Kingsley

Kingsley

WhatsApp will soon stop working on millions of phones after the messaging app announced it will stop supporting older devices.

The Facebook-owned company revealed on its support page which smartphones would no longer be able to access the app, claiming the move was necessary to ensure the security of its users.

Various versions of AndroidiPhone and Windows Phone are affected, with the official support period ending on 1 February, 2020.

WhatsApp will no longer work on any iPhones running iOS 8 or earlier, which was first introduced by Apple in 2014. This means anyone with an iPhone 6 or newer will not need to worry about losing WhatsApp.

Android phones using an older version than 2.3.3 – also known as Gingerbread – will also no longer be supported and anyone attempting to create a new account or verify an existing account using older Androids will be blocked.

Android Gingerbread came out in 2010, so nearly a decade’s worth of Samsung, Huawei, Sony and Google smartphones are safe from the cull.

Windows Phones running the mobile operating system Windows Phone 8.1 or beyond will continue to be supported by WhatsApp.

Any WhatsApp users affected could theoretically update their OS in order to continue using WhatsApp, however many older phone models will either have difficulty running newer operating systems, or will simply not allow them to be installed.

It is not the first time WhatsApp has ended support for older phones and has previously described it as a “tough decision” to cut off users for the sake of safety and functionality.

 

Independent

The son of the man who ruled Angola for 38 years has gone on trial for corruption in a rare case of such a high-profile official being taken to court.

José Filomeno dos Santos and his co-accused helped spirit $0.5bn (£0.4bn) out of the country during his time as head of Angola's Sovereign Wealth Fund, prosecutors say.

They have both pleaded not guilty.

The case is seen as a test of Angola's commitment to fight corruption.

It is an extraordinary moment for a famously corrupt, impoverished and oil-rich country, says BBC Southern Africa correspondent Andrew Harding.

José Eduardo dos Santos was president from 1979 until he resigned in 2017 to be replaced by President Joao Lourenco, who is from the same governing party, the MPLA.

What has happened to the former first family?

The fortunes of the family of the former president, who had allowed corruption to flourish during his rule, changed after he stepped down, our reporter says.

After coming to power, Mr Lourenço abruptly turned against the Dos Santos clan and promised reforms and a clean-up, he says.

The new president fired another of his predecessor's children, Isabel dos Santos, Africa's richest woman, from her position as head of the state oil giant Sonango in November 2017 over alleged embezzlement.

Ms Dos Santos denies any wrongdoing. She now lives abroad after saying that her life had been threatened.

In 2017, she told the BBC that she faced prejudice because of who she was.

The former president is also believed to have left the country. This is the first time that a member of the Dos Santos family has been taken to court.

José Filomeno dos Santos, also known as Zenu, spent seven months in jail over the corruption allegations before being freed in March.

He was appointed head of the $5bn sovereign wealth fund in 2013 when his father was in power but was removed in 2017.

Mr Dos Santos appeared before the Supreme Court on Monday in the capital, Luanda, along with three co-defendants, who also face charges of money laundering and embezzlement - one of them is former central bank governor Valter Filipe da Silva.

 

Source: BBC

Muhammad Babandede, the comptroller general of the Nigeria Immigration Service said all Africans will be allowed to come to Nigeria without visa starting from January 2020.

The federal government has given the approval allowing all Africans to come to Nigeria without visa starting from January 2020, the Nigeria Immigration Service (NIS) has said.

The News Agency of Nigeria (NAN) reports that Muhammad Babandede, the comptroller general of the NIS made this known at the inauguration of the Africa–Frontex Intelligence Community (AFIC) on Wednesday, December 11, in Abuja.

Legit.ng gathers that Babandede said President Muhammadu Buhari will soon make the official announcement.

 

Source: Legit

Recently the Minister of Mines and Hydrocarbons of Equatorial Guinea announced the winners of the EG RONDA 2019 licenses, many companies unfamiliar with the legal environment of Equatorial Guinea are preparing to enter the market.

Centurion (CenturionLG.com) Legal Advisor Pablo Mitogo Akele advises how new companies can avoid mistakes commonly overlooked by oil and gas companies when hiring non-local staff.

With large projects under negotiation, 27 blocks in the last round of oil and gas licenses added to the Gasmegahub project, is most likely that several companies are going to need to hire new staff or expand their current workforce in the next two years. In the same way the mining projects that are potentially going to be developed in the country will necessarily create not only a new sector of activities that is not currently contemplated in the salary decree, but will create a whole range of new jobs and new  professionals that neither are  in the salary decree of 2011.

Why do we talk about salaries? Many companies in the oil sector have had problems of salary differences in the past, because foreign workers had previously been paid more than to locals performing the same job. This has ended in court trials that have led to huge losses for companies, sometimes between 400 and 1200 million Franc Cefas. Most of these cases, could have been avoided.

What is salary difference?

In a very simple way; when two people do the same job, but receive different salaries for whatever reason, the salary difference occurs. The law requires that wages be equated. One of the common causes occurs when hiring non-local staff.  It is important to keep in mind that there are other situations in which the salary difference can occur if the legal requirements are not observed.

 For example a) errors in the calculation of the salary, b) for the duality of functions, or c) for the transfer of the worker to another work centre or country.

How the salary is calculated in Equatorial Guinea:

The legal minimum wage according to Decree No. 121/2011, dated September 5, establishes the interprofessional minimum salary of the national private sector is 117,304. (around 180 euros) equal for all those who work for others in the private sector. Except the informal sectors, domestic workers, work with friends and work with family members. However, that does not mean that it is what you must pay. This salary is multiplied by what we call “coefficient” and that coefficient varies according to the professional category and the sector of activity. For example, an accountant from sector A (oil sector) and an accountant from sector B (industrial sector, banks and insurance agencies) have the same legal minimum wage: 117,304. However, the oil sector accountant has a legal coefficient of (11) while the other has a coefficient of (4.4.)

If you multiply the minimum wage by the coefficient assigned to a category or profession, you will get the base salary. In the case of the oil sector accountant, for example, the result would be 1,290,345 XAF per month (1,985 euros). You cannot pay less than this, because it is the monthly legal minimum wage for this category in this sector. If you pay less than this, the salary difference occurs.

The central idea here is that, if you pay a worker less than they should earn, you will have to pay the remaining difference.This difference does not always exist.

On the 29th of November, the Minister of Mines and Hydrocarbons of Equatorial Guinea announced the winners of the EG RONDA 2019 licenses, so many companies unfamiliar with the legal environment of Equatorial Guinea are preparing to enter the market. Centurion Law Group has previously worked with many of them and we are willing to help our clients and new companies looking to avoid the mistakes that other oil and gas companies have made when hiring non-local staff. There are some things you should be careful with:

The difference in wages.

You can generally hire “non-local staff” to carry out your operations in Equatorial Guinea if you respect the criteria of local content. However, you should keep in mind that, in Equatorial Guinea, if two people do the same job, they should be paid  the same as long as that contract is a labour contract. The mistake that many companies have made is that, when setting salaries to their non-local staff, they paid differences of more than 6 times what local worker that does the same job earns. Judges have interpreted this as salary discrimination and many companies have been heavily sanctioned and have ended up adjusting salaries after paying those remaining differences.

We have seen this happen repeatedly, when analysing some cases, we have realized that , there was no adequate justification as to why non-local workers were paid more.

In Equatorial Guinea the law allows additional salary benefits to all those who move from their country to provide their services in another. Such benefits include:

• Payment of transportation expenses to their place of destination and back to their place of origin.

• Installation costs.

• If the worker is permanent or whose contract must last at least one year, the employer must pay a salary plus based on the cost of living which cannot be less than 50% of the employee’s base salary.

• From the third month of service or at the request of the worker, the employer must pay the round-trip transfer of the family in charge of the worker.

The law does not discriminate on grounds of nationality. However, what a company should know is that, well-structured and correctly justified, a foreign worker can earn more, not because he is a foreigner but because the same benefits that the law grants to an Equatoguinean when he mustwork outside the country, apply to foreigners whenever the employment contract is governed by the labour legislation of Equatorial Guinea.

When it is not structured properly, then it seems that some are paid more than others and the judges interpret that there is discrimination against the locals and the differences in wages must be paid from the first day of work.

Job descriptions.

 Another source of problems with wage differences arises when the Job descriptions are not clear enough and a worker ends up doing functions that correspond to two categories according to the salary decree.  This small error can create problems for the company because a law prior to the current labour legislation interprets this situation as a duality of functions and forces the employer to make a 35% increase on the salary. The problem is that it is very difficult to realize when there is a duality of functions, so that companies that in the past have had to pay 35% more calculated since the first day of work of the worker thathad no intention of performing duality of functions. They simply did not take into account the structure of functions set by the salary decree.

Employment contract vs civil contract of service provision. The legislation in Equatorial Guinea differentiates very well between an employment contract and a civil contract of service provision. Having the right contracts can mean the difference between a big economic loss or not. Make sure you have the right contracts because the difference may be in small details, enough to overlook a new company. If you have signed a contract for the provision of services with a non-local worker, it is normal for him to earn much more wherethere would be no salary difference because what he earns technically is not salary and consequently he is  not subject to the salary decree. However, both your company and that worker will have other types of tax obligations and different benefits. That is why we insist on clarity and transparency with contracts and especially with what happens in practice. Small things like paying by invoice to a worker and not by payroll, completely change the type of contract.

We address this situation because although the obligations under a service provision contract could be economically higher, keep in mind that, if this is the situation, there is no longer an obligation to match what a non-local contracted person earns with a local one Basically because they are not linked to the company under the same contractual form. In our experience, we have seen cases in which there was in practice a contract for the provision of services, but by paying the non-local worker by means of a payroll instead of an invoice, technically his income becomes a salary and the obligation to match his salary with local workers legally begins.

How to avoid these problems?

If you are a new company or you plan to venture into Equatorial Guinea to do business, especially if you are an oil and gas company, you should review both the way you contract, the types of contracts you sign with people you hire, the way you set salaries and how you pay those who work for your company. Here are some tips on how you should address some of these problems:

• Hire a labour audit. The only way to know if you have any of the problems we have mentioned, is to perform an audit. A labour audit consists of a review of compliance with labour legislation analysing very specific points in both contracts and the way in which they are applied in practice. When we  performed audits in the past, even the most orderly companies that acted with full transparency and good faith realized that they had serious problems. A labour audit simply offers you a panoramic view of compliance with labour legislation. In our experience, many of the problems are usually in the contracts. For example, a situation that is repeated a lot in addition to the salary difference itself is the duality of functions. We have had to recommended to companies to change many job descriptions or restructure the functions of their employees because sometimes just one more function gave the worker the right to a 35% increase in his salary. A company can use this system to save on hiring new staff, if it pays 35% more, but if it is not what it wants, it is better that this be reviewed.

• Follow the recommendations in the audit report. The audit report is written in a very simple and practical language. It contains specific instructions on how to solve the problems that have been detected. We always offer the option to regulate everything. We review the contracts, adjust the job descriptions, review the functions that workers perform in practice and suggest changes. We have even written new internal regulations for companies because those they had left them unprotected, etc.

• Check your payroll sheet. You must justify that the reason why the non-locals earn more is due to the payment of the additional rights that the same law already establishes. Consult with a lawyer so that this process is clarified with the support of the labour authority. You must find a way to do it and be very transparent with this. Above all, for mining companies whose categories the law does not yet include, it is very important to work with the labour authorities following the procedure established by the salary decree for those functions that are not contemplated.

• Integrate ADRs in resolving conflicts with employees. If you get a demand and the object is the salary difference, we always recommend resolving it by agreement. Mediation or negotiation are perfect tools to close these types of cases. We have reduced significant amounts in the past through negotiations that have sometimes resulted in 60% less than the total amount. The labour law in Equatorial Guinea does not allow employees to renounce their rights. They cannot legally decide not to collect them and any agreement about that will be invalidated by the judge. However,  they can negotiate the amounts and a judge can validate the agreement.

• Organize seminars and workshops. Invite your lawyer to give talks, it is convenient for workers to understand what they are entitled to and the things to which they are not entitled. Having uninformed workers will not help you because you run the risk that they can initiate unfounded complaints and because it is the company that must prove in most cases that workers are not entitled to what they ask for, we have seen many cases in which a company ends up paying minute complaints because it could not provide evidence against what the workers were asking for. A famous case is that of a worker who was cleaning and managed to take a picture as a mechanic with mechanic uniform, under a car, performing a reparation process. The company could not provide evidence that the man was not a mechanic because they (the company) had not even signed a formal contract with that employee. Guess what? The judges ruled that, although the photo does not imply working effectively as a mechanic, the employer had not been able to dispel the doubt of the court as to whether he was a mechanic or not. Then, in case of doubt, they (the judges) applied the principle of in dubio pro-operario, according to which, the doubts are interpreted in favour of the workers.

Many companies that have had to pay for salary differences in the past have made mistakes; But there have also been cases where there really was a difference despite the additional legal benefits. In both cases, we have realized that most of the companies did not intend to pay the locals less. To get out of doubt, there is nothing better than hiring an audit, believe me, the time and money you can lose in these types of problems is much greater.

Pablo Obama Mitogo Akele is a Legal Advisor at Centurion Law Group specialising in Alternative Dispute Resolution and Contract Negotiation.

 

Last month Benin president Patrice Talon shook the establishment table of France-Africa relations when he said in an interview the Francophone nations in West Africa want take more control over their CFA franc currency and plan to move some of their reserves away from France

“Psychologically, with regards to the vision of sovereignty and managing your own money, it’s not good that this model continues,” is reported to have told Radio France Internationale.

But while Talon’s comments was a something of a surprise, it was no longer a shock. Where once the idea of the questioning the status of the France-backed CFA franc seemed heresy,  discussions around its future are becoming more common both from grassroots activists and in offices of African governments and opposition leaders.

Earlier this year, Luigi Di Maio, Italy’s former deputy prime minister and current minister of foreign affairs revived the controversy about the role of the CFA franc on Africa’s development with a provocative statement:“France is one of those countries that by printing money for 14 African states prevents their economic development and contributes to the fact that the refugees leave and then die in the sea or arrive on our coasts.”

Although President Emmanuel Macron of France said he would “not respond” to the statement, he did note that in the past “France will go along with the solution put forward by your [African] leaders.” The statement, however, has brought to question the CFA franc currency zone, the relations between the 14 countries within the CFA zone and France, and their impact on economic and development performance.

There is also a clear divergence in opinion among African leaders using the currency. In a recent trip to France, president Alassane Ouattara of Cote d’Ivoire qualified the discussion about the CFA franc as a “false debate,” considering that the currency is “solid and well-managed” as well as “stabilizing” African economies.

But Chad’s president Idriss Debby said back in 2015 he considers the CFA as “pulling African economies down,” and that “time has come to cut the cordon that prevent Africa to develop.” He called for a restructuring of the currency in order to “enable African countries which are still using it to develop.”

In my book Innovating Development strategies in Africa: The Role of International, Regional, and National Actors, I examine the political economy of the performance and economic development strategies of the countries from CFA franc zone from 1960 to 2010. Building on it and additional research, it is important to address this debate dispassionately with impartial analysis of how the CFA works, the arguments of its supporters and opponents both academically and politically, its broader impact on economic performance, and the options ahead.

The origin story

The CFA franc was created in December 1945 when the French government ratified the Bretton Woods Agreement and became the currency of les colonies françaises de l’Afrique or the CFA (“French Colonies of Africa”). The French Treasury guaranteed the currency under a fixed exchange rate dependent on the deposit of 50% of CFA franc reserves into the French central bank.

The CFA was later split into the Communauté Financière d’Afrique (“Financial Community of Africa”) which included the West African countries Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo and the Communauté Financière de l’Afrique Centrale(“Financial Community of Central Africa”) including Cameroon, the Central African Republic, Chad, the Republic of the Congo, Equatorial Guinea, and Gabon.

The Central Bank of West African States and the Bank of Central African States are responsible for coordinating monetary exchanges through operating accounts with the French Treasury. These accounts operate according to several rules, including:

  • Each central bank must maintain at least 50% of foreign assets with the French Treasury,
  • Foreign exchange cover of at least 20% should be maintained for “sight liabilities”
  • Each government is limited to a ceiling of 20% of that country’s revenue from the previous year.

The CFA franc monetary system is designed to guarantee the franc currency in international markets, while simultaneously preventing overdraft and inflation in CFA member countries. Between the early 1950s and the mid-1980s, CFA franc countries had stronger real GDP growth and lower inflation than other sub-Saharan African countries. For example, within the past fifty years, Côte d’Ivoire experienced an average inflation rate of 6%— a much lower rate than its neighbor Ghana, which averaged 29% inflation.

From 1960 to 1978, Cote d’Ivoire averaged an annual GDP growth rate of 9.5%, which then stagnated, while Ghana’s GDP responded positively to structural adjustment programs in the 1980s. Cote d’Ivoire, among other CFA countries, did not respond immediately to structural adjustment programs. Strong growth and low inflation from the early independence period did not survive the economic shocks of 1986 to 1993, and the CFA became significantly overvalued and subject to increasing deficits in the French Treasury’s operations accounts. Domestic production lapsed, and African countries increasingly relied on imported materials. CFA countries’ public debt increased and central banks exceeded statutory ceilings, leading to significant fiscal imbalances.

In1994France devalued the CFA franc, raising the parity rate from 50 CFA francs per French franc to 100 CFA francs per French franc. CFA member countries’ governments imposed wage freezes and layoffs in the wake of the CFA devaluation, leading to widespread unrest over inaccessible goods for consumers and unmanageable price controls for suppliers.

Then Senegalese president Abdou Diouf had promised citizens during his 1993 campaign that franc would not be devalued. So in 1994 thousands of demonstrators responded to this broken promise as many suffered the effects of France bowing to Western pressure to increase the CFA franc’s parity rate. Just one month before the devaluation, Michel Roussin, the French Cooperation Minister, had said there was no chance at devaluing the CFA Franc because France was “very attached to the Franc Zone”.

Growing debates

The challenge of implementing effective monetary policies for growth and stability throughout Africa has led to years of debate over the CFA franc zone. Many European and African leaders have supported its continuation, while others seek separation between France, the European Union, and Francophone African countries.

The debates over the CFA franc often begin with the question of exchange rates and devaluation. Studies have shown that the CFA franc’s convertibility at a fixed exchange rate was the impetus for the 1994 devaluation; an average of 730 million French francs was being converted each month before 1992, which was a massive increase from the less than 284 million French francs converted monthly before 1984.

Monetary policies that were effective in achieving real exchange rate depreciation also resulted in a reduction in government expenditures and a decline in investment. As a positive effect, the unlimited convertibility of the CFA franc to the euro has generally reduced the risk of foreign investment in CFA countries. Though, foreign investment in CFA countries remains low relative to other emerging economies, such as the BRICS economies that include South Africa.

Guinea, which has its own currency, still stands as an example for supporters of the CFA zone. Guinea frequently experiences currency shortages and its central bank does not have sufficient policies to ensure stability, so the CFA zone is presented as a solution to instability in this particular case.

Côte d’Ivoire president Alassane Ouattara has in the recent past contended that CFA zone countries are better off than Anglophone countries due to growth and low inflation, whereas the poor are disproportionately affected by unpredictable inflation in Anglophone countries. What is rarely discussed is that similar or better outcomes could be achieved with other policy options.

In terms of trade, the CFA’s fixed exchange rate to the euro has led to a greater facilitation of trade through the reduction of uncertainty and stabilization of domestic prices. The logic of fixed exchange rates traces back to the Bretton Woods period when 63% of developing countries had their currency pegged to that of an industrial country.

The potential problems with a fixed exchange rate are mostly offset in Central African Economic and Monetary Union (CAEMU) countries, due to these countries’ high levels of excess liquidity from oil revenues. However, West African Economic and Monetary Union (WAEMU) countries have experienced declining liquidity since 2004, thus suffering from the volatility of a fixed rate amidst external shocks.

Ideally, countries in the same monetary union should coordinate member countries’ fiscal policies to offset shocks in different parts of the union. However, no such coordination occurs in the CFA zone.

 

The CFA franc zone as a whole has thus resulted in:

  1. Limited intra-regional trade, especially in Central Africa.
  2. High dependence on producing and exporting a limited number of primary commodities.
  3. A narrow industrial base.
  4. A high vulnerability to external shocks.

A focus on primary commodities and limited intra-regional trade are broadly reflective of CFA franc member countries’ lack of export diversification and low industrialization. Intra-regional trade accounted for about 11% of total external trade of WAEMU countries, 6% of CAEMU countries, and only 9% of all CFA countries’ total external trade.

The CFA franc’s fixed exchange rate is vulnerable to being a pawn on international markets to the detriment of the African economies.

The French government again considered devaluation in 2012, which, while disregarded as a rumor, was assumed to be a method of safeguarding the euro and maintain France’s credit rating. The CFA franc’s exchange rate could thus become a pawn in international markets to the detriment of CFA economies. In 2014, a drop in oil prices increased fiscal and current-account deficits within the monetary zone. Though, African leaders agreed to IMF-supported programs that inspired spending cuts to remedy the deficits instead of changing the exchange rate. This adamant support for the CFA franc’s peg to the Euro challenges the perspective that only European leaders support the fixed rate of CFA francs to Euros.

Debates over the persistence of the CFA franc zone also focus on African states’ independence and sovereignty. Large numbers of unemployed youth throughout sub-Saharan Africa—which may reach over 350 million over the next two decades—are often the loudest opponents of the CFA zone. Other pro-democracy movements, like Y’en a Marre in Senegal and Le Balai Citoyen in Burkina Faso, consider the dismantling of the CFA zone as essential to their campaigns to reform their countries’ respective governments. Other protests have included Kemi Seba, the Benin-born French activist who was charged with burning CFA notes in Senegal before being deported.

Some African economists consider the broader dependency on European monetary policies as a restriction to growth due to a hyper-fixation on inflation. However, African elite and wealthy individuals, the primary beneficiaries of the CFA franc zone configuration, support its continuation. Thus, debates will continue within the various dimensions of class, power, and politics.

The future

Scholars and policymakers have proposed several options to improve the viability of the CFA franc or replace the currency. Each option has advocates and opponents because the different policies target distinct challenges, such as exchange rate independence, inflation control, GDP-growth incentives, and capital mobility. The four most prominent options are to:

l. Tie the CFA franc to a basket of currencies, such as the dollar and the yuan. Pegging the CFA franc to multiple currencies will increase the relative stability of the currency in the event of exchange rate fluctuations of any of WAEMU or CAEMU’s trading partners.

A basket peg based on an import-weighted index, as proposed by Crokett and Nsouli (1977), has also been evidenced to be more beneficial for developing countries. An import-weighted index would be most beneficial for WAEMU due to its high levels of import diversification, while a different configuration, such as an export-weighted index, a bilateral trade index, or an index based on the SDR (special drawing rights) might be more appropriate for the CAEMU zone that is highly focused on primary commodities. Though, in general, severe depreciation of basket currencies would have much graver effects on countries that mainly export primary products, such as CFA countries.

2. Restructure the reserve requirements for CFA franc countries. Higher levels of reserves will ensure the convertibility of the CFA franc, which is currently threatened by changing French and European fiscal policies. This option could be considered a short-term strategy, or precursor to other strategies, that may lead to greater monetary independence for CFA countries. However, in many CFA member countries, high reserves are derived from natural resource revenues, which are subject to changes in world prices and difficult to accommodate in the short-term.

3. Separate WAEMU and CAEMU into optimum currency areas. Optimum currency areas (OCA) have the benefits of high factor mobility, economic interdependence, sectoral diversification, and wage and price flexibility. The challenge is to support the costs related to the establishment of OCAs and ensure the establishment and compliance of uniform regulations.

Though undoubtedly difficult to implement, this configuration could likely benefit both monetary unions because member states’ fiscal policies will be easier to coordinate within a similar regional context. Some research suggests West African CFA members of ECOWAS, the Economic Community of West African States, are already primed to become an OCA because these countries are best suited to integrate their real exchange rates. Although ECOWAS is mulling the launch of “Eco,” a new currency to be used by its 15 member states, including Nigeria, Aloysius Uche Ordu, former Vice President of the African Development Bank recently evaluated its prospects, and argues launching Eco by January 2020 “is, at best, an expensive distraction that the people of West Africa can ill afford at this particular moment”.

4. The establishment of the African Monetary Union. An African Monetary Union would be most challenging to implement and require countries to adhere to strict fiscal rules similar to the CFA zone until stability was achieved. This strategy requires significant investment and capital mobility to ensure a strong exchange rate union and currency convertibility. Movement of labor and capital are necessary to spur economic growth and stabilize relatively different economies. The appeal of an integrated African Monetary Union is the tremendous potential to increase intra-regional trade and encourage domestic production capabilities. However, another monetary union may lead to similar problems of dependence as the CFA franc zone.

Overall, policymakers from the CFA franc zone should analyze the various options to determine a short-term and long-term plan that will increase growth and lead to equitable development of countries that are at different stages. African and European leaders must be resolute and accountable to the various interest groups throughout their two continents.

Any restructuring of the CFA franc will have drastic macroeconomic effects that will require an increase to public investment and provision of public goods, attractive investment policies, development aid, and resource mobilization. The future of the CFA franc is yet to be determined, but it deserves comprehensive, sensitive analysis.

 

 

Source:  Quartz Africa

Ghana’s cedi is headed for its 25th straight year of depreciation against the dollar as the government’s fiscal challenges erode investor confidence in the currency of the world’s second-biggest cocoa producer.

The cedi is down 13% so far in 2019, according to data compiled by Bloomberg, poised for the worst decline since 2015, when it slumped 18%. It has declined every year since Bloomberg started keeping records in 1994.

Investors are concerned the government won’t stick to spending targets as it gets closer to an election next year, according to Cobus de Hart, chief economist for west, central and north Africa at NKC African Economics in Paarl, South Africa. The cedi slipped 0.1% on Thursday to 5.67 per dollar, bringing its decline this quarter to 5%.

Ghana's cedi has depreciated every year since 1994

“The overshooting fiscal deficit and debt from arrears is putting pressure on the cedi,” De Hart said by phone. “We have an election coming up next year and portfolio investors are concerned that the plan outlined in the 2020 budget will not be met because revenue continues to underperform.”

Ghana’s budget deficit is forecast to widen to 4.9% of gross domestic product this year, from 4.1% in 2018, according to the median estimate in a Bloomberg survey of economists. The shortfall is rising as the government increases spending to pay for financial-sector bailouts and liabilities in the energy sector.

The central bank’s inability to quickly build foreign reserves due to a deficit in the current account is another source of cedi weakness, De Hart said.

“Even though the trade account is in surplus, the current account is in deficit, impeding accumulation of foreign reserves,” he said. “Gross reserves have hovered around $8 billion for some time now, which suggests that the central bank has not aggressively intervened to support the currency.”

Ghana adopted the cedi in 1965 to replace the Ghanaian pound, which was equal in value to the British pound and its currency since independence in 1957. The “new cedi,” worth 1.2 original cedis and about half a British pound, was introduced in 1967. Decades of high inflation led to a redenomination in 2007, when the new cedi was phased out and replaced by the current currency at a ratio of one to 10,000. It has since lost about 80% of its value.

 

Bloomberg

The UK’s Serious Fraud Office has launched an investigation into suspicions of bribery at mining and commodity trading group Glencore.

The SFO said “it is investigating suspicions of bribery in the conduct of business by the Glencore group of companies, its officials, employees, agents and associated persons”.

In a statement, the £30bn company added: “Glencore has been notified today that the Serious Fraud Office has opened an investigation into suspicions of bribery in the conduct of business of the Glencore group.”

Glencore, which is listed on the London stock exchange but has its headquarters in Baar, Switzerland, said it would cooperate with the investigation.

Its share price fell by 9% on the news to close at 216.9p, a three-year low. The company is the world’s biggest commodity trader, buying and selling everything from oil to cotton, wheat and sugar. It operates in more than 50 countries and also has a significant mining operation for gold, silver, platinum, nickel, iron and aluminium.

The announcement of the SFO probe is the latest setback for Glencore, which is already being investigated by the US Department of Justice for alleged money laundering and corruption in Nigeria, Venezuela and the Democratic Republic of Congo (DRC), Africa’s biggest copper producer, dating back to 2007.

The announcement of a UK enquiry had been widely expected in mining circles, following a Bloomberg report in May that stated that the SFO was preparing to open a formal bribery investigation into Glencore and its work with Israeli billionaire Dan Gertler and the leader of DRC.

Gertler’s notoriety in the DRC, which is rich in resources but riven by conflict, spans nearly two decades. He is reported to have made billions from being the unofficial gatekeeper to natural resources deals in the central African country. His friendship with the nation’s former president Joseph Kabila – who was head of state from 2001 until earlier this year – has long been a source of controversy.

Gertler was cited by a 2001 UN investigation that said he had given Kabila $20m to buy weapons to equip his army against rebel groups in exchange for a monopoly on the country’s diamonds.

The Israeli was also named in a 2013 Africa Progress Panel report that said a string of mining deals struck by companies linked to him had deprived the country of more than $1.3bn in potential revenue.

In 2017, leaked documents that formed part of the Panama Papers investigation showed how Glencore had secretly loaned tens of millions of dollars to Gertler after it enlisted him to secure a controversial mining agreement in the DRC.

The tycoon has repeatedly stated that all allegations of illegal behaviour are “false and without any basis whatsoever”, that he “rejects them absolutely”, and that he transacts business “fairly and honestly, and strictly according to the law”.

Glencore has also developed a controversial reputation of its own.

The company was founded in 1974 by the commodities trader and financier Marc Rich, who in 1983 was indicted on charges described by the then US attorney for New York, Rudolph Giuliani, as “the biggest tax evasion case in United States history”.

He was also charged with buying millions of barrels of oil from Iran during the 1979-81 hostage crisis, flouting a ban on “trading with the enemy”. He fled to Switzerland and remained on the FBI’s most-wanted list until he was controversially pardoned by Bill Clinton in the final hours of his presidency in 2001.

By then, Rich had long lost control of the company following a management buyout in 1993.

Under its billionaire chief executive, Ivan Glasenberg, the company grew to become the world’s biggest commodity trader, supplying the raw materials used in products from cars to smartphones.

When it floated on the London stock exchange in May 2011 it was valued at £38bn but the shares, which were then priced at 530p each, have never been worth as much since.

Many of Glencore’s executives have left in the past year. This week, Glasenberg hinted that he could leave the company soon.

 

Source: theguardian.com

South African Airways (SAA) said on Friday it has applied to enter ‘business rescue’, a form of bankruptcy protection it hopes will save the cash-strapped state carrier from collapse.

SAA, which has been making losses since 2011, is deeply in debt and has received more than 20 billion rand ($1.36 billion) in government bailouts over the past three years — all of which has achieved little more than keeping it barely afloat.

A government memo on Wednesday said President Cyril Ramaphosa had ordered SAA to seek the business rescue — in which a specialist takes control of a company with the aim of rehabilitating it, or at least securing a better return for creditors than liquidation would bring.

After years of government dithering, the distressed state entity’s crisis was increasingly seen as a test of Ramaphosa’s resolve to carry out badly-needed economic reforms.

Years of corruption and mismanagement have put several state owned enterprises in dire straits, including power utility Eskom, whose financial problems have left it struggling to keep the lights on.

South Africa’s credit rating is teetering on the brink of junk largely because of these problems. All agencies but Moody’s have cut its rating to below investment grade, risking billions of dollars of investment outflows if Moody’s does follow suit.

How Ramaphosa handles SAA’s restructuring, in the face of fierce opposition from unions, could be taken as a signal his resoluteness in a much bigger, immanent battle with Eskom.

A strike last month left the airline without enough money to pay salaries, then two major travel insurers stopped covering its tickets against the risk of insolvency. It has been granted a 4 billion rand ($272 million) lifeline from the government and banks to launch the rescue plan.

On Thursday Les Matuson from Matuson Associates was appointed to restructure the company. He is already reviewing payments to creditors and is scheduled to come up with a plan for how to handle them within 25 days.

His appointment spurred an outcry from two of the largest trade unions at SAA, the National Union of Metalworkers of South Africa (NUMSA) and South African Cabin Crew Association (SACCA), who argued that he should have been independently chosen.

“We don’t trust a process where a shareholder and the board get to hand pick a business rescue practitioner,” SACCA President Zazi Nsibanyoni-Mugambi told Reuters on Friday.

“We can’t leave it to the same people that we’ve been complaining about for many years,” she said.

The opposition Democratic Alliance (DA)’s shadow minister for public enterprises, Ghaleb Cachalia, approved the plan, saying: “we hope that ANC government will take a stand ... in the best interest of South Africa and the economy.”

SAA flights appeared to be operating normally according to the existing schedule, ahead of the publication of a new provisional flight schedule soon.

 

- Reuters

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