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Macro Thoughts

Home Thoughts

“In this series, I was eager to show this very moment, for what
yesterday seemed to be a bottomless spiritual vacancy, today can be
filled with new life goals.”

It symbolizes the resistance to political repression

This large-scale collage includes materials found by the artist on the
streets around his studio in Los Angeles, USA. Visually suggestive of
aerial maps of sprawling, urban areas, the collage is constructed
entirely from paper fragments which, the artist believes, ‘act as
memory of things pasted and things past. You can peel away the layers
of papers and it’s like reading the streets through the signs’. The
work takes its title from a derogatory slang term for migrant day
labourers in the San Francisco Bay Area, reflecting the artist’s
long-standing interest in the sub-cultures of the inner city.

The painting is undoubtedly Gertler’s outstanding contribution to
British modernism, as DH Lawrence recognised when writing to him in
October: ‘It is the best modern picture I have seen: I think it is
great, and true.’

Political Reflections

“Unity is iron and steel; unity is a source of strength,” “Complete
reunification of the motherland is an inevitable trend..no one and no
force can ever stop it!” he added.

The presidential election in Argentina was no less than a game-changer
and a graphic lesson for the whole Global South. It pitted, in a
nutshell, the people versus neoliberalism. The people won – with new
President Alberto Fernandez and former President Cristina Fernández de
Kirchner (CFK) as his VP.
Neoliberalism was represented by Mauricio Macri: a marketing product,
former millionaire playboy, president of football legends Boca
Juniors, fanatic of New Age superstitions, and CEO obsessed with
spending cuts, who was unanimously sold by Western mainstream media as
the new paradigm of a post-modern, efficient politician.
Well, the paradigm will soon be evacuated, leaving behind a wasteland:
$250 billion in foreign debt; less than $50 billion in reserves;
inflation at 55 percent; the U.S. dollar at over 60 pesos (a family
needs roughly $500 to spend in a month; 35.4 percent of Argentine
homes can’t make it); and, incredible as it may seem in a
self-sufficient nation, a food emergency.
Macri, in fact the president of so-called Anti-Politics, No- Politics
in Argentina, was a full IMF baby, enjoying total “support” (and
gifted with a humongous $58 billion loan). New lines of credit, for
the moment, are suspended.
Fernandez is going to have a really hard time trying to preserve
sovereignty while negotiating with foreign creditors, or “vultures,”
as masses of Argentines define them. There will be howls on Wall
Street and in the City of London about “fiery populism,” “market
panicking,” “pariahs among international investors.”
Fernandez refuses to resort to a sovereign default, which would add
even more unbearable pain for the general public.
The good news is that Argentina is now the ultimate progressive lab on
how to rebuild a devastated nation away from the familiar, predominant
framework: a state mired in debt; rapacious, ignorant comprador
elites; and “efforts” to balance the budget always at the expense of
people’s interests.
What happens next will have a tremendous impact all over Latin
America, not to mention serve as a blueprint for assorted Global South
struggles.
And then there’s the particularly explosive issue of how it will
influence neighboring Brazil, which as it stands, is being devastated
by a “Captain” Bolsonaro even more toxic than Macri.
It took less than four years for neoliberal barbarism, implemented by
Macri, to virtually destroy Argentina. For the first time in its
history Argentina is experiencing mass hunger.
In these elections, the role of charismatic former President CFK was
essential. CFK prevented the fragmentation of Peronism and the whole
progressive arc, always insisting, on the campaign trail, on the
importance of unity.
But the most appealing phenomenon was the emergence of a political
superstar: Axel Kicillof, born in 1971 and CFK’s former economy
minister. When I was in Buenos Aires two months ago everyone wanted to
talk about Kicillof.
The province of Buenos Aires congregates 40 percent of the Argentine
electorate. Fernandez won over Macri by roughly 8 percent nationally.
In Buenos Aires province though, the Macrists lost by 16 percent –
because of Kicillof.
Kicillof’s campaign strategy was delightfully described as “Clio mata
big data” (“Clio kills big data”), which sounds great when delivered
with a porteño accent. He went literally all over the place – 180,000
km in two years, visiting all 135 cities in the province – in a humble
2008 Renault Clio, accompanied only by his campaign chief Carlos
Bianco (the actual owner of the Clio) and his press officer Jesica
Rey. He was duly demonized 24/7 by the whole mainstream media
apparatus.
What Kicillof was selling was the absolute antithesis of Cambridge
Analytica and Duran Barba – the Ecuadorian guru, junkie of big data,
social networks and focus groups, who actually invented Macri the
politician in the first place.
Kicillof played the role of educator – translating macroeconomic
language into prices in the supermarket, and Central Bank decisions
into credit card balance, all to the benefit of elaborating a workable
government program. He will be the governor of no less than the
economic and financial core of Argentina, much like Sao Paulo in
Brazil.
Fernandez, for his part, is aiming even higher: an ambitious, new,
national, social pact – congregating unions, social movements,
businessmen, the Church, popular associations, aimed at  implementing
something close to the Zero Hunger program launched by Lula in 2003.
In his historic victory speech, Fernandez cried, “Lula libre!” (“Free
Lula”). The crowd went nuts. Fernandez said he would fight with all
his powers for Lula’s freedom; he considers the former Brazilian
president, fondly, as a Latin American pop hero. Both Lula and Evo
Morales are extremely popular in Argentina.
Inevitably, in neighboring, top trading partner and Mercosur member
Brazil, the two-bit neofascist posing as president, who’s oblivious to
the rules of diplomacy, not to mention good manners, said he won’t
send any compliments to Fernandez. The same applies to the
destroyed-from-the-inside Brazilian Ministry of Foreign Relations,
once a proud institution, globally respected, now “led” by an
irredeemable fool.
Former Brazilian Foreign Minister Celso Amorim, a great friend of
Fernandez, fears that “hidden forces will sabotage him.” Amorim
suggests a serious dialogue with the Armed Forces, and an emphasis on
developing a “healthy nationalism.”
Compare it to Brazil, which has regressed to the status of
semi-disguised military dictatorship, with the ominous possibility of
a tropical Patriot Act being approved in Congress to essentially allow
the “nationalist” military to criminalize any dissidence.
Hit the Ho Chi Minh Trail
Beyond Argentina, South America is fighting neoliberal barbarism in
its crucial axis, Chile, while destroying the possibility of an
irreversible neoliberal take over in Ecuador. Chile was the model
adopted by Macri, and also by Bolsonaro’s Finance Minister Paulo
Guedes, a Chicago boy and Pinochetist fan.
In a glaring instance of historical regression, the destruction of
Brazil is being operated by a model now denounced in Chile as a dismal
failure.
No surprises, considering that Brazil is Inequality Central. Irish
economist Marc Morgan, a disciple of Thomas Piketty, in a 2018
research paper showed that the Brazilian 1 percent controls no less
than 28 percent of national wealth, compared to 20 percent in the U.S.
and 11 percent in France.
Which bring us, inevitably, to the immediate future of Lula – still
hanging, and hostage to a supremely flawed Supreme Court. Even
conservative businessmen admit that the only possible cure for
Brazil’s political recovery – not to mention rebuilding an economic
model centered on wealth distribution – is represented by “Free Lula.”
When that happens we will finally have Brazil-Argentina leading a key
Global South vector towards a post-neoliberal, multipolar world.
Across the West, usual suspects have been trying to impose the
narrative that protests from Barcelona to Santiago have been inspired
by Hong Kong. That’s nonsense. Hong Kong is a complex, very specific
situation, which I have analyzed, for instance, here, mixing anger
against political non-representation with a ghostly image of China.
Each of the outbursts – Catalonia, Lebanon, Iraq, the Gilets
Jaunes/Yellow Vests for nearly a year now – are due to very specific
reasons. Lebanese and Iraqis are not specifically targeting
neoliberalism, but they do target a crucial subplot: political
corruption.
Protests are back in Iraq including Shi’ite-majority areas. Iraq’s
2005 constitution is similar to Lebanon’s, passed in 1943: power is
distributed according to religion, not politics. This is a French
colonizer thing – to keep Lebanon always dependent, and replicated by
the Exceptionalists in Iraq. Indirectly, the protests are also against
this dependency.
The Yellow Vests are targeting essentially President Emmanuel Macron’s
drive to implement neoliberalism in France – thus the movement’s
demonization by hegemonic media.
But it’s in South America that protests go straight to the point: it’s
the economy, stupid. We are being strangled and we’re not gonna take
it anymore. A great lesson  can be had by paying attention to Bolivian
Vice-President Alvaro Garcia Linera.
As much as Slavoj Zizek and Chantal Mouffe may dream of Left Populism,
there are no signs of progressive anger organizing itself across
Europe, apart from the Yellow Vests. Portugal may be a very
interesting case to watch – but not necessarily progressive.
To digress about “populism” is nonsensical. What’s happening is the
Age of Anger exploding in serial geysers that simply cannot be
contained by the same, old, tired, corrupt forms of political
representation allowed by that fiction, Western liberal democracy.
Zizek spoke of a difficult “Leninist” task ahead – of how to organize
all these eruptions into a “large-scale coordinated movement.” It’s
not gonna happen anytime soon. But, eventually, it will. As it stands,
pay attention to Linera, pay attention to Kiciloff, let a collection
of insidious, rhizomatic, underground strategies intertwine. Long live
the post-neoliberal Ho Chi Minh trail.

The real time Feed is a c21st Netflix and is both unputdownable and
incendiary. From Chile where Protestors burned down the headquarters
of ENEL [The Electricity Generating Co] after a proposed Price
increase and a state of Emergency has been imposed. All over Latin
America from Peru to Ecuador to Haiti to Honduras, Demonstrators have
taken to the Streets. The IMF cut the projected economic growth rate
for Latin America from 1.4 percent to 0.6 percent, citing domestic
policies and the U.S.-China trade war and clearly nose-diving economic
opportunity is creating tinder-dry conditions. Of course, no country
is as extreme as Venezuela where GDP is down from $350bn in 2012 to an
estimated $60bn in 2019. People have been pushed to the Edge and are
taking to the Streets.
Paul Virilio pronounced in his book Speed and Politics, “The
revolutionary contingent attains its ideal form not in the place of
production, but in the street, where for a moment it stops being a cog
in the technical machine and itself becomes a motor (machine of
attack), in other words a producer of speed.’’
This Phenomenon about which I am speaking is not limited to Latin
America. We have recently witnessed the ''WhatsApp'' Revolution in
Lebanon, where a proposed Tax on WhatsApp calls sent up to 17% of the
Lebanese Population into the street. Iraq is on a Knife Edge. Millions
of Algerians sent the wheelchair bound Bouteflika home not too long
ago. Hong Kong remains in open rebellion and trying to shake off the
''Crusher of Bones'' Xi Jinping and his Algorithmic Control.
The Phenomenon is spreading like wildfire in large part because of the
tinder dry conditions underfoot. Prolonged Stand-Offs eviscerate
economies, reducing opportunities and accelerate the negative Feedback
Loop.
Antonio Gramsci wrote “The crisis consists precisely in the fact that
the old is dying and the new cannot be born; in this interregnum a
great variety of morbid symptoms appear....now is the time of
monsters.”
This level of unhappiness is unprecedented in a time of ''Peace'' and
in a time when our august Financial Institutions keep touting about
how it has never been so good for the Human Race.
Dr. Célestin Monga in a recent piece characterised the situation thus
The Great Discordance ''the planet is filled with rage and anger''
The New Economy of Anger ''Anger and discontent levels around the
world are high, despite the fact that most available indicators of
political and economic progress are better than they have even been''
Leadership in the c21st has become nationalistic and jingoistic,
horizons have been narrowed. President Trump is not John F Kennedy. Xi
Jinping is all about Han China. Narendra Modi is all about the
Hindutva. Boris is all about Brexit. In Africa, other than the Nobel
Prize Winner Abiy, who else is sketching out a horizon?
Todays leadership does not appreciate the humanity of all of its
Citizens, how can they appreciate the humanity of the World or as
Marshall McLuhan once put it
“There are no passengers on the Spaceship Earth. We are all crew.”
Ryszard Kapuściński wrote
“Revolution must be distinguished from revolt, coup d’état, palace
takeover. A coup or a palace takeover may be planned, but a
revolution—never. Its outbreak, the hour of that outbreak, takes
everyone, even those who have been striving for it, unawares. They
stand amazed at the spontaneity that appears suddenly and destroys
everything in its path. It demolishes so ruthlessly that in the end it
may annihilate the ideals that called it into being.”
This is a Revolution and it is a Global Phenomenon.
Ryszard Kapucinski also said: "If the crowd disperses, goes home, does
not reassemble, we say the revolution is over."
It is not over. More and more People are gathering in the Streets.
Unless we are now going to Xinjiang the Whole World [A Million People
Are Jailed at China's Gulags. I Managed to Escape. Here's What Really
Goes on Inside @haaretzcom “Children are being taken from their
parents, who are confined in concentration camps, and being put in
Chinese orphanages,” he says. “Women in the camps are receiving
inoculations that make them infertile''], the current modus operandi
is running on empty.

“Late to the party: Russia’s return to Africa.” tweeted
@pstronski.“Our African agenda is positive and
future-oriented''Putin’s linguistics is an art form and I imagine he
buttressed the above points by discreetly showing his visitors a photo
of a dead Gaddafi and maybe he dwelled a little on the bottle and then
a Photo of a spritely Bashar Assad and would surely not even have had
to ask the question; what’s the difference?Between 2006 and 2018
Russia’s trade with Africa increased by 335 per cent, more than both
China’s and India’s according to the Espresso Economist.Russia is now
Africa’s leading supplier of arms. According to the Swedish think tank
SIPRI, between 2012 and 2016 Russia had become the largest supplier of
arms to Africa, accounting for 35 percent of arms exports to the
region“Russia regards Africa as an important and active participant in
the emerging polycentric archi- tecture of the world order and an ally
in protecting international law against attempts to undermine it,” the
story of a brave but beleaguered Central African lion, who was
fighting a losing battle against a pack of hungry hyenas. Luckily the
lion had a friend who came to the rescue — the strong Russian bear I
would argue Putin’s timing is exquisite and optimal and his Model has
an exponential ROI. Russia’s “political technologists” have reportedly
devised bespoke solutions for confronting incipient and ongoing color
revolutionsOnce we look through the Optics of two nuclear-capable
supersonic bombers belonging to the Russian Air Force landing in
Pretoria for the aircraft’s first-ever landing on the African
continent and, according to an embassy official, only the second
country in which it has made a public appearance outside of Russia.The
first was Venezuela. Then we need to see this move for what it is. It
is meaningful.Where Xi is fed up and speaks about the ‘’The End of
Vanity’’ becau-se the ROI [outside commodities and telecoms for China]
is negative, Putin has created a hybrid model with an exponential ROI.
I would imagine he is on speed dial.

“Hatred, jealousy, and greed - emotions, rather than strategy - will
set the terms of [information warfare] struggles”.

International Markets

Euro 1.1160
Dollar Index 97.251
Japan Yen 107.97
Swiss Franc 0.9859
Pound 1.2963
Aussie 0.6906
India Rupee 70.89
South Korea Won 1165.39
Brazil Real 4.0174
Egypt Pound 16.137
South Africa Rand 15.081

Yuan stress has been accompanied with spikes in VIX this year.

Commodities

Futures edged higher in New York on Friday, but are down 4% this week.
Chinese officials are warning they won’t budge on the thorniest issues
and are wary of President Donald Trump’s impulsiveness even as the two
sides get close to signing an initial agreement, people familiar with
the matter said. U.S. crude inventories rose by more than forecast
last week and a JBC Energy report showed Saudi Arabian production
rebounded to normal levels in October. West Texas Intermediate crude
for December delivery rose 19 cents, or 0.4%, to $54.37 a barrel on
the New York Mercantile Exchange as of 10:53 a.m. in Singapore. The
contract lost 1.6% on Thursday, just managing to eke out an 0.2% gain
for October. Brent for January added 7 cents to $59.69 a barrel on the
London-based ICE Futures Europe Exchange. The December contract
dropped 0.6% as it expired on Thursday. The global benchmark crude
traded at a premium of $5.27 to WTI for the same month.

Emerging Markets

Frontier Markets

Sub Saharan Africa

Every window of the factory on the outskirts of Adama is smashed. On
the side of the road are the scorched remains of a bus and lorries
torched by angry young men last week. This scene of mob violence, just
75km from Addis Ababa, the capital, is one that is becoming wearily
familiar to many Ethiopians.
The democratic revolution kick-started by Abiy Ahmed, the prime
minister, last year has long been bittersweet. The government released
tens of thousands of political prisoners, welcomed back exiled
opponents and promised free and fair elections in 2020.
Last month Abiy won a Nobel peace prize, for helping end a
decades-long conflict with neighbouring Eritrea. But his efforts to
put his own country on a more liberal path have been marred by rising
violence and ethnic tensions.
The latest killings suggest it is the transition’s darker side that is
ascendant.

ADDIS ABABA (Reuters) - At least 78 people were killed during protests
in Ethiopia last week over the treatment of a prominent activist, the
prime minister’s spokeswoman said on Thursday.
Billene Seyoum told a news conference that 409 people had been
detained over the unrest and that investigations were ongoing and the
death toll and number detained could rise.
Supporters of activist Jawar Mohammed took to the streets last week to
protest against his treatment after he said police had surrounded his
home in Addis Ababa and tried to withdraw his government security
detail.
Crowds of young men from his Oromo ethnic group quickly turned their
anger against Prime Minister Abiy Ahmed, also an Oromo, saying that he
had betrayed them by mistreating Jawar.
Billene said that at least 78 civilians had died in “a very senseless
act of violence” in the Oromiya and Harari regions and the eastern
city of Dire Dawa.

Government workers in Zimbabwe on Thursday announced plans for a
“massive” protest march next week to press for higher wages, as the
finance minister said the economy would this year fall into recession
for the first time since 2008.
The Apex Council of public sector unions said the government had not
responded to its demands for U.S. dollar-indexed salaries to cushion
workers against inflation that economists say reached 380% in
September.
“As a consequence of the above, the Apex Council is calling upon all
civil servants to prepare for a massive protest march,” the council
said.
In a letter to labour minister Sekai Nzenza, the union chair Cecilia
Alexander and her deputy Thomas Muzondo said the demonstration would
be held on Wednesday, when they would hand a petition to government.
Finance Minister Mthuli Ncube earlier told lawmakers that the economy
is set to shrink by 6.5% this year - its first contraction in a decade
- after a drought and power shortages.
Ncube said water in the Kariba dam, which can produce 1,050 MW, was so
low that “we are dangerously close to a level where we have to cut off
power generation”. Kariba was producing 122 MW on Thursday.

“Money is accordingly a system of mutual trust, and not just any
system of mutual trust: money is the most universal and most efficient
system of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between
high Inflation and revolutionary conditions, Zimbabwe is a classic
example where there are $9.3 billion of Zollars in banks compared to
$200 million in reserves, official data showed.
The Mind Game that ZANU-PF played on its citizens has evaporated in a
puff of smoke.
‘’The choice of that moment is the greatest riddle of history’’ and
also said “If the crowd disperses, goes home, does not reassemble, we
say the revolution is over.”
What is clear to me is that Zimbabwe is at a Tipping Point moment.

For a quarter-century, South Africa has been able to count on an
investment-grade rating from Moody’s Investors Service. Bond buyers
may be forgiven for wondering why.
Financial markets have been pricing in a downgrade for months, and the
other two major rating companies have had South Africa at junk status
for two years. Should Moody’s follow suit, the nation would suffer
enormous financial consequences.
For one, the country would lose its place in the FTSE World Government
Bond Index, which requires at least one investment-grade rating from
either Moody’s or S&P Global Ratings.
Exiting it would spark an investor selloff and outflows of as much as
$15 billion, according to Bank of New York Mellon Corp., at a time
when South Africa needs portfolio investment to finance its persistent
current-account deficit. A downgrade would also raise borrowing costs,
complicating the government’s efforts to balance the budget.
South Africa doesn’t need more fiscal woes. It’s already spending 138
billion rand ($9.2 billion) to bail out Eskom Holdings SOC Ltd., the
troubled state power utility.
Coupled with other likely industry aid packages, deficit spending will
rise to a decade high next year, with debt topping 70% of gross
domestic product, according to this week’s medium-term budget
statement.
The country’s 10-year bond yield is almost three percentage points
higher than lower-rated Brazil’s.
“From a rating agency’s perspective, this means only one thing: The
debt trajectory is unsustainable over the long term,” Cristian Maggio,
London-based head of emerging-market strategy at TD Securities, said
in a report after Wednesday’s budget release.
“We think the sovereign debt ratings will have to be adjusted lower.”
An “outright downgrade is unlikely without a prior change of outlook.”
Finance Minister Tito Mboweni himself said Thursday that the fate of
the Moody’s rating was “not looking good.”
Most analysts in a recent Bloomberg survey predicted that Moody’s
would change its outlook on the nation’s credit rating to negative,
from stable, before the end of the year -- a move likely to precede a
downgrade.
Moody’s is scheduled to review its rating on Friday, after a call with
Treasury officials. The company declined to comment on why it hadn’t
downgraded South Africa.
“I expect Moody’s to look at three things: the debt metrics, is our
growth story credible and what are we doing on the expenditure side,”
Dondo Mogajane, director-general at the National Treasury, said in an
interview in Cape Town. “It remains a challenge and a concern.”
Moody’s already rates Eskom’s long-term debt at B2, five notches below
investment grade and lower than Fitch. That means the utility has to
rely on government guarantees to borrow in capital markets, increasing
the strain on state finances. Should Eskom be unable to repay its
debt, the government would be on the hook for as much as 280 billion
rand.
Moody’s, say former government officials, investors and economists,
has kept South Africa investment-grade partly because of history,
partly because of methodology.
When South Africa emerged from apartheid and the consequent
international isolation in 1994 under the leadership of Nelson
Mandela, one of the first things it sought was a credit rating that
would allow the government to access funding in international markets.
Fitch responded with a BB rating, two levels below investment grade,
and S&P followed suit.Then came Moody’s, with an assessment of Baa3,
the lowest investment rating and two levels higher than the others.
Mandela’s charisma had something to do with it, according to Estian
Calitz, director-general of the Treasury at the time and now an
economics professor at Stellenbosch University.
But South Africa also worked hard to earn credibility, he said.
The president and his cabinet “had a profound understanding of what it
would take to get South Africa back to international markets,”
maintaining fiscal discipline even as they pursued policies aimed at
redressing economic inequalities, Calitz said earlier this year.
President Thabo Mbeki, who succeeded Mandela in 1999, continued along
that path, and South Africa’s credit rating improved during his
administration. It reached its apex with Moody’s in 2009, a year after
Mbeki was replaced by Jacob Zuma.
That’s when the tide started turning, according to Lungisa Fuzile, a
former director-general of the Treasury who resigned from office
during Zuma’s presidency.
A series of downgrades ensued, sparked by a slowing economy,
institutional decline and rising political risks, including Zuma’s
firing of his respected finance minister, Nhlanhla Nene.
By 2017, Fitch and S&P had the country at junk, while Moody’s had
shaved its rating by three levels.Moody’s and S&P consider broadly
similar factors when making their assessments, according to
information published on their websites:
The economy, institutional strength, fiscal position and
susceptibility to event risk. But Moody’s appeared to give greater
weight to the institutional and political factors that underpin the
willingness to repay debt, according to Calitz.
“The rating companies had two questions in 1994: Can you repay foreign
debt and service debt until maturity, and will you do it?” said
Calitz.
“The political factor seemed to have weighed a bit more with Moody’s
than with S&P. Moody’s seemed to look more at the political economy
whereas S&P was stronger on the technical factors.”
It’s not like Moody’s hasn’t come close to cutting South Africa to
junk. The company placed it on review for a cut to sub-investment
grade in December 2017. But when the review was concluded three months
later, the country kept its Baa3 rating and was rewarded with an
outlook change to stable from negative.
Market pricing indicates it’s only a matter of time before Moody’s
comes into line with its competitors. The cost of insuring South
Africa’s debt for five years using credit-default swaps is more than
double that for Russia, which has a similar rating at Moody’s. And
it’s higher than that of Brazil, which is rated junk.
The premium investors demand to hold South Africa’s dollar debt rather
than similar-maturity U.S. Treasuries, at 345 basis points, is about
on par with Bolivia, rated one step below investment level, and
Jamaica and Belarus, both six notches into junk.
And among emerging markets, only junk-rated Turkey, Lebanon and
Nigeria pay more for 10-year local-currency debt.
South Africa’s longer-maturity debt and its low level of
foreign-currency bonds -- 10% of total debt -- set the country apart
from other emerging markets, said Lucie Villa, Moody’s vice president
and lead sovereign analyst for South Africa, in September.
“That’s certainly something that explains one of the reasons why we
are at Baa3 at the moment,” Villa said at the company’s sub-Saharan
Africa summit in Johannesburg.
While the country still faces major challenges -- including the crisis
at Eskom -- President Cyril Ramaphosa has started repairing some of
the damage since he came into office in February last year. Though
some investors are frustrated at the slow pace of change,
Moody’s is giving him some breathing room, said Gina Schoeman, a
Johannesburg-based economist at Citigroup Inc.
“Moody’s will look at all of this and say he’s actually had very
little time to enact a lot,” Schoeman said.
“It comes down to, will Moody’s see fiscal effort, are they seeing an
effort to actually do something on growth? And then they’re going to
have to weigh that up with the more fundamental deterioration in GDP,
in debt, in the fiscal metrics.”

Charlie Robertson [Chief Economist Renaissance Capital] has pronounced
that South Africa [is] Heading for [a] Junk Downgrade. A meme flying
round on social media is that There is a New sex position called the
“Ramaphosa” Get on top and do nothing [@danielmarven].

The Purest Proxy for the China, Asia, EM and Frontier markets feedback
loop phenomenon is the South African Rand aka the ZAR.
The rand was down 0.4% to 15.1121 per dollar by 12:05 p.m. in
Johannesburg, its weakest level on a closing basis since Septem- ber
2018.
The rand is also the most volatile currency in the world, with the
one-week implied volatility climbing a fourth day.

Sudan once had the largest railway network in Africa, with most of the
train cars obtained from the United States.
But decades of negligence, economic troubles, and U.S. sanctions have
made the railway reliant on Chinese-made trains and parts that it can
hardly afford.
With the recent ouster of Omar al-Bashir, the railway's supporters are
hoping the United States will soon lift sanctions to help restore it
to its former glory
Yassin remembers the railway's glory days, when it was the largest in
Africa, running 5,000 kilometers (3,100 miles) from the Egyptian Red
Sea and crisscrossing Sudan to what is now South Sudan.
Yassin said Jebait school was graduating one hundred students per year
- all qualified to work on the railway. It was a strong corporation.
There was abundance in spare parts and locomotives.
But the railway fell apart through mismanagement and a fear of
organized labor's influence on the economy and politics.
Now, railway workshops in Sudan look like a graveyard, littered with
dozens of vehicles, some of them idle for decades.
Sudan fired thousands of qualified rail workers, replacing some with
political appointees put in place after former president Omar
al-Bashir came to power.
Mahmoud Salih, director of engineers in the Khartoum train workshop,
said if the sanctions are lifted, they can at least be updated with
the technology of the trains.
Salih added that Sudan is so late to update the current technology,
it's functioning with the past century's technology, they need to
update and then develop.
After the British colonial era, the state-run railway became reliant
on U.S. trains and replacement parts. But because of sanctions,
Khartoum has been unable to buy U.S. parts  leaving only 18 of the
railway's 106 U.S.-made trains in service.
Sudan Railways corporation director Mohamed Hamid said the railway
turned to China to keep the trains running.
Hamid said when the U.S. embargo cut out everything; they had to
import their spare parts and needs from other countries.
He said that they resorted to China, they have the American
locomotives and, of course, China cannot produce the American spare
parts, especially the main machines from Caterpillar (Inc.), so what
they were going to do?
Importing a few Chinese trains in 2014 allowed Sudan to launch two new
passenger lines.  But poor track conditions means the trains can only
go 60 kilometers per hour - half their maximum speed.
Before Yassin retires at the end of this year, he hopes to see U.S.
sanctions lifted and more efforts by Sudan's transitional government
to get the country's railways back on track.

The ‘’zeitgeist’’ of the Revolution in Khartoum was intoxicating. As I
watched events unfold it felt like Sudan was a portal into a whole new
normal.

Kenya

Par Value:                  0.05/-
Closing Price:           29.25
Total Shares Issued:          40065428000.00
Market Capitalization:        1,171,913,769,000
EPS:             1.58
PE:                 18.513

Safaricom PLC HY 2020 results for the period ended 30th September 2019
vs. 30th September 2018
HY Voice revenue 46.87b vs. 47.53b -1.4%
HY Mpesa Revenue 41.97b vs. 35.52b +18.2%
HY SMS Revenue 8.60b vs. 9.67b -11.0%
HY Mobile data revenue 19.78b vs. 19.01b +4.0%
HY Fixed service revenue 4.55b vs. 3.84b +18.4%
HY Other service revenue 2.55b vs. 2.49b +2.4%
HY Service revenue 124.32b vs. 118.05b +5.3%
HY Handset revenue and other revenue 5.16b vs. 4.31b +19.7%
HY Construction revenue 0.35b vs. 0.30b +15.2%
HY Other income 0.07b vs. 0.17b -58.8%
HY Total revenue 129.93b vs. 122.83b +5.8%
HY Direct costs [37.48b] vs. [34.96b] +7.2%
HY Contribution margin 92.07b vs. 87.57b +5.1%
HY Contribution margin % 71.1% vs. 71.5% -0.4%
HY Operating costs [25.59b] vs. [25.82b] -0.9%
HY EBITDA 66.49b vs. 61.79b +7.6%
HY EBITDA margin% 51.3% vs. 50.4% +0.9%
HY Depreciation and amortization [16.67b] vs. [17.56b] -5.1%
HY EBIT 49.82b vs. 44.22b +12.7%
HY Net financing, FX and fair value losses 1.85b vs. 1.41b +31.2%
HY Earnings before taxation 51.71b vs. 45.63b +13.3%
HY Net income 35.65b vs. 31.50b +14.4%
EPS 0.89 vs. 0.78 +14.4%
HY Free cash flow 37.33b vs. 38.42b -2.8%
KEY HIGHLIGHTS
Full-Year Guidance Maintained
• Service revenue growth of 5.3% to KShs 124.32bn.
• Voice service (incoming and outgoing) revenue declined 1.4% to KShs 46.87bn.
• M-PESA revenue grew by 18.2% to KShs 41.97bn.
• Mobile data revenue increased by 4.0% to KShs 19.78bn.
• Messaging revenue declined by 11.0% to KShs 8.60bn.
• Fixed service revenue increased by 18.4% to KShs 4.55bn.
• One month active overall customers increased by 8.9% to 27.45mn.
• One month active M-PESA customers increased 12.4% to 23.61mn.
• One month active mobile data customers increased 14.8% to 20.19mn.
Strong financial performance
• 12.7% growth in EBIT, or Profit before Interest and Tax, to KShs
49.82bn with an
EBIT margin of 38.5%, up 2.4ppts YoY.
• Net Income, or Profit after Tax, increased by 14.4% to KShs 35.65bn.
• Free Cash Flow declined 2.8% to KShs 37.33bn.
Operating review
Revenue growth for the half year to September 2019 was 5.3% driven by
robust performance across M-PESA and fixed data and strong customer
growth offsetting decline in the traditional revenue streams and soft
performance on mobile data.
Voice and messaging
Voice declined 1.4% while messaging declined 11.0%. This decline was
partly driven by competitive pressures and migration to newer
technologies, and partly by the impact of corrective actions taken
last year to make it easier for our customers to manage their premium
rate subscriptions, and opt out of them where no longer needed. Voice
and messaging are now 44.6% of service revenue.
M-PESA
M-PESA has sustained robust growth in the period recording a YoY
growth of 18.2% despite the impact of the slow-down in the gaming
industry. The growth was driven by 12.4% YoY increase in 30-day active
M-PESA customers to 23.61 million and a 7.8% YoY growth in monthly
usage per customer to 13 chargeable transactions per month. The
company added 2.6 million active M-PESA customers with MPESA now
accounting for 33.8% of service revenue, further accelerating
displacement of traditional voice and messaging services. Excluding
gaming, revenue grew 20.9% YoY and chargeable transactions per
customer per month grew 17.5%.
Mobile Data
Mobile data registered a 4.0% growth in revenue as we continue to
carry the effect of corrective actions taken in prior year;
repositioning data bundles and absorbing the excise duty increase.
Mobile data now accounts for 15.9% of service revenue and registered
an impressive 14.6% growth on the revenue earned in the second half of
last year. Growth in mobile data revenue is expected to return to
double digits in the second half of this year driven by increased
penetration and usage.

Conclusions

M-PESA remains the Jewel in the Crown.
Continue to drive Mobile data Usage which is precisely the correct response.
+14.4% EPS in a soft Economy is actually stellar.