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Satchu's Rich Wrap-Up
 
 
Tuesday 11th of September 2018
 
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Africa

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"The precocity of the Indian Ocean as a zone of long-range navigation and cultural exchange is one of the glaring facts of history" made possible by the "reversible escalator" of the monsoons
Africa


Professor Felipe Fernández-Armesto explains ‘’ The precocity of the
Indian Ocean as a zone of long-range navigation and cultural exchange
is one of the glaring facts of history’’, made possible by the
‘’reversible escalator’’ of the monsoons.

read more




03-SEP-2018 :: I asked, "Darling, how was it?" She said, "Daddy, I danced and I danced and I didn't stop!"
Africa


I remember a time my then 11 Year old daughter Layla attended the
school disco and when I picked her up, her eyes glittered and she
could scarcely stand still. I asked, ‘’Darling, how was it?’’ She
said, “Daddy, I danced and I danced and I didn’t stop!’’ I wanted to
pick her up, spin her as Jean Rhys wrote in her Novel ‘’Wide sargasso
sea’’: Only the magic and the dream are true - all the rest’s a lie.
And, “I must remember about chandeliers and dancing, about swans and
roses and snow.”

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"Our souls are made of water, Goethe says. So too, our bodies. There is a flow within us, rising and falling, unidirectional, to the heart." - J.M. Ledgard, Giraffe
Africa


“Our souls are made of water, Goethe says. So too, our bodies. There
is a flow within us, rising and falling, unidirectional, to the heart.
there is a flow without also. We circulate. We are drawn up, and we
fall back down to earth again. It's all haemodynamics.” ― J.M.
Ledgard, Giraffe

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"the strangest life exists in the cracks" - J. M. Ledgard, Submergence
Africa


“Until the discovery of hydrothermal vents off the Galápagos Islands
in 1977, scientists assumed that life on earth was photosynthetic and
belonged to the surface. It was the other way around: photosynthetic
life came later, when cells strayed to the top where they were cooked
for millions of years before evolving a way to absorb the light, and
all the while the chemosynthetic life in the abyss was evolving a
stability we cannot hope for.”
― J.M. Ledgard, Submergence

Political Reflections

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As with the threat of a cholera epidemic in Basra, Iraqi crises tend to spread swiftly and infect the whole region.
Law & Politics


The current protests in Iraq are the most serious seen in the country
for years, and are taking place at the heart of some of the world’s
largest oilfields. The Iraqi government headquarters in Basra was set
ablaze, as were the offices of those parties and militias blamed by
local people for their wretched living conditions. Protesters have
blockaded and closed down Iraq’s main sea port at Umm Qasr, through
which it imports most of its grain and other supplies. Mortar shells
have been fired into the Green Zone in Baghdad for the first time in
years. At least 10 people have been shot dead by security forces over
the last four days in a failed effort to quell the unrest.

If these demonstrations had been happening in 2011 during the Arab
Spring then they would be topping the news agenda around the world. As
it is, the protests have so far received very limited coverage in
international media, which is focusing on what might happen in the
future in Idlib, Syria, rather than on events happening now in Iraq.

Notice the bars on all the windows.

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A handshake on the White House lawn sealing the first of the landmark Oslo accords inspired hope that Israeli-Palestinian peace could finally be achieved @AFP
Law & Politics


A handshake on the White House lawn sealing the first of the landmark
Oslo accords inspired hope that Israeli-Palestinian peace could
finally be achieved, but 25 years later, those dreams have faded

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In the presence of the King of Morocco and the Ruler of Ajman, Mohamed bin Zayed receives Mohamed Al Mazrouei @MohamedBinZayed
Law & Politics


In the presence of the King of Morocco and the Ruler of Ajman, Mohamed
bin Zayed receives Mohamed Al Mazrouei, winner of Wharton School’s
Global Young Leaders Academy Business Plan contest.

International Markets

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1602
Dollar Index 95.15
Japan Yen 111.39
Swiss Franc 0.9747
Pound 1.3039
Aussie 0.7123
India Rupee 72.425
South Korea Won 1125.60
Brazil Real 4.0865
Egypt Pound 17.8395
South Africa Rand 15.1941

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Trade war worries push emerging currencies to 17-month low
Emerging Markets


The selloff in emerging markets deepened on speculation the U.S.-China
trade war will escalate. Currencies slumped to their lowest level
since April 2017 as Goldman Sachs Group Inc. said its models signaled
further declines for some developing nations. Stocks also fell.
Brazil’s real led losses among its major peers amid intense volatility
before a new election poll. The Argentine peso slid after some traders
said the rally triggered by optimism the International Monetary Fund
will expedite funding went too far, too fast. Turkish data showing the
economy expanded less than forecast overshadowed bets on another rate
hike, pushing down the lira. The rupee pared its drop as India said
it’s considering a plan to tap its citizens overseas after the
currency tumbled on gloomy current-account data.
And the situation doesn’t get any better from a technical perspective.
Some patterns suggest that the $4.5 trillion selloff that has taken
the MSCI Emerging Markets Index below its 20-year average valuation --
normally a signal for investors to return -- has further to run before
reaching the point where four major turnarounds in the past 20 years
began.
Latin America:

BRAZIL:Real declined 1 percent to 4.0942 per dollar
MEXICO: 10-year local-bond yield rose to the highest on record
TURKEY Lira fell 0.8 percent to 6.4578 per dollar
SOUTH AFRICA 9-year local-bond yield rose to the highest in more than
eight years
RUSSIA: 10-year local-bond yield flat at highest in more than two years
INDIA: Rupee Tumbles to New Record as India Scrambles to Halt Decline
India Is Said to Ask RBI to Ramp Up Efforts to Soften Rupee Drop

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[The End of] Halcyon Days @TheStarKenya
Emerging Markets


Wikipedia has an article on: halcyon days and it reads thus,

From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her
husband died in a shipwreck, Alcyone threw herself into the sea
whereupon the gods transformed them both into halcyon birds
(kingfishers). When Alcyone made her nest on the beach, waves
threatened to destroy it. Aeolus restrained his winds and kept them
calm during seven days in each year, so she could lay her eggs. These
became known as the “halcyon days,” when storms do not occur. Today,
the term is used to denote a past period that is being remembered for
being happy and/or successfuL

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Indian Rupee closed at 72.445/USD -0.97% at another record low @Sunchartist
Emerging Markets


It is now lost 11.85% YTD making it the worst performing currency in
JP Morgan Asia  Dollar Index

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We think GDP which was still rising 5% in 2Q18 will be falling in 3Q18, and we hope recovering by 2H19 @RencapMan
Emerging Markets


Our second guess on how Turkey's economy will be impacted by the 2018
crisis. We think GDP which was still rising 5% in 2Q18 will be falling
in 3Q18, and we hope recovering by 2H19.

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Who's Overshooting the Most in Emerging Markets @business
Emerging Markets


The Turkish lira has fallen further than necessary to close the
country’s wide current account deficit: That conclusion, based on
Bloomberg Economics’ analysis of the relationship between exchange
rate movements and trade flows, suggests the sell off has been
extended by fear. Things look different for Argentina and South
Africa, where currencies probably need to fall further to close
deficits. Brazil’s challenge is not primarily its current account
deficit, but to the extent that is a factor, the drop in the real is
already more than enough to solve it.

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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice
Emerging Markets


If volatility spikes, positions are going to be reduced en masse. Or
to put it another way and to borrow the lyrics from the Eagles Hotel
California:

Mirrors on the ceiling,
The pink champagne on ice
And she said “We are all just prisoners here, of our own device” Last
thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
“Relax,” said the night man,
“We are programmed to receive.
You can check-out any time you like,
But you can never leave! “
What is clear is that we are at the fag-end of this party.

Frontier Markets

Sub Saharan Africa

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NOV 14 ::Ouagadougou's Signal to Sub-Sahara Africa
Africa


What’s clear is that a very young, very informed and very connected
African youth demographic [many characterise this as a ‘demographic
dividend’] – which for Beautiful Blaise turned into a demographic
terminator – is set to alter the existing equilibrium between the
rulers and the subjects, and a re-balancing has begun.

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African cities surge to top of global growth league @FTWorldnews
Africa


Karim Kane is a carpenter, not a speculator. But the plot of land he
bought a decade ago is worth nearly 25 times what he paid for it. In
2007, the village chief sold it to him for the equivalent of about
$450. Mr Kane built a house for his wife and six children on land that
today he reckons is worth nearly $11,000.
The area where Mr Kane lives is little more than muddy hills with
scattered plots of land given over to cows and goats. Pedlars lead
donkey carts loaded with plastic jerry cans of potable water. But
despite its semi-rural appearance Mr Kane has no doubt that he is now
a resident of Mali’s capital. “I’m a Bamakois,” he says, using the
French word for a citizen of Bamako.
Almost unnoticed, Africa has become the world’s most rapidly
urbanising continent. From 2018 to 2035 the UN predicts that the
world’s ten fastest growing cities will all be African. It’s a trend
that has already enveloped Mr Kane, whose land has been swallowed up
by Yirimadio, the fastest-growing part of Bamako, which may itself be
the fastest-growing city in Africa.
In parts of the neighbourhood, shacks of people recently arrived from
the countryside jostle with houses being constructed by Bamakois who
are snapping up cheaper plots of land on the city edge. As Bamako has
grown exponentially it poses huge logistical problems for the
cash-starved authorities that are replicated across the continent.
According to a World Bank study, 472m people in sub-Saharan Africa
live in cities. High birth rates and migration from the countryside
mean by 2040 Africa’s urban population will more than double to 1bn,
it says, a rate that far outpaces urbanisation elsewhere in the world.
Tann vom Hove, a senior fellow at City Mayors, which puts Mali’s
capital at the top of the list with an annual expansion rate of 4.5
per cent, says the trend is more important than the precise ranking.
Estimates from the United Nations say other cities, including Dar es
Salaam, a city of nearly 5m in Tanzania, are growing even faster than
Bamako.
Some of Africa’s megacities, including Lagos, Nigeria’s commercial
capital of 21m people, and Kinshasa, the chaotic capital of the
Democratic Republic of Congo, are sucking in hundreds of thousands of
new people each year. Smaller cities, such as Yaounde in Cameroon and
Brazzaville in Congo, are growing almost as fast.
Urbanisation is what helped ignite the “ Africa rising” narrative
promoted by the likes of McKinsey, a consultancy, whose 2016 Lions on
the Move II report highlighted cities as an engine of productivity.
From 2015 to 2045, McKinsey found, 24m more Africans would be living
in cities each year, compared to 11m in India and 9m in China.
“Urbanisation has a strong correlation with the rate of real GDP
growth,” it said, adding that “productivity in cities is more than
double that in the countryside”.
The World Bank estimates Bamako’s population today at 3.5m, more than
10 times its size at independence in 1960.
But managing urban growth, with its associated problems of service
provision, housing, crime and congestion, has become one of biggest
policy challenges on the continent.
“For me this is a catastrophe foretold,” says Issa N’Diaye, a
professor of philosophy at the University of Bamako, of his city’s
untrammelled growth. “Bamako is a time-bomb.”
Bamako, he says, and by implication many other cities in Africa, lacks
the resources and institutional capacity to cope with explosive
growth. There is not even a proper land registry, he says, meaning
multiple claims on the same plot can be tied up in court for years.
Skyrocketing land prices have led to rampant corruption, Mr N’Diaye
says, alleging that land allocated for schools in his own
neighbourhood has been sold off by unscrupulous officials.
Rapid urban expansion has also left people bereft of services, he
says. “There’s been no planning whatsoever of the road system, water
drainage, electricity or urban transport. The city is becoming more
and more unlivable.”
Since 2005, Yirimadio’s population alone has risen from about 20,000
to 190,000, according to officials from Muso, a health organisation
that serves the area. In parts of the neighbourhood Yirimadio, locals
have campaigned for a standing water pipe; in others they have dug
their own wells.
Yuba Diakite left what he says was the tedium of farming to try his
luck at accounting in Bamako. The women in his rented quarters, where
whole families are squashed into a single room, get up before dawn as
they would in the village, he says. “Our women exhaust themselves over
this question of water.”
Somik Lall, the World Bank’s lead economist for urban development in
Africa, says the continent’s urbanisation is running ahead of its
income. Africa, he says, is 40 per cent urban with a per capita gross
domestic product of roughly $1,100. By the time Asia reached 40 per
cent urbanisation, its GDP per capita was $3,500, he says.
Bamako’s expansion has been especially rapid because of people fleeing
north and central Mali, unstable since an al-Qaeda-linked group took
control in 2012, before being expelled by a French-led military
invasion.
In the Ministry of Housing and Town Planning, Abdramane Diawara, the
director, is well aware of the challenges.
“It is difficult to implement the plans we have, let alone a plan for
the future,” he says, brandishing a document entitled Bamako Horizon
2030. “Bamako should be an asset to the country,” he adds, before
slumping back in his chair. “Instead, it’s a problem.”

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Djibouti nationalises @DPWorldwide shares in Red Sea port @fastFT
Africa


The African state of Djibouti took full control of its Red Sea
container port from DP World, the latest twist in a long-running
dispute between the partners.
Djibouti nationalised DP World’s shares in the Doraleh Container
Terminal, ending a concession agreement that it claimed was “severely
prejudicial to the fundamental interests of the Republic of Djibouti.”
The Dubai-based logistics company had a 33.33% stake in the DCT
company that has operated Doraleh since 2006, but had taken de facto
control of the terminal, the government said. Djibouti originally
seized Doraleh in February after accusing DP World of deliberately
under-using the port in favour of other regional terminals, including
Berbera in Somaliland, which DP World also runs.
“In practice, DCT has been operated, through the shareholders
agreement, for the sole purpose of serving DP World’s interest,” the
government said.
The dispute is part of a wider strategic manoeuvring in which several
countries and companies are jostling for control of ports and shipping
routes. Positioned on the Red Sea, a narrow waterway separating the
east coast of Africa from the Gulf and a thoroughfare for 30 per cent
of world shipping cargo, Doraleh is one of east Africa’s busiest ports
and the key transit point for imports to Ethiopia, Africa’s second
most populous country.

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06-AUG-2018 :: The Indian Ocean Economy and a Port Race. @TheStarKenya
Africa


Today from Massawa, Eritrea [admittedly on the Red Sea] to Djibouti,
from Berbera to Mogadishu, from Lamu to Mombasa to Tanga to Bagamoyo
to Dar Es Salaam, through Beira and Maputo all the way to Durban and
all points in between we are witnessing a Port race of sorts as
everyone seeks to get a piece of the Indian Ocean Port action.

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The Big Risk is that some these Port investments will be "Hambanota"-ed
Africa


Investments in Ports have a long lead time and I am not certain that
those same investments are able to re-calibrate at the speed with
which the Geopolitics is moving.  The Big Risk is that some these Port
investments will be ‘’Hambanota’’-ed.

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Zimbabwe's new finance minister mulls scrapping bond notes -paper @ReutersAfrica
Africa


Zimbabwe’s new Finance Minister Mthuli Ncube may scrap the quasi
currency bond note and liberalise exchange controls as part of reforms
he plans to implement by end of this year, a state-owned weekly
newspaper reported on Sunday.
Officially, they are pegged to the dollar at a rate of 1:1, but on the
street $1 fetches up to 1.50 in bond notes.
“I am very clear that there have to be currency reforms and the
current currency approach is not working,” Ncube told the
government-owned Sunday Mail.
He said he would explore three options: either Zimbabwe joins the
South African rand union; uses only the U.S. dollar while removing
bond notes from circulation, or reintroduces the Zimbabwean dollar.
There are $350 million worth of bond notes in circulation, according
to latest central bank figures.

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VW mulls Ethiopia in Africa foray
Africa


VW spokesperson Andile Dlamini said last week the company was
exploring expansion into Ethiopia "and component assembly is the
initial business we are looking at. Vehicle assembly is also under
consideration in the long term."

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"The wind of change is blowing through this continent. Whether we like it or not, this growth of national consciousness is a political fact."
Africa


I refer you to Uganda. Bobi and Barbi Wine have now arrived in the US.
But what caught my attention was a video of revellers at a Tarrus
Riley concert who while chanting ‘people power’ threw bottles at
@BebeCoolUG while he was on stage performing and later ended his
performance. Inflexion points are difficult to discern but this is one
right here. A debt crisis and a political inflexion point where those
who fought for independence hand over to the ‘’born free’’ generation
is in fact a ‘’double whammy’’.

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South Africa Land Prices Drop 32% on Land-Reform Change, Drought @BBGAfrica's @anamonteiro126
Africa


Farm prices in South Africa have plunged by a third since the ruling
party decided to seek a change to the constitution to make it easier
to expropriate land without compensation, and as commodity prices fell
due to bumper harvests following a drought.

The average price of agricultural land sold in July was 9,318 rand
($614) a hectare compared with 13,700 rand in December, when the
African National Congress adopted the policy, Johann Bornman, an
economist who is the chairman of Agri Development Solutions, said by
phone Monday. He utilizes data from the country’s Deeds Office, which
maintains the property registry. The information was first published
in Afrikaans-language Rapport newspaper Sunday.

Output by the agricultural industry contracted 29 percent in the
second quarter -- a major contributor to the country falling into its
first recession since 2009.

The average price of a hectare of agricultural land is 43 percent
lower than April 2016, when it was at a record, Bornman said. The
total value of transactions has dropped 57 percent since December to
826 million rand, he said.

Farming debt with lenders such as commercial banks and cooperatives
and which is often secured with land is at about 160 billion rand,
according to IHS Markit, which based the figures on central bank data.

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27-AUG-2018 :: Traders might consider buying 1 Year Maturity One Touch ZAR Puts with a 17.00 strike.
Africa


I think the Rand is at risk of a precipitous, asymmetric downside move
as far as 17.00 to the Dollar. Traders might consider buying 1 Year
Maturity One Touch ZAR Puts with a 17.00 strike.

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27-AUG-2018 :: The ZAR gets caught up in the CrossFire. @TheStarKenya
Africa


President Trump the linguistic and financial warfare specialist has
the Machine-Gun and the ZAR is in its line of Fire.

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The Reality is that the Government of Kenya is simply in no position to forgo that VAT.
Africa


If Kenyatta does as lawmakers wish by exempting fuel from tax and
retaining the rate cap, it would be seen as “a complete failure by the
presidency,” according to Jacques Nel, an economist at South
Africa-based NKC African Economics. The potential loss of the IMF
facility has made investors jittery and forswearing the extra revenue
would be a further knock for the nation’s finances, he said.
[Bloomberg]

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The Bigger challenge is this. Clearly the VAT imposition is going to ripple through the economy, dial up inflation and dial down consumer spending power.
Africa


GDP growth is surely going to lose momentum and given the reaction we
have witnessed, its becoming increasingly clear we are testing the
limits of the ''Laffer Curve''

We need to starting ''Think[ing] different'' to borrow the iconic
Apple Advert from 1997 and fast but make no mistake a reversal of the
VAT on Petroleum is simply not possible.

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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September 2018
 
 
 
 
 
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