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Satchu's Rich Wrap-Up
 
 
Wednesday 07th of November 2018
 
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M.G. Vassanji travels back to Tanzania
Africa


When the acclaimed novelist answered in Swahili, the official asked
why a Canadian passport holder spoke the dominant language of East
Africa. “Uhuru Street,” Vassanji replied, naming the street in the
neighbourhood of Dar, where he spent much of his childhood. He
pronounced the word in proper Swahili, which had come to him “as
readily as the taste of a much loved fruit: a mango, say, or a
jackfruit.

And Home Was Kariakoo offers an insider’s experience of East Africa,
empathetic and informed. Vassanji is dismayed by how often the
continent is portrayed as a basket case of “war, disease and hunger.”
He is no less agitated by the glibness of influential literary
travellers through the region, such as V.S. Naipaul and Paul Theroux,
who critique and dismiss without, in a sense, being qualified. “They
don’t know the language,” he says, “and so cannot get the nuance. They
just start judging.” His own impulse is the opposite. “I want to write
as someone who’s from there, who knows and loves the place, and show
it to be alive, teeming with life.”

Vassanji’s East Africa is indeed bursting, and he delights in moving
from town to town in Tanzania and Kenya, recording that teeming life.
He is equally attentive to the histories—of the slave trade and
colonialism, the post-independence politics that drove so many Indians
into exile—that lie beneath, as neglected as the ruins on Kilwa
Island, a legendary city in its glory six centuries ago.

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LAST WEEK, AS thousands of Central American migrants made their way northward through Mexico, walking a treacherous route toward the US border, talk of "the caravan," as it's become known, took over Twitter. @WIRED
Law & Politics


Late last week, about 60 percent of the conversation was driven by
likely bots. Over the weekend, even as the conversation about the
caravan was overshadowed by more recent tragedies, bots were still
driving nearly 40 percent of the caravan conversation on Twitter.
That's according to an assessment by Robhat Labs, a startup founded by
two UC Berkeley students that builds tools to detect bots online. The
team's first product, a Chrome extension called BotCheck.me, allows
users to see which accounts in their Twitter timelines are most likely
bots. Now it's launching a new tool aimed at news organizations called
FactCheck.me, which allows journalists to see how much bot activity
there is across an entire topic or hashtag.

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Law & Politics


French President Emmanuel Macron called on Tuesday for a “real
European army” as the continent marks a century since the divisions of
WWI. “We have to protect ourselves with respect to China, Russia and
even the United States of America,” Macron told Europe 1 radio. The
French president has pushed for a joint EU military force since his
arrival in power last year. He said Tuesday that Europe needed to
reduce its dependence on US might, AFP reports. “When I see [US
President Donald Trump] announcing that he’s quitting a major
disarmament treaty which was formed after the 1980s euro-missile
crisis that hit Europe, who is the main victim? Europe and its
security,” he said. Faced with “a Russia which is at our borders and
has shown that it can be a threat,” Macron added: “We need a Europe
which defends itself better alone, without just depending on the US,
in a more sovereign manner.”

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Currency Markets at a Glance WSJ
International Trade


Euro 1.1463
Dollar Index 95.95
Japan Yen 113.24
Swiss Franc 0.9993
Pound 1.3133
Aussie 0.7270
India Rupee 72.955
South Korea Won 1118.70
Brazil Real 3.7619
Egypt Pound 17.9290
South Africa Rand 14.0498

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.@UN Security Council considers lifting Eritrea sanctions next week @Reuters
Africa


The U.N. Security Council is considering lifting sanctions on Eritrea
next week after a rapprochement with Ethiopia, although some members
want to maintain some diplomatic pressure to ensure a dispute with
Djibouti is resolved, diplomats said on Monday.
A British-drafted resolution, seen by Reuters, proposes the immediate
removal of an arms embargo and targeted sanctions - a travel ban and
asset freeze - imposed on Eritrea. It also strongly encourages Eritrea
and Djibouti to work towards normalizing ties and settling a
decade-old border dispute.
However, diplomats, speaking on condition of anonymity, said France
and some other council members were keen to maintain some sort of
diplomatic pressure on Eritrea. Council members can propose changes to
the text during negotiations on the draft resolution this week.

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Rwanda: A Poster Child for Development With a Dark Side @WSJAfrica
Africa


KIGALI, Rwanda—Seen from the concrete blocks marking the graves of
some 250,000 victims of the 1994 genocide, the glistening skyline in
the capital of this East African nation is the most obvious sign of
the grand experiment taking place here.
A quarter century after the mass slaughter of as much as 15% of its
population, Rwanda has been hailed as a homegrown model of African
development and its iron-fisted president, Paul Kagame, is a favorite
at international business conferences such as the World Economic
Forum.
Rwanda’s economy has grown an average of 7.3% a year since 2000,
outpacing its bigger, mineral-rich neighbors. Leaders of other African
nations send officials to study the Rwandan Development Board, where
local and foreign investors can set up a company within six hours,
online if desired.
But rights groups and a growing number of academics point to a darker
side of Rwanda’s economic miracle. They say severe political
repression, including the detention of hundreds of homeless and other
poor Rwandans in “rehabilitation centers,” have diminished the
country’s advances. Researchers have questioned whether the economy is
actually performing as well as the data says, accusing the government
of manipulating poverty and growth statistics—a claim the government
denies.
At the heart of this debate is what has become known as the Rwanda
model: free-market overhauls prescribed by the International Monetary
Fund and the World Bank, paired with the unforgiving leadership of Mr.
Kagame. Now 61 years old, Mr. Kagame has ruled the country since his
Rwandan Patriotic Front ended the genocide that followed the
assassination of then-President Juvenal Habyarimana.
“The main driver of all the transformation process in Rwanda is the
leadership,” Finance Minister Uzziel Ndagijimana said. “Rwanda was
blessed to have a leader, President Kagame, right from the beginning,
from the hardest time, 1994, to today.”
Mr. Ndagijimana and other backers of the Rwanda model say the
president’s authority and attention to detail have allowed the country
to make grand leaps. Since 1994, the percentage of Rwandans living in
poverty has fallen to 39% from 77%, while average life expectancy has
surged to 67 years from 29, according to government statistics, which
the IMF and other international institutions also use.
The country now has more women in parliament than any nation (they
hold 61% of the seats); plastic bags are banned; schools are free and
obligatory until the age of 15 and every citizen has basic health
insurance. On the last Saturday of each month, all working-age
Rwandans are required to do at least three hours of community work.
The government says it wants to turn Rwanda into East Africa’s
financial and information-technology hub and achieve
upper-middle-income status by 2035. In today’s dollars, that would
mean raising per capita gross national income to at least $4,000 a
year from the current $800. The IMF calls the plan ambitious, but says
the required growth rates “might be possible.”
Big construction projects, including luxury hotels and a $300 million
convention center, have led to a spike in government debt, forcing the
country to request a $200 million IMF bailout in 2016. Public tenders
are often won by companies owned by the ruling RPF and the military,
further tightening Mr. Kagame’s hold.
Over the past five years, 69% of investments went to Kigali, home to
just 10% of the population.
But even in official statistics, Rwanda doesn’t always perform well.
Its score in the World Bank’s Human Capital Index was the same as the
Democratic Republic of Congo. Some 37% of children under 5 are stunted
because of malnutrition.
For Ms. Duhizimana, the ultimate test of the Rwanda model will be her
children’s quality of life. “I hope [their life will be better], since
I didn’t get to go to school,” she says. “If they finish school, maybe
they will find jobs.”

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Economic turmoil is unavoidable in Mnangagwa's Zimbabwe
Africa


October’s economic turmoil in Zimbabwe has again highlighted the
precarious state of the country’s economy. A casual social media post
or imprudent policy statement by a government official is enough to
cause panic among Zimbabwean consumers who know from bitter experience
that if others are panic-buying, they should do the same. The result
is shortages of basic commodities like sugar, cooking oil and bread
and, of course, fuel and medication.
At the heart of the problem is government overspending. The profligacy
of the Mugabe administration has not changed under President Emmerson
Mnangagwa’s government. The total budget deficit for the year is
expected to surpass $2.3-billion – quite impressive for a country with
a tiny national budget of $3.8-billion.
The deficit is funded by the issuance of government bonds – primarily
treasury bills. The problem with these “IOUs” from government to the
banks comes when the bills mature, ie become payable, after one or two
years.
The government simply doesn’t have the money to pay the debts. But a
default would render the $8.3-billion worth of treasury bills out
there almost valueless, destabilise the entire financial system and
foreclose the bills as a way of raising money by government.
Previously, government dealt with the problem by printing money – a
temporary escape route that closed when the currency became worthless
as a result and the country was forced to dollarise.
The “solution” now is through the simple expedient of directing the
Reserve Bank to make book entries into the credit columns of banks
holding maturing treasury bills. The credit is not backed by anything
other than a second IOU from government to the Reserve Bank.
In this way “money” is created from thin air. But it never loses its
ethereal form. When depositors go to banks and put their cards into
ATMs, nothing comes out. The banks advise that the depositors must
make do with electronic transfers for all transactions. The transfers
are done through the Real Time Gross Settlement (RTGS) clearance
process.
Officially the “RTGS money” is US dollars, on a par at 1:1 with hard
cash. The laws of economics say otherwise. With government creating
billions of dollars of RTGS money unsupported by anything, its value
has declined. Before the October crash, it was trading at 2:1 for hard
cash.
So the logjam continues. The currency problem cannot be solved without
investment, and investment won’t come until the currency problem is
solved and certainly not while Zimbabwe has shown itself prone to
bouts of extreme economic chaos and potential social unrest. And while
government scratches its collective head, Zimbabwe’s economy inches
ever closer to the brink.

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Mozambique to share gas revenue in 'tuna bond' restructuring @ReutersAfrica
Africa


Mozambique has reached an agreement with creditors to restructure a
$726.5 million Eurobond, including extending maturities and sharing
future revenues from huge offshore gas projects, the finance ministry
said on Tuesday.
Mozambique has been battling to recover from a debt crisis after
admitting in 2016 to $1.4 billion of previously undisclosed lending,
much of which was supposed to be spent on a tuna fishing fleet.
The disclosure prompted the International Monetary Fund and foreign
donors to cut off support, triggering a currency collapse and leading
to a debt default.
Mozambique has since missed bond repayments.
The finance ministry said the proposed restructuring would see
bondholders receive new paper maturing in 2033, with principal
repayments beginning in 2029.
The new bonds will have a face value of $900 million with a coupon of
5.875 percent, the finance ministry said.
Creditors would also receive 5 percent of future fiscal revenues from
the Area 1 and Area 4 natural gas projects.
The payments from gas revenues would be capped at $500 million a year
but could still be a boon for bondholders.
Mozambique’s Rovuma Basin boasts gas resources of around 180 trillion
cubic feet, enough to underpin massive liquefied natural gas export
plants under development by global energy firms including Exxon Mobil,
Anadarko and Eni.
Mozambique said the four creditors who had agreed to the restructuring
control around 60 percent of the 2023 bond.
Bondholders made a restructuring proposal to Mozambique in August
after rejecting an earlier offer from the government.
Credit Suisse and Russian lender VTB were key organisers of lending to
Mozambique, receiving almost $200 million in fees, according to an
independent audit.

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Mozambique Proposes New Eurobond in Debt-Restructuring Offer
Africa


Mozambique has finally struck a restructuring deal with Eurobond
holders, almost two years after defaulting.
The southern African nation has agreed in principle with holders of 60
percent of its bonds, including New York-based hedge fund Greylock
Capital Management LLC, a deal that will see them swap into a new $900
million Eurobond maturing in 2033 and another instrument linked to
future gas revenues, the Ministry of Finance said in a statement
Tuesday.
This “looks like an important first step out of its long-running debt
saga,” said William Jackson, chief emerging-market economist at
Capital Economics Ltd. in London. “Markets have welcomed the
development.”
The government’s sole Eurobond, a $727 million security maturing in
2023, rose around 3 cents to 88.9 cents on the dollar by 12:00 p.m. in
London, the highest level in more than two years, which equates to a
yield of around 15.2 percent.
The ministry reached an agreement with four members of the so-called
Global Group of Mozambique Bondholders: Greylock, Farallon Capital
Europe, Mangart Capital Advisors, Pharo Management
The deal is conditional on parliamentary approval and the parties
finalizing the “detailed terms”
The Finance Ministry expects to start an exchange offer early next year
Both new instruments will be senior unsecured obligations of the government
The Eurobond will have a 5.875 percent coupon; through 2023, 4 percent
will be paid in cash and the rest will be “payable via capitalization”
The notes will amortize from September 2029 via five equal payments
The $900 million includes the outstanding principal and unpaid
interest as of September this year
The government will pay 5 percent of its revenue from two offshore gas
natural projects -- Area 1, being developed by Anadarko Petroleum
Corp., and Eni SpA’s Area 4 -- into a so-called “value recovery
instrument” until 2033
There will be a payment cap of $500 million
The “precise payment dates and mechanism for calculating and verifying
payment amounts to be determined in definitive documentation”
The ministry made no mention of the more than $1 billion of loans for
state companies Mozambique Asset Management and ProIndicus that the
government also wants to restructure. Both companies’ loans have state
guarantees. The government wanted to deal with all debt holders
together, but the Eurobond holders argued they should get preferential
treatment because the legality of the guarantees was questionable.
One of the world’s poorest nations, Mozambique came unstuck in 2016
when the International Monetary Fund and other donors suspended
financing programs after they found out about the state-guaranteed
loans, which the government had kept secret. It was also hit by lower
revenue from coal and aluminum exports.
Mozambique still faces several obstacles to getting out of its
financial crisis, according to Jackson of Capital Economics. Holders
of three-quarters of the Eurobonds by value will probably need to
agree to the restructuring proposal for it to go ahead and even if it
does, the government will need to tighten spending further, he said.
“The deal would only make a relatively small dent in Mozambique’s
overall fiscal problem,” he said. “The debt burden is only likely to
improve significantly with either significant fiscal tightening or a
re-profiling of multilateral and bilateral lending.”

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Ghana opens commodities bourse in push to lift farmer income
Africa


Ghana is opening its first commodities exchange as the West African
nation seeks to raise the income of farmers by connecting them with
buyers for their produce, eliminating crop wastage.
The Ghana Commodities Exchange will Tuesday begin facilitating trade
in yellow and white corn, soybeans and sorghum, Chief Executive
Officer Kadri Alfah said in a phone interview Monday from the capital,
Accra. The state-owned bourse will allow mostly small-scale farmers to
deliver as little as one metric ton of produce to warehouses and be
paid within a day after a transaction, he said.
Until now, producers have often lost more than two-thirds of their
harvests due to a failure to find buyers in time, Victoria Adongo, an
official of the Peasant Farmers Association of Ghana, said by phone.
The government of President Nana Akufo-Addo has earmarked agriculture
for the creation of jobs and economic growth. The sector expanded by
6.1 percent in 2017, from 2.9 percent the year before, accounting for
more than a fifth of gross domestic product.
The exchange is forecasting to trade 30,000 tons to 50,000 tons of
produce within the first year, said Alfah. While Ghana is the world’s
second-biggest cocoa producer, the chocolate ingredient will at first
be excluded from the exchange as farmers’ access to markets are
already well developed, requiring more studies on how to offer a
beneficial service to growers and buyers, he said.

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'EU regrets deterioration of human rights situation in the country and will be conducting a broader review of its relations with Tanzania' @samirasawlani
Africa


European Union say Head of Delegation in Tanzania, Ambassador Roeland
Van de Geer has been recalled to Brussels for consultations: 'EU
regrets deterioration of human rights situation in the country and
will be conducting a broader review of its relations with Tanzania'

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The Kenya Shilling is uppermost in most Folks minds
Kenyan Economy


The Kenya Shilling is uppermost in most Folks minds.
The Key levels are from 2011 and are 105.00-107.00.
In the matter of the shilling I would prefer to be long than short and
I beg to differ with the august and venerable IMF in this matter.

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05-NOV-2018 :: Safaricom H1 2019 Earnings #SafaricomHYResults
Kenyan Economy


Make no mistake that the ''mission console'' [''The specialist is
monitoring data on his mission console'' Don Delillo's The Angel
Esmeralda] is in the hands of the CEO, wherever he might be
physically. I gently ribbed Bob about how Michael Joseph had been
kicking back [in his absence], cracking jokes and informing us about
when Bob finally started listening to him was when Safaricom finally
got its skates on. Bob, who had obviously watched everything via a
Live Feed, spoke of ''Little'' Michael and his team, finessing the
story of how Michael and a little team first started out in the
Norfolk Towers. They are clearly very close.

Safaricom is a conviction Buy at Fridays closing Price of 24.50.

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