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Wednesday 31st of August 2016 |
Afternoon, Africa |
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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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Melons are a thing with Babur. Hot, grumpy, and newly sober in Hindustan, he remembers the melons of Kabul: Africa |
How can one forget the pleasures of that country? Especially when abstaining from drinking, how can one allow oneself to forget a licit pleasure like melons and grapes? Recently a melon was brought, and as I cut it and at it I was oddly affected. I wept the whole time I was eating it.
Early in his travels Babur, referencing a king from the Shahnama, carves on a rock: “Like us many have spoken over this spring, but they were gone in the twinkling of an eye./ We conquered the world with bravery and might, but we did not take it with us to the grave.”
Babur did not take the world with him to the grave, but he left himself in the world. Truly it is a rare thing for a voice to call across 500 years and greet you like a friend.
Political Reflections
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@AfDB_Group chief @akin_adesina warns Africa on international debt @FT Africa |
Akinwumi Adesina told the Financial Times that he expected the downturn in Africa, which was triggered by the slump in commodity prices and the slowdown in China, to last for up to another three years.
Africa was facing a debt “challenge” rather than crisis, he said, but warned that “there has to be a lot more fiscal consolidation.”
The International Monetary Fund forecasts that sub-Saharan Africa’s gross domestic product will grow at 1.6 per cent this year, a sharp decline from 3.5 per cent in 2015, and well below the average of 5-7 per cent over the past decade.
African governments sold $12bn of eurobonds last year, compared with about $26.5bn between 2006 and 2014, according to the African Development Bank. The weakness of many African currencies has meant debt service costs have soared in local currency terms, while several commodity producers are battling foreign currency shortages.
Mr Adesina, who took over as the bank’s president in September last year, said that expanding the tax base and improving the efficiency of tax administration would be the easiest ways to boost public finances.
He said the tax-to-GDP ratio in sub-Saharan Africa was about 14.5 per cent, compared with more than 30 per cent for most developed nations.
“So a lot more needs to be done to expand the tax base in Africa. Today it’s about $500bn a year [for the region], which is much better than it used to be, but we need to expand that.”
“Instead of African countries running off to raise a lot of eurobonds, I think there’s huge amounts of capital available more locally that we must tap for Africa’s development,” he said.
He added that borrowing should only be undertaken to finance projects that enhance economic growth.
Mr Adesina said African pension funds had a pool of $334bn, sovereign wealth funds $164bn and there was some $56bn of foreign direct investment looking for bankable projects.
“For me, without energy Africa is going nowhere,” he said. “You can’t have industries without energy and you can’t have growth without industries.”
Providing jobs for young people should be another urgent policy goal, Mr Adesina warned, describing youth unemployment as the “number one problem for Africa today”.
The International Labour Organisation said last year that long-term youth unemployment in sub-Saharan Africa in 2014 was 48 per cent.
“Our growing population should be a positive if it’s well harnessed but it’s right now looking like a time bomb because of the high level of unemployment among the youth,” Mr Adesina said. “It could heighten social, political and economic fragility for the continent.
“Young people, the future of Africa are jumping on rickety boats to get to Europe just because the growth process has not been conducive to great jobs in Africa.”
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Africa |
Africa’s largest economies stall amid slumping commodity prices and political infighting @economics Biggest African Economies Stall on Politics, Commodity Slump
Africa’s two largest economies are stalling amid slumping commodity prices and political infighting that’s hampering decision making.
A government report on Wednesday will probably show Nigeria contracted for a second consecutive quarter in the three months through June as the price and output of oil, its main source of revenue, were squeezed. While South Africa may have avoided falling into a recession, according to the median estimate of five economists surveyed by Bloomberg, the continent’s most-industrialized economy will not grow this year, the nation’s central bank said last month.
The global slump in commodity prices and weak demand from the continent’s main export partners have hit Nigeria, Africa’s second-largest oil producer, and South Africa, where mining produce accounts for about half of export earnings, weighing on both economies. A shortage of foreign currency in Nigeria after the central bank held a currency peg for more than a year, curbed imports, further limiting output, while political uncertainty in South Africa increased in the last week.
“Both countries’ economies are on a declining path,” Manji Cheto, senior vice president at Teneo Intelligence in London, said by phone. “That’s being led by politics in South Africa, and government policies that are reactive in Nigeria and might not work in the short term.”
Nigeria’s economy probably shrank 1.6 percent in the three months through June, according to the median of 15 economist estimates compiled by Bloomberg, following a 0.4 percent year-on-year contraction in the first quarter. Gross domestic product may decline by 1.8 percent for the year, according to the International Monetary Fund.
Nigeria delayed the approval of its record spending plans of 6.1 trillion naira ($19.4 billion) as President Muhammadu Buhari’s administration haggled with lawmakers over budgetary allocations. Militants have destroyed energy installations in the Niger River delta, cutting the nation’s oil output to an almost three-decade low, and further reducing earnings from an industry hit by a more than 50 percent drop in price since the middle of 2014. Nigeria relies on oil for two-thirds of government revenue and 90 percent of foreign-currency earnings.
“Both countries are adjusting to the decline in commodity prices,” said Sizwe Nxedlana, chief economist at Johannesburg-based First National Bank. “The nice thing about South Africa is that we are significantly more diversified as an economy than Nigeria.”
Nigerian central bank Governor Godwin Emefiele increased borrowing costs by 200 basis points last month to fight inflation that reached 16.5 percent in June and lure investors to help prop up the naira. The currency has lost more than a third of its value against the dollar since the central bank removed a currency peg on June 20.
While South Africa’s rand strengthened more than 10 percent against the dollar between the start of the year and early August, helping the economy to temporarily replace Nigeria as the continent’s largest in dollar terms, the currency slumped more than 5 percent since reports a week ago that Finance Minister Pravin Gordhan may be arrested. Gordhan, 67, said on Aug. 24 his attorneys received a letter from the Hawks, a special police unit, asking him to come to their office. He did not comply with the request.
“It’s a foregone conclusion that Nigeria is in recession,” Cheto said. “Revenue growth has been positive in South Africa, but if the political situation deteriorates, it will show negatively in the economy.”
The naira was unchanged at 314.75 per dollar by 9:01a.m. on Lagos on Tuesday. The rand strengthened 0.3 percent to 14.3682 per dollar.
While South Africa’s economy contracted the first quarter due to a slump in farming and mining output, manufacturing, which accounts for about 13 percent of GDP, expanded in the three months through June, retail sales grew and business confidence improved. The trade account and budget balance recorded surpluses in June as exports increased and the government’s revenue collection rose. The nation’s statistics office will release economic growth data for the second quarter on Sept. 6.
The diversification of South Africa’s economy and strong consumer spending could help it improve next year, according to Kevin Lings, chief economist at Stanlib Asset Management.
“It’s going to be tougher for Nigeria to effect the recovery than for South Africa,” Lings said. “It’s going to have to settle down the extreme movements in the currency and encourage the private sector more broadly.”
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S.African minister tells Eskom to release coal contracts report to Treasury Africa |
South African Public Enterprises Minister Lynne Brown said on Tuesday she had asked state-owned power utility Eskom to immediately provide a report required by the Treasury, which is investigating the utility's coal contracts.
Brown said she was concerned a public row between the Treasury and Eskom could lead to the utility being downgraded by credit rating agencies.
The Treasury on Monday accused Eskom executives of blocking the probe of coal contracts between the utility and a company linked to the wealthy Gupta family that is accused of holding undue political sway over President Jacob Zuma.
The Sunday Times reported the Treasury's investigation had revealed Eskom paid more than 130 million rand ($9 million) to Tegeta Exploration & Resources Ltd., a mining company owned by the Gupta family, for coal the power utility could not use.
Conclusions
Brian Molefe in the crosshairs http://www.destinyman.com/wp-content/uploads/2013/08/Brian-Molefe_690x450_crop_80.jpg
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IMF Says Mozambique Must Accept Audit to Restore Confidence Africa |
Mozambique’s government should take measures to restore confidence with international partners by accepting an external forensic audit, the outgoing International Monetary Fund representative said.
A group of 14 donors demanded in May an investigation by international auditors on how loans to at least three Mozambique state-owned companies were used before resumption of aid. The group suspended budgetary support after the southern African nation revealed in April that it had more than $1.4 billion in undisclosed debt.
“If the government proceeds with the international forensic audit, it will be important to restore trust with donors,” IMF’s Alex Segura told reporters in the capital, Maputo, late Monday.
An IMF team is expected in Maputo in September to assess the government’s compliance with austerity measures agreed on during a past visit in June, the government-run Noticias newspaper reported earlier this month, citing Prime Minister Carlos do Rosario.
The IMF projects economic growth will slow to 4.5 percent this year compared with 6.6 percent in 2015. The metical has weakened 34 percent this year against the dollar, the second-worst performing currency in Africa after the Nigerian naira, driving inflation to 20.7 percent in July.
The yield on Mozambique’s $727 million Eurobond due January 2023 shed 3 basis points to 17.11 percent on Tuesday, compared with a record 19.18 percent on June 27, when the IMF warned the nation’s public debt was at a high risk of distress.
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Kenyan Economy |
The potential for a U.S. rate increase and looming elections have narrowed the window for a second international dollar bond issue by East Africa’s most advanced economy, said International Monetary Fund Country Representative Armando Morales.
Kenya must “get all the financing they need well ahead of elections” due in a year, Morales said Aug. 27 in an interview in the capital, Nairobi. Authorities also need to “analyze the Fed very carefully before moving,” he said. The Kenyan Treasury should be prepared to act on the sale “as soon as the markets allow.”
Kenya plans to borrow 462 billion shillings ($4.6 billion) from external lenders this fiscal year to help plug a 9.3 percent budget deficit. The country raised $2.82 billion in a debut Eurobond sale in 2014, and may issue new debt “if an opportunity presents itself,” Treasury Secretary Henry Rotich said in June. President Uhuru Kenyatta will seek a second term in office in August 2017.
The country has already arranged a $600 million loan from China and a $1.5 billion stand-by facility from the IMF this year.
The fourth quarter of 2016 may be Kenya’s best opportunity for an international sale of dollar debt, provided the Federal Reserve holds off increasing rates until December, Jibran Qureishi, an economist at Stanbic Holdings Plc, said Monday by phone from Nairobi.
A September rate increase by the Fed may push Kenya toward “much more expensive funding,” with investors likely to seek yields exceeding 8 percent, Qureishi said. Yields on Kenya’s securities due 2024 fell 2 basis points to 7.12 percent in Nairobi on Tuesday.
Conclusions
This is an Optimal moment.
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Jubilee Holdings reports H1 16 EPS +4.95% Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 470.00 Total Shares Issued: 59895000.00 Market Capitalization: 28,150,650,000 EPS: 42.7 PE: 11.007
H1 Gross earned premium 13.624931b vs. 12.094921b +12.650% H1 Reinsurance [5.269488b] vs. [4.674688b] +12.724% H1 Net earned premium 8.355443b vs. 7.420233b +12.604% H1 Claims and policyholder’s benefits payable [7.484882b] vs. [6.167019b] +21.370% H1 Commission paid [1.670716b] vs. [1.623381b] +2.916% H1 Management Expenses [1.911607b] vs. [1.667013b] +14.673% H1 Investment income 3.451855b vs. 2.651368b +30.191% H1 Net fair value loss through profit or loss [364.908m] vs. [124.651m] -192.744% H1 Operating profit 1.371007b vs. 1.233736b +11.126% H1 Share of results of associates 601.767m vs. 582.990m +3.221% H1 Group profit before income tax 1.972774b vs. 1.789578b +10.237% H1 Net profit 1.578735b vs. 1.468638b +7.497% H1 Total other comprehensive income [354.689m] vs. [449.585m] -21.107% H1 Total comprehensive income 1.224046b vs. 1.019053b +20.116% EPS 21.2 vs. 20.2 +4.950% Total equity 21.228070b vs. 17.235920b +23.163% Total assets 87.567452b vs. 81.023155b +8.077% Cash and cash equivalents at the end of the period 9.554014b vs. 13.228172b -27.775% Dividend per share 1.00 vs. 1.00 –
Conclusions
Strong well managed with 9.55b in cash on the balance sheet.
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Sanlam Kenya reports H1 16 EPS [-0.89cents] Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 35.50 Total Shares Issued: 144000000.00 Market Capitalization: 5,112,000,000 EPS: -0.43 PE: -82.558
H1 Gross written premium 2.639297b vs. 2.594647b +1.721% H1 Outward reinsurance premium [200.884m] vs. [209.164m] -3.959% H1 Net written premium 2.438413b vs. 2.385483b +2.219% H1 Total income 3.616845b vs. 3.563330b +1.502% H1 Gross benefits and claims paid [1.883908b] vs. [1.570386b] +19.965% H1 Net change in contract liabilities [765.969m] vs. [542.484m] +41.197% H1 Net claims and policy holders benefits [2.620053b] vs. [2.083221b] +25.769% H1 Total benefits, claims and other expenses [3.761571b] vs. [3.151631b] +19.353% H1 [Loss]/ profit before share of profit of an associate [144.726m] vs. 411.699m -135.153% H1 [Loss]/ profit before tax [144.727m] vs. 411.699m -135.154% H1 [Loss]/ profit for the year after tax [128.369m] vs. 263.963m -148.631% H1 [Loss]/ profit attributable to equity holders of the parent [128.500m] vs. 267.243m -148.084% EPS [0.89] vs. 1.86 -147.849% Total assets 27.994882b vs. 27.077022b +3.390% Cash resources at the end of the year 3.533967b vs. 4.655231b -24.086% No interim dividend
Company Commentary
The Group recorded a loss before tax of -145m for the six months ended 30th June 2016, compared to a profit of 412m for the same period in 2015. This is mainly attributable to lower income from property sales, marked-to-marketfair value losses on equity investments, an increase in expenses related to the implementation of the new Group strategy and negative persistency experience in the life book. Portfolio earnings increased by 98% from 607m to 1.2b in 2016.
Conclusions
Tidying up and working through the digestion Phase.
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Trans-Century reports H1 16 EPS +330.093% Earnings here Kenyan Economy |
Par Value: Closing Price: 5.45 Total Shares Issued: 280284476.00 Market Capitalization: 1,527,550,394 EPS: -7.09 PE: -0.769
H1 Turnover 4.139670b vs. 5.205064b -20.468% H1 Profit from operations 1.758367b vs. 240.321m +631.674% H1 Net finance costs [202.106m] vs. [496.955m] -59.331% H1 Profit/ [Loss] before income tax 1.191052b vs. [646.341m] +284.276% H1 Profit/ [Loss] for the period 1.313850b vs. [676.131m] +294.319% EPS 4.97 vs. [2.16] +330.093% Cash and cash equivalent at 30th June [408.343m]
Company Commentary
Group's Earnings were positively impacted by 1. the recognition of write back on convertible bond following the successful resolution in March 2016 2. Lower interest costs due to reduced non-trading debt 3. FX Gain following the recovery of regional currencies against the US Dollar.
The Outlook remains positive growing order book in our Power Division and a strong pipeline of Engineering projects.
Conclusions
Interesting.
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