Oakbay holds interests of the three Indian-born brothers, which include mines that won coal supply contracts with Eskom.

Pamensky could not be reached for comment at Oakbay Resources and Energy, where he is listed as a non-executive director.

Public Enterprises Minister Lynn Brown, who oversees Eskom, said she would be submitting her recommendations to cabinet to replace the vacancies on the board of the power firm.

Eskom CEO Brian Molefe said last Friday he would step down in January after being implicated in the investigation, but denied any wrongdoing.

The main opposition Democratic Alliance party said it would press for criminal charges against Molefe on Thursday.

“We cannot stand by as those in positions of power are allowed to abuse state institutions for their own selfish gain and to the detriment of South Africans,” it said in a brief statement.

The investigation on whether the Gupta family had an influence over Zuma’s appointment of ministers and the awarding of contracts to government departments and state firms stopped short of saying crimes had been committed.

(Reporting by Tiisetso Motsoeneng and Stella Mapenzauswa; Editing by Richard Balmforth)

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JOHANNESBURG (Reuters) – South Africa’s rand tumbled as much as four percent on Wednesday along with other emerging market currencies after investors were rattled by a shock win for Republican Donald Trump in the fiercely-contested U.S. election.

Trump scored a surprising win over Democrat Hillary Clinton, opening a path to the White House for the political outsider seen as a risk to global growth as he has pledged to renegotiate trade deals, impose high import tariffs and stirred fears of a currency war with China.

By 0945 GMT the rand had slumped 2.99 percent to 13.5850 per dollar after falling to session low of 13.8300, its weakest since Oct. 31.

“The question now is what will a Trump victory mean for the performance of SSA (sub-Saharan Africa) markets. Near-term in any risk off environment, the ZAR (rand) is likely to be most impacted,” said Razia Khan, chief economist, Africa at Standard Chartered bank.

“As the market focus gradually shifts to the kind of policy we are likely to see, and the implications of a Republican Congress and Presidency both in favour of further fiscal stimulus, there are likely to be more meaningful implications for SSA markets.”

Government bonds weakened alongside the currency, and the yield for the benchmark instrument due in 2026 was up 12.5 basis points to 8.785 percent.

The stock market opened lower, down more than 2 percent before recovering slightly. At 0957 GMT, the Top-40 index was up by 0.31 percent, while the broader all-share rose by 0.21 percent.

(Reporting by Mfuneko Toyana and Olivia Kumwenda-Mtambo; Editing by James Macharia)

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JOHANNESBURG (Reuters) – Imports of cold-rolled steel products, particularly from China, are hurting South African producers, initial findings from a local trade agency showed on Monday, potentially paving the way for additional import duties.

Domestic steel producers have said China, which produces half the world’s steel, has been dumping excess output locally as consumption at home wanes and, these low-priced imports have resulted in low sales volumes for the domestic firms.

The International Trade Administration Commission of South Africa (ITAC) launched an investigation in July into whether to impose safeguard duties, also known as emergency tariffs, on imports of cold-rolled steel from a number of countries including China, at the request of steel maker ArcelorMittal South Africa.

South Africa had previously said it is considering imposing emergency tariffs on some iron and steel imports in a filing to the World Trade Organization.

Pretoria slapped a 10 percent tariff on imported steel in August last year, but the emergency tariff, which would not apply to imports of stainless steel or silicon electrical steel, would provide much greater protection.

ITAC said in its report released on Monday that the steel sector had suffered “serious injury” as sales and output volumes dwindled and market share declined after a surge in steel imports.

But it did not impose provisional measures as it took into account the possible positive effect of the tariff increase introduced in August last year.

Its report was based on data from ArcelorMittal South Africa, which accounts for 83 percent of local production of the affected goods.

Emergency tariffs are used against an unforeseen surge of imports that threatens domestic producers. They are usually imposed for three years and there is no upper limit on how high the duty can be.

(Reporting by Nqobile Dludla; Editing by James Macharia)

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