Africa Brief

Africa Brief: Fuel prices rise as subsidies cut, Mozambique tourism next big thing and more…

Fuel prices rise as subsidies cut

Cameroon has cut some of its costly fuel subsidies, a move that will please international donors calling for reforms, although similar moves have been reversed in the past due to the threat of protests against subsequent price rises. The price of petrol rose by 14 percent and diesel by15 percent yesterday, while gas prices were up over 8percent, the government said on Monday The International Monetary Fund has for years called for a cut in subsidies, which cost about $600million (R6.3 billion) a year. Cameroon has repeatedly stalled the move after deadly protests in 2008 and Nigeria’s failed bid to cut similar subsidies in 2012. A litre of petrol now costs 650CFA francs (R14.34), while diesel is up to 600 CFA francs a litre.

by Reuters published in The Star, Business Report on 02/07/2014

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FNB opts to start from scratch in Ghana

First National Bank (FNB) has changed its plans regarding on how it will establish its presence in Ghana. The new plan involves starting a new business in Ghana. It is believed that more growth market will be achieved cheaply for the First Rand Group with this new plan as acquisition capital will be saved. The new plan was confirmed by the CEO Mike Vacy-Lyle when he said that FNB will start from scratch to organically create a fully-fledged retail and business banking presence. The group was in the process of getting a banking license. Analysts believe that it is logic to grow organically than through acquisitions .Although FNB‘s competitors are well established in Ghana, FNB expects a growth rates to remain same level as last year whereas World Bank expect higher growth. Reports in previous years showed that there were 27 deposit taking banks of which 15 were Ghanaian owned. World Bank data has shown that Ghanaian economy has grown from past year. Data from financial inclusion has shown that 29.4% of people over the age of 15 in Ghana had bank accounts.

by Phakamisa Ndzamela published in Business Day on 02/07/2014

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Mozambique tourism ‘next big thing’ – Imara

Mozambique’s extensive gas and coal deposits have attracted significant, foreign investor interest but the next big opportunity could prove to be the in the development of the nation’s vast tourism potential. The Botswana-listed group was recently named lead financial adviser on a $15m (R159m) hotel project intended to kick start substantial growth in Mozam­bique’s tourism industry.  The recent multibillion dollar investments in Tete’s coalfields have resulted in the country experiencing boom resources. Imara foresees a 60:40 debt-equity funding structure and additional equity investors are now being required. “Mozambican Government is taking steps to develop a world class tourism in order to stay competitive”‘ Lopes said.

Excerpt from Mozambique tourism ‘next big thing’ – Imara, published in The New Age on 02/07/2014

FDI target up to $2bn next year

The Zimbabwe Investment Authority wants to draw $2 billion (R21bn) in foreign direct investment (FDI) next year, double this year’s target, as the government clarifies black empowerment laws for investors. While FDI levels were “embarrassingly low” compared with neighbours such as Mozambique, clarity on Zimbabwe’s indigenisation law would probably lead to increased flows, Nigel Chanakira, the chairman of the investment promotion body said on Friday Finance Minister Patrick Chinamasa said in May that legislators were committed to changing black ownership laws passed in 2008 that compel foreign- and white-owned firms to sell majority stakes to black Zimbabweans.

by Bloomberg published in The Star, Business Report on 02/07/2014

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Diaspora bond in the offing

Nigeria planned to issue a bond totaling between $100m and $300m aimed at the country’s diaspora by the end of the year. Nigeria chose Stanbic IBTC Bank and Goldman Sachs as lead managers of the bond in April. The bond would be sold only to offshore diaspora investors, with no onshore portion.

by Reuters published in The Star, Business Report on 01/07/2014

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Bids sought for steam power

Kenya invited bids for the construction of two electricity generation plants to supply a combined 60 megawatts from geothermal power. The winning firms would be expected to finance and complete building the plants by the end of next year. Kenya want to utilize its vast geothermal energy resources in the Rift Valley, expanding total power generation capacity by 5000mW by 2017, from 1700mW now.

by Reuters published in The Star, Business Report on 01/07/2014

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Inflation slows on food prices

Slowing food price rises dragged Ugandan inflation down from 5.4% a month earlier to 4.9% in the year to June. Month-on-month, consumer prices declined 1% last month. The price of various foodstuffs including Irish potatoes, milk and sugar all declined. Core inflation, excluding food and fuel costs, declined from 3.3% to 2.7% last month.

by Reuters published in The Star, Business Report on 01/07/2014

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David Okwara

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