January 2016

Saudi Arabia’s oil premium may force India to tap Africa

India is looking at Africa to spruce up its oil and gas imports as it seeks to diversify its energy basket after Saudi Arabia’s decision to charge a premium for the oil it sells to Asian customers, according to the government.

“Regarding this (Saudi Arabia charging a premium), we are looking for alternative sources of oil. Towards this, we are in talks with various African nations and the upcoming India-Africa Hydrocarbon Summit will help in moving this forward,” a senior official in the Ministry of Petroleum and Natural Gas said on condition of anonymity.

Africa already contributes around 15 per cent of India’s oil needs, with India having imported 32 million metric tonnes from the entire continent in 2014. Last year, Nigeria overtook Saudi Arabia as the largest contributor to India’s oil imports for a short period of time and currently remains one of the top providers of oil to India.

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January 2016

Crude oil prices dropped below $29 a barrel

Crude oil prices dropped below $29 a barrel on Sunday evening as investors brace for Iran's return to global oil markets.

The West officially lifted sanctions on Iran on Saturday, paving the way for the OPEC country to dramatically ramp up oil production.

But Iran's long-awaited return is only going to deepen the epic supply glut that has caused oil prices to crash from $100 a barrel in mid-2014 to less than $30 a barrel last week.

Sure enough, crude oil prices tumbled below $29 a barrel on Sunday for the first time since November 2003.

"The rubber stamping of this deal is just adding another bearish influence to a market already under a lot of bearish influences. It really couldn't have come at a worse time," said Matthew Smith, director of commodity research at ClipperData, a firm that tracks global oil shipments.

Iran is expected to quickly boost oil exports by 500,000 barrels per day immediately, and it could reach 1 million barrels per day within a year. Iranian officials hope to eventually increase output by almost 1.5 million barrels per day.

However, much uncertainty exists over whether Iran can accomplish that goal because its oil fields have experienced a long period of under investment.

The oil markets have been spooked by Iran's determination to aggressively scale up its output despite the depressed prices. But Iran badly needs to boost revenue after years of being isolated by economic sanctions that crippled its economy.

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January 2016

Rand Meltdown Brings S. Africa Recession, Junk Rating Closer

South Africa is moving closer to a recession and possible credit-rating downgrade to junk after the rand collapsed and as investors lose faith in the ability of President Jacob Zuma’s government to stem the slide.

The currency of Africa’s second-largest economy crashed to a new record low of 17.9169 against the dollar early on Monday as market turmoil in China and a drop in U.S. stocks deterred risk-taking. The 9 percent slump in the rand was the most since 2008 and the biggest of emerging-market and major currencies tracked by Bloomberg.

Policy makers are running out of options on how to ease the crisis. Rising inflation risks stemming from the rand may force the central bank to take more aggressive action in tightening policy at a time when the economy is barely growing. Worsening debt levels and the threat of credit-rating downgrades mean Finance Minister Pravin Gordhan has limited room to veer from his budget targets by boosting spending.

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December 2015

Big African debt burdens are back again

NAIROBI — Rock stars helped convince the international community to write off more than $100bn of African government borrowings a decade ago. Now the big debts are back, and it’s getting tougher for countries to pay them off.

Mozambique was one of the biggest beneficiaries of debt forgiveness, with its debt slashed from 86% of gross domestic product (GDP) in 2005 to 9% the next year. The country has built it back up since then to 61% of GDP.

Ghana’s debt was 82% of GDP in 2005 just before the international community forgave about half of it. It’s now up to 73% of GDP and growing, according to the International Monetary Fund (IMF). In 2003 terms, its debt stood at $7.5bn. The debt level, in today’s dollars, is now nearly $25bn.

It’s a postscript to the apparent success story that began after a high-profile debt initiative championed by musicians such as Bono helped 35 countries escape crippling obligations to international lenders. Coupled with the commodities boom, the debt relief helped set off a wave of investment and growth that saw several African economies develop, reduce poverty and integrate with the global economy more than ever before.

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November 2015

Business Climate improves in sub-Saharan Africa

Sub-Saharan African economies continue to implement reforms to improve on the business climate for domestic entrepreneurs, with members of the Organization for the Harmonization of Business Law in Africa (OHADA) being particularly active during the past year.

The World Bank Group’s Annual Ease of Doing Business, has stated, according to an official statement issued by the World Bank Group in Accra, and copied the Ghana News Agency.

Measuring Regulatory Quality and Efficiency 2015, records a total of 69 reforms in 35 economies in Sub-Saharan Africa. Of these, 14 of OHADAs 17-member countries implemented 29 reforms. The report says the region stood out in implementing reforms under the Getting Credit indicator.

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November 2015

Agribusiness Briefs: Land O’Lakes makes investment in Africa

ARDEN HILLS, Minn. — Land O’Lakes Inc. and Villa Crop Protection of South Africa have formed a partnership, effective Oct. 26, that will capitalize on the growth potential of the South African agricultural market. The two organizations are joining two complementary portfolios of crop input products and services to help all sizes of farms sustainably improve their yields. This is Land O’Lakes’ first commercial investment in Africa and reflects the cooperative’s accelerated growth in its international business.

With the deal, Land O’Lakes, through its South African subsidiary, assumes a 52.5 percent ownership stake in Villa Crop Protection. The existing Villa Crop Protection management team will continue to lead the business. People and product expertise from Land O’Lakes’ crop inputs business Winfield Solutions LLC will support and assist existing operations.

“South Africa has a dynamic and growing agriculture industry, and we are proud to be entering this country with a local market leader in crop protection,” said Chris Policinski, Land O’Lakes president and CEO. “We’ve been in countries across the world, including parts of Africa, for 35 years through our international development efforts. This is our first major international commercial investment in Africa.”

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November 2015

Alphamin and South Africa’s IDC sign $10 million funding agreement

Alphamin Resources has announced that it has secured an investment of $10 million as part of an agreement with South Africa’s Industrial Development Corporation (IDC).

The investment will be directed to Alphamin Bisie Mining, which is the company’s subsidiary used to operate in the Democratic Republic of Congo (DRC). Upon receipt of the full amount, IDC will hold 15 percent of the class ‘A’ shares of Alphamin DRC (or 14.25 percent of Alphamin DRC as a whole).

The IDC has been investing in mining companies for over 70 years; in financial year end 2014/2015 it invested in excess of $900 million of which $150 million was invested in 10 other African countries.

Alphamin’s Interim CEO Boris Kamstra said: "The IDC's investment into Alphamin DRC represents a vote of confidence for Alphamin from a significant experienced long term investor. We look forward to working with the IDC in developing the Bisie tin project."

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November 2015

In Africa, local companies outplay multinationals: report

Johannesburg (AFP) - Local African companies have gained a competitive edge on the continent over their multinational counterparts and are making inroads where overseas players once dominated, said a report released Tuesday.

The study by the US-based Boston Consulting Group said African firms had a better understanding of local markets, and had seized opportunities to increase their market share.

"In emerging markets, there is no substitute for on-the-ground experience," said a report titled "Dueling with Lions".

"To win new ground, multinationals need to understand how Africa's business has shifted."

The report cited improved economic and political conditions and the adaptability of African businesses, with companies allocating resources to grow domestic operations and develop market-specific products.

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November 2015

Multinational transactions drive 60% of illicit financial flows from Africa – Lawyer

Every year between $50 to $60 billion are illicitly moved out of Africa and activities of transnational companies make up 60 per cent of the factors that drive the activities.

While many African countries are party to several sub-regional, continental and global conventions, the region has the highest illicit financial outflows to GDP ratio, with transactions by multinational companies believed to account for 60 per cent, criminal activities 35 per cent, and corruption is five per cent.

A Kenyan lawyer, Grace Mbogo has therefore suggested that African countries should build the capacity of lawyers and law firms in tax law, fighting corruption, asset recovery, legislative drafting of laws and other law practice areas relating to illicit financial flows, to help in fighting the phenomenon.

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November 2015

Tullow Oil rebound fizzles out

n a nod to the growing acceptance that oil prices will likely stay lower for longer,Tullow Oil (TLW) has tightened its belt again and slashed 2016 capital expenditure plans further. Its focus on West African assets and balance sheet protection is welcome, and M&A rumour refuses to go away. That huge debt pile is a real turn-off, though, and this operational update does nothing to improve the outlook

Average production in West Africa should now be 66-67,000 barrels of oil per day (bopd) in 2015, in line with City forecasts but at the bottom of the company's 67-70,000 range. Tullow's Jubilee field, offshore Ghana, is on track to meet its 100,000 bopd target, despite restricted gas exports over the summer. VSA Capital thinks the 33,000 bopd net to Tullow during the third-quarter is "encouraging".

When the oil company's Ghanaian TEN project is complete - first oil is still expected mid-2016 - Tullow's West African oil assets will be pumping around 100,000 barrels of the black stuff from the ground each day in 2017, net to the company.

Revenue and cost of sales are in line with expectations for this year, and Tullow expects to generate pre-tax operating cash flow before working capital of around $1 billion and end 2015 with net debt at around $4.2 billion.

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November 2015

Nigeria’s Fines on MTN, Banks Shows Buhari Under Fiscal Stress

Nigeria is tightening rules against investors in a move analysts say is evidence of a government struggling to cope with fiscal pressures in the face of plunging oil prices, creating more unpredictability for Africa’s biggest economy.

MTN Group Ltd. was fined $5.2 billion by Nigeria’s telecommunications regulator last week, more than 20 percent of the mobile-phone company’s market value, for failing to comply with an order to disconnect customers with unregistered phone cards. In the same week, regulators also imposed fines on Standard Bank Group Ltd.’s Nigerian unit, United Bank for Africa Plc and First Bank of Nigeria Ltd.

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November 2015

Africa: UN Official Sees Potential of Sino-Africa Cooperation On Renewable Energy

Harare — There is huge potential for China and Africa to collaborate in the development of renewable energy sources as the continent steps up efforts to cope with climate change, a senior official with a UN agency has said.

Africa had become increasingly vulnerable to climate change and there was need for the continent to adapt to global warming and ensure energy security through accelerated investment in renewable energy, said Fatima Denton, a director of special initiatives division in the United Nations Economic Commission for Africa (UNECA).

She told Xinhua on the sidelines of the fifth conference on climate and development in Africa underway in the resort town of Victoria Falls. She said Africa could tap into China's vast technological advancement to develop climate resilient energy infrastructure.

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November 2015

The EU’s new trade strategy paints a “redefined” relationship with Africa

The European Commission (EC) presented last week its new trade and investment strategy. Entitled “Trade for all: towards a more responsible trade and investment policy”, it is based on three key principles – efficiency, transparency, and promoting European values. According to an official press release  from the Commission, the document presents how the new strategy will ensure that the EU’s trade policy benefits as many people as possible.

"Europeans know that trade can deliver jobs, growth and investment for consumers, workers and small companies. And they want more of those results. But they don't want to compromise on core principles like human rights, sustainable development around the world or high quality regulation and public services at home,” said EU Trade Commissioner Cecilia Malmström.

"So trade policy must become more effective, more transparent and more in tune with our values. In short, it must become more responsible. That's what we’re doing today,” she added.
The new trade and investment strategy prioritises major projects that are currently on the table of European trade diplomacy, like the Doha Round of WTO talks, the Transatlantic Trade and Investment Partnership (TTIP), the EU-Japan free trade agreement and the EU-China investment agreement. It opens the door to new negotiations, especially in the Asia-Pacific region (with Australia, New Zealand, the Philippines and Indonesia), and plans the modernisation of certain existing Free Trade Agreements (Mexico, Chile, and the Customs Union with Turkey). Finally, it aims to deepen the EU’s relationships with its partners on the African continent.
A “redefined” relationship with Africa
The strategy highlights the momentous transformation that the African continent is undergoing and the significant impact it will have on the world in the years and decades to come. While it is true that Africa has been the fastest growing continent over the past decade, the European Commission believes that the key challenge is to make this growth sustainable.

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November 2015

Google’s newest renewable energy investment: Africa’s biggest wind farm

Google has made a reputation for itself in recent years as a major investor in renewable energy. And this morning, the company announced its newest investment: a wind power project in Kenya that, when completed, will be the continent’s biggest wind farm.
The Lake Turkana Wind Power Project, which broke ground in July, is expected to generate 1,400 gigawatt-hours of power per year, or 15 percent of the country’s electricity consumption, according to a fact sheet from Vestas, one of the project’s co-developers. The project will include 365 wind turbines, spread along the shore of Kenya’s Lake Turkana.


Vestas, a global wind energy company, will be in charge of installing the turbines (likely early next year) and will also provide maintenance for the farm for 15 years. Currently, Vestas owns a 12.5 percent stake in the project — and Google’s investment will be to buy this stake once the project goes online, which is planned for 201

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November 2015

JPMorgan Plans Africa Expansion Even as Regulators Block Entry

amie Dimon, chief executive officer of JPMorgan Chase & Co., which has offices in South Africa and Nigeria, said the bank wants a presence in more African countries to spur growth, even after regulators in Ghana and Kenya refused the lender entry.

“We’ll hopefully start opening branches again in Africa,” he said in a Bloomberg Television interview with Stephanie Ruhle on Monday. “I’m not doing that because it’s going to affect earnings in the next couple years. I’m doing that because that forms the base for the next generation.”

JPMorgan joins banks including Barclays Plc, BNP Paribas SA and Citigroup Inc. that have added operations in Africa to gain from the continent’s economic growth. Sub-Saharan Africa is forecast to grow 3.8 percent this year and 4.3 percent next year, making it one of the fastest-expanding regions, an International Monetary Fund report released Oct. 6 shows.

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November 2015

Diamond’s Atlas Mara Eyes Three More Africa Acquisitions in 2015

Atlas Mara Ltd., the banking group that’s acquiring African lenders, is seeking to buy as many as three more businesses in 2015, co-founder Robert Diamond said.

“We hope before the end of the year to announce two or three more transactions,” Diamond said in a Bloomberg Television interview in New York with Stephanie Ruhle on Tuesday.

Atlas Mara, started in 2013 by Diamond, the former chief executive officer of Barclays Plc, and Ugandan entrepreneur Ashish Thakkar, acquired ABC Holdings and ADC African Development Corp. last year and bought a stake in Union Bank of Nigeria Plc. The group is present in seven African countries.

“Africa is open for business,” Diamond said. “They want investment. It’s fun, it’s a lot of hard work. But it’s really important that it’s open for business. Not many emerging economies with this potential allow foreign investment into banks and majority ownership.”

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September 2015

India and Africa: Picking up the pace of trade and investment

On March 25 – 27 March 2015, the third annual meeting of The Growth Net will be held in New Delhi, India. Convened by Smadja & Smadja and Ananta Centre, the event is a one-of-a-kind platform for companies from emerging economies to come together and discuss ways to “boost the business, trade, and financial linkages” amongst their respective countries, recent trends and developments in legal and regulatory frameworks, and other issues relevant to commercial

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March 2015

Financing Africa’s massive projects without need of donors

It is an audacious USD 4.8 billion project undertaken by one of the world’s poorest countries. At the construction site in the Benishangul region of Ethiopia near the Sudanese border, some 8 500 workers are labouring tirelessly every day to build the gigantic Grand Ethiopian Renaissance Dam. When completed in 2017, the dam will generate 6 000MW of electricity for domestic consumption and export. On the surface, the 170m-tall dam, Africa’s biggest hydropower project

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March 2015

2014 2nd highest year for African PE – AVCA

A recent announcement by Uganda's Oil Ministry that a Russian company - RT Global Resources - won the bid to build a USD 3bn oil refinery highlights the Kremlin's attempts to return as a major player in Africa. RT Global Resources is a subsidiary of Russia's largest state-backed corporation Rostec whose CEO, Sergey Chemezov, is on US and EU sanctions lists after Russia's moves in Ukraine. Chemezov, nicknamed "Putin's arms dealer" and a longtime friend

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March 2015

Kenya signs power line deals to link western area, neighbours

Kenya has signed deals worth 8.14 billion shillings (USD 89 million) to construct a 313-km high-voltage transmission line to connect geothermal power plants to its western region and help link the grid to neighbouring countries. Kenyans suffer frequent blackouts because of supply shortfalls and ageing lines, while many in the country are not connected to the grid. Poor power supplies are seen as a hindrance to regional businesses. A series of projects initiated by the state aim to improve power distributiona and link Kenya's grid to its neighbours

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March 2015

Russia returns to Africa amid increasing isolation

A recent announcement by Uganda's Oil Ministry that a Russian company - RT Global Resources - won the bid to build a USD 3bn oil refinery highlights the Kremlin's attempts to return as a major player in Africa. RT Global Resources is a subsidiary of Russia's largest state-backed corporation Rostec whose CEO, Sergey Chemezov, is on US and EU sanctions lists after Russia's moves in Ukraine. Chemezov, nicknamed "Putin's arms dealer" and a longtime friend of the president, is leading the company in moves designed to ease Russia's

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March 2015

Financing for development: six priorities for Africa

Less than 150 days remain before the Third International Conference on Financing for Development (FfD) takes place in Addis Ababa. The African development financing context has certainly changed since the two previous similar gathering in Monterrey in 2002 and in Doha in 2008: For example, private capital flows, mainly in the form of foreign direct investment, and remittances have now overtaken official development assistance (ODA)

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March 2015

U.S. Export Agency doubles Africa offices to help boost trade

Bloomberg. The U.S. Commercial Service, the export promotion arm of the Department of Commerce, doubled its presence in Africa over the past year to boost trade with some of the world’s fastest growing economies. The agency opened offices in Angola, Ethiopia, Mozambique and Tanzania in the past 12 months and is planning its biggest-ever trade mission to sub-Saharan Africa in September, Donald Nay, a regional senior commercial officer, said in an

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March 2015

Hitting the high notes of African resource M&A: Nana Sangmuah

With six mining deals in 16 months, mining takeovers in African nations are happening with increasing frequency, and Nana Sangmuah, MD of research with Toronto-based Clarus Securities, says more African M&A is on the way. But he cautions investors about companies high-grading reserves to generate cash flow. When the music stops, Sangmuah says, those companies will crash. In this interview with The Gold Report, Sangmuah tells investors how to

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February 2015

Dark times: South Africa, Ghana crises reveal how ‘Africa Rising’ will look like without power

South Africa’s central bank last month revised its 2015 growth forecast from 2.5% to 2.2%, explicitly blaming the country’s electricity woes for the cut. Until last year the continent’s biggest economy, South Africa had already been struggling to keep up with the rest of sub-Saharan Africa, whose sustained growth

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February 2015

Nigeria secures USD 60bn in foreign and local investments

The Nigeria Investment Promotion Commission says that a total pipeline investment of $60bn has been secured from local and foreign investors. The Executive Secretary of the Commission, Mrs. Saratu Umar, said shortly after signing a Memorandum of Understanding with the Executive Director, Nigerian Export Promotion Council, Mr. Segun Awolowo on Tuesday in Abuja that the agreement was aimed at boosting investment in the non-oil sectors

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February 2015

Private equity firms looking past South Africa

Johannesburg. South Africa is no longer the destination of choice for private equity investors seeking to tap returns on the continent. Buyout firms are increasingly targeting markets such as Kenya and Nigeria, Africa's largest economy, where expansion this year is forecast by the International Monetary Fund to be more than double that of South Africa. "Almost all the growth is outside South Africa's borders," said Andrew Dewar, managing partner of Johannesburg-based Rockwood Private Equity (Pty), which was spun out of Barclays Africa Group

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February 2015

Sub-Saharan Africa’s electricity demand to quadruple by 2040: McKinsey

This is against the background of electricity challenges in sub-Saharan Africa. McKinsey & Company released the Brighter Africa Report that looks at the electricity demand and possibilities of private sector investment in the energy space. According to the report, inadequate electricity supply slows GDP growth by 1 to 3 percentage points annually and leaves 600 million Africans without electricity. The report, which comes from the company’s Electric Power and

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February 2015

The 20 fastest-growing economies this year

Emerging markets in Asia and Africa still reign supreme: They're at the top of global growth projections over the next two years. The world is expected to grow 3.2 percent in 2015 and 3.7 percent next year after expanding 3.3 percent in each of the past two years, according to a Bloomberg survey of economists. China, the Philippines, Kenya, India and Indonesia, which together make up about 16 percent of global gross domestic product, are all forecast to grow more than

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February 2015

Investors bet on Nigeria in spite of its growing chaos

London. Nigeria is riven by an Islamist insurgency, political chaos and sliding oil prices. But for a unit of Africa’s biggest insurer, the potential returns from its currency are still too good to resist. Acadian Asset Management Bryan Carter is switching out of Nigerian bonds into forwards speculating on the future value of the naira. Record-high yields on the derivatives imply a 25% loss against the dollar over the next year. Mr Carter says that is too much

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