Africa in brief
SA Treasury says recession, falling revenue hurt public finances
Falling revenues and a recession mean South Africa will struggle to finance public services, the National Treasury said on Tuesday, as ratings agency Moody's warned of the risks of rising government debt.
Africa's most industrialised economy tipped unexpectedly into recession in the second quarter, and the appointment of a new finance minister added to currency and financial market turmoil.
President Cyril Ramaphosa last week made former central bank governor Tito Mboweni his fourth finance minister in two years, replacing Nhlanhla Nene who quit after admitting to meetings with the family at the centre of corruption allegations.
Mboweni will the deliver medium-term budget policy statement (MTBPS) next week, which will be closely watched for details of
Ramaphosa's stimulus plan to pull the economy out of recession and avoid further ratings downgrades.
"The contraction of our public finances is placing tremendous stress on us and our ability to finance public services and this threatens the affordability of planned expenditure," treasury director-general Dondo Mogajane told a parliamentary committee.
-Nampa/Reuters
Increased China-Africa trade due to US trade war
China is likely to boost imports from African countries as it seeks new sources of commodities in the wake of a trade war with the United States, a senior executive of Standard Chartered Bank in China said.
Trade links between the Asian economic powerhouse and African nations like Kenya have been growing robustly in recent years, offering opportunities to lenders who serve Chinese clients doing business on the continent like Standard Chartered.
Carmen Ling, Standard Chartered's global head of the internationalisation of the Chinese currency renminbi (RMB), cautioned there would be no winners from the trade war in the short term, but added some African nations could gain in the long term.
"We believe that countries like Kenya and Nigeria will benefit because China will look to import more from Africa; some agricultural products from Kenya, some oil products from Nigeria," she told Reuters late on Monday.
"Trade flow patterns will change because China will need to look for new trade partners."
-Nampa/Reuters
Zambian mining group says tax changes will hit exploration
Zambia's proposed mining tax increases will hit mineral exploration and production in Africa's second biggest copper producer, companies involved in exploration said on Tuesday.
Zambia plans to introduce new mining duties, replace Value Added Tax with sales tax and increase royalties to help bring down mounting debt, its finance minister said while delivering the 2019 budget speech last month.
The Association of Zambian Mineral Exploration Companies (AZMEC) said in a statement the measures proposed in the budget would not help the growth of the nation's mining sector.
Mineral exploration is an inherently high cost and high risk activity, AZMEC President Geoffrey Mulenga said.
He added that no new viable copper discoveries had been made in Zambia over the past decade.
"Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producing nation," he said.
Without new mineral discoveries, Zambia's mining industry would continue to stagnate and ultimately contract, hitting tax collection, employment and export revenue, he said.
Congo signs deal for US$14 bln Inga hydroelectric project
Congo signed a joint deal on Tuesday to develop a US$14 billion hydroelectric project with one consortium led by China Three Gorges Corporation and a second Spanish-led one.
The Inga 3 project is part of a US$50-US$80 billion programme to expand hydroelectric dams along the Congo River, but it has repeatedly been delayed by red tape and disagreements between Democratic Republic of Congo and its partners.
After initially competing for the deal, the Chinese investor group and the other including Spain's ACS (Actividades de Construccion y Servicios SA) were asked to submit a joint bid, which they did in June.
The next stage requires the investors to carry out detailed studies for the project, taking into account social and environmental considerations, the state agency responsible for the project said in a statement.
The 11 000-megawatt Inga 3 is projected to provide power for South Africa as well as mines and other consumers in Congo.
-Nampa/Reuters
Nigeria to probe US$3.5 bln NNPC fuel subsidy fund
Nigeria's upper house of parliament plans to investigate an alleged US$3.5 billion fuel subsidy fund at state-oil firm NNPC, lawmakers said on Tuesday.
The Senate alleges NNPC used the fund to subside the price of imported petrol without the house's approval, the lawmakers said.
Fuel subsidies are a contentious issue in Nigeria, where prices are kept artificially low at 145 naira (US$0.48) per litre, often as a populist tool.
That has meant that as fuel prices increase globally, it has become unprofitable for private petrol marketers to import, forcing NNPC to step in to prevent major shortages.
However, state oil firm money spent on subsidies is meant to be included in Nigeria's national budget, subject to approval by the national assembly.
The Senate President, Bukola Saraki, said parliament would set up a committee to look into the issue.
A spokesman for NNPC said the oil company would await a decision from lawmakers and then decide how to respond.
"We have to call for the resolution (by the Senate), analyse it and respond accordingly," he said.
-Nampa/Reuters
Algeria hopes to have energy law ready in 2019
Algeria wants to have a new energy law ready by the first half of 2019 and might use Mexico's legislation as inspiration, the CEO of state energy firm Sonatrach said on Tuesday.
The North African OPEC member has been preparing changes to its hydrocarbon law in a bid to attract foreign investors that have stayed away in recent years, citing bureaucracy and tough terms.
"A good model of an energy law is Mexico's as it allowed them to attract US$300 billion in investment ... definitely this is a good model and I will be very happy to have such a law,"
Abdelmoumen Ould Kaddour said during a visit to the Hassi Rmel gas field.
"We will be ready by the first half of 2019," he added, without giving further details of what exactly he liked about the Mexican legislation.
Sonatrach has hired consultancies, including US law firm Curtis Mallet-Prevost, Colt & Mosle LLP, to help amend the law.
Since his appointment in March 2017, Kaddour has convinced international firms that were reluctant to invest in Algeria to re-engage with the North African country after he resolved legal disputes with them.
-Nampa/Reuters
Falling revenues and a recession mean South Africa will struggle to finance public services, the National Treasury said on Tuesday, as ratings agency Moody's warned of the risks of rising government debt.
Africa's most industrialised economy tipped unexpectedly into recession in the second quarter, and the appointment of a new finance minister added to currency and financial market turmoil.
President Cyril Ramaphosa last week made former central bank governor Tito Mboweni his fourth finance minister in two years, replacing Nhlanhla Nene who quit after admitting to meetings with the family at the centre of corruption allegations.
Mboweni will the deliver medium-term budget policy statement (MTBPS) next week, which will be closely watched for details of
Ramaphosa's stimulus plan to pull the economy out of recession and avoid further ratings downgrades.
"The contraction of our public finances is placing tremendous stress on us and our ability to finance public services and this threatens the affordability of planned expenditure," treasury director-general Dondo Mogajane told a parliamentary committee.
-Nampa/Reuters
Increased China-Africa trade due to US trade war
China is likely to boost imports from African countries as it seeks new sources of commodities in the wake of a trade war with the United States, a senior executive of Standard Chartered Bank in China said.
Trade links between the Asian economic powerhouse and African nations like Kenya have been growing robustly in recent years, offering opportunities to lenders who serve Chinese clients doing business on the continent like Standard Chartered.
Carmen Ling, Standard Chartered's global head of the internationalisation of the Chinese currency renminbi (RMB), cautioned there would be no winners from the trade war in the short term, but added some African nations could gain in the long term.
"We believe that countries like Kenya and Nigeria will benefit because China will look to import more from Africa; some agricultural products from Kenya, some oil products from Nigeria," she told Reuters late on Monday.
"Trade flow patterns will change because China will need to look for new trade partners."
-Nampa/Reuters
Zambian mining group says tax changes will hit exploration
Zambia's proposed mining tax increases will hit mineral exploration and production in Africa's second biggest copper producer, companies involved in exploration said on Tuesday.
Zambia plans to introduce new mining duties, replace Value Added Tax with sales tax and increase royalties to help bring down mounting debt, its finance minister said while delivering the 2019 budget speech last month.
The Association of Zambian Mineral Exploration Companies (AZMEC) said in a statement the measures proposed in the budget would not help the growth of the nation's mining sector.
Mineral exploration is an inherently high cost and high risk activity, AZMEC President Geoffrey Mulenga said.
He added that no new viable copper discoveries had been made in Zambia over the past decade.
"Dramatically increased exploration activities are now required, more than ever, if Zambia is to remain a leading copper producing nation," he said.
Without new mineral discoveries, Zambia's mining industry would continue to stagnate and ultimately contract, hitting tax collection, employment and export revenue, he said.
Congo signs deal for US$14 bln Inga hydroelectric project
Congo signed a joint deal on Tuesday to develop a US$14 billion hydroelectric project with one consortium led by China Three Gorges Corporation and a second Spanish-led one.
The Inga 3 project is part of a US$50-US$80 billion programme to expand hydroelectric dams along the Congo River, but it has repeatedly been delayed by red tape and disagreements between Democratic Republic of Congo and its partners.
After initially competing for the deal, the Chinese investor group and the other including Spain's ACS (Actividades de Construccion y Servicios SA) were asked to submit a joint bid, which they did in June.
The next stage requires the investors to carry out detailed studies for the project, taking into account social and environmental considerations, the state agency responsible for the project said in a statement.
The 11 000-megawatt Inga 3 is projected to provide power for South Africa as well as mines and other consumers in Congo.
-Nampa/Reuters
Nigeria to probe US$3.5 bln NNPC fuel subsidy fund
Nigeria's upper house of parliament plans to investigate an alleged US$3.5 billion fuel subsidy fund at state-oil firm NNPC, lawmakers said on Tuesday.
The Senate alleges NNPC used the fund to subside the price of imported petrol without the house's approval, the lawmakers said.
Fuel subsidies are a contentious issue in Nigeria, where prices are kept artificially low at 145 naira (US$0.48) per litre, often as a populist tool.
That has meant that as fuel prices increase globally, it has become unprofitable for private petrol marketers to import, forcing NNPC to step in to prevent major shortages.
However, state oil firm money spent on subsidies is meant to be included in Nigeria's national budget, subject to approval by the national assembly.
The Senate President, Bukola Saraki, said parliament would set up a committee to look into the issue.
A spokesman for NNPC said the oil company would await a decision from lawmakers and then decide how to respond.
"We have to call for the resolution (by the Senate), analyse it and respond accordingly," he said.
-Nampa/Reuters
Algeria hopes to have energy law ready in 2019
Algeria wants to have a new energy law ready by the first half of 2019 and might use Mexico's legislation as inspiration, the CEO of state energy firm Sonatrach said on Tuesday.
The North African OPEC member has been preparing changes to its hydrocarbon law in a bid to attract foreign investors that have stayed away in recent years, citing bureaucracy and tough terms.
"A good model of an energy law is Mexico's as it allowed them to attract US$300 billion in investment ... definitely this is a good model and I will be very happy to have such a law,"
Abdelmoumen Ould Kaddour said during a visit to the Hassi Rmel gas field.
"We will be ready by the first half of 2019," he added, without giving further details of what exactly he liked about the Mexican legislation.
Sonatrach has hired consultancies, including US law firm Curtis Mallet-Prevost, Colt & Mosle LLP, to help amend the law.
Since his appointment in March 2017, Kaddour has convinced international firms that were reluctant to invest in Algeria to re-engage with the North African country after he resolved legal disputes with them.
-Nampa/Reuters
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