By George Obulutsa

NAIROBI (Reuters) – Safaricom raised its forecast for full-year core profit on Friday after a 31 percent jump in the first six months of the year, driven mainly by growth in revenue from mobile data services.

Safaricom said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to March 31 to come in at 94 billion shillings ($925 million) to 97 billion, up from a previous range of 89 billion to 92 billion.

“Mobile data is our fastest growing revenue stream, and we will focus on increasing the numbers of 3G and 4G smartphones on our network through launching more 4G sites and offering affordable smart devices,” the company said in a statement.

Safaricom, which is 40 percent owned by Britain’s Vodafone and by far the leading mobile phone operator in Kenya, said revenue from mobile data services surged 46 percent to 13.4 billion shillings in the six months to the end of September.

For the first time, revenue from non-voice services accounted for more than half of Safaricom’s overall telecoms services revenue, contributing 53 percent, up from 47 percent last year and 49 percent in the year to the end of March 2016.

Overall, Safaricom’s EBITDA rose 31 percent to 50.8 billion shillings in the period from 38.8 billion shillings in the same period in 2015 while pre-tax profit also jumped 31 percent to 34.5 billion shillings.

Safaricom shares, which had climbed 7 percent this week ahead of the results, were 1 percent lower on Friday at 21 shillings at 1100 GMT. Earnings per share rose to 0.60 shillings from 0.45 shillings.

The company that pioneered the successful M-Pesa mobile money transfer service said it had spent 18.9 billion shillings in the first half as part of efforts to broaden the reach of high-speed mobile internet across the east African country.

Its 4G service now covers 32 out of 47 counties in Kenya and its 3G network reaches 80 percent of the population.

Chief Financial Officer Sateesh Kamath said he expected Safaricom to have close to 1,100 base stations with 4G by the end of March, up from 635 at the end of September.

Safaricom’s overall service revenue, which includes all telecoms services but strips out items such as handset sales, rose to 98 billion shillings from 84.9 billion shillings.

M-Pesa revenue jumped 33.7 percent to 25.9 billion shillings from 19.35 billion shillings while revenue from phone calls edged higher to 45.7 billion shillings from 45.2 billion.

($1 = 101.6000 Kenyan shillings)

(Editing by David Clarke)

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JOHANNESBURG (Reuters) – South Africa’s MTN has named Old Mutual Emerging Markets chief as a new group chief financial officer (CFO), the company said on Monday.

Ralph Mupita, who will also be group Executive Director, joins the company in the middle of a hunt for new revenue streams that include convincing its more than 200 million users to use their handsets for everything from storing money to paying bills.

Mupita will take up his new role at MTN in April 2017, while acting group CFO Gunter Engling will assume the position of Deputy CFO, the company said in a statement.

Brett Goschen resigned as CFO in July after more than a decade at Africa’s second biggest telecoms operator.

“I am delighted to have someone of Ralph’s calibre join the team. His background in financial services and emerging markets will stand Ralph in good stead in his new role as Group CFO,” said MTN Executive Chairman Phuthuma Nhleko.

MTN has struggled to make money at a faster pace as years of price wars and regulation aimed at bringing tariffs down hit profitability and made it less attractive to spend on new networks.

Mupita will have to use his experience in financial services to shake off MTN’s reputation as a stock with a limited potential for growth.

(Reporting by Nqobile Dludla, editing by Louise Heavens)

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KAMPALA (Reuters) – Uganda’s inflation was slightly lower at 4.1 percent year-on-year in October, the statistics office said on Monday, driven by a slowdown in food prices.

Month-on-month inflation increased by 0.9 pct in October, unchanged from September. The year-on-year inflation in September was 4.2 percent.

Annual core inflation was revised to 5.1 percent, up from 4.1 percent in September, driven by an increase in the price of education, the Uganda Bureau of Statistics said in a statement.

Core inflation is a measurement that the central bank monitors for monetary policy, which strips out food, fuel, metered water and electricity prices.

(Reporting by Elias Biryabarema; Editing by Katharine Houreld and Alexander Smith)

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By Mfuneko Toyana

JOHANNESBURG (Reuters) – South Africa’s Finance Minister Pravin Gordhan faces a tough balancing act on Wednesday when he announces a midterm budget meant to boost the sickly economy and show his fraud case is not distracting him.

Gordhan has said he plans to reduce government spending, raise taxes and cut the budget deficit to 3.2 percent of gross domestic product (GDP) in the 2016/17 fiscal year, from 3.9 percent in the previous year.

But closer on his horizon are a Nov. 2 court appearance on fraud charges that he has dismissed as politically motivated, and pressure to provide more subsidies for students who have staged violent protests to demand free university education.

Analysts say any fiscal slippage could trigger credit ratings cuts to “junk”, and see little room for manoeuvre in an economy the central bank expects to grow by 0.4 percent this year.

“There is currently no space to loosen fiscal policy, or do much expenditure switching, ahead of 2019 national election,” said Maya Senussi, senior emerging markets analyst at Roubini Global Economics.

“With the political machinations, it becomes difficult for Gordhan to put something on the table that says we are re-engineering the economy for a different path,” Investment Solutions chief economist Lesiba Mothata said.

Opposition parties and business executives have backed Gordhan over the fraud charges, agreeing that they are politically motivated. President Jacob Zuma has said he is not in conflict with Gordhan and the country’s top prosecutor has denied any political motivation over the fraud charges.

Speaking in parliament on Tuesday, Zuma said that fraud charges against Gordhan were “a concern to all of us, including the investor community”, and that he had never discussed the case with the state prosecutor.

“As cabinet, we have expressed our full support of the minister while respecting the independence of law enforcement and prosecuting authorities,” he said.

The state prosecutor has said that Gordhan, in his previous role as head of the revenue service, cost the tax agency about 1.1 million rand by approving early retirement for a deputy commissioner in 2010 and re-hiring him as a consultant.

SUPPORT FOR GORDHAN

The outpouring of support for the minister, whom edgy financial markets see as a guarantor of stability, also reflects approval of Treasury’s commitment to rein in spending and cut debt, currently at 44.3 percent of gross domestic product.

But after losing much ground in August local government elections, including key urban centres, some in the ruling African National Congress (ANC) want him to loosen the purse strings to woo back voters before a 2019 national election.

The main Democratic Alliance party said it would hold a peaceful march to parliament on Wednesday to demand that Zuma’s government provide more funding for higher education.

A poll by Reuters last week showed economists expect Gordhan to now target a deficit of 3.4 percent of GDP.

The turmoil around the minister caused the rand to sink by 4 percent, but the currency has since recovered because of the support the minister has received.

Political analyst Daniel Silke said Gordhan had kept his political standing amid the fraud controversy by positioning himself as “the saviour of the national interest opposed to the forces of personal interest”.

(Additional reporting by Wendell Roelf in Cape Town; Editing by James Macharia and Tom Heneghan)

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JOHANNESBURG (Reuters) – South Africa’s Gold Fields will invest $1.4 billion to extend the life of its Damang mine in Ghana, it said on Monday, as it reported a quarterly output update.

The investment will extend the life of the mine by eight years to 2024, in which the firm expects to produce 1.56 million ounces of gold there.

Gold Fields signed an agreement with Ghana’s government in March linking royalties payments to the bullion price and lowering the corporate tax rate to 32.5 percent from 35 percent.

“Damang reinvestment was planned at a gold price of $1,200 an ounce, so we’ve got some headroom and, importantly, the breakeven price at Damang is $1,050 an ounce so we’ve got a $200 ounce cushion before the project starts becoming uneconomic,” Chief Executive Nick Holland told Reuters.

Gold was trading at around $1,265 per ounce on Monday.

Since 1997 the Damang mine has produced more than 4.0 million ounces from multiple open pits, but production has declined since 2013 as ore grades have been lower than expected.

The firm started a strategic review of the mine last year and mulled mothballing or even closing it, but ultimately decided to invest to deepen the main pit to get access to the full orebody.

Gold Fields also retains the option of expanding the operation at Damang should the gold price strengthen sustainably to above $1,400 per ounce, it said in a statement.

The company on Monday reported its total gold production in the three months to September 30 was 537,000 ounces, 4 percent lower than in the corresponding period a year earlier.

Gold Fields maintained its guidance for attributable equivalent gold production for 2016 at between 2.10 million and 2.15 million ounces.

Shares in Gold Fields fell 5.5 percent to 57.98 rand by 0738 GMT, compared to a 0.6 percent gain in the JSE’s All-share index.

(Reporting by Tiisetso Motsoeneng and TJ Strydom; editing by Jason Neely)

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CAPE TOWN (Reuters) – South Africa’s low economic growth, rising debt and depleted revenues will hurt the Treasury’s ability to close the country’s large fiscal deficits, a senior official said on Wednesday.

Director General of the National Treasury, Lungisa Fuzile, warned in a document presented to a parliamentary committee that the country would have to do more with less and introduce a range of cost cutting measures to make up for the poor economic growth, expected at 0.4 percent in 2016 by the central bank.

“In the absence of action, low economic growth leads to shortfalls in revenue with fiscal consolidation being derailed as national debt rises,” Fuzile said.

The government of Africa’s most industrialised country is under pressure to lift growth above 1 percent to avoid ratings downgrades to subinvestment later in the year, after sharp downturns in manufacturing and mining sectors saw the economy contract in the first quarter.

Finance Minister Pravin Gordhan, who has been summoned to appear in court in November over fraud charges, promised in February to cut the budget deficit to 3.2 percent from 3.9 percent in 2015 through a number of spending cuts.

Gordhan is due deliver his medium term budget before parliament budget on October 26, with ratings firms likely to announce their decisions by December.

(Reporting by Wendell Roelf; Writing by Mfuneko Toyana; Editing by James Macharia)

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By Joe Brock

PRETORIA (Reuters) – South African prosecutors ordered Finance Minister Pravin Gordhan on Tuesday to appear in court on Nov. 2 to hear fraud charges against him, news that sent the rand and share prices reeling.

The rand dropped as much as 3.4 percent against the dollar amid fears Gordhan’s legal troubles could damage investor confidence in South Africa, where he has stood out as a reliable figure for financial markets against a backdrop of corruption.

The banking index fell as much as 5.12 percent, wiping 46.3 billion rand ($3.3 billion) off the market capitalisation of South Africa’s six biggest banks.

Prosecutor Shaun Abrahams said Gordhan, in his previous role as head of the South African Revenue Service (SARS), had cost the tax agency around 1.1 million rand ($79,000) by approving early retirement for tax agency deputy commissioner Ivan Pillay and re-hiring him as a consultant.

Gordhan was served a summons to attend a court hearing at which he would acknowledge the charges against him, as outlined in the summons, the National Prosecuting Authority (NPA) said.

It was not a plea hearing, the NPA told Reuters.

Gordhan said he would remain in his post despite the court summons. He has denied the allegations, saying they are part of a politically motivated campaign against him.

In a statement late on Tuesday, President Jacob Zuma reaffirmed his support for Gordhan, adding that the decision to prosecute him came at a sensitive time when the minister was successfully leading initiatives towards economic revival.

Perceived rifts between Gordhan and Zuma have previously rattled markets in Africa’s most industrialised economy, which faces the risk of ratings downgrades later this year.

Speaking to reporters, Abrahams said: “I can assure you there has been no political interference in this matter.”

Gordhan is already being investigated for his role in setting up a surveillance unit at the tax department a decade ago that is suspected of spying on politicians including Zuma.

He was first questioned about this in February by an elite police unit but in August ignored a police summons on the inquiry, saying he had done nothing wrong.

Analysts say Gordhan has urged fiscal prudence to appease ratings agencies while factions close to Zuma want to push through expensive projects. The president has denied any rift with Gordhan.

Gordhan confirmed prosecution officials had delivered the summons to appear in court to his house on Tuesday morning.

“It looks like we are in for a bit of excitement going forward,” he said at a business seminar in Johannesburg.

His lawyers later said in a statement Gordhan was seeking legal advice “to bring the matter to an expedited end.”

“A STEP CLOSER”

Gordhan’s political allies and opponents alike expressed concern over the impact a prosecution could have.

David Maynier, the shadow minister of finance for the main opposition Democratic Alliance party, said that prosecuting Gordhan would be “a disaster for the economy” and would make a credit ratings downgrade more likely.

The ruling African National Congress urged Gordhan to cooperate with the summons and said the lingering inquiry was having a detrimental effect on the economy. The ANC said it hoped the prosecutor’s latest move would bring the country “a step closer to uncovering the truth from facts” and resolve the saga.

South Africa’s Communist Party, a member of a ruling alliance with the ANC, said it was opposed to “political persecutions in any manifestation.”

Analysts said the Gordhan summons undermined the business climate in the country.

“This will further erode confidence in the political and economic management of South Africa,” Daniel Silke, director of Political Futures Consultancy, said. “It will potentially affect our chances of sustaining the current rating agency levels.”

Government and dollar bonds fell sharply, while the cost of insuring exposure to South African debt leapt to three-month highs.

Investors and rating agencies back Gordhan’s plans to rein in government spending in an economy that has been forecast by the central bank to grow at just above zero percent this year.

A cut to “junk” status in ratings reviews due later this year would have pushed up Pretoria’s borrowing costs, making it harder to plug the budget deficit.

But Cathy Powell, a public law lecturer at the University of Cape Town, said she believed Gordhan was likely to come away unscathed. “I am willing to lay quite a lot of money on a bet that Gordhan will be found not guilty and he could then possibly make a civil claim against the NPA for malicious prosecution.”

($1 = 13.8542 rand)

(Additional reporting by Olivia Kumwenda-Mtambo, Ed Stoddard Tanisha Heiberg in Johannesburg, and Wendell Roelff in Cape Town; Writing by James Macharia; Editing by Ed Cropley/Mark Heinrich)

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TUNIS (Reuters) – Tunisia has cut its 2016 growth forecast to 1.5 percent this year, down from an expected 2.5 percent, its finance minister said on Wednesday, citing difficulties in the phosphate sector where protests have disrupted production.

“According to the complementary law for the 2016 budget, growth will be at 1.5 percent this year due to a decline in economic activity in several sectors including phosphate,” Finance Minister Lamia Zribi told reporters.

Growth in 2015 was only 0.8 pct after Islamist militant attacks hit the tourism sector that represents around 8 percent of the gross domestic product.

The country’s vital phosphate exports have been disrupted by strikes and protests by unemployed youth seeking jobs, costing the state tens of millions of dollars in lost revenue.

Tunisia produced 4 million tonnes of phosphate last year and output for the first six months of 2016 was at 1.86 million tonnes, according to the energy ministry. It produced about 8.26 million tonnes of phosphate in 2010. But output dropped after its 2011 revolution.

Tunisian Prime Minister Youssef Chahed told Reuters last week growth will 3 percent next year, helped by a package of reforms aimed at shoring up the new democracy won in the 2011 revolution with economic gains.

(Reporting By Tarek Amara; editing by Patrick Markey)

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By Joe Bavier

ABIDJAN (Reuters) – Economic growth in sub-Saharan Africa is likely to slip to 1.6 percent this year, its lowest level in two decades, due to continuing woes in the continent’s largest economies South Africa and Nigeria, a World Bank report said on Thursday.

Africa has been one of the world’s fastest growing region’s over the past decade, but a commodities slump has hit its oil and mineral exporters hard, bringing growth down to 3 percent in 2015.

However, other countries, including Ethiopia, Rwanda, and Tanzania, have continued to record GDP growth above 6 percent, according to “Africa’s Pulse”, the Bank’s twice-yearly analysis of economic trends.

The report, which was unveiled in Ivory Coast’s commercial capital Abidjan, also singled out Ivory Coast and Senegal as top performers.

“Our analysis shows that the more resilient growth performers tend to have stronger macroeconomic policy frameworks, better business regulatory environment, more diverse structure of exports, and more effective institutions,” said Albert Zeufack, World Bank chief economist for Africa.

Established and improved performers made up around a quarter of sub-Saharan Africa’s countries, are home to 42 percent of its people, but account for just 21 percent of economic output.

Meanwhile, 40 percent of African economies are struggling. They contain 36 percent of the continent’s population but contribute 62 percent of economic activity. Nigeria and South Africa alone account for half of output.

Despite a recent timid recovery in commodities, price are expected to remain below their 2011-14 peak levels, the report said.

As a result growth is projected to pick up slightly to 2.9 percent next year, the report said, and Africa’s economies are expected to expand by 3.6 percent in 2018.

However, government spending on Africa’s agricultural sectors is still lagging behind developing regions, despite making up a third of GDP and two-thirds of employment.

“Improving the productivity of smallholder farms is central to lifting rural incomes and reducing poverty in sub-Saharan Africa,” said Punam Chuhan-Pole, lead economist for World Bank Africa, who wrote the report.

“But unleashing this productivity requires investing in rural public goods such as rural infrastructure, agricultural research, and use of improved technologies, as well as in availability of good data and evidence.”

(Additional reporting by Loucoumane Coulibaly; Editing by Tim Cocks and Alison Williams)

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By Rania El Gamal, Alex Lawler and Vladimir Soldatkin

ALGIERS (Reuters) – Saudi Arabia and Iran on Tuesday dashed hopes that OPEC oil producers could clinch an output-limiting deal in Algeria this week as sources within the exporter group said the differences between the kingdom and Tehran remained too wide.

“This is a consultative meeting … We will consult with everyone else, we will hear the views, we will hear the secretariat of OPEC and also hear from consumers,” Saudi Energy Minister Khalid al-Falih told reporters.

Iranian Oil Minister Bijan Zanganeh said: “It is not the time for decision-making.” Referring to the next formal OPEC meeting in Vienna on Nov. 30, he added: “We will try to reach agreement for November.”

The Organization of the Petroleum Exporting Countries will hold informal talks at 1400 GMT on Wednesday. Its members are also meeting non-OPEC producers such as Russia on the sidelines of the International Energy Forum, which groups producers and consumers.

Oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh’s position as the kingdom had previously refused to discuss output cuts.

On Monday, Iranian Oil Minister Bijan Zanganeh said expectations should be modest and several OPEC delegates said the positions of Saudi Arabia and Iran remained too far apart. Oil prices were down 2 percent in Tuesday trade. [O/R]

Three OPEC sources said Iran, whose production has stagnated at 3.6 million barrels per day, insisted on having the right to ramp that up to around 4.1-4.2 million bpd, while OPEC Gulf members wanted its output to be frozen below 4 million.

“Don’t expect anything unless Iran suddenly changes its mind and agrees to a freeze. But I don’t think they will,” an OPEC source familiar with discussions said.

WHAT IRAN WANTS

Russian Energy Minister Alexander Novak was due to meet Zanganeh on Tuesday in what sources said was a new attempt to persuade Tehran to play ball. Several other sources said Algeria and Qatar were also talking to Iran in a bid to rescue a deal.

Iranian oil sources said Tehran wanted OPEC to allow it to produce 12.7 percent of the group’s output, equal to what it was extracting before 2012, when the European Union imposed additional sanctions on the country for its nuclear activities.

Sanctions were eased in January 2016.

Between 2012 and 2016, Saudi Arabia and other Gulf OPEC members have raised output to compete for market share with higher-cost producers such as the United States.

As a result, Iran believes its fair production share in OPEC should be higher than its current output, which it says should rise once Tehran agrees new investments with international oil companies. Saudi output has risen to 10.7 million bpd from 10.2 million in recent months due to local needs for summer cooling.

“Iran believes this is a just volume of production, which it had prior to the sanctions. This has been discussed more than once,” Novak said on Tuesday.

Gary Ross, a veteran OPEC watcher and founder of U.S.-based think tank PIRA, said Saudi output had risen too steeply in recent months and even if it were cut to pre-summer levels, Iran would see an offer to freeze its own output as unfair.

“It is a carefully calculated offer because Saudi Arabia knows it will not be acceptable to Iran … Saudi Arabia wants to put the blame of OPEC inaction in Algiers on Iran,” Ross said.

“There will be tremendous political and revenue pressure on Iran to do a deal but PIRA thinks it unlikely Iran will accept the Saudi offer for it clearly does not pass President Hassan Rouhani’s fairness test.”

The Saudi and Iranian economies depend heavily on oil, but Iran is seeing the pressure easing as it emerges from years of sanctions. Riyadh, on the other hand, faces a second year of record budget deficits and is being forced to cut the salaries of government employees.

Falih said he was, nevertheless, optimistic about the oil market although rebalancing was taking longer than expected.

He said record global stocks of oil had started to decline: “How fast will it take place, it also depends on the production agreement. If there is a consensus on one in the next few months, Saudi Arabia will be with the consensus view.”

(Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

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