Africa’s investment flow takes a -5% dip

Africa’s investment flow takes a -5% dip

The world’s foreign direct investment (FDI) took a significant decline of 13 percent last year, recording an estimated $1.52 trillion, as global economic growth remained weak and world trade volumes posted anaemic gains, says the Global Trends Investment Monitor released Wednesday.

The report says that the fall reflects a heterogeneous impact of the current economic environment on countries worldwide as it was not shared equally across regions.

FDI flows to Africa also registered a -5 percent decline to close the year at $51 billion. Mozambique saw its FDI fall 11 percent, but the level was still significant at an estimated $3 billion. South Africa saw a 38 percent increase in FDI inflows, though they remained at a relatively low level of $2.4 billion.

The report says that equity investments at the global level were boosted by a 13 percent increase in the value of cross-border mergers and acquisitions, which rose to their highest level since 2007, reaching $831 billion. “The value of greenfield projects announcements reached an estimated $810 billion – a 5% rise from the previous year, although this was largely due to a number of very large projects announced in a handful of countries”, says the report.

It was noted in the report that slowing economic growth and falling commodities prices weighed on FDI flows to developing economies with inflows to these economies falling to an estimated $600 billion, due to significant decreases in Developing Asia and in Latin America and the Caribbean. “Nevertheless, developing economies continue to comprise half of the top 10 host economies. There was a widespread downturn in cross-border mergers and acquisitions activity across developing sub-regions during the year, which fell 44% in terms of value”, says the report.

Looking ahead, the report says economic fundamentals are supportive of a potential rebound in FDI flows in 2017. Global economic growth is projected to accelerate in the coming year, reaching 3.4 percent compared to the post-crisis low of 3.1 percent in 2016. Growth in developed countries is expected to improve, including in the United States through fiscal stimulus.

“Emerging and developing economies are also forecast to rebound significantly in 2017, led by a sharp rise in growth in natural resources exporting countries as commodities prices are expected to increase, especially for crude oil”, the report says. Greater economic activity will help boost world trade volumes, which are forecast to expand by 3.8 percent in 2017 compared to just 2.3 percent in 2016. UNCTAD projects that global FDI flows will increase by around 10% over the year.

Zim forecast to produce lower platinum in F17 as total mineral revenue remains flat in Q3

Zim forecast to produce lower platinum in F17 as total mineral revenue remains flat in Q3

HARARE – Global refined platinum production is forecast to rise by two percent in 2017 with all regions except Zimbabwe expected to sustain or increase production levels, according to the World Platinum Council third quarter report.

“With the exception of Zimbabwe, all regions are expected to sustain or increase production levels next year. The processing of a one-off concentrate backlog for Zimbabwe earlier this year, following a smelter outage in 2015, will result in lower refined supply in 2017 (-6 percent to 445 koz),” said WPC chief executive Paul Wilson in the report.

Global refined platinum supply is forecast to decline by three percent to 5,970koz in 2016 while total global supply of platinum group metals is forecast to decline by two percent to 7,7 million ounces in 2017 from 7,8 million ounces in 2016.

“This is mainly as a result of a decline in secondary supply as jewellery recycling in China returns to a more typical level after retailer destocking raised it in 2016.

“Total mining supply is still expected to exceed 6,000 koz for the year, despite refined inventory restocking in the second half,” said Wilson.

South African platinum production is estimated to be five percent lower at 4,235 koz owing to shaft closures in 2015 while output from Russia is forecast to decrease by five percent owing to a planned refinery closure.

North American platinum supply for the period was down five percent quarter on quarter but 11 percent higher year-on-year owing to plant maintenance in the prior year period.

Zimbabwe maintained a production level of 115 000 ounces of platinum both quarter on quarter and year on year in the third quarter of 2016. The country’s refined output for the first nine months of 2016 increased 26 percent year on year owing to a release of concentrate in the first quarter that had built up during the 2015 smelter outages. Processing of stockpiled concentrate and increasing production rates in Zimbabwe should see growth of 17 percent year on year to 475 000 ounces.

However actual production in the nine months according to the Chamber of Mines Zimbabwe rose 20 percent to 10 831kg while earnings were 4 percent higher at $298.54 million. Overall, Zimbabwe’s mining sector generated $1.38 billion in revenue in the nine-month period compared to $1.34 billion in the same period in 2015 as depressed international prices hit on earnings.

Chief executive Isaac Kwesu told a press conference that the mining industry recorded mixed mineral output performance for the nine months with key minerals such as gold, platinum and nickel recording significant output growth while diamond, chrome and coal recorded significant output contraction for the period.

“The general price trend for the minerals has been depressed in 2016 compared to 2015 except for gold which recorded a 6.8 percent increase in price,” he said. Nearly half of the revenues were generated through gold, which earned $648.6 million during the period up from $532.5 million in 2015. Production was 13 percent higher at 16 139kg.

The rest of the major minerals however recorded declines in earnings, with diamonds, at minus 43 percent registering the biggest fall to $73 million after production dipped 37 percent to 1.66 million carats.

Depressed international prices took their toll on minerals such as palladium which saw earnings declining five percent while overall production had surged 21 percent to 8 760kg.

Rhodium and ruthenium which recorded a 17 percent and 18 percent increase in output respectively, also saw revenues going down 25 percent and eight percent.

“The industry remains fragile notwithstanding the growth,” Kwesu said.
Obstacles impacting on viability of the sector remained unchanged and included high costs structures as well as high mining fees.

Kwesu said current foreign currency shortages were also adding on to the challenges the sector, which requires about $1 billion annually to import inputs and other consumables, is facing.

A State of the Mining Industry report is set to be released next week.

Nokia-Alacatel’s Nigerian offices closed by watchdog for lack of licence

ABUJA


Nigeria’s telecoms regulator has shut the offices of Nokia-Alcatel for operating in Africa’s largest economy without the necessary permit, the watchdog said on Friday.

The Nigerian Communications Commission’s (NCC) spokesman Tony Ojobo said that the mobile telecoms equipment manufacturer had failed to obtain the 2 million naira ($6,349) licence required for the sale and installation of network equipment.

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The head of Nokia’s Nigerian operations said the company was in talks with the NCC to secure the licence and that its offices would reopen imminently.

Nokia-Alcatel had applied for the licence about three months ago but had not completed the process, a separate NCC source said, adding that the company had operated without the permit for some time.
Nokia-Alcatel’s office will be reopened after they comply, he said.,  -(Reuters)

South Africa’s rand tumbles on global risk aversion, blue chips lift stocks

JOHANNESBURG


South Africa’s rand slumped as much as 2 percent against the dollar on Friday, as global concerns following North Korea’s nuclear test compounded domestic political uncertainty, sending investors fleeing to safe haven assets.

Stocks however snapped two sessions of losses, lifted by companies with sales outside South Africa which stand to benefit from the weaker currency.

The rand stumbled to 14.4500 to the dollar during Friday trade, its softest in a week, and was trading at 14.3700 by 1530 GMT, a 1.6 percent decline from Thursday’s New York close.
It tracked other emerging market currencies which fell partly on news that North Korea had conducted its fifth nuclear test.

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“If there’s a serious threat to geo-political stability we are likely to see risk-off trading, and the rand being one of the most liquid in terms of emerging market currencies will be affected,” ETM market analyst Ricardo Da Camara said. Government bonds were also weaker, with the yield on the 2026 benchmark issue climbing 16 basis points to 8.755 percent.

The rand’s woes were compounded by continuing domestic concerns around an investigation into Finance Minister Pravin Gordhan over the activities of a surveillance unit set up under his watch, which police say spied on politicians. Gordhan questioned on Thursday the motive of the inquiry, saying it had no basis. Opposition parties have called it a witch-hunt and a veiled attack on the independence of the Treasury. – Reuters

South Africa’s finmin approves “going concern” guarantee for national airline

JOHANNESBURG


South Africa’s Finance Minister Pravin Gordhan has conditionally approved an application from the cash-strapped national airline for a guarantee as a going concern, the ministry said on Friday. South African Airways (SAA) has been surviving on state-guaranteed loans and has failed to submit financial statements for the past two years, with results for 2015/16 held back after the Treasury refused to grant it 5 billion rand ($346 million) in additional loan guarantees.

“SAA’s application for a going concern guarantee has been approved with conditions which include (that) the primary focus of the board must be to return the airline to financial sustainability,” a finance ministry statement released after Gordhan met SAA’s new board said.
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It said funding must be secured to meet the airline’s liquidity requirements and that SAA should work with the National Treasury and the public enterprises department on the potential introduction of a strategic equity partner.
The government last week reappointed Dudu Myeni, an ally of President Jacob Zuma, as SAA’s chairwoman, despite objections from the main opposition party which holds her responsible for the crisis at the airline. On Wednesday Gordhan told parliament that he wanted SAA to become financially viable in five years’ time and to discontinue unprofitable routes. (Reuters)

IMF insists on international audit of Mozambique debt

MAPUTO


The International Monetary Fund (IMF) is demanding an external forensic audit of Mozambique’s public debt to regain investor confidence after a scandal over more than $2 billion in secret loans, its local representative said on Tuesday. Parliament and the attorney-general’s office have launched investigations into the undisclosed borrowing in 2013 and 2014 but the government has baulked at opening up its books to outside auditors.

However, the IMF, which suspended assistance when the loans came to light this year, has insisted on external scrutiny as a precursor to resuming financial aid to what is one of the world’s poorest countries.
“It is important to move quickly to an international forensic audit,” its representative, Alex Segura-Ubiergo, said in an interview on Radio Mozambique, the public broadcaster.

The debt crisis and aid suspension has hit Mozambique hard, with its currency, the metical, losing nearly 40 percent against the dollar since January and economic growth slowing to below 4 percent.
With foreign debt soaring towards 100 percent of GDP, the government has been forced to revise its 2016 budget, which now shows a deficit equal to 11.3 percent of GDP, while the central bank hiked interest rates by 300 basis points in July to try to prop up the currency and contain inflation.

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South Africa’s ANC backs Gordhan but warns ministers to obey police summons

JOHANNESBURG


South Africa’s ruling party backed Finance Minister Pravin Gordhan on Tuesday but said ministers should obey police summons issued during investigations, days after Gordhan declined to meet detectives looking into his time at the tax office.
Gordhan said last week he had done nothing wrong and had no legal obligation to obey a police summons over the probe into whether he used a surveillance unit set up when he was head of the tax service to spy on politicians.

There has been speculation in local media that Gordhan could be charged over the investigation, but state prosecutors have denied the claims, which have hit South African assets.
“The continued speculation and the public spectacle … is hurting the economy and could be dealt with better,” African National Congress (ANC) Secretary General Gwede Mantashe said. “The ANC reaffirms its unreserved confidence in the Minister.” The rand gained briefly after Mantashe expressed confidence in Gordhan but then went into reverse, falling 0.6 percent to a session low, after he told a news conference that ministers must obey police summons.

“The minister must cooperate with processes. If he has no case to answer he can only prove that through processes,” Mantashe told a news conference.
He also said the Treasury, one of South Africa’s most respected government departments, should not seek to present itself as being above the law and deserving of special treatment.
“We do however caution them against taking a public posture that seems to isolate themselves from the rest of government and positions them as victims to be protected by society,” he said.
The investigation first came to light in February. Political analysts say it is part of a plot to undermine Gordhan by a faction allied to President Jacob Zuma, who is said to have been among the politicians spied on by the tax surveillance unit.

CEO of Millicom Africa sees growth opportunities in data

GHANA


Following her recent visit to Ghana, Cynthia Gordon, the CEO of Millicom Africa has emphasized the remarkable growth opportunities in data and Tigo’s commitment to giving customers access to superior high speed internet services.

“We were the first to launch 4G in 3 operations in Africa including Tanzania, Chad and Rwanda and have seen exponential growth in our data revenues – close to 34% in Q2 2016. We are exploring options to giving customers 4G services in Ghana,” she said.

 

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While in Ghana, Cynthia Gordon, called on the Minister for Communications, Dr. Omane Boamah, who expressed his commitment to ensuring fairness among the players in the telecom industry and was optimistic that the early introduction of key enablers such as a technology neutral unified license will support universal usage of spectrum. He believed this would be a key factor to growing and supporting government’s economic development efforts.

The Millicom Africa Chief also met with the executives of the National Communications Authority, the NCA to discuss further advancements in technology. She was very impressed with the vision to develop the market and the high levels of support and cooperation. “We share a common passion to a working partnership for the benefits of mobile broadband to Ghanaians and this will accelerate GDP growth and socio-economic development,” she explained.

“With our technology developments and ongoing efforts, we will continue to grow our market share and complement our existing portfolio of services including Tigo Cash which currently has a registered base of 3.2 million customers. In addition to this, Tigo Business will continue to develop strong and viable mobile and fixed solutions to Ghana’s underserved enterprise sector.

Sun International joins South African exodus from Nigeria

JOHANNESBURG


Hotel and gaming group Sun International has become the latest South African business to pull out of Nigeria because of weak economic growth and clashes with regulators and shareholders in the west African country.

In January, Nigeria’s Economic and Financial Crimes Commission (EFCC) launched a probe into Sun International’s initial investment in the Tourist Company of Nigeria (TCN), which owns and operates the 5-star Federal Palace Hotel in Lagos.

Sun International, which also reported on Monday a 20 percent fall in diluted adjusted headline earnings per share (AHEPS) to 628 cents for the year to June, said The Federal Palace had been hit by slow economic growth, low oil prices, the threat from militant group Boko Haram and a weakening naira.

“The board has decided to exit Nigeria and steps will be taken to achieve this in a manner that does not erode further value,” the company said in a statement.

“Continued setbacks in Nigeria as well as the ongoing shareholder dispute have frustrated all attempts to develop and improve the property,” it added.

Sun International bought a 49 percent stake of the Nigerian Stock Exchange-listed TCN in 2006, becoming the largest single shareholder. In recent years, Sun has been drawn into a dispute within its fellow shareholder, the Ibru family. The company’s decision to exit Nigeria follows food and clothing retailer Woolworths and Tiger Brands, which sold its loss-making Nigerian arm to Dangote Industries. Nigeria, Africa’s largest economy, is suffering its worst financial crisis in decades as a slump in oil revenues hammers public finances and the naira. The central bank governor has said recession is likely.

Analysts said Sun International’s dispute with fellow investors was at least as important in its decision to leave.

“They are in a way stuck in a problematic arrangement on the property and it’s been very difficult for them to create value there. It certainly makes sense for them to reduce exposure to Nigeria,” said Avior Capital Markets analyst De Wet Schutte.

“Nigeria is a difficult place to build a business.”

 

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CEO Graeme Stephens said the exit could take a year or two, and the company was no longer committed to expanding in Africa.

“We’ve been strategically exiting Africa for a couple of years and what was left was Nigeria. We’re not looking anywhere else in Africa,” Stephens told Reuters, adding the company would focus on growing its Latin America business.

In June, Sun said it was disposing its remaining minority interests in Zambia, Botswana, Namibia, Lesotho and Swaziland to Minor International Public Company. Shares in Sun International were down 0.47 percent by 1139 GMT. Reporting its results, the company said poor economic conditions in South Africa resulted in revenue growth at casinos of only 0.8 percent to 7 billion rand ($515 million).

“In South Africa, the economic environment remains a serious concern. We do not anticipate any meaningful growth in gaming revenue until there is a recovery in the economy and renewed consumer confidence,” Stephens said.

The South African Reserve Bank expects the economy to flatline this year, due to a drought and falling commodity prices.

Nigeria’s Buhari to ask for emergency powers to revive economy

ABUJA


Nigerian President Muhammadu Buhari will ask parliament for extra powers for one year allowing him to take “emergency” decisions to revive the flagging economy, a government source said on Monday.

Africa’s biggest economy contradicted in the first quarter and government officials have said recession is likely as vital oil revenues have crashed due to low crude prices. GDP data for the second quarter is due this week.

The government put together a bill titled “Emergency Economic Stabilisation” giving Buhari extra powers such as amending laws which will be submitted to parliament, the source said.

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Buhari was seeking to accelerate plans to improve the investment climate, the source said. The bill would allow him for example to ease visa restrictions for investors and give them incentives, plans that have been delayed.

In June, the central bank floated the naira, allowing the currency to devalue by around 40 percent to attract investment and ease hard currency shortages.

On Friday, Finance Minister Kemi Adeosun said Nigeria is to allocate 60 billion naira ($182 million) more spending on capital projects as part of the 2016 budget, coming on top of 400 billion already spent.

But critics of Buhari says the government has not done enough to end Nigeria’s worst economic crisis for decades. Tens of thousands of workers have been laid off, while companies across sectors say they cannot get enough hard currency to import spare parts or raw materials.

There was no immediate reaction from the two chambers of parliament which is currently in recess.(Reuters)