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Satchu's Rich Wrap-Up
Friday 23rd of November 2018

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The Latest Daily PodCast can be found here on the Front Page of the site

Macro Thoughts

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This incredible photo marks the end of Matador Torero Alvaro Munera's career. He collapsed in remorse mid-fight when he realized he was having to prompt this otherwise gentle beast to fight @welcomet0nature

This incredible photo marks the end of Matador Torero Álvaro Múnera’s
career. He collapsed in remorse mid-fight when he realized he was
having to prompt this otherwise gentle beast to fight. He went on to
become an avid opponent of bullfights. Even grievously wounded by

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An aerial photo of the Andaman Island chain, a remote Indian archipelago in the Bay of Bengal, where American John Chau was killed last week. Photo: Hari Kumar / AFP

Chau, 27, was shot with arrows after setting foot on North Sentinel
Island, which is home to about 150 people, believed to be the last
pre-Neolithic tribe in the world.
Chau allegedly hired a fishing boat then paddled a kayak to the shore
carrying fish and a football as gifts, according to a journal quoted
by different media, AFP reported.
Tribespeople fired arrows at him, one of them reportedly piercing his
Bible. He returned to a fishermen’s boat and spent the night writing
about his experiences before going back to the island the next day –
and getting killed.
Indian police are said to have charged the seven fishermen who took
Chau to the island, but are allegedly not able to charge any of the
tribespeople given the island’s sovereignty.
Indian journalist Subir Bhaumik told the BBC the special status of
Sentinel Island has complicated matters for legal authorities.
“It’s a difficult case for the police,” he said. “You can’t even
arrest the Sentinelese.”

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Inside the British Army's secret information warfare machine @WIRED
Law & Politics

A barbed-wire fence stretched off far to either side. A Union flag
twisted in a gust of wind, and soldiers strode in and out of a squat
guard’s hut in the middle of the road. Through the hut, and under a
row of floodlights, I walked towards a long line of drab, low-rise
brick buildings. It was the summer of 2017, and on this military base
nestled among the hills of Berkshire, I was visiting a part of the
British Army unlike any other. They call it the 77th Brigade. They are
the troops fighting Britain’s information wars.

“If everybody is thinking alike then somebody isn’t thinking,” was
written in foot-high letters across a whiteboard in one of the main
atriums of the base. Over to one side, there was a suite full of
large, electronic sketch pads and multi-screened desktops loaded with
digital editing software. The men and women of the 77th knew how to
set up cameras, record sound, edit videos. Plucked from across the
military, they were proficient in graphic design, social media
advertising, and data analytics. Some may have taken the army’s course
in Defence Media Operations, and almost half were reservists from
civvy street, with full time jobs in marketing or consumer research.

From office to office, I found a different part of the Brigade busy at
work. One room was focussed on understanding audiences: the makeup,
demographics and habits of the people they wanted to reach. Another
was more analytical, focussing on creating “attitude and sentiment
awareness” from large sets of social media data. Another was full of
officers producing video and audio content. Elsewhere, teams of
intelligence specialists were closely analysing how messages were
being received and discussing how to make them more resonant.

Explaining their work, the soldiers used phrases I had heard countless
times from digital marketers: “key influencers", “reach", “traction".
You normally hear such words at viral advertising studios and digital
research labs. But the skinny jeans and wax moustaches were here
replaced by the crisply ironed shirts and light patterned camouflage
of the British Army. Their surroundings were equally incongruous – the
77th’s headquarters were a mix of linoleum flooring, long corridors
and swinging fire doors. More Grange Hill than Menlo Park. Next to a
digital design studio, soldiers were having a tea break, a packet of
digestives lying open on top of a green metallic ammo box. Another
sign on the wall declared, “Behavioural change is our USP [unique
selling point]”. What on Earth was happening?

“If you track where UK manpower is deployed, you can take a good guess
at where this kind of ‘influence’ activity happens,” an information
warfare officer (not affiliated with the 77th) told me later, under
condition of anonymity. “A document will come from the Ministry of
Defence that will have broad guidance and themes to follow.” He
explains that each military campaign now also has – or rather is – a
marketing campaign too.

Ever since Nato troops were deployed to the Baltics in 2017, Russian
propaganda has been deployed too, alleging that Nato soldiers there
are rapists, looters, little different from a hostile occupation. One
of the goals of Nato information warfare was to counter this kind of
threat: sharply rebutting damaging rumours, and producing videos of
Nato troops happily working with Baltic hosts.

Information campaigns such as these are “white”: openly, avowedly the
voice of the British military. But to narrower audiences, in conflict
situations, and when it was understood to be proportionate and
necessary to do so, messaging campaigns could become, the officer
said, “grey” and “black” too. “Counter-piracy, counter-insurgencies
and counter-terrorism,” he explained. There, the messaging doesn't
have to look like it came from the military and doesn't have to
necessarily tell the truth.

I saw no evidence that the 77th do these kinds of operations
themselves, but this more aggressive use of information is nothing
new. GCHQ, for instance, also has a unit dedicated to fighting wars
with information. It is called the “Joint Threat Research Intelligence
Group” – or JTRIG – an utterly unrevealing name, as it is common in
the world of intelligence. Almost all we know about it comes from a
series of slides leaked by NSA whistleblower Edward Snowden in 2013.
Those documents give us a glimpse of what these kinds of covert
information campaigns could look like.

According to the slides, JTRIG was in the business of discrediting
companies, by passing “confidential information to the press through
blogs etc.”, and by posting negative information on internet forums.
They could change someone’s social media photos (“can take ‘paranoia’
to a whole new level”, a slide read.) They could use masquerade-type
techniques – that is: placing “secret” information on a compromised
computer. They could bombard someone’s phone with text messages or

JTRIG also boasted an arsenal of 200 info-weapons, ranging from
in-development to fully operational. A tool dubbed “Badger” allowed
the mass delivery of email. Another, called “Burlesque”, spoofed SMS
messages. “Clean Sweep” would impersonate Facebook wall posts for
individuals or entire countries. “Gateway” gave the ability to
“artificially increase traffic to a website”. “Underpass” was a way to
change the outcome of online polls.

They had operational targets across the globe: Iran, Africa, North
Korea, Russia and the UK. Sometimes the operations focused on specific
individuals and groups, sometimes the wider regimes or even general
populations. Operation Quito was a campaign, running some time after
2009, to prevent Argentina from taking over the Falkland Islands. A
slide explained “this will hopefully lead to a long-running,
large-scale, pioneering effects operation”. Running from March 2011,
another operation aimed for regime change in Zimbabwe by discrediting
the Zanu PF party.

Walking through the headquarters of the 77th, the strange new reality
of warfare was on display. We’ve all heard a lot about “cyberwarfare”
– about how states could attack their enemies through computer
networks, damaging their infrastructure or stealing their secrets. But
that wasn’t what was going on here. Emerging here in the 77th Brigade
was a warfare of storyboards and narratives, videos and social media.
An engagement now doesn’t just happen on the battlefield, but also in
the media and online. A victory is won as much in the eyes of the
watching public as between opposing armies on the battlefield. Warfare
in the information age is a warfare over information itself.

Propaganda published on Facebook by Russian PR firms in an attempt to
affect the 2016 US presidential election

Over a decade ago, and a world away from the 77th Brigade, there were
people who already knew that the internet was a potent new tool of
influence. They didn’t call what they did “information warfare”, media
operations, influence activities, online action, or any of the
military vernacular that it would become. Members of the simmering
online subcultures that clustered around hacker forums, in IRCs, and
on imageboards like 4chan, they might have called it “attention
hacking”. Or simply lulz.

In 2008, Oprah Winfrey warned her millions of viewers that a known
paedophile network “has over 9,000 penises and they’re all raping
children.” That was a 4chan Dragon Ball-themed in-joke someone had
posted on the show’s messageboard. One year later, Time magazine ran
an online poll for its readers to vote on the world’s 100 most
influential people, and 4chan used scripts to rig the vote so that its
founder – then-21-year-old Christopher Poole, commonly known as “moot”
– came first. They built bots and “sockpuppets” – fake social media
accounts to make topics trend and appear more popular than they were –
and swarmed together to overwhelm their targets. They started to reach
through computers to change what people saw, and perhaps even what
people thought. They celebrated each of their victories with a deluge
of memes.

The lulz were quickly seized upon by others for the money. Throughout
the 2000s, small PR firms, political communications consultancies, and
darknet markets all began to peddle the tactics and techniques
pioneered on 4chan. “Digital media-savvy merchants are weaponising
their knowledge of commercial social media manipulation services,” a
cybersecurity researcher who tracks this kind of illicit commercial
activity tells me on condition of anonymity.

“It’s like an assembly line,” he continues. “They prepare the
campaign, penetrate the target audience, maintain the operation, and
then they strategically disengage. It is only going to get bigger.”

A range of websites started selling fake accounts, described,
categorised and priced almost like wine: from cheap plonk all the way
to seasoned vintages. The “HUGE MEGA BOT PACK”, available for just $3
on the darknet, allowed you to build your own bot army across hundreds
of social media platforms. There were services for manipulating search
engine results. You could buy Wikipedia edits. You could rent fake IP
addresses to make it look like your accounts came from all over the
world. And at the top of the market were “legend farms”, firms running
tens of thousands of unique identities, each one with multiple
accounts on social media, a unique IP address, its own internet
address, even its own personality, interests and writing style. The
lulz had transmogrified into a business model.

Inside the base of the 77th, everything was in motion. Flooring was
being laid, work units installed; desks – empty of possessions –
formed neat lines in offices still covered in plastic, tape and
sawdust. The unit was formed in a hurry in 2015 from various older
parts of the British Army – a Media Operations Group, a Military
Stabilisation Support Group, a Psychological Operations Group. It has
been rapidly expanding ever since.

In 2014, a year before the 77th was established, a memo entitled
“Warfare in the Information Age” flashed across the British military.
“We are now in the foothills of the Information Age” the memo
announced. It argued that the British Army needed to fight a new kind
of war, one that “will have information at its core”. The Army needed
to be out on social media, on the internet, and in the press, engaged,
as the memo put it, “in the reciprocal, real-time business of being
first with the truth, countering the narratives of others, and if
necessary manipulating the opinion of thousands concurrently in
support of combat operations.”

Then the business of lulz turned into geopolitics. Around the world,
militaries had come to exactly the same realisation as the British,
and often more quickly. “There is an increased reliance on, and desire
for, information,” Nato’s Allied Joint Doctrine for Information
Operations, published in 2009, began. And it reached the same
conclusion as the British military memo: wars needed to have an
“increased attention on Info Ops”. Simply put, information operations
should be used to target an enemy’s will. “For example, by questioning
the legitimacy of leadership and cause, information activities may
undermine their moral power base, separating leadership from
supporters, political, military and public, thus weakening their
desire to continue and affecting their actions,” the document

Russia, too, was in on the act. The Arab Spring, the revolutions in
several post-Soviet states, Nato’s enlargement – each of those had
chipped away at the crumbling edifice of Russian power. Russia had a
large conventional army but that seemed to matter less than in the
past. The Chief of the Russian General Staff, Valery Gerasimov, began
to rethink what a military needed to do. Warfare, he argued in an
article for Voyenno-Promyshlennyy Kurier (The Military Industry
Journal), was now “hybrid” – blurring the lines between war and peace,
civilian and military, state and non-state. And there was another
blurring too: between force and ideas.
“Moral-psychological-cognitive-informational struggle”, as Gerasimov
put it, was now central to how conflicts should be fought.

We now know what Russian information warfare looks like. Moscow has
built an apparatus that stretches from mainstream media to the
backwaters of the blogosphere, from the President of the Russian
Federation to the humble bot. Just like the early attention hackers,
their techniques are a mixture of the very visible and very secret –
but at a vastly greater scale.

Far less visible to Western eyes, however, were the outbreak of other
theatres of information warfare outside of the English language.
Gerasimov was right: each was a case of blurred boundaries. It was
information warfare, but not always just carried out by militaries. It
came from the state, but sometimes included plenty of non-state actors
too. Primarily, it was done by autocracies, and was often directed
internally, at the country’s own inhabitants.

A Harvard paper published in 2017 estimated that the Chinese
government employs two million people to write 448 million social
media posts a year. Their primary purpose is to keep online discussion
away from sensitive political topics. Marc Owen Jones, a researcher at
Exeter University’s Institute of Arab and Islamic Studies, exposed
thousands of fake Twitter accounts in Saudi Arabia, “lionising the
Saudi government or Saudi foreign policy”. In Bahrain, evidence
emerged of spam-like operations, aiming to stop dissidents finding
each other or debating politically dangerous topics online. In Mexico,
an estimated 75,000 automated accounts are known locally as Peñabots,
after President Enrique Peña Nieto, flooding protest hashtags with
irrelevant, annoying noise burying any useful information.

Disinformation and deception have been a part of warfare for thousands
of years, but across the world, something new was starting to happen.
Information has long been used to support combat operations, but now
combat was seen to taking place primarily, sometimes exclusively,
through it. From being a tool of warfare, each military began to
realise that the struggle with, over and through information was what
war itself actually was about. And it wasn’t confined to Russia, China
or anyone else. A global informational struggle has broken out. Dozens
of countries are already doing it. And these are just the campaigns
that we know about.

On their shoulders, the soldiers of the 77th Brigade wear a small,
round patch of blue encircling a snarling golden creature that looks
like a lion. Called an A Chinthe, it’s a mythical Burmese beast first
worn by the the Chindits, a British and Indian guerrilla force created
during the Second World War to protect Burma against the advancing
Japanese Army. An army of irregulars, the Chindits infiltrated deep
behind enemy lines in unpredictable sorties, destroying supply depots
and severing transport links, aiming to spread confusion as much as

It’s no accident that the 77th wear the Chinthe on their shoulder.
Like the Chindits, they are a new kind of force. An unorthodox one,
but in the eyes of the British Army also a necessary innovation;
simply reflecting the world in which we all now live and the new kind
of warfare that happens within it.

This new warfare poses a problem that neither the 77th Brigade, the
military, or any democratic state has come close to answering yet. It
is easy to work out how to deceive foreign publics, but far, far
harder to know how to protect our own. Whether it is Russia’s
involvement in the US elections, over Brexit, during the novichok
poisoning or the dozens of other instances that we already know about,
the cases are piling up. In information warfare, offence beats defence
almost by design. It’s far easier to put out lies than convince
everyone that they’re lies. Disinformation is cheap; debunking it is
expensive and difficult.

Even worse, this kind of warfare benefits authoritarian states more
than liberal democratic ones. For states and militaries, manipulating
the internet is trivially cheap and easy to do. The limiting factor
isn’t technical, it’s legal. And whatever the overreaches of Western
intelligence, they still do operate in legal environments that tend to
more greatly constrain where, and how widely, information warfare can
be deployed. China and Russia have no such legal hindrances.

Equipping us all with the skills to protect ourselves from information
warfare is, perhaps, the only true solution to the problem. But it
takes time. And what could be taught would never keep up with what can
be done. Technological possibility, as things stand, easily outpaces
public understanding.

The Chinthe was often built at the entrances of pagodas, temples and
other sacred sites to guard them from the menaces and dangers lurking
outside. Today, that sacred site is the internet itself. From the
lulz, to spam, to information warfare, the threats against it have
become far better funded and more potent. The age of information war
is just getting started.

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"One of the defining bifurcations of the future will be the conflict between information masters and information victims."
Law & Politics

Now set these events alongside these comments from the US army war
college quarterly 1997. The US officer assigned to the deputy chief of
staff (Intel- ligence), charged with defining the future of warfare,
wrote “One of the defining bifurcations of the future will be the
conflict between information masters and information victims.”

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This information warfare will not be couched in the rationale of geopolitics, the author suggests, but will be "spawned" - like any Hollywood drama - out of raw emotions
Law & Politics

This information warfare will not be couched in the rationale of
geopolitics, the author suggests, but will be “spawned” - like any
Hollywood drama - out of raw emotions. “Hatred, jealousy, and greed -
emotions, rather than strategy - will set the terms of [information
warfare] struggles”.

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The specialist is monitoring data on his mission console when a voice breaks in, "a voice that carried with it a strange and unspecifiable poignancy"
Law & Politics

He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m
not sure it’s helping.”
“We are clearing an outframe to locate source.”
“Thank you, Colorado.”
“It is probably just selective noise. You are negative red on
the step-function quad.”
“It was a voice,” I told them.

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The second thing is non-linearity, you have to learn how to navigate a linear system (the new 21st digital ecosystem) in a non-linear way.
Law & Politics

Traditional media has been disrupted and the insurgents can broadcast
live and over the top. From feeding the hot-house conspiracy frenzy on
line (‘’a constant state of destabilised perception’’), timely and
judicious doses of Wikileaks leaks which drained Hillary’s bona fides
and her turn-out and motivated Trump’s, what we have witnessed is
something remarkable and noteworthy.

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Baloch separatist Baloch Liberation Army claims responsibility for attack in phone call to AJE, spox says three "fidayeen" attackers armed with guns and grenades are fighting police. @AsadHashim
Law & Politics

Firing, explosion at Chinese consulate in Karachi, as armed men
attempt to storm building. Baloch separatist Baloch Liberation Army
claims responsibility for attack in phone call to AJE, spox says three
"fidayeen" attackers armed with guns and grenades are fighting police.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1413
Dollar Index 96.44
Japan Yen 112.88
Swiss Franc 0.9939
Pound 1.2863
Aussie 0.7246
India Rupee 70.675
South Korea Won 1132.13
Brazil Real 3.8046
Egypt Pound 17.8950
South Africa Rand 13.7873

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Oil hits 2018 lows on emerging supply glut Reuters

Brent crude oil futures hit their lowest since December 2017 at $61.52
per barrel, before recovering to $62.10 by 0430 GMT. That was still 50
cents, or 0.8 percent below their last close.
U.S. West Texas Intermediate (WTI) crude futures slumped by more than
2 percent, to $53.35 a barrel, after coming within 5 cents of an
October 2017 low reached earlier in the week.
Amid the plunge, Brent and WTI price volatility has surged in November
to approach levels not seen since the market slump of 2014-2016 and,
before that, the financial crisis of 2008-2009.

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Early Figures Show Venezuela Economy Fell 16.6 Percent in 2017 @economics
Emerging Markets

Preliminary figures compiled by Venezuela’s central bank indicate that
the crisis-wracked nation’s economy contracted 16.6 percent in 2017,
according to two people with direct knowledge of the estimates.
For the first time since 2016, the bank is preparing a raft of
macroeconomic indicators for the International Monetary Fund to avoid
sanctions including a possible expulsion from the lender. Bank
technicians began working extended shifts and weekends earlier this
month to deliver new growth and inflation data and meet a strict Nov.
30 deadline issued by IMF officials.
The preliminary data points to the fourth straight year of contraction
for the oil-rich nation that’s been slammed by gross mismanagement, a
breakdown of public services and wide-scale hunger. Economists have
been left to guess on the exact depth of the crash, as the government
maintains a near blackout on official statistics including homicides,
inflation, and HIV rates.
Indicators such as inflation were being handled directly by the bank’s
directors, the people said. A spokesperson from Venezuela’s central
bank declined to comment on the figures.
According to Bloomberg’s Cafe Con Leche Index, Venezuela’s annual
inflation rate is now at 187,400 percent. Gross domestic product will
shrink 18 percent in 2018, representing a third consecutive year of
double-digit decline, according to estimates from the IMF’s most
recent World Economic Outlook report.
In May, the IMF’s executive board issued a declaration of censure
against Venezuela for its failure to provide information. “Data
provision was an essential first step to understanding Venezuela’s
economic crisis and identifying possible solution,” the board said in
a statement at the time, adding it would reconvene in six months to
review the country’s progress.
Analysts say expulsion from the IMF would cause Venezuela to lose
access to what little remaining funds it has associated with the
lender and could also trigger a cross-default on some sovereign bonds.

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Congo confirms near record number of new Ebola cases on Wednesday

Thirteen new cases of Ebola were confirmed on Wednesday in
northeastern Democratic Republic of Congo - one of the highest daily
counts since the start of the outbreak in July, the health ministry

“It’s pretty exceptional,” health ministry spokeswoman Jessica Ilunga
said, commenting on the data published in its daily bulletin on the

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#Ethiopia: The phrase "no journalists in jail" takes a while to sink in, but it is true. It's an index that brought Ethiopia's name from the second worst journalists jailer in Africa to "no journalists in jail" in just seven months.

#Ethiopia: The phrase "no journalists in jail" takes a while to sink
in, but it is true.  It's an index that brought Ethiopia's name from
the second worst journalists jailer in Africa to "no journalists in
jail" in just seven months. Let's keep it that way.

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The most serious potential offence that critics of the FCA say it ignored is money-laundering. 'The money was paid straight from the banks to Abu Dhabi. It's a clear red flag @Africa_Conf

The disappointment in the FCA decision is based on readings of the
report by risk consultancy Kroll Associates, published last July,
which showed numerous irregularities (AC Vol 58 No 14, Rock and
Kroll). The findings indicated Credit Suisse lacked basic information
on whether the companies they were lending to were viable. The most
serious potential offence that critics of the FCA say it ignored is
money-laundering. 'The money was paid straight from the banks to Abu
Dhabi. It's a clear red flag; that alone should be enough for the FCA
to investigate,' one investigator familiar with the case said. Taking
into account overpricing and money re-allocated to the Ministry of
Defence in an opaque accounting exercise, over $1bn is unaccounted

Bondholders told Africa Confidential that they believed Credit Suisse
was not transparent with them about its other lending commitments to
Mozambique, only revealing its other $622 million loan, to Proindicus,
when forced to do so during the 2016 debt exchange. In that deal, the
original bond issued by state tuna-fishing company Ematum was
restructured into the Mozam sovereign bond (AC Vol 57 no 23, The
burden of war and debt). One bondholder complained that the bank
should have answered questions about the details of the loans. The
investor said they would never have agreed to the Mozam exchange had
they known the details of the Proindicus loan. The source says that
one of the larger bondholders asked Finance Minister Adriano Maleiane
about it directly during exchange discussions in London, and he denied
the loan existed.

Concern has been expressed that the FCA decision sends the wrong
signal about UK regulatory enforcement. The United States Department
of Justice continues its criminal investigation into the loans and
Switzerland is also looking into Credit Suisse's role. There is less
examination of the Russian-owned VTB despite its major role in the
lending, which totalled almost half of the $2bn.

The downgrading of the FCA inquiry comes just after the Mozambican
government agreed in principle a new deal with 60% of the holders of
the Mozam sovereign bonds. This restructures the remaining $727m debt
on terms far more favourable to the bondholders than those presented
by the government in March (AC Vol 59 No 6, Maputo's haircut). Rather
than the 50% 'haircut' proposed by Maleiane earlier this year,
bondholders will accept a trim of only 1.7%, or, as one financial
expert put it, 'basically nothing'. Mozambique's bargaining position
against the bondholders' group is weak.

The new bond is larger, at just over $900m, and will be more
attractive to creditors as interest payments are tied to Mozambique's
expected gas revenues. After repeated delays and uncertainty, the
buy-in of US oil giant ExxonMobil has breathed new life into the gas
sector projects and given reassurance to investors that the money will
eventually start to flow.

As part of the bond restructure, the government has committed to
paying 5% of its revenues from the gas projects into a new Value
Recovery Instrument (VRI) capped at $500m and ending when the bond
matures in 2033. It will pay 4% of the new bond's 5.875% coupon in
cash, and the rest from the VRI. Although the effective interest rate
has almost halved, creditors will still make large profits. Between
$1.7bn and $2.2bn will be paid to creditors on the original loan of
$760m, according to the anti-debt lobbying organisation, the Jubilee
Debt Campaign.

Restoring relations with the IMF is important because the state needs
billions of dollars in loans to fund its own participation in the gas
concessions. In April state petroleum company ENH hired financial
consultancy Lazard Freres, which is already advising the government on
its debt restructuring, to help it raise $2bn to refinance its stake
in the ENI's gas concession in the Rovuma basin. Société Générale has
been helping ENH raise funds for its interests in Anadarko's block for
which it needs another $2.3bn, according to the IMF. These funds will
need sovereign guarantees, which will once again add to Mozambique's
public and publicly guaranteed debt stock.

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Every day in Sudan's dusty capital Khartoum, queues for cash machines fill the shaded sidewalks as anxious customers try to access their savings in banks that have imposed withdrawal limits as low as $11 per day @FT @thomas_m_wilson

After a 20-year US trade embargo was lifted last year, government
officials predicted an economic revival as their country came in from
the cold. Instead, the economy has faltered, the value of the Sudanese
pound is plummeting, and citizens are lining up for cash so they can
convert it into hard goods.
“We have an acute economic crisis because inflation is skyrocketing
and the national currency is declining,” said Hassan Elhag Ali Ahmed,
professor of political science at the University of Khartoum. “People
are facing serious hardship trying to meet their daily needs.”
For Sudan’s strongman president Omar al-Bashir, the economic crunch is
one of the biggest tests he has faced during three decades in power.
It is also a warning to every country under US sanctions that the
process of rehabilitation does not happen quickly. US trade is no
longer prohibited, but Sudan is still unable to access IMF or World
Bank support, remains outside the World Trade Organization and most
western banks refuse to serve it.
Since coming to power in a military coup in 1989, Mr Bashir has
withstood a lot: ruptures in his ruling party; an international arrest
warrant; the secession of half of his of country. But his economic
troubles are eroding public trust in a new way.
This year the value of the Sudanese pound has plummeted by 85 per cent
against the dollar and inflation reached nearly 70 per cent in
September — one of the highest levels in the world.
Braving the government’s intolerance of dissent, thousands of
protesters took to the streets across the country in January after
bread prices soared following a government decision to cease
state-funded imports of grain.
Five years ago, dozens of people died in clashes with security forces
when citizens demonstrated against an end to fuel subsidies. “When
people protested in 2013 the situation was better than now,” said
Mohammed Ameen, 28, a student at the University of Khartoum. “So what
happens next is impossible to predict.”
The economy has been starved of foreign exchange since South Sudan
seceded in 2011, taking with it three-quarters of the country’s oil
production, but economic hardship has accelerated in the past two
Osama Daoud Abdellatif, chairman of the DAL Group conglomerate and one
of the country’s richest men, said Sudan’s economic travails were a
consequence, in part, of reforms to open the economy.
“We wanted to be part of the World Trade Organization and we opened
up, so our imports jumped hugely and our exports did not match up,” he
said. “The basic problem is a huge [trade] deficit, which has led to a
massive shortage of foreign currency.”
Sudan resumed negotiations on membership of the WTO in January 2017
after a 13-year impasse, implementing a series of economic reforms in
line with WTO rules. It is still not a member but imports have flooded
in. At the end of 2017 the country’s trade balance deficit was
estimated at $2.7bn.
“We did it cold turkey without any [IMF] support so the impact was
devastating financially and socially,” Mr Abdellatif said.
There is scant evidence that Sudan has sponsored terrorism in the
recent past, but it remains on a US list of state sponsors of
terrorism, which prevents the government from accessing financial aid
from multilateral institutions.
President Bashir still faces an international arrest warrant for
alleged war crimes committed by his troops in the Darfur region.
“We are fully aware of how the international community views us,”
Al-Dirdiri Mohamed Ahmed, Sudan’s foreign minister, said. “We believe
that we should not panic, we should see to it that those points that
are of concern to the international community are sorted out and
eventually we will get there.”
For much of this year the 74-year-old president appeared to be out of
ideas on the economy, but in the past three months things have
The country began a new round of talks with the US to remove Sudan
from the terrorism list and in September Mr Bashir appointed a prime
minister, Mutaz Musa, to breathe new life into the government.
Mr Musa announced a 15-month emergency economic reform plan in October
to reduce inflation and stabilise the exchange rate. The 51-year-old
former engineer is also the first cabinet minister to use a Twitter
account, providing a level of interaction with citizens that many
Sudanese never thought possible.
“He’s very serious, he’s concerned and he’s open to the people,” said
Mr Ahmed, the university professor. “He is finally putting his hands
on the real causes of the hardship.”
Mr Musa, who is also serving as finance minister, cut the value of the
Sudanese pound from 28 to 47.5 to the dollar to match the black market
rate and said he would allow the currency to float freely. That move,
long requested by the IMF, should encourage exports by making Sudanese
goods cheaper on the international market.
Sudan sells oil, gold, cotton, gum arabic and livestock, particularly
to the Middle East, but it has struggled to boost production since
South Sudan seceded and took with it substantial export revenues.
Following the prime minister’s interventions, there should be no more
excuses, Mr Daoud said. “He has given the private sector a real
opportunity to do something with exports and now we need to get down
and produce.” Mr Daoud added. “ At the end of the day no one is going
to come and help us and why should they?”

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In Tanzania, a bulldozer president tests donors @ReutersAfrica

The soldiers started fanning out in the cashew nut growing regions of
southern Tanzania - a jolting sight for traders and, campaigners say,
a watershed moment for a country once held up as a darling of
development groups.
The government said the troops were there last week to make sure
growers and markets were obeying new orders by President John
Magufuli, known to his supporters as “the bulldozer”. His forceful
interventions on everything from commerce to sexual morality have
placed him on a collision course with donors.
On Monday, soldiers were out again further north in the tourist hub of
Arusha, this time to crack down on street black market currency
“We as Tanzanians are not accustomed to this ... Since independence,
we have not seen the army on the streets like this,” said lawyer Fatma
Karume who has represented opposition lawmakers in a series of
“There’s a climate of fear. To suggest that Magufuli’s policies are
populist or popular is not understanding the mood among the average
person. These policies are not popular, they’re authoritarian.”
Magufuli, 59, has said his interventions protect the economy. He
appeals to nationalism - railing against foreign interference and
telling women not to use birth control because Tanzania needs more
“Some countries are now facing declining population growth. They are
short on manpower ... I see no reason to control births in Tanzania,”
the president said in a speech in September.
But donors and investors have looked on with increasing alarm,
wondering at the speed of the decline of Tanzania’s international
standing. They say the economic and social interventions have been
accompanied by increasing restrictions on the opposition, the press,
even bloggers.
“Respect for human rights and the rule of law has been repeatedly
undermined,” the EU mission in the country announced last week after
saying government pressure had led to the “forced departure” of its
Foreign Affairs Minister Augustine Mahiga told Reuters that the
government had had a number of unspecified issues with the ambassador,
without elaborating.
Denmark suspended $10 million in planned aid last week over
“unacceptable homophobic comments” by the governor of commercial
capital Dar es Salaam, after he said a new security squad would start
rounding up LGBT people. The foreign ministry later said his statement
did not reflect official policy.
“What we are now seeing is a tipping point where (the government) has
gone after so many different groups that international donors are
saying ‘Enough is enough’,” said Nic Cheeseman, Professor of Democracy
at Britain’s Birmingham University.
“The question is whether donors are going to continue to pull out,” he
said. “Tanzania is not a country that can survive without this
support, even though it has significant natural resources.”
The government has for years received more than a billion dollars
annually in foreign grants, putting it among the five biggest aid
recipients in Africa, according to the World Bank.
Such grants are expected to account for more than 8 percent of
spending, according to this year’s budget.
The government response to criticism has ranged from a defiant defense
of its record to quieter retreats on individual disputes.
Mahiga, the minister, dismissed pressure from aid groups as “intimidation”.
“They are using the words ‘You will suffer the consequences’”, the
minister told Reuters, declining to name the government he had been
speaking to.
“If these are the consequences we are ready to suffer,” he said. “We
cannot kneel down and be blackmailed, because they have money and we
are poor. I think this is not how international behavior should be
between neighbors.”
The World Bank this month put a planned $300 million loan for an
education project on hold, partly in response to a law preventing
pregnant girls from returning to school.
World Bank Vice President Hafez Ghanem flew into the country to
discuss the issue, then said a cautious agreement had been reached to
get the loan process back on track after Tanzania agreed to reconsider
the legislation.
It is a world away from Magufuli early days, when he came to power in
2015, and won international praise for his promises to crack down on
He courted popularity with surprise visits at government departments,
at one point walking into the country’s main public hospital and
sacking senior managers, saying they were not delivering.
But for Murithi Mutiga of the International Crisis Group, the populist
alarm bells were already there.
“The world has only begun to pay attention to the situation after
Magufuli weighed in on social wedge issues that typically attract
media coverage, “ he said.
“But the direction of travel in which he was taking Tanzania was clear
from the start.”


Tanzania does not have the balance sheet to support its current
approach and this Strategy is now hitting a Wall.

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South Africa Raises Interest Key Rate First Time Since 2016

The South African Reserve Bank increased its benchmark interest rate
for the first time in more than two years as it sees inflation risks
remaining elevated.
The Monetary Policy Committee voted to raise the benchmark repurchase
rate to 6.75 percent from 6.5 percent Thursday. Of the six panel
members, half preferred the increase and the rest favored an unchanged
stance, Governor Lesetja Kganyago told reporters Thursday in the
capital, Pretoria.
Delaying the adjustment could cause inflation expectations to become
entrenched at higher levels, which would require even stronger
monetary response in future and the MPC still sees its stance as
“The three-three split sends a more dovish outlook for the policy-rate
trajectory,” Jeffrey Schultz, an economist at BNP Paribas South
Africa, said by phone. “This is a Reserve Bank that’s being prudent
and proactive in mitigating inflation risks.”
Africa’s most-industrialized economy hasn’t expanded at more than 2
percent annually since 2013 and the central bank predicts it will only
reach that growth rate by 2020. The MPC cut its growth outlook for
this year to 0.6 percent from 0.7 percent and said risks are tilted to
the downside.
The rand strengthened 1 percent to 13.7842 per dollar by 4:08 p.m. in
Johannesburg, the strongest intraday level since Aug. 10. The yields
on benchmark government bonds due December 2026 fell 8 basis points to
8.97 percent, the lowest since Sept. 28.

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Nigerian central bank set to reach deal in $8.1 bln MTN dispute @ReutersAfrica

In August, the central bank ordered MTN and its banks to bring $8.134
billion back into Nigeria, sending the company’s shares plummeting.
The regulator alleged the firm had sent the funds abroad in breach of
foreign exchange regulations.

“We have held meetings with the MTN group and we are at the verge,”
Emefiele said on Thursday. “I am optimistic that we have reached the
end of the road.”

Nigeria, which accounts for a third of MTN’s annual core profit,
making it MTN’s biggest market.

MTN’s lenders - Standard Chartered, Stanbic IBTC Bank, Citibank and
Diamond Bank - were also fined in connection to the money transfer.

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Cocoa Crisis Hits Top Grower's Exporters as Banks Pull Finance @BBGAfrica

Domestic shippers in the world’s top cocoa producer are losing market
share to foreign-backed competitors as exporters become ensnared in
the fallout of the liquidation of Saf-Cacao.
Cocoa shippers in Ivory Coast are struggling to raise finance for the
buying and storing of beans as lenders curb their exposure to the
sector. Stung by about 150 billion CFA francs ($261 million) in unpaid
debts by Saf-Cacao, formerly one of the biggest cocoa exporters before
a court ordered the company’s liquidation in July, banks have
curtailed their lending to minimize the risk of accumulating further
Since the start of the new season last month through Nov. 11,
foreign-based exporters such as Cargill Inc., Olam International Ltd.
and their local units have accounted for 72 percent of all cocoa
arrivals at the two major ports in Abidjan and San Pedro, according to
documents with government data seen by Bloomberg. That compares with
62 percent in the previous season through September, the documents
The situation “is leaving local traders without access to cash and
banks uneasy about financing the next campaign,” said Vincent Le
Guennou, managing director of Emerging Capital Partners, which has a
majority stake in pan-African lender Oragroup SA. It “has been
dragging on for too long now.”
Price speculation was at the root of an about-turn in fortunes for
Saf-Cacao, which purchased the second-highest volume of cocoa from
Ivory Coast two years ago. After cocoa reached a six-year high in July
2016, the company was one of several local shippers who bet on further
gains and was then caught wrong-footed, defaulting on 15,000 metric
tons of cocoa for the annual season through September last year,
according to an audit of the industry by KPMG.
The audit showed 32 exporters defaulted on 222,302 metric tons of
cocoa, more than a 10th of the record crop of 2.1 million tons
harvested in the same season. Smaller exporters, which at the time
were represented by industry groups known as Pmex and Coopex,
accounted for 68 percent of unfulfilled contracts.
Last week, one of the biggest representative groups for domestic
shippers met with the Professional Association of Banks and Financial
Institutions to request more funding that will be vital to avoid a new
wave of contract defaults, according to two people familiar with the
matter. Talks are continuing even as lenders have little appetite to
increase finance for as long as Saf-Cacao’s liquidation drags on, said
the people, who asked not to be identified because the information
isn’t public.
The banking association’s executive director, Serge Kouamelan,
confirmed that the meeting took place, saying the parties “discussed
the difficulties exporters are facing,” while declining to comment
further when contacted by phone. A spokeswoman for the regulator
didn’t answer calls seeking comment.
Saf-Cacao’s failure is prompting banks to “hold off on lending while
the cocoa industry is under scrutiny,” Edward George, head of group
research at Ecobank Transnational Inc. in London, said in a telephonic
interview. “The slack will be taken up by big trading houses who have
ample access to finance.”
It’s not only local exporters who are getting hit by the demise of
Saf-Cacao. Domestic banks will struggle to absorb their losses, a
situation that “would allow multinationals to regain real control over
the sector by excluding local businesses with limited means,” Bank of
Africa said last month in a report on the crisis.
Some of the local banks had provided more credit to Saf-Cacao than
their buffers were able to absorb in an industry where the minimum
capital requirement is 15 million euros ($17 million), said Laureen
Kouassi-Olsson, the regional head for Western and Central Africa at
Amethis Finance, a private-equity firm that owns part of CFG Bank, a
Moroccan lender expanding in the region. Banks are not allowed to lend
more than a fifth of their capital holdings to a single client, she
“There’s nothing to be done, unless the government works with a
potential buyer” for Saf Cacao, Kouassi-Olsson said in an interview.
“The banks won’t have any choice but to write off some of the debt.”

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.@BankofKigali BK Group - Bank Kigali Rights Issue and Nairobi Listing H/T @bankelele

EDIT Nov 23 results : Rights issue announced uptake was 43% with 104
million of the offered 222 million shares subscribed for, raising ~$31
million. And following the rump offer, by institutional investors, who
oversubscribed for the shares and took up took up 136 million shares
for ~$41 million, the total issue performance has been recorded at
107% and the new shares will list on Nairobi and Kigali exchanges on
November 30.

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#Kenya Railways is raising cargo fees on the SGR by 80% in a bid to ease the taxpayer's burden of paying the Chinese firm that manages the new railway. @BD_Africa
Kenyan Economy

Cargo charges on the standard gauge railway (SGR) from Mombasa to
Nairobi will rise by up to 79 per cent from January 1 in bid to raise
more revenue to pay the Chinese operator.
Kenya Railways said the cost of transporting a 20-foot container from
Mombasa to Nairobi will increase to $500 (Sh51,275) from Sh35,000, a
46.5 per cent rise
Hauling the larger 40-foot container will cost up to Sh$700
(Sh71,785), from the current Sh40,000, reflecting a 79.9 per cent
“The promotional freight tariff will come to an end on December 31,
2018, and thereafter the (new) tariff book rate will become effective
from January 1,” Kenya Railways said in a notice.

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@KenyaPower reports FY 2018 EPS 0.98 -63.83% Earnings here
Kenyan Economy

Par Value:                  20/-
Closing Price:           3.60
Total Shares Issued:          1951467045.00
Market Capitalization:        7,025,281,362
EPS:             0.98
PE:               3.673

The energy company in charge of national transmission, distribution
and retail of electricity throughout Kenya.

FY Results through 30th June 2018
FY Non Fuel Revenue 95.463b versus 91.952b
FY Revenue 125.854b versus 120.742b +4.06%
FY Total Power Purchase Costs 84.1b versus 80.477b
FY Other Operating Income 8.670b versus 8.130b
FY Transmission and Distribution costs [39.628b] versus [34.745b]
FY Operating Profit 10.796b versus 13.650b
FY Finance Costs [7.807b] versus [6.040b]
FY Profit before Tax 3.089b versus 7.656b -59.65%
FY Profit after Tax 1.918b versus 5.280b -63.674%
FY EPS 0.98 versus 2.71 -63.83%
FY Dividend 0.00 versus 0.50B
Cash and Cash equivalents at end of Year [7.603b] versus [1.150b]

Company Commentary

During the Year under review Net Profit before Tax decreased by 59.7%
to 3.089b from 7.656b [restated] in the previous year. This was mainly
attributable to increased transmission and distribution costs as a
result of maintenance activities on the expanded network.
Electricity Sales grew by +2.3% 8.459m Units versus 8.272m unites.
Expanded Customer Base + an improved average yield led to a +3.8%
increase in sales revenue.
Fuel cost decreased by 485m [2.00%] due to improved energy mix
following less utilisation of expensive thermal plants during the
Transmission and distribution costs increased by 14.1%. The rise was
attributed to higher debtors' provisions, depreciation due to
increased capital investment and the rising cost of doing business
Finance costs increased +29.3% - caused by use of short term
borrowings to bridge cash flow shortfalls.
Co. recorded a -59.7% decrease in Net Profit before Tax - decrease
attributed to increase in transmission and distribution costs by
4.567b and a rise in finance costs by 1.767b
No dividend


Better than I expected. Cash and cash equivalents position remains a concern.

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@StanChartKE nine month net profit rises to Sh6.3bn @BD_Africa
Kenyan Economy

Standard Chartered Kenya’s  net profit for the nine months ended
September rose by a third to Sh6.3 billion on higher revenue from
government securities, fees and commissions and a fall in provision
for bad loans.
The top tier lender, which had made a net profit of Sh4.7 billion in
the corresponding period last year, cut its provision for bad loans by
half, from Sh3.73 billion last year to Sh1.88 billion this year.
Interest income from government securities went up by 15 per cent to
Sh9.5 billion even as the bank’s outstanding stock of securities
shrank by Sh10 billion to Sh115.5 billion, indicating a shift to
higher-yielding bonds.
The lender however saw a two per cent fall in interest income from
customer loans to Sh9.9 billion, continuing a trend that has hit a
number of banks this year due to a lower cap on rates and a preference
for government lending. Interest expenses rose marginally by two per
cent to Sh5.76 billion, while operating expenses fell by 6.7 per cent
to Sh12.4 billion largely due to lower provisions for bad loans.
“Non-interest income increased by 10 per cent to Sh7 billion compared
to a similar period in 2017 driven by good growth in fees and
commissions, foreign exchange income and growth in our wealth
management business,” said StanChart in a statement.
“Interest income on customer loans and advances declined by two per
cent to Sh9.9 billion due to lower average balances coupled with
re-pricing in line with the reduction of the Central Bank Rate while
interest income from government securities increased by 15 per cent.”
The fall in loan loss provision continues to provide the base for
banks’ increasing their profits in the nine month period, with fellow
top tier lenders KCB, Cooperative Bank, DTB and Equity Bank all making
significant reductions in their loan loss provisions even as the stock
of bad loans goes up.
Only Barclays among the six tier-one lenders that have so far released
their results has made an increase in the provision.
Stanchart cut it’s bad loans provision even as its gross
non-performing loans stock rose by Sh2.5 billion to Sh19.5 billion.
Overall, the bank’s loan book shrunk by Sh3.2 billion to stand at
Sh114.2 billion at the end of September compared to the same period
last year, saying that they remain selective in lending in order to
grow the balance sheet in a safe and sustainable manner.

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Kenya Shilling versus The Dollar Live ForexPros 102.47 Last
Kenyan Economy

Nairobi All Share Bloomberg -15.77% 2018


Nairobi ^NSE20 Bloomberg -25.16% 2018


Every Listed Share can be interrogated here


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

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