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Satchu's Rich Wrap-Up
 
 
Tuesday 26th of January 2016
 
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Chasing Fried Eggs with Jorge Luis Borges
Africa


On another occasion, during an interview in Rome, an Italian
journalist tried to embarrass him. As he failed to do so he asked
Borges, “Do you still have cannibals in your country?” Borges replied,
“No, we don’t. We ate them all…”

For a blind person used to living on past memories, perhaps the life
of the imagination was for him more important than real life. And yet
his life and work had a singular impact on the life of many.

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“There is no pleasure more complex than that of thought and we surrendered ourselves to it.” ― Jorge Luis Borges, Labyrinths
Africa


“This has happened and will happen again,' said Euphorbus. 'You are
not lighting a pyre, you are lighting a labyrinth of flames. If all
the fires I have seen were gathered together here, they would not fit
on earth and the angels would be blinded. I have said this many
times.' Then he cried out, because the flames had reached him.”
― Jorge Luis Borges, Labyrinths: Selected Stories and Other Writings

“Tennyson said that if we could understand a single flower we would
know who we are and what the world is. Perhaps he meant that there is
no deed, however so humble, which does not implicate universal history
and the infinite concatenation of causes and effects. Perhaps he meant
that the visible world is implicit, in its entirety, in each
manifestation, just as, in the same way, will, according to
Schopenhauer, is implicit, in its entirety, in each individual.”
― Jorge Luis Borges, Labyrinths: Selected Stories and Other Writings

“Whoever has seen the universe, whoever has beheld the fiery designs
of the universe, cannot think in terms of one man, of that man’s
trivial fortunes or misfortunes, though he be that very man. That man
has been he and now matters no more to him. What is the life of that
other to him, the nation of that other to him, if he, now, is no one?
This is why I do not pronounce the formula, why, lying here in the
darkness, I let the days obliterate me.”
― Jorge Luis Borges, Labyrinths: Selected Stories and Other Writings

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Syrian talks delayed while UN seeks agreement on participants
Law & Politics


Conclusions


One surmises that Assad and Putin are altering the facts on the ground
in their Favour and that therefore probably happy to string this
along.

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Winners and Losers in the Syrian Civil War Patrick Cockburn
Law & Politics


The two sides hate each other and have spent five years trying to kill
each other, making it unlikely that they will agree to share power in
any way except geographically, with each side keeping the territory it
currently holds and defending it with its own armed forces.

The problem about ending the war in Syria and Iraq is that there is a
multitude of players who are too strong to lose but too weak to win.
Countries and movements such as Iran and Hezbollah see themselves as
fighting for their very existence in a war they cannot afford to lose.
Others, like Saudi Arabia and Turkey have invested too much
credibility in the struggle for Syria to admit they are not going to
achieve their aim of ousting President Bashar al-Assad.

The big loser here could be Turkey, which seemed to be in such a
strong position to extend its influence across the Middle East in
2011. Its image as an economically prospering, democratic yet Islamic,
state was attractive to many Arab protesters looking to overthrow and
replace dictatorial rule. But the Turkish President, Recep Tayyip
Erdogan, soon made clear that he was supporting a Sunni Arab sectarian
takeover that was anti-Shia, anti-Kurd and anti-secular and was bound
to be resisted. Having first backed the Muslim Brotherhood, Turkey
then tolerated or helped Isis, al-Nusra and extreme jihadi groups.

It was a calamitous miscalculation for Syria and for Turkey. For all
President Erdogan’s neo-Ottoman dreams of making Turkey a great power
in the Middle East again, he has achieved the opposite. How he
responds to this failure should become clear in the coming months as
the US and Russia try, in different ways, and in support of a rather
different list of allies, to close the border between northern Syria
and Turkey.

President Erdogan will either have to accept Turkey’s exclusion from
northern Syria or increase Turkish military involvement, possibly
including an invasion. Critical commentators in Turkey say he wanted
to invade last year, but was restrained by senior Turkish army
generals. Full-scale military engagement by Turkey would be more
difficult today, since Russian military intervention and the shooting
down of a Russian bomber by a Turkish F-16 on 24 November. A Turkish
move into northern Syria now would face American disapproval and
resistance by Russian aircraft and anti-aircraft missiles.

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Malaysia Calls for Caution on #MH370 as Metal Found in Thailand
Law & Politics


Malaysia’s government cautioned against speculating about the location
of missing Malaysia Airlines Flight 370 after a chunk of metal was
found off southern Thailand.

The barnacle-encrusted debris, measuring about 2 meters by 3 meters,
was found by fishermen Jan. 23 off the country’s east coast in the
Gulf of Thailand, the Bangkok Post reported. Electrical wires hung off
the curved piece of metal, which was stamped with numbers in several
places, the newspaper said.

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25-AUG-2014 The signal announcing this new arrhythmic normal was the disappearance of the #MH370
Law & Politics


His excellency Johan Borgstam told me the signal announcing this new
arrhythmic normal was the disappearance of the MH370. Since then
planes have been falling out of the sky like flies. And the
uncertainty around MH370 and MH17 which is sharpened by the way the
story is seemingly turned on and off took me back to Don Delillo

‘’”We are not witnessing the flow of information so much as pure
spectacle, or information made sacred, ritually unreadable. The small
monitors of the office, home and car become a kind of idolatry here,
where crowds might gather in astonishment.’’

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0854
Dollar Index 99.26
Japan Yen 117.88
Swiss Franc 1.0131
Pound 1.4210
Aussie 0.6929
India Rupee 67.824
South Korea Won 1205.48
Brazil Real 4.0861
Egypt Pound 7.8307
South Africa Rand 16.6099

Dollar Index 3 Month Chart INO 99.264 [Target 110.00 by End 2016]

http://quotes.ino.com/charting/index.html?s=NYBOT_DX&v=d3&t=c&a=50&w=1

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Crude Oil 1 Year Chart INO 29.57
Commodities


Emerging Markets

Frontier Markets

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South Sudan needs arms embargo; leaders killing civilians - U.N. panel
Africa


The panel asked the council to blacklist "high-level decision makers
responsible for the actions and policies that threaten the peace,
security and stability of the country."

The names of the individuals the panel recommend for sanctions in the
form of an international travel ban and asset freeze were not included
in the body of the report. But a diplomat familiar with the contents
told Reuters that a highly confidential annex calls for blacklisting
both Kiir and Machar.

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Africa Currency Crises Spark Diverging Central Bank Stances
Africa


Africa’s biggest economies are taking opposite approaches on monetary
policy as they struggle to cope with collapsing commodity prices and a
slump in investor confidence.

South Africa, Nigeria, Angola and Ghana are set to announce their
first interest-rate decisions of the year this week in an environment
complicated by plummeting currencies, rising inflation risks and
deteriorating growth. While a record-low rand may force South African
policy makers to take more aggressive action, Nigeria is set to stick
to its looser policy, according to analysts surveyed by Bloomberg.

The contrasting approaches underscore the difficult policy choices
African central banks are being forced to take as their currencies
suffer the worst of the rout in global financial markets. In Nigeria,
the continent’s biggest economy, growth concerns and naira stability
have trumped inflation risks, while fiscal pressures in Ghana and an
oil-triggered crisis in Angola have fueled weaker currencies and
prompted higher interest rates.

“A further decline in commodity prices, tightening of monetary policy
by the U.S. Federal Reserve, and unfavorable weather conditions mean
that the short-term outlook for African currencies is weak,” Jacques
Verreynne, an economist at NKC African Economics, based in Paarl, near
Cape Town, said in an e-mailed response to questions.

“Although the outlook for economic growth is fairly weak in many parts
of the continent, there is pressure on central banks to raise interest
rates in order to anchor inflation expectations,” he said.

The Bank of Ghana is set to kick off the week’s policy decisions by
keeping its benchmark interest rate unchanged at 26 percent on Monday
after three increases last year, according to seven of the 10
economists surveyed by Bloomberg. Kenya’s central bank also opted last
week to extend the pause in its interest-rate cycle by leaving the
policy rate at 11.5 percent.

In Nigeria, pressure is mounting on Governor Godwin Emefiele to
devalue the naira and ease foreign-currency controls that are hurting
businesses and worsening the outlook for growth in Africa’s biggest
oil producer.

He surprised market analysts at the last Monetary Policy Committee
meeting in November by cutting the benchmark rate by 2 percentage
points to 11 percent and snubbing calls to weaken the currency.

All but one of the 22 economists surveyed by Bloomberg predict
Emefiele will leave the key rate unchanged on Tuesday, with some
predicting an adjustment to the naira rate.

“The concerns are that the currency is under pressure, that the
currency is misaligned,” Bismarck Rewane, chief executive officer at
Financial Derivatives Co. Ltd., said by phone from Lagos, Nigeria’s
commercial capital. “Ghana and South Africa have already moved closer
to an equilibrium. Nigeria has not really accepted that the currency
price is in disequilibrium.”
While the Central Bank of Nigeria has virtually fixed the naira at
197-199 per dollar since March, South Africa’s rand has plunged about
29 percent and Ghana’s cedi is down almost 8 percent in the same
period. Authorities in Angola, sub-Saharan Africa’s biggest oil
producer after Nigeria, have gradually devalued the kwanza since last
year.

The rand’s slide to a record-low of 17.9169 per dollar on Jan. 11 is
adding to pressure on inflation in South Africa at the same time that
the worst drought in more than a century boosts food costs. Inflation
accelerated to 5.2 percent in December and is set to exceed the
central bank’s 3 percent to 6 percent target band this year. The rand
gained 0.2 percent to 16.4389 by 8:57 a.m. in Johannesburg.

That may prompt the Reserve Bank to increase the magnitude of its rate
increases from 25 basis points. While most of the 23 economists
surveyed by Bloomberg predict higher rates this week, 16 forecast the
repurchase rate of 6.25 percent will be lifted by at least 50 basis
points.

The MPC decision is the first since the U.S. Federal Reserve raised
interest rates in December and President Jacob Zuma shocked financial
markets by changing his finance minister three times in the space of
five days, triggering a weaker rand.

Governor Lesetja Kganyago said in an interview on Jan. 20 that it’s
impossible to avoid the trade-off between growth and inflation and the
central bank will “act with resolve” if price pressures stemming from
a weaker rand spread more broadly in the economy.

“There’s still room for African central banks to tighten monetary
policy,” Courage Kingsley Martey, an economist at Databank Group Ltd.,
said by phone from the Ghanaian capital, Accra. “It is possible to
sacrifice growth for some time and then allow macroeconomic stability
to return, else inflation will return to haunt growth.”

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Seychelles, an Indian Ocean archipelago off the East African coast, plans to offer so-called blue bonds
Africa


Seychelles, an Indian Ocean archipelago off the East African coast,
plans to offer so-called blue bonds, which fund the development of
sustainable fisheries, to investors later this year.

The country’s Treasury is in talks with multilateral agencies
including the African Development Bank and the World Bank to
facilitate the sale of $10 million of the government-backed debt,
Finance Minister Jean-Paul Adam said in a phone interview Jan. 22 from
the capital, Victoria. The securities are modeled on green bonds,
which channel their proceeds to projects that save energy, curb
pollution and recycle resources.

Seychelles is considering the debt as it’s $169 million of bonds due
January 2026 outperform other sub-Saharan African nations, returning
2.6 percent this year compared with an average loss of 2.9 percent
among 17 countries on the continent tracked by Bloomberg. The
commercial fishing industry in Seychelles, which has Africa’s biggest
tuna-canning factory, is dominated by companies including Thai Union
Group Pcl, Thailand’s largest seafood exporter. Fisheries account for
about 1 percent of the country’s $1.4 billion economy, according to
World Bank and African Development Bank data.

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02-NOV-2015 The Seychelles @TheStarKenya
Africa


I am writing this article from Mahe, which is the one of 115 islands
that make up the Seychelles archipelago, which lies 1,500 Kilometres
off East Africa. Seychelles has a population of 90,024 and that is the
smallest population of any independent African state. The minister for
Finance, Trade and The Blue Economy Jean-Paul Adam informed me that
the Seychelles receives tourists three times its population every
year. If Kenya was to receive the same ratio of tourists, we would be
welcoming 120 million tourists a year. The minister described to me
how the Seychelles navigated the 2008 financial crisis [debt to GDP
soared close to 125 per cent] and the Republic defaulted, but now runs
an annual surplus of over five per cent. The debt-to-GDP ratio is in
the 40 per cent range [after some help from the Paris Club and the
IMF]. Let us hope Seychelles in 2008 is not a Harbinger for some
countries on the mainland continent.

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From Venezuela-Type Crisis to Free Float: Nigeria Naira Choices
Africa


“They have to do something,” said Ayodele Salami, who manages about
$500 million of African equities as chief investment officer of
London-based Duet Asset Management Ltd. Foreign investors are seeking
a depreciation to about 250, and an end to foreign-exchange trading
restrictions before re-entering the country, he said. “It would really
undermine the credibility of the central bank if they say nothing
about it.”

The foreign-exchange controls were hurting U.S. companies’ ability to
do business in Nigeria, Commerce Secretary Penny Pritzker said in an
interview in the commercial capital, Lagos.

Here are the options open to Emefiele, and their probable consequences:

* Devalue and let the currency trade in a band:
Analysts at Credit Suisse Group AG and Morgan Stanley are among 13 of
16 surveyed by Bloomberg who predict the central bank will devalue the
naira on Tuesday to between 214 to 275 per dollar.
In this scenario, Emefiele would still want some control, and can do
so by allowing the naira to trade 5 percent either side of a new
midpoint, said Chernay Johnson, an analyst at Credit Suisse in
Johannesburg.

* No devaluation for six months:
Despite the growing scarcity of dollars and the black-market rate
plunging to 305 this month, the central bank, whose policies are
backed by President Muhammadu Buhari, has no plans to devalue for at
least another six months, according to JF Ruhashyankiko, a Goldman
Sachs Group Inc. economist in London. In the meantime, Emefiele will
curb the supply of dollars to banks to save foreign reserves at their
lowest level since at least mid-2010, he said.

* Let the naira float:
Buhari and Emefiele have said that weakening the currency may
accelerate inflation already at a three-year high of 9.6 percent. That
makes this option unlikely, especially given Nigeria’s history of
retaining a strong grip on the currency, according to John Ashbourne,
a London-based economist at Capital Economics Ltd.

* Create a second official exchange rate:
Emefiele may continue holding the central bank’s official rate and
allow companies deemed strategic, such as fuel importers, access to
it, said Razia Khan, head of Africa economic research at Standard
Chartered Plc in London. The regulator may then let everyone else use
a more liberalized interbank market in a bid to encourage
foreign-exchange inflows.
The danger is that it could distort the market and lead companies and
individuals able to buy at official rates to sell back their dollars
on the interbank and black markets to profit from what would be wide
spreads, she said.
“There has been increasing talk of the possibility of a two-tier
exchange rate,” said Khan. “Nigeria had one in the past. All it did
was encourage round-tripping. You cannot police it.”

* Resort to a Venezuela-style regime:
Emefiele could try to maintain the current regime indefinitely, which
may lead to the black market being the only source of dollars for most
Nigerians and “risks pushing the country into a Venezuela-type
crisis,” according to Ashbourne of Capital Economics.
The South American oil exporter, where the official rate of 6.3
bolivars per dollar is almost irrelevant against a black-market rate
that’s as high as 850, declared an economic crisis this month.

read more


Nigeria All Share Bloomberg -16.33% 2016
Africa


23,963.64 +137.14 +0.58%

Ghana's central bank kept its benchmark policy rate at 26 percent on
Monday citing moderation in the pace of consumer inflation, its
governor Henry Kofi Wampah said.

Ghana Stock Exchange Composite Index Bloomberg +0.25% 2016

http://www.bloomberg.com/quote/GGSECI:IND

1,999.84 -0.18 -0.01%

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CBK governor sets public finance tone for the year BD_Africa
Kenyan Economy


Opposition leader Raila Odinga has recently named the CBK as one of
the institutions that played a negative role in the controversial
Eurobond affair and called on authorities to investigate some of the
institution’s senior staff. What is your position?

Claims that $999 million (Sh100 billion) is missing from the CBK
accounts are far from the truth. There was a balance $999 million in
JP Morgan sovereign bond account and the National Treasury instructed
the CBK to transfer the balance from the sovereign bond account at CBK
and close the JP Morgan account.

So the CBK acquired the $999 million and credited the National
Treasury account with Sh88 billion. That is the simple transaction and
this we do all the time.

The account that was credited with the US dollars is a CBK account in
the Federal Reserve Bank of New York. We at CBK have accounts with so
many other central banks in the world because we are regularly working
with them in our normal course of business.

There was another transaction on December 17. The amount in US dollars
was $815 million and it was converted to Kenya shillings at the then
prevailing rate such that the Treasury account was credited with
Sh73.8 billion.

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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January 2016
 
 
 
 
 
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