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Friday 15th of January 2016 |
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11-JAN-2016 2016 Starts With A Bang @TheStarKenya Africa |
Home Thoughts
“You have wakened not out of sleep, but into a prior dream, and that dream lies within another, and so on, to infinity, which is the number of grains of sand. The path that you are to take is endless, and you will die before you have truly awakened.” ― Jorge Luis Borges
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“All men who repeat a line from Shakespeare are William Shakespeare” ― Jorge Luis Borges, Labyrinths Africa |
“They seek neither truth nor likelihood; they seek astonishment. They think metaphysics is a branch of the literature of fantasy” ― Jorge Luis Borges, Labyrinths
“There is no need to build a labyrinth when the entire universe is one.” ― Jorge Luis Borges
“Time is the substance I am made of. Time is a river which sweeps me along, but I am the river; it is a tiger which destroys me, but I am the tiger; it is a fire which consumes me, but I am the fire.” ― Jorge Luis Borges, Labyrinths: Selected Stories and Other Writings
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The leader of al-Qaeda has called for attacks on Saudi Arabia, following the mass execution of 47 people in the Kingdom Law & Politics |
The leader of al-Qaeda has called for attacks on Saudi Arabia, following the mass execution of 47 people in the Kingdom – many of whom were tied to the extremist group.
Al-Zawahiri, the group's leader, announced the threats in a seven-minute audio recording earlier this week, which was reported by a US terror monitor, the SITE Intelligence Group said on Thursday.
In the recording the Egyptian militant leader urged his followers to launch new attacks against the kingdom’s ruling Al Saud family, which he called a “rotten regime that corrupted your religion”.
Al-Zawahiri dismissed the killing of al-Nimr as part of the “Saudi-Iranian competition for power in the region”.
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Zimbabwe presidency dismisses Mugabe heart attack rumour Africa |
A rumor than Zimbabwean President Robert Mugabe has suffered a heart attack is a "grim lie", his spokesman George Charamba said on Thursday.
"This is the way the website seeks to improve its hits in order to get dirty money from Google. There is a financial incentive to the grim lie," Charamba told Zimbabwe's state-run newspaper The Herald.
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Ethiopia confronts its worst ethnic violence in years Africa |
The violence has also earned Ethiopia a rare rebuke from the U.S. government, which considers it a key ally in the fight against terrorism.
“We were protesting peacefully and marching around the town when we heard about the deaths in the other villages, and so we became angry and attacked the farm,” said 27-year-old Drabuma Terrafa, standing near the charred remnants of a Solagrow potato warehouse.
Ethiopia’s federal police and army counterterrorism units have poured into the state. In more than a dozen interviews, people described arbitrary arrests, beatings and killings by security forces.
“I think the strategy is to terrorize people by shooting them point blank,” said Merera Gudina, the chairman of the opposition Oromo Federalist Congress party.
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Barclays's Africa Choice to Depend on Capital, Ex-Director Says via @business Africa |
Barclays Plc must decide whether its capital is best deployed in Africa amid slowing growth in the continent’s biggest economy and a need to further shrink its balance sheet, according to Michael Rake, the bank’s former deputy chairman.
"Barclays has historically been in a very good position there, but is suffering in South Africa economically,” Rake, who stepped down from the British bank’s board at the end of 2015, said in an interview on Bloomberg Television Thursday. "The question becomes around priorities and capital. It’s a good business and the board, I’m sure, will continue to keep under review its African position and how to handle it."
Britain’s second-largest lender will give a strategic update alongside its full-year earnings on March 1. Candice Macdonald, a spokeswoman for Barclays in London, declined to comment on the bank’s plans for Africa.
Barclays shares tracked a slide by world equity markets, falling 3.9 percent to 193.9 pence at 10:55 a.m. in London and extending their decline to 11 percent this year. McFarlane pledged in July to double the share price over the next three to four years. Barclays Africa, which trades in Johannesburg and has a market value of about $6.6 billion, fell 1.6 percent to 130 rand and is down 9.6 percent this year.
In Africa, where Barclays has operated for almost a century, pretax profit slipped 7.7 percent in the third quarter, compared with increases at the credit-card and personal and corporate-banking divisions. The region reported a return on equity of 9.7 percent in the third quarter, above the 9.3 percent level for 2014, but below the bank’s target of at least 11 percent.
In the region, the bank had 52.2 billion pounds ($75 billion) of assets, about 14 percent of its total, as of Sept. 30 and employed 44,700 people in Africa and the Middle East at the end of 2014, according to its annual report.
"It’s for the Barclays board to judge the future of Africa," Rake said. "If you take a long-term view, Africa could be very important, as it has five of the fastest-growing economies."
Political and economic turmoil has made Barclays’s job more difficult. President Jacob Zuma has taken South Africa to the brink of a junk credit rating and caused the rand to plummet against the dollar last year after he fired his finance minister and replaced him with an unknown lawmaker.
Staley and McFarlane have frozen hiring indefinitely and are planning to cut 20 percent of staff at the investment bank. Rake, who was deputy chairman for more than three years, said Barclays will prioritize advisory and execution businesses, such as mergers and acquisitions and debt capital markets, and cut back in the "so-called casino banking area."
“I think the focus would be at the moment on London, New York, perhaps with Tokyo, Hong Kong and Shanghai, but really being able to serve global clients,” Rake said of his “personal view” for the best geographic distribution for the investment bank.
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Acrimonious Exit of Nene Hits Africa's Economy, @TheStarKenya Africa |
The markets are not interested in Zuma’s explanations, they are seeing a South African president who has gone rogue.
The signal emitted by Nene’s unceremonious sacking, has criss-crossed the world and imperiled the South African Economy. The economy which was barely growing is going to contract. The cost of living and the cost of borrowing is going to spike big.
The first- and second-round effects are going to shudder South Africa Inc.
And the scariest part for South Africans is this: The president just doesn’t get it.
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Water politics Sharing the Nile Economist Africa |
The Renaissance Dam is merely the latest test of countries’ willingness to share water. There may soon be more difficulties. Ethiopia plans to build other dams on the river, which could further affect downstream supply. Sudan has promised foreign investors an abundance of water for irrigation. If Egypt is made to feel at the mercy of its neighbours, it may not have finished rattling its sabre.
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Nigeria stocks hit 3-1/2-year low as funds sell on naira woes Reuters Africa |
The naira has dived 34 percent on the black market compared with its official level of 197 after the central bank stopped dollar sales to retail currency outlets. The move has intensified speculation that Africa's top oil producer will have to formally devalue its currency soon.
"With crude oil prices down, accretion to FX reserves is out of the question ... putting investors on red alert. The central bank may not be able to meet all the demand for FX even if it were to devalue," said Ayodeji Ebo, head of research at Afrinvest.
the share index, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, has fallen for five straight days, sliding below the psychologically important 25,000 point line not seen since September 2012.
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SABMiller Shuts South Sudan Unit on Foreign Currency Deficit Africa |
SABMiller Plc will close its brewing operations in South Sudan, the only beer factory in the world’s youngest country, by mid-February as a foreign-currency shortage curtails its ability to import raw materials.
The company will cut as many as 176 jobs by the end of March, said Carlos Gomes, the managing director of South Sudan Beverages Ltd. The brewer has failed to make a profit in the war-torn country since setting up the nation’s first brewery in 2009, he said in an interview in October.
South Sudan devalued its currency by 84 percent last month in favor of a floating regime when it adopted the parallel market’s rate of 18.5 pounds per dollar from a previous fixed rate of 2.96.
“We have for many months not had access to any significant amount of forex,” Gomes said in response to e-mailed questions. “We had large South Sudan pound deposits in the bank at the time the devaluation was announced. The end result is that we incurred a loss of tens of millions of dollars, placing SSBL in an even worse position than it was.”
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Kenya tests international appetite for new debt sale @FT Kenyan Economy |
Kenya is gauging international appetite for new sovereign bonds as investors warn that weakening emerging markets will push the country’s borrowing rate above 10 per cent. Henry Rotich, Kenya’s finance minister, said the country was planning an international roadshow for new long-dated bonds, while also exploring alternative means of raising external budget support.
These could include a soft loan from the China Development Bank, Islamic financing, export credit arrangements and the sale of debt denominated in Japanese yen, known as samurai bonds.
“We just want to expand our menu,” Mr Rotich told the Financial Times in an interview. “Which one to pick depends on how quick we can pick one.”
Kenya’s announcement follows news that Nigeria and Mongolia are also planning to issue debt despite dwindling investor appetite for bonds sold by developing countries. Falling bond prices mean countries that paid 5 or 6 per cent to borrow on markets two years ago now face rates of 10 per cent.
“Kenya is lucky that it can still issue,” said Kevin Daly at Aberdeen Asset Management. “Ghana and Zambia have been shut out of markets by prohibitively high yields. For Kenya, issuance will be challenging but the last bond sale did well and there is likely still appetite.”
Prices for the country’s five- and 10-year bonds have dropped sharply since last year, pushing the yield on Kenya’s 2024 bond from 5.97 per cent in April to 9.45 per cent.
Kenya hopes to boost its standing with international investors by securing an extension of standby facilities from the International Monetary Fund before holding a bond roadshow in February or March.
The roadshow “is basically to meet investors and gauge appetite for our longer-term bonds”, said Mr Rotich. “If we were to issue another eurobond, could we look at 15 years, 20 years, I’ve seen countries that have done 30 years.”
As a net oil importer, Kenya has benefited from the slump in oil prices and the government expects growth to reach 5.8 per cent for 2015, and 6.1 per cent in 2016.
However the country’s debt burden has grown to equal 56 per cent of GDP, a high level for EMs and the budget deficit target for 2015-16 is 8.7 per cent. To limit the pressures, Kenya plans to diversify its sources of credit.
Mr Rotich said he was in discussions with the China Development Bank for a budget support loan of $600m at a rate of about 3.65 per cent above the London interbank offered rate (Libor).
Kenya is also scheduled to host an Islamic financing conference next month, although Mr Rotich said it would take up to two years to issue any sukuk (Islamic bond) because the country’s banking law would first have to be amended.
East Africa’s largest economy was one of the most successful participants in the recent EM credit boom, breaking records in 2014 for the biggest sovereign bond debut by an African country.
About $600m of the $2bn money raised was used to pay off a syndicated loan while the remainder was mostly spent on development infrastructure projects such as roads, rural electrification and health projects.
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11-JAN-2016 Which brings me back to East Africa and Kenya. There is a massive trend- change occurring Kenyan Economy |
Which brings me back to East Africa and Kenya. There is a massive trend- change occurring in front of our eyes in what was a previously intractable problem, the perennial current ac- count deficits. This is an important point to note. Our import bills [fuel and associated product are the single biggest expense item] have cratered. At current prices, I estimate Kenya is on-side by $150 million a month. This is big and this is why the shilling has turned ‘teflon’. In fact, whilst Kenya still runs behind Tanzania and of course Ethiopia on a GDP basis, this part of Africa is now outperforming the rest of sub-Saharan Africa and the outperformance is accelerating and we might just find ourselves in a sweet spot.
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21-DEC-2015 The Teflon Shilling and Other Matters @TheStarKenya Kenyan Economy |
What’s going on you might well ask?
Oil accounts for about a quarter of Kenya’s annual import bill. According to latest data, Kenya imported Sh177.2 billion worth of fuel and lubricants between January and September, a 34.66 per cent drop from the Sh271.2 billion it took in during the same period last year. That’s a Sh94 billion swing and nearly a $1 billion. That’s $1 billion of dollar demand that has evaporated. Since September, the price of fuel has tanked more than 20 per cent further accelerating this trend. Ear- lier in the year, I spoke of how this $1 billion boost would underpin our economy by providing a powerful grassroots stimulus. However, what has happened is that the govern- ment has creamed off a great deal of this by raising taxes on the price of fuel and thereby improving its fiscal position and this has blunted the price move at the pump.
Other factors that are supporting the shilling are the bona fides of the Central Banker. The regime change at the apex bank has been extremely well received by the markets.
The political hullabaloo around the Eurobond is now being discounted because no one in fact believes that there was a Sh140 billion heist.
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Kenya aims to cut external, fiscal deficits - fin min Kenyan Economy |
Kenya's economy is expected to grow 6.1 percent in 2016 and the government wants to trim ballooning budget and current account deficits to steady the economy, its finance minister said on Thursday.
Kenya, East Africa's biggest economy, set a budget deficit target of 8.7 percent for the 2015/2016 fiscal year starting July, unnerving some investors who were also uneasy about Kenya's current account deficit, which stood at above 8 percent.
The current account deficit was fuelled by a growth of imports like oil and consumer goods which was not matched by growth in exports. The budget deficit swelled due to increased spending on infrastructure projects and local government units created in 2013.
Officials and investors say the government has to deal with the deficits to boost investor confidence and stave off instability in the currency and borrowing rates. The shilling lost 11 percent against the dollar in 2015, but faired better than most African currencies.
Finance Minister Henry Rotich said the global slump in the price of crude oil had helped the country's current account deficit to improve due to a lower import bill.
"With the measures we are taking to cut the fiscal deficit, the twin deficits will obviously go down," he told Reuters by phone.
"We are aiming at around 6.5 percent (current account deficit) and also getting our fiscal deficit, including grants, coming down to about 4.5 percent."
He said Kenya was reviewing all government ministries' expenditure plans for this fiscal year with a view to cutting unnecessary items and reducing borrowing.
"By the end of this month we will have known what savings we are likely to achieve from the exercise," he said, adding the measures will be contained in a supplementary budget to be taken to parliament for approval.
Growth was expected to be 6.1 percent this year, slightly up from last year's projection of about 5.8 percent. Rotich said growth will be driven by public investments in infrastructure, a recovery in tourism and farming.
"We are still seeing infrastructure supporting the growth. Construction remains strong. We see recovery of tourism boosting that. With the favourable weather, we see agriculture will also be strong," he said.
The government is investing in a Chinese-built 327 billion shilling ($3.2 billion) modern railway, tarmac roads and power plants. Tourists have started to return to the country's beaches and game reserves after key Western markets like Britain lifted travel warnings.
Rotich said the main risks to Kenya's growth outlook were global developments including any slowdown in the Chinese economy, the direction of the oil price and U.S. interest rates.
"The risks continue to be external developments. It has become difficult to get a full feel of forecasts for global economic developments," he said, adding the main risk at home was any adverse weather like poor rainfall.
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Barclays Africa to shut down Nairobi office over redundancy Kenyan Economy |
Barclays Africa Group will close its regional management office based in Nairobi shifting all support role to its South Africa premises.
The office will be closed in March.
The move is expected to see redeployment of over 30 staff based here but will not affect Barclays Bank Kenya employees.
Barclays Africa Group, which in 2013 revealed plans to raise its revenues from the continent and make it account for 20-25 per cent of its returns by 2016, said the move was meant to streamline its operations on the continent.
“Barclays Africa Group Limited (BAGL) can confirm that it will close down its regional operations and technology management office in Nairobi, Kenya by 31 March this year. Our Africa operations will continue to be supported by the pan-African regional centre based in South Africa,” a statement from Barclays Africa Group read.
National Bank Says Kenyan Government Stalls Its Expansion http://www.bloomberg.com/news/articles/2016-01-14/national-bank-says-kenyan-government-stalls-its-expansion-plans
National Bank of Kenya Ltd. pushed back targets to strengthen its balance sheet after the government failed to approve proposals by the state-controlled lender to raise capital, Chief Executive Officer Munir Sheikh Ahmed said.
National Bank, which has total assets of 118 billion shillings ($1.2 billion), requires 7 billion shillings in fresh capital to enable it to compete with lenders including Barclays Bank of Kenya Ltd., Ahmed said in an interview Wednesday in the capital, Nairobi. Barclays is Kenya’s fifth-biggest bank by assets, while National Bank currently ranks 10th, according to data compiled by Bloomberg.
“The bank needs capital to grow at a rapid pace, but this has been delayed,” Ahmed said. “We are relying on profit generated month-on-month to grow the balance sheet. Trading profit becomes part of capital. It’s pure organic growth and that’s a slower pace.”
Kenyan Treasury Secretary Henry Rotich said in October the government is considering merging National Bank with Consolidated Bank of Kenya Ltd., Development Bank of Kenya Ltd. and other state-owned lenders as part of a plan to sell government assets to private investors. Rotich also proposed in his annual budget in June that minimum capital requirements be raised to promote consolidation in the banking industry, though that plan was rejected by lawmakers after opposition from the central bank.
The proposed merger of the state-owned banks “doesn’t take away our strategy to grow to top-tier status,” Ahmed said.
National Bank shares climbed 1.2 percent to 16.85 shillings on Wednesday, bringing it’s gain to 6.3 percent this year. The lender’s price-to-earnings ratio stands at 2.64, compared with 6.29 at Kenya Commercial Bank Ltd., the nation’s biggest lender by assets.
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The Teflon Shilling and Other Matters @TheStarKenya 21-DEC-2015 Kenyan Economy |
What’s going on you might well ask?
Oil accounts for about a quarter of Kenya’s annual import bill. According to latest data, Kenya imported Sh177.2 billion worth of fuel and lubricants between January and September, a 34.66 per cent drop from the Sh271.2 billion it took in during the same period last year. That’s a Sh94 billion swing and nearly a $1 billion. That’s $1 billion of dollar demand that has evaporated. Since September, the price of fuel has tanked more than 20 per cent further accelerating this trend. Ear- lier in the year, I spoke of how this $1 billion boost would underpin our economy by providing a powerful grassroots stimulus. However, what has happened is that the govern- ment has creamed off a great deal of this by raising taxes on the price of fuel and thereby improving its fiscal position and this has blunted the price move at the pump.
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