South Africa's central bank is concerned about further downgrades to local currency debt and the impact on the stability of the domestic financial system, it said in a report on Tuesday.
Africa's most industrialised economy has this year suffered from credit ratings downgrades after President Jacob Zuma sacked respected Finance Minister Pravin Gordhan in late March. "The possibility of further downgrades to South Africa's local currency rating and South Africa consequently being excluded from the remaining bond indices is disconcerting," the bank said in a financial stability review.
The regulator added that should ratings agencies downgrade South African local currency debt further it could have a significant impact on the cost of funding and investment flows. "Market volatility could increase as a result, with sharp losses likely to be recorded in the currency, bond and equity markets, thereby negatively affecting the stability of the domestic financial system," it said. S&P Global Ratings cut South African foreign debt to sub-investment grade in April, while Fitch downgraded both the foreign and local currency debt to "junk" status.
Moody's, two notches above junk status, has put South Africa on review for a downgrade. Local currency borrowing makes up about 90 percent of the South Africa's total 2.2 trillion rand ($165 billion) of debt.
Botswana has introduced the Tourism Development Levy (TDL) despite resistance from the Hospitality and Tourism Association that resulted in its withdrawal last year.
The Ministry of Environment, Natural Resources Conservation and Tourism, through the Botswana Tourism Organisation (BTO) last week announced that it was introducing the levy to raise funds for conservation and national tourism development.
Effective June this year, all non-Sadc visitors entering Botswana will be required to pay $30 tourism levy at the point of entry. “The levy is purposed to support the growth of the industry and broaden the tourism base,
resultantly improving the lives of the people of Botswana,” BTO said in a statement.
The Tourism Statistics Annual Report for 2015 shows that from the 1,661 million visitors who entered Botswana in that year, 11.4 percent (190 000) were from non-Sadc countries. A back of the envelope calculation shows that at $30 per person government is likely to accrue around $5.7 million (P60 million) per annum through the levy. According to BTO, non-Sadc visitors can pay the levy at the point of entry through electronic payment machines, cash, debit or credit card.
“After payment, a special receipt corresponding to the passport will be automatically generated. The receipt should then be presented to immigration officials and the passport and receipt will then be handed to the traveller. “The receipt is valid for a 30 days period and can be used for multiple entries. The funds will be used to develop more tourism products,” BTO said.
Tourism is Botswana’s second largest foreign exchange earner and contributes significantly to employment and economic growth.
Source: The Chronicle
Africa's biggest mobile phone operator MTN Group reported a 7.1 percent rise in group revenue for the first quarter of 2017, helped by a strong performance in its data services segment, the company said on Wednesday.
MTN said data revenue, which contributed 20 percent of total revenue, was up 29.4 percent on year for the three months ended March 2017, while the count of group subscribers fell 1.5 percent on quarter due to "restatements to subscriber numbers in Ghana, Rwanda and Zambia."
Founded with the help of Pretoria at the end of white rule in 1994, MTN is seen as one of post-apartheid South Africa's biggest commercial successes, but clashes with regulators in the recent years have raised questions about its governance and hobbled growth.
(Reporting by Nqobile Dludla; Editing by Vyas Mohan)- Reuters
Chinese conglomerate HNA Group has become Deutsche Bank AG's largest shareholder after increasing its stake in the German lender to almost 10%.
U.S. public filings show HNA raised its stake to 9.92% through C-Quadrat Asset Management (UK) LLP, the U.K. subsidiary of C-Quadrat Investment AG. HNA's increased stake in Deutsche Bank makes it the lender's largest shareholder, ahead of members of Qatar's royal family and U.S. money manager BlackRock Inc., according to public filings.
Deutsche Bank declined to comment. HNA and C-Quadrat couldn't be reached immediately for comment. At Tuesday's closing price, HNA's 204.7 million-share stake was worth about EUR3.4 billion ($3.7 billion). HNA has previously said its holding in Deutsche Bank is passive and it intended to keep it below 10%.
Based in China's Hainan province, HNA Group began as an airline operator, before expanding into hotels, tourism, logistics, real estate and finance. HNA's most high-profile acquisitions have been U.S.-based companies, with the firm last year taking a roughly 25% stake in hotelier Hilton Worldwide Holdings Inc.
Deutsche Bank last month completed an $8.5 billion capital increase in which HNA Group and other shareholders participated, people close to the matter said at the time. The fundraising, Deutsche Bank's third since 2013, aimed to soothe concerns about the strength of the bank's capital buffers.
Set against the backdrop of low growth, dire unemployment figures, and a huge infrastructure deficit – the theme of this year’s African World Economic Forum (WEF) is “inclusive and sustainable growth”.
This is a familiar subject for policymakers. On both the regional and global stage it’s natural to speak in terms of market integration among groupings of nations to stimulate economic growth. Reducing bottlenecks to trade often serves as the focal point, with Free Trade Agreements (FTAs) typically the formal means of implementing these initiatives.
The idea behind all of this is that connected markets provide a larger base of customers into which companies can sell their products and services. And that, for their part, customers benefit from greater product diversity and value. This in turn creates a virtuous cycle in which a growing economy makes investment in the region more bankable. With greater access to funding, investment in needed capital projects can be accelerated, in turn reducing Africa’s sizeable infrastructure gap and stimulating inclusive growth.
Admittedly, this orthodox take on markets and growth is not firmly embraced across Africa. Rather, what remains prevalent is an emphasises on government intervention and the role of the ‘developmental state’ as seen in South Africa’s National Development Plan .
What’s not in dispute is the continent’s infrastructure gap. Road and rail transport costs in Africa are estimated to be about 50% greater than comparable regions in other parts of the world. And over 600 million people across the continent lack access to electricity while even greater numbers make do with sub-standard levels of drinking water and sanitation.
Estimates suggest that the continent needs as much as $1 trillion in invested capital over the next ten years to close the infrastructure gap.
The question is whether the WEF gathering can make a dent in this problem. In reading background studies to this year’s meeting, the forum seems more attuned to the world it would like to see, rather than the one at hand. To move beyond the “spin” the forum should address impediments to inclusive growth.
New solutions to old problems?
The WEF is not the first to have focused on market integration as a way to promote economic growth. The African Union Summit has recently taken steps to establish a continental Free-Trade Area (FTA) that would include all 54 African countries. This is on top of an alphabet soup of long established sub-regional groupings such as the East African Community, West African Community, Southern African Development Community (SADC). A grouping of these three FTAs stands as a Tripartite Free Trade Area covering a combined population of almost 600 million people.
Yet trade between African nations still represents only 12% of the continent’s total trade. This is far below levels seen in North America (40%), Asia (50%) and Western Europe (70%), and is often cited as an impediment to Africa’s economic development.
SADC’s recent history provides a useful perspective to the successes and failures of African FTAs. SADC was established in its modern form in 1992, having a mandate to promote integration of economic development programmes among member states. At its 2003 Dar es Salaam Summit it adopted an ambitious 15 year programme in which a free trade arrangement, customs union, common market and ultimately a regional monetary union were to be established.
While piecemeal progress has been made since then, the plan’s more ambitious aspects have been largely set aside. Post mortems cite a range of protectionist measures that are defeating its objectives. These include the reluctance of member states to wind back tariffs on goods and services, provisions promoting local content, subsidised industry assistance and visa restrictions.
The WEF has replaced the language of FTA’s and customs unions with the call for “connecting markets, revitalising manufacturing, and integrating innovation”. The practical side of this focuses on industrial corridors in transport, energy markets and financial services and e-commerce.
Here too the SADC was ahead of the curve in terms of planning and adopting a regional infrastructure master plan in 2012. This sector based “corridor” approach to development is meant to be rolled out across energy, transport, water and telecommunications.
But where the SADC has been quick to plan – it has fallen down in implementation.
Old problems stand in the way of new solutions
A report by the Development Bank of Southern Africa concludes that few measures to facilitate trade have yielded measurable results. National interests have tended to override regional objectives. Local and global protectionist trends have only made this more pervasive.
The SADC Energy Plan may become the next non-starter in infrastructure development. So far, it has identified power generation and transmission projects costing between US$ 90 billion to over US$ 200 billion. No doubt some development finance will be allocated to these projects, but the bulk of the required investment is unlikely to move beyond countless feasibility plans.
Obtaining the hundreds of billions needed in power markets alone will require improved standards of governance and regulation. But member states often struggle in these areas, and comprehensive reform across the region seems an unlikely outcome until these fundamental issues are addressed.
Is rhetoric better than reality?
It seems incongruous that the WEF talks about the region as the least competitive globally, but follows with the observation that “fortunately, there are regional clusters of global manufacturing excellence”. This is not to discount clusters of excellence. But the WEF’s reference to an African Outer Space Programme within the context of growing a manufacturing base, and pointing to drones as a solution to the continent’s transport woes, is, at best, naive.
Hopefully the meeting will rise above the spin, and make a meaningful attempt at addressing the dire economic conditions affecting the lives of hundreds of millions of people across Africa.