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'Nobody Survives Hyperinflation': Currency Crisis Claims Another Strongman @economics @PaulWallace123 Law & Politics |
For autocratic leaders seeking lessons from the toppling of Sudanese
President Omar al-Bashir, avoiding a currency crisis may be the key to
survival.
It’s the same problem that did for long-standing rulers from Angola to
Zimbabwe and may yet claim Venezuela’s Nicolas Maduro.
Al-Bashir, who the military ousted on Thursday to end more than 30
years of rule, faced months of protests against the government’s
economic mismanagement, repression and corruption.
One of the root causes of the 75-year-old’s downfall was his inability
to manage a shortage of foreign exchange that sent inflation soaring
and hammered living standards.
Sudan’s woes can be traced back to the secession of South Sudan in
2011, which saw it lose almost all its oil fields and 60 percent of
fiscal revenue, according to the Institute of International Finance.
But the government’s decision to ramp up spending while pegging its
currency only exacerbated the situation.
''With the loss of oil revenue, the government monetized the deficit,
causing inflation to spiral and reserves to dwindle as the central
bank maintained an overvalued exchange rate,” Jonah Rosenthal and
Garbis Iradian, economists at the Washington-based IIF, said in a note
Thursday.
The central bank devalued the pound almost 40 percent to 47.5 per
dollar in October. But it was too little, too late. The currency’s
black-market rate tumbled again and now stands at around 75 against
the greenback.
Inflation is almost 120 percent, according to Steve H. Hanke, a
professor of applied economics at Johns Hopkins University in
Baltimore.
Al-Bashir is far from the only strongman to come unstuck in recent
years thanks to a balance-of-payments crisis. Robert Mugabe was pushed
out by Zimbabwe’s army in 2017 as a dollar squeeze caused havoc in the
southern African nation, while the ruling party in Angola pressured
President Jose Eduardo dos Santos to resign earlier than he wanted in
the same year.
Tellingly, one of the first things his successor, Joao Lourenco, did
was devalue the kwanza to try and end a dire scarcity of hard
currency.
And Algeria’s Abdelaziz Bouteflika, who was forced out of power this
month, faced his own currency problems. The 2014 crash in oil and gas
prices crimped the Arab nation’s dollar earnings.
While it avoided the kind of economic pain seen in Sudan, it spent
more than $100 billion of reserves to prop up the dinar and avoid
tough measures such as a devaluation or turning to the International
Monetary Fund for a bailout.
In Venezuela, where inflation is more than 1 million percent, making
the bolivar all but worthless, Maduro has managed to hold on thanks to
continued support from the military and outside powers such as Russia.
But if Sudan and Zimbabwe are a guide, he’ll also need to solve the
currency chaos.
“Nobody survives hyperinflation,” Daniel Osorio, president of New
York-based Andean Capital Advisors, which advises money managers on
Latin America, said Thursday at a debt conference in Washington.
“Sooner or later it pushes you out.”
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10 NOV 14 ::Ouagadougou's Signal to Sub-Sahara Africa Africa |
Thousands of protesters had thronged the streets of Ouagadougou and
sacked buildings including Parliament. A group of young activists
themselves the ‘Citizen’s Broom’, led by a rapper named Smockey, led
the protests that culminated in the storming of parliament.
In a gesture similar to the fall of Saddam Hussein in 2003, or Muammar
Gaddafi in 2011, Beautiful Blaise Compaoré’s statue in Bobo-Dioulassou
was also torn down.
The tipping point for this accelerated sequence of events was
President Compaoré stacking parliament in order to extend the
presidential term limit. There are plenty of African presidents who
are seeking to pull off the same magic trick and events in Ouagadougou
have surely put them on notice.
Martin Aglo, a law student from Benin, told Reuters: “After the Arab
Spring, this is the Black Spring”.
During the Arab Spring [now in the bleak mid-Winter], nearly all
commentators spoke of how this North African wildfire could not leap
the Sahara and head to sub-Saharan Africa. The reasons were that the
State [incumbents] had a monopoly on the tools of violence and would
bring overwhelming force and violence to bear.
We need to ask ourselves; how many people can incumbent shoot stone
cold dead in such a situation – 100, 1,000, 10,000? This is another
point: there is a threshold beyond which the incumbent can’t go. Where
that threshold lies will be discovered in the throes of the event.
Therefore, the preeminent point to note is that protests in Burkina
Faso achieved escape velocity. Overthrowing incumbents is all about
acceleration, momentum and speed best characterised by the Ger- man
word ‘Blitzkrieg’.
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'Large number of countries in #Africa are governed by an increasingly entrenched & uncompromising group of old men' - #Algeria, #Sudan & danger of presidents-for-life | Opinion | by @Fromagehomme @mailandguardian Law & Politics |
Algeria and Sudan are engulfed by protests against leaders who have
overstayed their welcome. Their stories are vital and need to be told,
but we must also recognise that they are not exceptional and a number
of other countries may soon follow suit.
This is because Africa has seen a growing number of leaders establish
themselves as “presidents for life” over the last few years.
Burundi’s Pierre Nkurunziza, Sudan’s Omar al Bashir, Cameroon’s Paul
Biya, and Chad’s Idris Deby are just some of the leaders that have
successfully removed presidential term limits.
Meanwhile in Uganda, President Yoweri Museveni, who was scathing about
those who failed to relinquish power in his younger days, has been in
power so long that he recently had to remove constitutional age
limits, having already removed term limits back in 2005.
Despite the fact that term-limits have been respected in many
countries, and that occasional transfers of power have led to a number
of changes of government in the continent’s more democratic states,
this means that a large number of countries are governed by an
increasingly entrenched and uncompromising group of old men.
Some commentators have argued that allowing leaders such as Rwanda’s
Paul Kagame to remain in power is a good thing as it generates
political and policy continuity.
But any careful analysis of what these presidents have done in office
demonstrates that nine times out of ten, the longer a leader remains
in office in Africa the worse the consequences are for democracy and
inclusive economic growth.
That we see popular uprisings against gerontocratic leaders in both
Algeria and Sudan is not a coincidence: it reflects growing
frustration with the failure of out of touch despots to provide the
basics, such as political stability and affordable food.
The great danger moving forwards is that a number of other countries
including Cameroon and Uganda are following in their footsteps.
Efforts by leaders to entrench themselves in power are nothing new.
The first set of life presidents were the nationalist leaders who took
power after the end of colonial rule. While some died in office
relatively early, such as Kenya’s Jomo Kenyatta, and a small number
resigned, including Tanzania’s Julius Nyerere, many changed the
constitution to enable them to rule for decades.
Figures such as Malawi’s Hastings Banda and Uganda’s Idi Amin even
changed their official titles to reflect their desire for authority.
The onset of the multi-party era was supposed to have changed all
this. With a small number of exceptions, the vast majority of
countries introduced presidential term-limits that were intended to
stop one individual from gaining a monopoly on power.
This process was not just driven by the spread of American norm. It
also reflected a growing recognition that one of the reasons that many
African states had performed poorly during the 1980s was the absence
of effective checks and balances against bad leadership.
The key lesson that many constitutional experts took from this was
that additional measures needed to be employed to re-establish the
separation between the ruling party and the state.
In many countries, this was a successful project. Over the last
decade, term-limits have become consolidated in a wide range of states
including Ghana, Kenya, Liberia, Nigeria, Mozambique, Sierra Leone,
Tanzania and Zambia.
But in the more authoritarian corners of the continent, leaders have
found it relatively easy to remove these restrictions. As a result,
six of the world’s top 10 longest serving leaders – excluding members
of royal families who hold nominal positions – are African presidents.
While Cameroon’s Paul Biya currently holds the record for the longest
serving leader at 42 years, Equatorial Guinea’s Teodoro Obiang Nguema
Mbasogo is just behind him in second place, having been in power for
38 years.
Despite all the talk of the “youth bulge”, the reality is that Africa
still features a remarkable number of political systems designed to
protect old men.
Recent uprisings against long-term leaders in Algeria and Sudan
highlight the dangers of life presidents. In both cases, ordinary
citizens have taken incredible risks to campaign for change.
They have not done this simply because they are bored with seeing the
same old faces, but because they understand that that the economic and
political challenges they face cannot be separated from the presidents
who demand their loyalty. It is precisely the personalization of
government and the deep politicization of all aspects of the state
which occurs when leaders stay too long that facilitates the abuse of
power.
In Algeria, this was exacerbated by the poor health of President
Abdelaziz Bouteflika who, at 82, was seeking re-election for a fifth
term in office. Yet the protests were about much more than his lack of
dynamism, channelling widespread anger at the extent of corruption and
the failure of the “system”, or “pouvoir”, to deliver for the people.
After the Chief of Staff of the army, Lt Gen Ahmed Gaid Salah,
intervened to force Bouteflika’s resignation, protestors adopted the
slogan “1962: country liberated, 2019: people liberated”.
The rising cost of living is also one of the main drivers of the
popular uprising in Sudan. But while inflation of 70% and the doubling
of bread prices brought people to the streets, their grievances run
much deeper and include the failure of the government to build an
inclusive political system that can represent the interests of all
citizens.
Evidence of growing factionalism within the security forces suggests
that many in the police and army also feel the need for change, which
in turn increases the risk that the conflict will rapidly escalate
into something approaching civil war.
Sudan and Algeria are rightly dominating the headlines right now, but
they are not alone. In Cameroon, Paul Biya’s divide-and-rule strategy
has led to growing tensions between the Anglophone minority and his
government, leading to a series of protests that were brutally put
down by the government.
According to UN Office for the Coordination of Humanitarian Affairs
(OCHA), the violence led to hundreds of civilian deaths and the
displacement of over 450,000 people. Similar stories could be told of
a number of other states in which life presidents refuse to leave
power.
Further progress towards either democratic consolidation or more
effective government is unlikely in any of these countries while the
current leadership remains in place.
The threat posed by life presidents to democracy and development in
Africa is real and growing. During the research for our book How to
Rig an Election, Brian Klaas and I found that on average the chances
of an election being manipulated increased every year a leader was in
power.
This is not surprising: none of the countries run by the six longest
serving leaders in Africa are democracies. The negative relationship
between time in office and authoritarianism is bad news for other
countries that have so far received much less attention than Algeria
and Sudan but appear to be on the same pathway.
In Uganda, for example, President Museveni’s leadership has run out of
steam and looks like it will become increasingly reliant on a
combination of electoral manipulation and repression to retain power.
The economy continues to grow at a steady rate, but there is growing
evidence that the country’s oil wealth risks being wasted. At the same
time, younger and more vibrant rivals such as Bobi Wine are harassed,
arrested and in some cases tortured.
Uganda is unlikely to feature the kind of popular uprising witnessed
in Sudan any time soon, but the seeds of a future crisis are currently
being sowed.
Changing a leader, of course, does not solve all of a country’s
problems like some kind of political silver bullet. One of the most
problematic legacies of life presidents is that they leave behind
self-serving regimes that quickly regroup in order to re-establish
their authority, often resorting to even greater repression in the
process.
Those protesting in both Algeria and Sudan know this well, and have
demanded not just the removal of individual leaders but the end of the
rotten systems that propped them up.
The sad reality is that the longer an authoritarian leader has been in
power, the harder it is to genuinely reform the broader political
system that they put in place.
In Algeria, Bouteflika has gone but the army has not. The best way to
avoid the rise of authoritarian abuses is therefore to stop leaders
from becoming life presidents in the first place.
Nic Cheeseman is the professor of democracy at the University of
Birmingham and the author of How to Rig an Election
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@Uber Makes IPO Case That It's About the Platform, Not the Losses @business International Trade |
Uber Technologies Inc., the current era’s archetypal startup, moved
toward becoming a public company Thursday, revealing that it racked up
a $3 billion operating loss last year and hoping potential investors
will look beyond that.
Less than two years after being tapped to take Uber to its initial
public offering destination, Chief Executive Officer Dara
Khosrowshahi’s stamp on the company has been branding it as a
“platform” -- a word that appears more than 700 times in its IPO
prospectus.
Khosrowshahi, who quit his CEO job at Expedia Group Inc. to join Uber,
is pitching the ride-hailing giant as an interconnected web of
promising businesses. Most notably, Uber’s food-delivery business grew
149 percent year-on-year to $1.5 billion in revenue in 2018.
“Our continued success will come from stellar execution and the
strength of the platform we have worked so hard to build,”
Khosrowshahi said in a letter to investors included in the filing.
To make that case, Uber cites a preferred metric: monthly active
platform consumers, otherwise known as people who touch one of its
services at least once a month. Uber says it has 91 million MAPCs,
more than double the number in 2016.
Khosrowshahi isn’t just trying to look past ride-hailing, he’s also
trying to move beyond his predecessor, Travis Kalanick, whose brash
leadership frequently landed the company in court or under the
microscope, or both.
“Some of the attributes that made Uber a wildly successful startup --
a fierce sense of entrepreneurialism, our willingness to take risks
that others might not, and that famous Uber hustle -- led to missteps
along the way,” Khosrowshahi said in his letter.
Nonetheless, Kalanick remains on Uber’s board with an 8.6 percent
ownership stake, according to the filing.
Uber’s biggest challenge in its IPO, in which it seeks to raise about
$10 billion, according to people familiar with its plans, may be
simultaneously explaining to investors why the company is immature
enough to justify losing billions of dollars, while proving it’s
mature enough to be a publicly traded company worth somewhere in the
range of $100 billion.
Uber, 10 years old and easily the world’s biggest ride-hailing
company, holds a market share in that category of more than 65 percent
in the U.S., Canada, Latin America, Europe, Australia and New Zealand,
the filing with the U.S. Securities and Exchanges Commission shows.
But growth in its core business is decelerating. While ride-hailing
revenue grew 95 percent in 2017 from the previous year, that rate
slowed to 33 percent last year, Uber said in the filing.
Its solution is to cast itself as a still-fledgling character in the
broader transportation landscape. Uber is just at the very beginning,
it argues, asserting that its share of the entire global
transportation business is less than 1 percent.
Drawing an implicit comparison to Amazon.com Inc.’s push to become the
universal retailer, Uber contends its platform positions it to become
all-things transportation, encompassing everything from scooters and
bicycles to freight delivery, driverless vehicles and even flying
cars.
“It sort of reminds me a little bit about the internet era when it was
about ‘so many eyeballs are hitting our site,’” said Reena Aggarwal,
director of the Georgetown Center for Financial Markets and Policy.
Uber’s diversification push is worth noting, Aggarwal said, citing
Uber Eats as a start.
“Uber Eats is a pretty big chunk of the company right now,” she said.
“We think of it as just a ride-sharing company. I wonder in five
years, what is it going to look like.”
The long-awaited IPO filing gives potential investors their first look
at hundreds of pages of detailed information about Uber. The San
Francisco-based company plans to kick off a road show to market shares
to potential investors this month and begin trading publicly in May,
the people familiar with the details said.
The IPO comes amid an expected surge of listings by Silicon Valley
unicorns -- startups valued at more than $1 billion -- and is likely
to be the largest U.S. listing this year and among the 10 largest of
all time on U.S. exchanges.
Uber’s filing follows rival Lyft Inc.’s $2.34 billion listing in
March, which is the biggest U.S. IPO so far this year. Pinterest Inc.
and Zoom Video Communications Inc. are set to price their IPOs next
week.
Other high-profile companies considering going public include Slack
Technologies Inc., Postmates Inc., Palantir Technologies Inc. and
Airbnb Inc.
Details of Uber’s proposed offering, including the targeted price
range and the number of shares for sale, will be disclosed in a later
filing.
Operating Losses
Uber lost $3.04 billion on an operating basis in 2018 on revenue of
$11.3 billion, bringing total operating losses over the past three
years to more than $10 billion, Thursday’s filing shows.
The company, which has previously made public some of its financial
results, disclosed further details in its filing -- including a net
income of $997 million for 2018. That profit was driven primarily by
the sales of assets in Southeast Asia and Russia, as well as an
increase in the estimated value of its stock in China’s largest
ride-hailing company, Didi Chuxing.
Those deals contributed to almost $5 billion in what Uber called “other income.”
Uber’s reliance on ride-sharing for the vast majority of its revenue
is evident from its filing. In the fourth quarter, the company
generated $2.54 billion in adjusted net revenue, with $2.31 billion of
that coming from ride sharing. Only $165 million in adjusted net
revenue came from Uber Eats.
Uber filed with an initial offering amount of $1 billion, typically a
placeholder amount used to calculate fees that will change. The
company applied to list on the New York Stock Exchange under the
ticker UBER. Morgan Stanley and Goldman Sachs Group Inc. are leading
the offering.
Investors are traditionally willing to look past losses in an IPO,
especially such a significant one, said Barrett Daniels, a Deloitte
partner who advises companies on going public.
“There’s so much around this to make it an interesting and compelling
transaction,” Daniels said. “The brand recognition makes this company
so valuable.”
The growth of Uber Eats, from about $100 million in revenue to about
$1.5 billion over three years, is particularly exciting, he said.
''If that was a stand-alone business, Uber Eats by itself would make
it an incredibly compelling story,” he said.
Lyft’s performance since its March debut may signal caution to some
investors. Lyft, which operates in the U.S. and Canada, increased the
size of its share sale, and then priced its shares at $72 each, at the
top of an elevated range.
The stock then leaped 21 percent at the opening bell, only to sink
since then, closing at $61.01 on Thursday.
Uber’s sheer size may set it apart from Lyft, said David Erickson, a
finance professor at the University of Pennsylvania’s Wharton School.
''The punchline is this the largest high-growth tech company that’s
going to be going to the public markets,” he said. “This is where
everyone is going to focus when they think about where they want to
allocate dollars from an investor standpoint.”
Here are some of the other key numbers in Uber’s 285-page IPO filing,
which included dozens more pages of financial statements:
Uber has spent more than $1 billion on autonomous vehicle technology
to compete with Alphabet Inc., Apple Inc. and General Motors Co.
The company’s primary user number is called MAPC -- monthly active
platform consumers. That number stood at 91 million in the fourth
quarter of 2018, up from 68 million in the same period of 2017
A roster of 29 banks in total signed on to underwrite Uber’s IPO
Uber is putting aside $300 million to make a one-time cash payout to
1.1 million qualifying drivers
Khosrowshahi’s compensation will be in part tied to Uber maintaining a
full diluted equity value of $120 billion
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Kenya Airports Agency @KenyaAirports Sees Land at $9.9 Billion on Revaluation @markets Bella Genga Kenyan Economy |
Kenya Airports Authority expects its land holdings to be worth more
than 1 trillion shillings ($9.9 billion) after a revaluation is
concluded in a month, Chief Executive Officer Jonny Andersen said.
“Since we’ll have a different balance sheet, we can go to the banks
and ask for completely different financing because we’ll have so much
value,” Andersen said in an interview in the Kenyan capital, Nairobi.
“It will completely change the balance sheet of KAA because we are
valued at a completely different rate.”
The state-owned agency last valued its 11,000 acres of land in the
capital, Nairobi, in 2004 at 80 million shillings, which is “putting
KAA at a huge disadvantage,” Chairman Isaac Awuondo told lawmakers on
Wednesday.
The agency’s revenue was 15.9 billion shillings in the 12 months
through June 2017, about 80 percent of which was from Kenya’s biggest
airport in Nairobi.
The facility has lost market share to neighboring rival Ethiopia
Airlines Group, which has invested in a new fleet and expanded the
main airport in Addis Ababa into a regional hub.
KAA will have to invest in the Nairobi hub to stem the loss in market
share, which now stands at 34 percent of regional traffic, from 47
percent in 2013, Andersen said.
KAA also plans to revise its charges taking into account inflation and
other changes since it last reviewed rates more than two decades ago.
“It will make us more commercial, not so much dependent on taxes and
fees,” he said. “We are charging too much on some things and too
little on others, so we need to look over the whole thing to be more
adjusted to the market data.”
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.@WPPScangroup posts biggest single one day price move +71.37% at @NSE_PLC in more than a decade after releasing FY 2018 Earnings @WPP Kenyan Economy |
Par Value: 1/-
Closing Price: 20.05
Total Shares Issued: 432155985.00
Market Capitalization: 8,664,727,499
EPS: 1.37
PE: 14.635
The largest marketing services company in East Africa.
WPP Scangroup Limited FY 2018 results through 31st December 2018 vs.
31st December 2017
FY Billings 13.821790b vs. 14.118620b -2.102%
FY Revenue 4.504904b vs. 4.122869b +9.266%
FY Operating and administrative expenses [3.863870b] vs. [3.710602m] +4.131%
FY Operating profit 641.034m vs. 412.267m +55.490%
FY Net interest income 291.104m vs. 290.412m +0.238%
FY Share of profit in associates 25.131m vs.
FY Impairment of goodwill [21.322m] vs.
FY Foreign exchange losses [5.157m] vs. [27.395m] -81.175%
FY Profit before tax 959.888m vs. 696.414m +37.833%
FY Profit for the year 612.209m vs. 477.943m +28.092%
Profit attributable to equity holders of parent company 554.481m vs.
454.696m +21.945%
Profit attributable to NCI 57.728m vs. 23.247m +148.325%
Basic and diluted EPS 1.37 vs. 1.20 +14.167%
Total Assets 11.240951b vs. 13.758912b -18.301%
Total Equity 8.489379b vs. 8.965169b -5.307%
Cash cash equivalents at the end of the year 4.377820b vs. 3.396739b +28.883%
Final dividend per share 1.00 vs. 0.75 +33.333%
Special dividend 3.00
COMMENTARY
The Group faced a challenging economic environment during 2018 in
Kenya, its largest market, as a result of reductions in expenditure by
majority of the Groups key clients.
This led to a decline in the Groups revenue in the traditional
business activities of advertising, media and public relations.
On a positive note, there was growth in the digital and technology
offering and in research due to the acquisition of TNS Kantar research
business in July 2018.
Overall Revenue grew by 9.3%. Kenya accounted for 62% of the total,
down from the 73% in 2017, primarily on account of TNS Kantar
acquisition, which has a sizable presence in Nigeria and West Africa
resulting in growth of revenues from Nigeria to 11% of the Group's
revenues up from 6%.
Operating profit was up by 55.5% from Ksh412m to Ksh641m. Interest
income remained the same despite lower interest rates due to increase
in available funds.
Overall Profit Before Tax was up 37.8% from Ksh696m to Ksh960m and
Profit after Tax was up by 28.1% from Ksh478m to Ksh612m.
Future outlook
Based on the year to date performance for 2019, it is expected that
there will be an improvement in operating profit for the full year
2019.
Proposed Dividend(s)
The Board of Directors recommend a Final Dividend of Ksh 1.00 per
share [ 2017 Ksh 0.75] for the year ended 31 December 2018 and a
Special Dividend of Ksh 3.00 per share, subject to shareholder
approval at the annual general meeting to be held on 10 May 2019 and
payable to shareholders on the Register of Members at the close of
business on 10 May 2019.
The dividend will be paid from retained earnings of the company which
stood at Ksh 1,794m as at 31 December 2018.
Conclusions
That Special Dividend the declared dividend 34.188% of Yield on
yesterdays closing price
Good to see West Africa beginning to gain Traction.
These results and the mouth-watering dividend means we have seen the
low for this share.
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