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2016

June 2016

08 June 2016

Africa’s mining industry lost $27 billion last year

By Staff Writer | Nairametrics June 8, 2016                                                                                                                                                                      

Striking platinum miners gather at the Wonderkop Stadium in Marikana, South Africa.

AFP

According to PwC, the top 40 miners in Africa recorded a collective loss in market capitalization of about $27 billion as investors turn away from sector.

Among the reasons are poor investment, capital management decisions, and in some quarters for squandering the benefits of the boom. The mining industry has been in a commodity down turn for the past three years after enduring years of boom when market prices were high.

The Buhari Administration has outlined its plans to jump-start Nigeria’s mining revolution and may want to draw from the conclusion of this report to ensure the industry attracts investors money. Here is an excerpt of the report;

The 13th in PwC’s industry series analysing financial performance and global trends, the report reveals a first ever collective net loss (US$27bn) for the Top 40 miners with market capitalisation falling by 37%, effectively wiping out all the gains made during the commodity super cycle.

Michal Kotzé, Mining Industry Leader for PwC Africa, says: “Last year was undoubtedly challenging for the mining sector. The Top 40 experienced their first ever collective net loss, their lowest return on capital employed, a significant drop in market capitalisation, and an overall decline in liquidity with the result that the Top 40 were more vulnerable and carrying heavier debt loads than in prior years.”

“We are also seeing shareholders persist with a short term focus, impacting the capital available for investment and, as a result, constraining options for growth.

“But this is a hardy industry, and while many miners may be down they are certainly not out.”

Mine 2016 also found:

> Investors punished the Top 40 for poor investment and capital management decisions, and in some quarters for squandering the benefits of the boom.

> Concerns over the ‘spot mentality’ from shareholders focused on fluctuating commodities prices and short term returns rather than the long term investment horizon required in mining.

> A focus on maximising value from shedding assets as well as mothballing marginal projects or curtailing capacity by Top 40 minters. This is further evidenced by a significant drop off in capex signaling an almost stagnant investment environment.

> A positive focus on cost reduction resulting in a 17% drop in operating costs against a backdrop of higher production volumes and lower input costs – an impressive achievement given the production increases seen during 2015.

2016

June 2016

07 June 2016

Excitement as Equatorial Guinea begins oil and gas licensing round

 

 

Equatorial Guinea's oil and gas sector is thought to hold promising prospects.

Getty Images

On Monday, Equatorial Guinea’s Ministry of Mines, Industry and Energy (MMIE) officially launched the country’s latest oil and gas blocks licensing round, EG Ronda 2016.

Companies are now able to submit letters of interest to the ministry, and to view the official map of available blocks.

The announcement, which was made at an industry conference in Cape Town, is part of a four city promotional tour that will commence in London, followed by Singapore, Istanbul and finally ending off in Texas Houston.

Public promotion of the bidding round, which calls for expression of interest on 37 open licenses, of which 32 are offshore, will commence on 20 June and conclude on 30 November, 2016.

Oil and gas exploration has high potential

The MMIE intends to build upon Equatorial Guinea’s strong reputation for exploration success by inviting oil and gas companies with the requisite financial and technical competency to explore its blocks.

A total of 114 discoveries have been made in the West African country to date, adding that the discovery success rate of 42% is double the global average.

Obiang Lima highlighted that a recent gas discovery in EG-01, made by a Brazilian exploration firm Oleo e Gas, has a high probability of being brought onshore for gas to power and potentially petrochemicals, depending on the amount.

The country is bolstering efforts to support and develop its energy infrastructure, including storage, petrochemicals and floating liquefied natural gas.

These efforts are expected to further drive exploration and production of the country’s indigenous resources.

Minister of Mines, Industry and Energy H.E. Gabriel Mbaga Obiang Lima said: “Our nation is a proven profitable home for global oil and gas companies that explore our waters, and now we look forward to meeting potential explorers at roadshow events worldwide in 2016.”

EG Ronda 2016 bidding round

During the launch it was said that the EG Ronda 2016 makes available all acreages not currently operated or under direct negotiation.

This comprises 37 blocks in total, 32 of them offshore. This includes Block A-12, newly relinquished by Marathon Oil, which has hosted multiple oil discoveries.

Also open is the former EG-05 block, which was formerly held by Glencore. EG-05 was then split into four prospective offshore licenses which have never been drilled.

2016

June 2016

03 June 2016

Ugandan cabbies face stiff competition with Uber entry

By Staff | The East African June 3, 2016

Kampala, Uganda's buzzing capital.

Weesam

Uganda’s local taxi operators face stiff competition after entry of global online taxi firm, Uber.

The American taxi hailing service, already operating in 462 cities in 71 countries, has upset the market in these nations with its low pricing business model.

“At Uber, we are proud to connect millions of global citizens to affordable and reliable rides. By offering a friendly and reliable complement to existing transport options, we can help improve urban mobility in Kampala,” Uber’s general manager for sub-Saharan Africa, Alon Lits said Thursday during its official launch in the Ugandan capital.

Uber charges its customers for every kilometre covered unlike regular cab drivers who price based on arbitrary spot negotiations with clients. Each trip is automatically and openly priced, helping users to budget for their travel expenses.

Customers seeking the firm’s services are required to download an Uber App, which they then use to call the taxis that are registered in the platform. The app allows customers to get a driver within the same vicinity reducing transit time.

However, the low pricing model has seen Uber drivers across the globe face threats, violent protests and legal action from regular cabbies who say Uber’s cheaper fares and business model are driving them out of business.

Uganda is the second country in East Africa after Uber launched in Nairobi early 2015 and extended its services to Kenya’s second largest city Mombasa in March this year.

With the Uganda entry, Uber now operates in five African countries including Kenya, Nigeria, South Africa and Egypt. The firm plans to launch in Ghana and Tanzania.

Uber rates

Uber has set a minimum charge of Ush5,000 (about $1.5) for rides in Kampala. Its clients will be charged a base rate of Ush1,300 and Ush900 per kilometre and an additional Ush200 per minute.

Customers will get free rides between Thursday 1pm and Sunday midnight. Cancellation of bookings will attract a charge of Ush5,000.

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2016

June 2016

02 June 2016

Central Bank of Kenya rejects takeover bids by seven suitors of collapsed Dubai Bank

By Brian Wasuna | Business Daily, Kenya June 2, 2016

Failure to disclose ownership and source of funds has seen the banking industry regulator turn down seven proposals by foreign and local firms that had expressed interest to inject capital and revive the collapsed Dubai Bank.

The Central Bank of Kenya (CBK) has filed in court a list of seven companies that sent inquiries about investing in Dubai Bank, but says none of the suitors met the legal requirements for owning a bank.

The High Court last November ordered the industry regulator to consider proposals by investors to rescue the lender, a position that was upheld by the Court of Appeal in March.

The CBK shut down Dubai Bank in August, citing serious cases of parallel banking, a mountain of unsecured loans that were not being serviced, interference with client accounts and a lack of a full organisational chart as provided for by the law.

But the lender’s second-largest depositor, supplies firm Richardson & David, has since obtained a court order from the High Court and Court of Appeal barring the regulator from liquidating Dubai Bank.

The supplies firm argued that there are offers from potential investors on the table to revive the lender.

Sovereign Financial Holdings (Virgin Islands), Ark Fincap Private Limited (India) Nedebe Group (South Africa), Longitude Finance (Kenya), Zen East Africa (Kenya), Manaa Bin Hasher Al Maktoum Investments (Dubai) and International Investment Consortium Limited (Malaysia) wanted to inject capital and revive Dubai Bank.

“Names and other details of the directors and senior officers of the company were not submitted. Documentary evidence of sources of capital was not submitted. Full disclosure of any association with officers of Dubai Bank was not made.

“The proposal by International Investment Consortium Limited has therefore failed,” the CBK says of a Malaysian firm that wanted to inject $50 million (Sh5 billion) capital.

The CBK also says in its report filed in court that the seven companies wanted to take up majority shareholding in Dubai Bank, while the law only allows one individual or entity to own a maximum of 25 per cent of a financial institution.

Dubai Bank’s insolvency, as declared by the CBK, has put its largest depositors in a tight spot with the lender’s total liabilities standing at more than Sh2 billion or twice the amount savers had in their accounts.

The CBK holds that the lender can only be revived with a capital injection of Sh4.3 billion, which cannot come from one individual or company.

Richardson and David wants Dubai Bank placed under receivership, and has expressed readiness to convert its Sh142 million deposits into shareholding in a last-ditch effort to save the lender from collapse.

The supplies firm says other big savers are willing to follow the same step to save Dubai Bank.

Sovereign Holdings, Zen East Africa and Nedebe Group wanted to inject $20 million (Sh2 billion). International Investment Consortium said it was interested in pumping $5 million (Sh5 billion) with Manaa Bin Hasher Investments taking up Sh3 billion.

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02 June 2016

Disruptors Vs the Disrupted, is it winner takes all? The future of financial services in Africa.

 

Fintech’s innovation playground is Africa. The sector took 30% by value of investments in the region in 2015. Entrepreneurs and investors see the opportunity in surging smartphone adoption, and the ease of winning customers in a setting where 80% are unbanked, and the traditional banking offer is costly and cumbersome.

Leapfrogging the world into mobile payments and loans and spanning everything from micro-insurance to Pay-as-You go solar, Africa is where the future of financial services is being re-imagined.

As old models get disrupted and new ones emerge, where can businesses and investors expect the biggest opportunities to come from and what is the likely fate of the traditional financial institutions? These are some of the discussion points that will be addressed by the FinTech panel at the upcoming Africa Tech Forum London.

Other key points to be discussed include:

  • What are the key challenges still hindering access to financial services in Africa?
  • Disruptors Vs the Disrupted, is it winner takes all? What is the fate of traditional banks in Africa? Will innovative startups and technology companies take over?
  • What are some success stories of the startups and traditional banks working together to innovatively provide more inclusive financial services?
  • What are some of the key trends in financial services emerging in Africa that will be important for the rest of the world?

 

The expert panel will include:

Stephen Haggard – Executive Chair Eneza (Moderator)

Fiona Ghosh – Partner Addleshaw Goddard

Tangwena Nelson – CFO Homestrings

Viola Llewellyn – Founder Ovamba

Alix Murphy – Senior Mobile Analyst, WorldRemit

 

Join 150+ investors, entrepreneurs, business leaders and professionals in the Banking, Finance, Venture Capital, Private Equity, Cleantech energy and the Mobile/Telecom sectors to gain expert insights into the emerging technology opportunities in Africa. For further details visit: www.africatechforumlondon.com

 

Eunice Ball is the founder of the Africa Technology Business Network, a London-based organisation that is a bridge to enable collaboration, skills transfer and investment between the UK and Africa technology ecosystems.

2016

June 2016

01 June 2016

Tembo to invest in Strandline Resources

By Staff Writer | Africa Global Funds June 1, 2016

Tembo Capital, a mining-focused private equity fund group, has agreed to invest $6.6m in Strandline Resources to ensure that the firm is fully funded to advance its portfolio of high value Tanzanian mineral sands projects over the next two years.

Under the Strategic Relationship and Subscription Agreement, Tembo will cornerstone a funding package comprising: up-front firm investment of $2.3m by way of placement of ordinary shares at an issue price of 0.7c per share (a 17% premium to the last closing price of Strandline shares); and a fully underwritten pro-rata renounceable rights issue to all eligible Strandline shareholders to raise up to $4.3m at 0.5c per share.

Strandline Resources is an Australian Stock Exchange listed company, that is focused on mineral exploration and development in Australia.

Strandline controls a dominant (2000km²) mineral sands exploration position along the coast of Tanzania, within a major world class mineral sands corridor.

These projects are located along the coast of Tanzania and surrounded by some of the world’s major world-class mineral sands mines, located in neighbouring Kenya, Mozambique, Madagascar and South Africa

The initial funding and Tembo’s long term commitment gives Strandline the capacity to fast track development of the high grade Fungoni deposit; undertake extensional drilling and feasibility studies of the high grade Resources at Tajiri; and continue exploration and discovery drilling across Strandline’s high value Tanzanian mineral sands portfolio.

Tom Eadie, Strandline’s Managing Director, said: “The Board of Strandline is delighted to welcome Tembo as a supportive major shareholder, which also has the capacity to provide valuable technical and strategic support.”

“Tembo’s investment and ongoing support strongly endorses the high potential of Strandline’s mineral sands projects and our highly capable team. The company is very excited about having the financial capacity to progress these high potential projects in the manner that they deserve,” he said.

Strandline believes that Tembo can add strategic, technical and financial value to the Company and its projects, to the benefit of all Strandline shareholders.

Strategic, long term relationship with Tembo includes: appointment of John Hodder of Tembo as a non-Executive Director of Strandline; access to Tembo’s strategic & financing networks within Emerging Markets; and potential access to future development funding of up to a further $15m over the medium to longer term.

Strandline has agreed a mandate with Hartleys Limited to act as underwriter and lead manager in relation to the Rights Issue (subject to execution of formal underwriting and sub-underwriting agreements, which are currently being finalized and are expected to be executed imminently).

Tembo has agreed to fully sub-underwrite the rights issue, subject to execution of the relevant formal sub-underwriting documentation.

Strandline will announce the rights issue timetable (including timing for trading of entitlements) and dispatch the associated offer documentation to eligible shareholders in the near future.

“We encourage all eligible shareholders to consider participation in the Rights Issue. Following its completion, Strandline will be well funded for significant activity over the coming 24 months to unlock the value of our Tanzanian portfolio,” said Eadie.

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01 June 2016

Multi-currency system dead, says RBZ as USD demand spikes (Zimbabwe)

By Staff Writer | The Source Zimbabwe June 1, 2016

Reserve Bank of Zimbabwe (RBZ) on Tuesday conceded that the multi-currency systema dopted in 2009 was effectively dysfunctional with the economy trading solely on the United States dollar, which has resulted in spiking cash demand, fuelling shortages.

Early this month, the central bank announced the introduction of bond notes as part of a raft of measures to promote exports and ease cash shortages.

But the notes, which central bank governor John Mangudya said will come into circulation in October, are viewed by a sceptical public as a backdoor return of the hated local currency.

Long, winding bank queues and revised bank withdrawal limits, once a feature in the hyper-inflation era of 2008, have returned to haunt Zimbabweans as cash shortages bite.

Zimbabwe six years ago dumped its inflation ravaged local currency, adopting a basket of foreign currencies expanded over time to nine, among them the US dollar, South African Rand, Botswana Pula, Japanese yen, and the Chinese yuan.

But central bank governor Dr John Mangudya said the multi-currency system, as it was envisaged, only worked for a short while.

“There has been a shift from the multi-currency in 2009 to the US dollar in 2016. We have put all our eggs in one basket now which is why the demand for the US dollar has increased,” Dr Mangudya said at a meeting organised by the Roman Catholic Church to discuss pressing economic issues.

“In the southern region they used to use more of South African Rand but they are now using US dollars so it means where we used to import $20 million a month, we are now importing $40 million because there has been a shift from the Rands to the US dollar.”

Mangudya said externalisation of the greenback was largely to blame for current shortages, while blaming Zimbabwe’s “too open economy” for promoting the unscrupulous behaviour.

He said the country’s had failed to manage its foreign currency as imports, which were almost at par with exports between 1990 and 2009, had to date doubled while exports trailed, leading to an average deficit of about $2,5 billion annually.

Mangudya said most Zimbabweans were unaware that exports, primarily tobacco and minerals such as gold, platinum and diamonds were the major source of foreign currency circulating in the country.

“Some of you laugh at the farmers sleeping at the tobacco auction floors but those are the people bringing in the foreign currency,” he said.

The RBZ, Dr Mangudya said, would begin paying exporters the five percent bonus in the form of bond notes in October.

He reiterated the bank would not re-introduce the Zimbabwean dollar in the near future.

Mangudya said the central bank was also encouraging use of plastic money by government institutions and public utilities to reduce demand for cash.

Roman Catholic Church Vicar General for the Harare Archdiocese, Father Kennedy Muguti told the central bank boss that people no longer had trust and confidence in government policies.

“People are still nursing wounds from the past,” he said, alluding to loss of savings when use of the Zimbabwe dollar was discontinued overnight.

Barclays Zimbabwe managing director, George Guvamatanga proposed that the central bank should introduce a maximum withdrawal limit of $500 per week.

He backed introduction of bond notes, arguing that the US dollar was being abused.

”Why should tomatoes that have been produced in Mutoko be paid for in foreign currency, why must workers be paid in foreign currency,” Guvamatanga questioned.

“We need a means of transacting that is not going to be abused. We cannot keep on bringing money into the economy that is disappearing.”

Guvamatanga appealed to bankers to slash charges to encourage use of plastic money. His appeal follows the announcement by Steward Bank chief executive, Lance Mambondiani said his bank would effective Wednesday slash money transfer charges by 50 percent.

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2016

May 2016

31 May 2016

StanChart and USAID’s partnership boosts Zambia’s power grid

By Staff Writer | ESI AfricaMay 31, 2016

Standard Chartered has partnered with the United States Agency for International Development (USAID), to deliver a term loan worth $60m to Zambia’s Electricity Supply Corporation (ZESCO).

The loan will finance capital expenditure tor ZESCO’s Lusaka Transmission and Distribution Rehabilitation Project (LTDRP) as well as provide bridge financing to facilitate new connections to the grid.

This is one of the largest facilities that USAID has delivered within President Obama’s ‘Power Africa’ partnership since the campaign’s launch in 2013.

This facility is Standard Chartered Zambia’s longest tenor and largest facility provided to a Zambian parastatal entity to date.

Andrew Okai, CEO of Standard Chartered Zambia, said: “By using our strengths in structuring financial solutions which promote economically enhancing partnerships and improve the lives of individuals, Standard Chartered can demonstrate our promise to be here for good.”

“This is the Bank’s second Power Africa partnership to benefit Zambia, with the first being Standard Chartered’s Private Equity investment in Zambian Energy Corporation,” he said.

ZESCO is a vertically integrated parastatal whose primary business is to generate, transmit, distribute and supply electricity within Zambia as well as exporting to the Southern Africa Power Pool (SAPP) countries.

It was established in 1970, and its governance has evolved over time to one that defines an arms-length relationship with Government of Zambia.

ZESCO has installed generation capacity of 2,224 MW which comprises 2,212 MW hydro (99%) and 11.3 MW diesel (1%).

The company owns approximately 39,000km of power transmission and distribution lines and has an installed substation capacity of 5,000 MVA in power transformation infrastructure.

ZESCO has four licenses for its strategic business units, generation, transmission, distribution and supply.

“Part of ZESCO’s strategic plan is to improve the quality of electricity and enhance connections to the national grid,” commented ZESCO’s Managing Director, Victor Mundende.

“USAID and Standard Chartered’s support has already delivered more than 15,000 new power connections.  Furthermore, some of the funds provided will be used for other scheduled power system upgrades, contributing to new and existing connections to homes and businesses across the country.  ZESCO remains committed to meeting its aspirations of electrifying 60% of Zambia by 2030,” he said.

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2016

May 2016

24 May 2016

Africa Tech Forum London: 4 reasons why you should be paying attention to Tech Disruption in Africa

In recent years Africa Tech has been receiving a lot of coverage, including in major publications such as the FT, TechCrunch, The Economist and The Next Web.

The world is therefore paying increasing attention to developments in the Africa tech sector.  Below are four reasons why you should be too.

1. Growing investment in Africa tech startups

Venture capitalists and Private Equity funds alike are viewing Africa with increased interest and taking larger bets on the continent. In 2014, over $4.2b was raised close to $500m

Some investors are already reaping the benefits such as the early investors in African online streaming service iRoko TV who it is reported made a 3000% return on their investment. At the upcoming Africa Tech Forum London on 22nd June, our VC and PE panellists will shine more light on the latest investment opportunities that are unfolding across the continent.

2. A growing consumer market that is underserved

Africas growing population is expected to account for one-fifth of the worlds population by 2025. According to McKinsey, Africas consumer-facing industries are expected to grow by $400 billion by 2020, representing the continents largest business opportunity. With sessions such as The profile of the rising African tech consumer market, the upcoming Africa Tech Forum will address how technology is increasingly playing a role in providing a means to better serve and understand this growing market.

3. A source for global tech talent

With nearly 200 million people aged between 15 and 24, Africa has one of the youngest populations in the world. While others argue about the risks this presents, organisations such as Andela and Tunga see it as an opportunity. They are training African youth to become high quality software developers and connecting them with global businesses who are faced with a growing tech talent shortage. This opportunity for talent arbitrage is another of the key points that will be discussed at the Forum in June.

4. A testing ground for inclusive innovation

Africa has become the testing ground for infrastructure-light solutions that can help underserved communities both in the developing and developed world. For example, innovations in mobile banking like M-PESA in Kenya, which has helped the country drive up access to financial services from 41% to over 60%, could hold some answers for the 2 million adults

Eunice Baguma Ball is an Africa tech enthusiast with over 10 years in the Africa mobile and digital sector. She is the organiser of the Africa Tech Forum London, a one day conference showcasing the most exciting technology opportunities unfolding across the African continent to the global business and investor community during London Tech Week 2016.

 

2016

May 2016

13 May 2016

Central bank unlikely to use IMF loan as reserves hit one-year high (Kenya)

By Otiato Guguyu | Business Daily, Kenya May 13, 2016

 

The Central Bank of Kenya (CBK) is unlikely to draw money from the International Monetary Fund’s (IMF) precautionary credit facility as foreign exchange reserves soar to a one-and-a-half-year high, analysts say.

According to the latest CBK weekly bulletin the reserves have touched $7.7 million which is equivalent to 5.01 months of import cover, a high last seen in December 2014.

The shilling, which the CBK mean-rated at 100.6 against the dollar Thursday, an almost nine-month high, has gained ground since it touched 106.1 in September last year.

“The CBK has more power and leverage for monetary policy action when it needs to bring about stability, so it begs the question whether they will need to draw from the IMF facility,” CfC Stanbic Bank regional economist, Jibran Qureishi said.

Kenya in March secured a new loan from the IMF totalling Sh153 billion ($1.5 billion) to be utilised within two years in case of external shocks.

According to the IMF, Kenyan authorities don’t intend to draw the precautionary facility “unless exogenous shocks lead to an actual balance of payments need”. The country similarly did not draw from the previous three-year facility.

A stable shilling, narrowing current account deficit, and the accumulated foreign currency reserves have reduced pressure on the CBK helping ensure it is not caught flat-footed should another forex crisis occur, as was the case last year and in 2011.

“The biggest actual reason the CBK might draw on IMF lines is if a sudden requirement for cash occurred. In my opinion the CBK needs to release more details on the terms of that facility so we know what it is for,” Deepak Dave of Riverside Capital, a markets debt expert said.

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