Nigeria’s central bank said on Monday a key interest rate setting meeting intended for January 22-23 will not be held due to an inability to form a quorum, adding that the benchmark rate will be maintained at 14 percent.
The decision comes because there are not enough members of the Central Bank of Nigeria’s (CBN‘s) Monetary Policy Committee (MPC) to form a quorum, the lender said in a statement.
“Under these circumstances, and in the absence of a meeting of the MPC, the CBN shall continue to maintain key monetary policy variables as decided by the last MPC meeting,” the central bank said.
On Friday, Reuters reported that the interest rate meeting was unlikely to be held because several new members of the MPC have yet to be approved by lawmakers, according to two central bank sources.
At least five of the MPC’s 12 members are due to be replaced after retiring last year.
At the heart of the matter is a stand-off between the presidency and legislature over the latter’s powers to confirm - or deny - executive nominees to key posts within the government.
After President Muhammadu Buhari appointed a top civil servant whose nomination Nigeria’s Senate had blocked, the upper parliamentary chamber is now refusing to approve other presidential nominees, including those for the MPC.
On Friday, a presidency official said he did not know when the stand-off would be resolved but it was being addressed by Buhari’s office.
Reporting by Paul Carsten; Editing by Elaine Hardcastle (Reuters)
The global tourism industry has huge economic importance. It contributes 10% of the world’s gross domestic product and 6% of exports. One billion people a year travel somewhere in the world.
Africa’s natural and cultural points of interest give the continent tremendous tourism potential. This shows in the numbers. In 2015, the sector generated USD$ 36 billion in Africa (7% of all exports in the region), up from USD$ 10 billion in 2000. Travel and tourism also directly supports 466,000 jobs. It’s expected that by 2030 the number of tourists will reach 134 million annually.
But African countries’ tourism industries are often constrained by a lack of infrastructure development, air connectivity and financing.
Ethiopia, in East Africa, is an example. The country has immense natural, cultural and historical attractions, but is a largely untapped tourism market. It suffers from a lack of infrastructure and the negative publicity the country received after the famine in the 1980s and various conflicts. It needs to make a big effort to market its potential and develop the measures to support the industry.
Ethiopia’s tourism sector showed a steady increase in the last decade. International tourist arrivals rose from 64,000 in 1990 to 680,000 in 2013 and are expected to reach 815,000 by 2024. This 2024 figure would mean a contribution of USD$2 billion to the country’s GDP. Over the next five years the sector is expected to create over a million jobs, or 3.6% of total employment.
Comfortable hotels play a vital role in attracting tourists. After the fall of the communist government 27 years ago, Ethiopia started privatising most of the state owned hotels and tourism establishments. To support this, the government adopted a policy that allows duty-free imports of hotel furniture, fixtures and equipment. It also provides for favourable loans to investors for the construction of new rated hotels.
But, while the hotel industry is growing, the number of available hotel rooms is still the lowest. In terms of room availability, Ethiopia is globally ranked 134 out of 140, compared to Kenya, Uganda and Tanzania at positions 122, 121 and 118 respectively. Furthermore, there are few hotels of an international standard, and many are old and unattractive. Infrastructure to support the hotels is lacking. There are no zoning policies to establish the areas where hotels should be constructed, or tourist activities to complement them when they are built.
Until recently, Ethiopia did not have enough hotels recognised under international rankings or ratings – they generously awarded themselves their own stars. This made it hard for visitors to judge the quality of a hotel. This changed in 2015 when the Ethiopian government, with the help of World Tourism Organisation, started rating hotels in the country. Though participation in the grading process is mandatory, the graded hotels still haven’t undergone annual audits to ensure they’re keeping up with the standard they were awarded.
Ethiopia also only has six internationally branded and managed hotels. This is a very low figure bearing in mind that the average number of tourists per year is nearly 700,000 and these six hotels have a combined total of less than 1,500 rooms. By comparison, Nairobi in neighbouring Kenya already hosts most of the international hotel brands – and expects 13 more to open their doors over the next five years.
There are also only three five star hotels in Ethiopia and the majority of the “rated” hotels which guarantee a certain standard of service are situated in the capital, Addis Ababa. Other hotels, rated only by online travel agents based on the guests’ comments and with fewer than 100 rooms, are scattered throughout major towns. This is a problem because most of the tourist attractions are located in the countryside. There is also a scarcity of budget facilities, like youth hostels, to cater for budget travellers and backpackers.
Another major issue is the hotel structures. After the fall of the communist regime, from 1995, Ethiopia started privatising. Over 287 enterprises were transferred from the public to the private sector – out of which 34, or 11.8%, were hotels. The aim was to improve economic efficiency, stimulate the private sector and mobilise more foreign and domestic investment. However, the process has been weighed down with problems which include; corruption, loss of jobs and a lack of ownership and transparency. The state retains control of many of the most valuable assets in the sector. These are not well maintained, as they are about to be privatised. For example, Addis Ababa’s Hilton hotel, completed in 1987, now needs urgent refurbishment.
Finally, the hotel industry needs to be supported by tourism infrastructure. It needs physical facilities like car parks, sewerage and water works, transport projects and roads. These have to be based on zoning policies, to establish where the hotels should be built. With the exception of Addis Ababa, there are also hardly any offerings of recreational or entertainment activities like parks, concerts or cinemas. And there are logistical gaps like the lack of adequate ATM machines and foreign exchange bureaus outside Addis Ababa. This means visitors need to carry large amounts of cash in local currency, which is inconvenient and unsafe.
To spur tourism growth and development, Ethiopia must improve the hotel industry and the infrastructure that supports it. It will take the cooperation of all stakeholders – government, hotel professionals, hotel owners and hotel trade associations – to achieve a competitive and sustainable sector.
South African cement producer PPC said on Friday it has reached agreement with lenders to reschedule the debt relating to a new $300 million plant in the Democratic Republic of Congo (DRC).
PPC, along with other South African construction firms, has been struggling to improve revenue and sales partly due to a slow roll-out of a government infrastructure investment package, squeezing its liquidity.
It has responded by borrowing heavily to build factories in Ethiopia, Rwanda, Zimbabwe and the DRC to boost overseas sales.
The firm said the total capital requirements for the DRC plant will now be limited to interest payments from January 2018 up to January 2020.
The plant is 60 percent debt funded by the International Finance Corporation (IFC) and Eastern and Southern African Trade and Development Bank.
PPC owns 69 percent of PPC Barnet DRC, while Barnet Group owns 21 percent and 10 percent is owned by the IFC.
The debt renegotiation also included an extension of the repayment period by an additional two years as well as an additional interest rate spread of 2.5 percent, making the new rate 6 month U.S. dollar LIBOR plus 975 basis points.
The initial terms of the debt included U.S. dollar denominated capital and interest payable biannually from July 2017 to July 2024, and six month U.S. dollar LIBOR interest rate plus 725 basis points.
“The rescheduling of debt firstly reduces the capital requirements by PPC Barnet DRC from PPC Ltd. Secondly it will improve cash flows for the DRC business which in turn will allow the business additional liquidity during this ramp up phase,” PPC’s chief financial officer Tryphosa Ramano said in a statement.
Reporting by Nqobile Dludla; Editing by Elaine Hardcastle (Reuters)
Nigeria’s central bank is unlikely to hold an interest rate setting meeting on Jan. 22 as scheduled because several new members of the monetary policy committee (MPC) have yet to be approved by lawmakers, two central bank sources told Reuters.
At least five of the MPC’s 12 members are due to be replaced after retiring last year. “The indications that the MPC might not hold are there because of quorum,” one of the sources said.
Central bank rules state that at least six members of the MPC are needed to approve an interest rate decision. A rate announcement had been expected on Jan 23, a day after the meeting.
The sources said the central bank would issue a statement.
At its last meeting in November, the MPC held rates at the same 14 percent level it has kept for more than a year, to fight inflation and to attract foreign investors to support the naira.
The head of Nigeria’s statistics bureau told Reuters this week he expects inflation to fall faster this year than in 2017 as the economy and currency stabilise, but warned that spending ahead of elections next year could stoke price rises.
Reporting by Chijioke Ohuocha and Camillus Eboh; Editing by Catherine Evans (Reuters)
Nigeria has moved closer to turning an oil industry bill into law after a 17 year struggle to complete the legislation which aims to increase transparency and stimulate growth in the country’s oil industry.
Nigeria’ lower house of parliament has passed a version of the bill which is the same as one approved by the Senate last year. This is the first time both houses have approved the same version of the bill. It still needs the president’s signature to become law.
The legislation - known as the Petroleum Industry Bill (PIB)- was broken up into sections to help to get it through.
The House of Representatives passed the first part called the Petroleum Industry Governance Bill (PIGB) on Wednesday.
“The PIGB, as passed yesterday, is the same as passed by the Senate. We have harmonised everything and formed the National Assembly Joint Committee on PIB,” Alhassan Ado Doguwa, a key PIB lawmaker in the House of Representatives, told reporters in the capital Abuja.
“Every consideration of the bills is now under the joint committee. We have broken the jinx after 17 years. We are working on the other accompanying bills.”
The passage of the first bill means that the government can move forward with new taxation legislation, which could make it more attractive for companies to invest, particularly offshore.
“It’s an unprecedented step forward. The PIB is something that has defied the last two governments,” Antony Goldman of PM Consulting said.
“The detail of what is agreed will determine the extreme to which the bill takes politics out of the sector and tackles systemic corruption.”
Uncertainty over terms affecting taxation of upstream oil development has been the main sticking point holding back billions of dollars of investment for the oil industry. This will be addressed later in an accompanying bill.
Shell, Chevron, Total, ExxonMobil and Italy’s Eni are major producers in Nigeria through joint ventures with the state oil firm NNPC.
The speaker for the House of Representatives Yakubu Dogara said later on Thursday that “the new legislation will be transmitted to the President within the next few days.”
The governance section deals with management of the Nigerian National Petroleum Corporation (NNPC). The National Assembly Joint Committee is working on two more bills as part of the PIB.
Dogara added that NNPC would be unbundled as a result of the legislation going through.
The PIGB would create four new entities whose powers would include the ability to conduct bid rounds, award exploration licences and make recommendations to the oil minister on upstream licences.
Nigerian lawmakers ordered an investigation on Thursday into whether the government could recover $21 billion in revenues from international oil companies.
Editing by Jason Neely and Jane Merriman (Reuters)
Nigeria has filed a claim against JP Morgan Chase for more than $875 million, accusing it of negligence in transferring funds from a disputed 2011 oilfield deal to a company controlled by the country’s former oil minister.
A spokeswoman for JP Morgan dismissed the accusation on Thursday, saying the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.
The suit filed in British courts relates to a purchase of the offshore OPL 245 oilfield in Nigeria by oil majors Royal Dutch Shell and Eni in 2011.
At the core of the case is a $1.3 billion payment from Shell and Eni to secure the block that the lawsuit says was deposited into a Nigerian government escrow account managed by JP Morgan.
The lawsuit said JP Morgan then received a request from finance ministry workers to transfer more than $800 million of the funds to accounts controlled by the previous operator of the block, Malabu Oil and Gas, itself controlled by former oil minister Dan Etete.
The lawsuit said that JP Morgan then transferred the funds to two accounts controlled by Etete, without sufficient due diligence to make sure the money did not leave accounts controlled by the Nigerian government.
Reuters was unable to reach either Etete or Malabu for comment.
The filing seen by Reuters was made in London in November on behalf of the Federal Republic of Nigeria, and says that JP Morgan acted with gross negligence by allowing the transfer of the money without further checks.
It said JP Morgan should have known that, under Nigerian law, the money should never have been transferred to an outside company.
“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected ... that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” the filing said.
Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy, where Eni is headquartered, for a separate legal case in which Milan prosecutors allege bribes were paid to Etete and others as part of the same oilfield deal, including sums that went to Etete’s Malabu.
Both Eni and Shell have repeatedly denied any wrongdoing in relation to that case. Malabu has never commented on the case and Reuters has not been able to contact it.
Shell last year said it knew some of its payment to the Nigerian government as part of the deal would go to Malabu “to settle its claim on the block”, but that it was a legal transaction.
There are also ongoing investigations regarding the deal in Nigeria and the Netherlands, where Shell is based.
The license for the offshore block was awarded to Malabu in 1998 under then-President Sani Abacha, but Shell finalised a deal for the block with the Nigerian government in 2011.
A British court, in a judgement late last year that agreed to return to Nigeria $85 million in frozen funds related to the deal, said that Malabu was controlled by Etete.
Additional reporting by Alexis Akwagyiram in Lagos, Writing by Libby George; Editing by Andrew Heavens (Reuters)
South Africa’s Treasury cannot afford to bail out ailing state-run utility Eskom but will take unspecified action soon to tackle the company’s challenges, Finance Minister Malusi Gigaba said on Thursday.
Eskom, which supplies virtually all of the power for Africa’s most advanced economy, has been embroiled in governance and graft crises and has delayed its interim results, a move that could see trading of its debt suspended on the Johannesburg bourse.
Reporting by Mfuneko Toyana; Writing by Ed Stoddard; Editing by Andrew Roche (Reuters)
Official reactions from Africa were appropriately critical of President Donald Trump’s credibly reported comments about not wanting more immigrants coming to the US from “shithole” countries. This included all those south of the Sahara. A few reactions even included constructive suggestions.
The African Group of United Nation ambassadors unanimously dismissed the comments as “outrageous, racist and xenophobic”. They demanded Trump retract them and apologise. Botswana, Senegal and South Africa summoned US local representatives to be served with a demarche. In normal diplomatic practice this is a stern request for an explanation and is tantamount to a formal protest.
But in dealing with Trump, normal protocols are beside the point.
More than a year after he took office Trump has yet to announce an Africa policy, or even fill important diplomatic positions. He has yet to nominate an Assistant Secretary of State for Africa or an ambassador to South Africa. This means that African leaders lack any policy context in which to frame and guide traditional diplomatic reactions.
The Trump administration’s incompetence makes it difficult for African countries to engage Washington in seeking meaningful explanations, much less substantive negotiations. Even at lower working levels sustaining routine relations are complicated by a lack of policy guidance, budgetary uncertainty, and inter-agency management. This affects complex development, environmental, trade or security issues.
Africa’s limited resources, institutional capacities and vulnerabilities add to the risks associated with the current state of affairs.
Challenging racism with reason
Ebba Kalondo, chief spokesperson for the African Union said Trump’s comment “flies in the face of accepted behaviour and practice”. But she then sounded a possibly hopeful note. She added that the US
remains a global example of how migration gave birth to a nation built on strong values of diversity and opportunity. We believe that a statement like this hurts our shared global values on diversity, human rights and reciprocal understanding.
Kalondo’s appeal to what Abraham Lincoln famously called “the better angels of our nature” also recalls how Trump’s predecessor, Barack Obama, sought to transform troubling moments into what he suggested could be “teachable moments”.
In this spirit prominent African Americans, such as popular TV news pundit Joy Reid, have responded to Trump with positive reminders. Reid informed her viewers that her mother is a professor who immigrated from Guyana and her father a successful Congolese-American geologist. Other successful Africans are also speaking out. This affirms that Kalondo’s reference to enduring shared global values may not ring as hollow as Trump’s bigoted comments might cause us to fear.
This does not deny the immediate danger posed by Trump. As a New York Times editorial reminded readers the day after the reported comment and his attempt to retract it:
Mr Trump is not just a racist, ignorant, incompetent and undignified. He is also a liar … And still supporting Trump are a substantial number of the 63 million voters who elected him. It is these people, albeit not a national minority, who he continues to court, with his denigration of immigrants and especially those of African origin.
Trump’s comments can be viewed as a reflection of his personal animus and a conviction that they will play well with his political base.
Further complicating any effort to hold Trump and his supporters to account is that he’s repeatedly said he “is the least racist person he knows”. Polling suggests that most of his political supporters also believe they’re not racists.
Such denials have a long history in US politics. They are at the heart of America’s ongoing struggle for racial justice as recounted in “The Nationalist’s Delusion” by Adam Serwer.
Trump and his white nationalist supporters will also never concede that the history of slavery and colonial exploitation perpetrated by their own American and European ancestors contributed to Africa’s problems of economic underdevelopment and political balkanisation.
Time to break with protocol
African governments and non-governmental groups are right to voice outrage in reaction to Trump’s outbursts, and to criticise his behaviour.
But they need to do more. They can encourage and cooperate directly with those in Congress, African-Americans and the growing network of civil society groups opposed to Trump. This may bend, or even violate, traditional diplomatic practice. But Trump’s own disregard for international principles and norms justifies using alternative methods and interventions.
Having America as a more politically capable, willing and acceptable partner is surely in Africa’s long-term interests. This aspiration can be rooted in the same values as the pan-African democratic vision enshrined in the AU’s Constitutive Act. The vision was championed more than a decade ago under the banner of an African Renaissance. It is based on shared commitments to democratic cooperation, greater collective self-reliance and eventual democratic integration. But it is floundering and could founder.
If Americans succeed in resisting Trump and reconsolidating their democracy, then this could lend critical support for African democrats who still believe in the shared vision that the AU’s Kolondo refers to.
Annual inflation in Nigeria slowed for the 11th month in a row in December, to 15.37 percent from 15.90 percent a month before, the head of the National Bureau of Statistics (NBS) said in a tweet on Tuesday.
Yemi Kale also said on his personal Twitter account that a separate food price index showed inflation at 19.42 percent in December, down from 20.30 percent in November.
In October, Central Bank Governor Godwin Emefiele said he expected inflation rates to fall at a faster pace and reach the high single-digits by the middle of 2018.
The bank has kept its main interest rate at 14 percent for over a year now as it battles inflation and seeks to attract foreign investors to support the naira currency.
The government wants to see rates come down to lower its borrowing costs and stimulate the economy.
The West African nation emerged from its first recession in 25 years in the second quarter of 2017 as oil revenues rose, although the slow pace of growth suggests the recovery remains fragile.
Reporting by Paul Carsten; Editing by Catherine Evans ABUJA (Reuters)
Kenya has secured a $750 million syndicated loan for seven years from the Trade Development Bank (TDB) to pay off creditors in another two-year syndicated loan that was extended last year, two banking sources told Reuters on Tuesday.
The government was also set to issue a $1.5 billion Eurobond for 10 years by the first week of March, to take advantage of high demand for new issues, said one of the sources.
Officials at the ministry of finance did not respond to a request for confirmation of the information from Reuters. TDB was also not immediately available for a comment.
Henry Rotich, the finance minister, said last November a six-month extension of the syndicated facility had been agreed with 90 percent of investors. Funds raised from a new Eurobond issue could be used to pay off the outstanding amount, he said.
Reporting by Duncan Miriri, editing by Larry King (Reuters)