Monday, 06 August 2018

Nigeria’s economy is expected to grow more slowly this year than previously forecast as investors hold off before elections in early 2019, a Reuters poll showed on Friday, while Kenyan growth is forecast at more than double the pace.

In the poll taken in the past week, analysts and economists’ forecasts showed a median of 2.1 percent growth for Nigeria, accelerating to 3.0 percent next year.

That was a significant downgrade from the previous poll taken three months ago, which showed Africa’s largest economy expanding 2.6 percent this year after a lacklustre 0.8 percent in 2017.

“Upcoming elections and the associated high-wire politics already underway would instigate caution on the part of economic stakeholders,” said Rafiq Raji, chief economist at Macroafricaintel in Lagos, who expects the economy to slow in the next few quarters.

“Business and investment decisions are thus likely to be postponed till after the 2019 elections,” he added.

Nigerians vote in February. On Tuesday, 16 senators quit President Muhammadu Buhari’s ruling party and the country’s third most senior politician said he might follow suit, in a blow to the leader who is seeking re-election next year.

This comes at a tough time for the economy. Growth slowed in the first quarter of 2018 for the first time since the country pulled out of recession last year as the non-oil sector struggled.

Fellow heavyweight South Africa also suffered its worst quarterly contraction in nine years, in a reminder to investors of the huge challenge President Cyril Ramaphosa faces to deliver long term economic growth.

A separate survey earlier this month showed South African GDP is expected to grow 1.5 percent this year. [ECILT/ZA] However, Reserve Bank Governor Lesetja Kganyago shocked markets last week when he revealed the Bank projects growth at only 1.2 percent, slower than last year.

It is a different story for Kenya, east Africa’s biggest economy, where analysts’ forecasts showed a median of 5.5 percent growth this year despite its debt problems. That was unchanged from a poll taken three months ago.

Growth is expected to accelerate next year to 5.9 percent, slightly faster than in the last survey.

Raji attributed this to the fact that Kenya is now an oil producer, even though robust production levels are a long way off. He cautioned that the recent suspension of production by Tullow on security grounds could cause problems.

Tullow aims to produce the first oil from its $2.9 billion Kenya project by 2021, allowing the country to export crude. However, protests and security problems have halted a pilot scheme which trucks around 600 barrels of oil per day to a storage facility in Mombasa.

Major African economies are also at risk to what may be more difficult times for the world economy.

Reuters polls of several hundred economists taken this month show global economic activity remains solid but has already passed its peak, with protectionist trade policies likely to slow activity significantly.

“(The) knock-on impact of higher trade tariffs will weigh on inflation and consumption expenditure in advanced economies,” said Gaimin Nonyane, head of economic research at Ecobank Group. “Extended risk-off sentiment is also a downside risk to price levels and growth in developing countries.”

But many sub-Saharan African economies have been relatively insulated from the challenges facing larger global economies. In Ethiopia, for example, growth has averaged nearly 10 percent for the past decade, albeit from a very low base.


Source: Reuters

Published in Economy
U.S. President Donald Trump acknowledged on Sunday that his son met with Russians in 2016 at Trump Tower to get information on his election opponent Hillary Clinton, saying it was “totally legal” and “done all the time in politics.”
The Republican president had previously said the meeting was about the adoption of Russian children by Americans.
Trump’s morning Twitter post was his most direct statement on the purpose of the meeting, though his son and others have said it was to gather damaging information on the Democratic candidate.
In a post on Twitter, Trump also denied reports in the Washington Post and CNN that he was concerned his eldest son, Donald Trump Jr., could be in legal trouble because of the meeting with the Russians, including a lawyer with Kremlin ties.
He repeated that he had not known about the meeting in advance.
“Fake News reporting, a complete fabrication, that I am concerned about the meeting my wonderful son, Donald, had in Trump Tower. This was a meeting to get information on an opponent, totally legal and done all the time in politics – and it went nowhere. I did not know about it!” Trump said.
Political campaigns routinely pursue opposition research on their opponents, but not with foreign representatives from a country viewed as an adversary. Russian officials were under U.S. sanctions at the time.
Special Counsel Robert Mueller is examining whether Trump campaign members coordinated with Russia to sway the White House race in his favor. Russian President Vladimir Putin has denied his government interfered.
One part of the inquiry has focused on a June 9, 2016, meeting at Trump Tower in New York between Donald Jr., other campaign aides and a group of Russians.
Email released by Donald Jr. himself showed he had been keen on the meeting because his father’s campaign was being offered potentially damaging information on Clinton.
Donald Jr. said later he realized the meeting was primarily aimed at lobbying against the 2012 Magnitsky sanctions law, which led to Moscow denying Americans the right to adopt Russian orphans.
President Trump has repeatedly denied that his campaign worked with Moscow, saying “No Collusion!” Last week, however, he adopted his lawyers’ tactics and insisted “collusion is not a crime.”
While collusion is not a technical legal charge, Mueller could bring conspiracy charges if he finds that any campaign member worked with Russia to break U.S. law. Working with a foreign national with the intent of influencing a U.S. election could violate multiple laws, according to legal experts.
CNN reported last month that Michael Cohen, the president’s longtime personal lawyer, was willing to tell Mueller that Trump did know about the Trump Tower meeting in advance.
Trump’s lawyers and the White House have given conflicting accounts about whether Trump was involved in crafting Donald Jr.’s response to a New York Times article last summer revealing the Trump Tower meeting with the adoptions rationale. Trump’s lawyers acknowledged in a letter to Mueller’s team in January 2018 that Trump dictated the response, according to the Times.
Trump has stepped up his public attacks on the Mueller probe since the first trial to arise from it began last week in Alexandria, Virginia, involving former Trump campaign chairman Paul Manafort.
The federal tax and bank fraud charges Manafort faces are not related to the Trump campaign but Manafort’s close relations with Russians and a Kremlin-backed Ukrainian politician are under scrutiny in the trial.
Trump’s attacks on the special counsel’s investigation have been rebuffed by Republican leaders in Congress who have expressed support for Mueller.
“The president should be straightforward with the American people about the threat to our election process that Russia, Putin in particular, is engaged in is ongoing,” Representative Ed Royce, chairman of the House Foreign Affairs Committee, said on CNN’s “State of the Union” on Sunday.
One of the president’s personal lawyers said on Sunday that if Trump is subpoenaed by the special counsel, his lawyers will attempt to quash it in court. Any legal battle over whether the president can be compelled to testify could go all the way to the U.S. Supreme Court, the lawyer, Jay Sekulow, said on ABC’s “This Week.”
U.S. intelligence agencies concluded last year that Russia interfered in the 2016 U.S. election with a campaign of hacking into Democratic Party computer networks and spreading disinformation on social media. American intelligence officials say Russia is targeting the November congressional elections, which will determine whether or not Republicans keep control of both chambers of the U.S. Congress.
Source: Reuters
Published in World
South Africa’s trade surplus widened more than expected to 12 billion rand ($915 million) as exports in precious, base metal and vehicle parts jumped, easing pressure on the economy and lifting the currency.
The South African Revenue Service said in Johannesburg that exports rose by 7.1 per cent on a month-on-month basis to 110 billion rand in June, while imports dipped 0.9 per cent to 98 billion rand.
Commodities led the rise in exports with sales of precious metals up 38 per cent and base metals rising 13 per cent in the month. Sales of vehicles equipment also went up 8 per cent.
Analysts said the large surplus was a sign the current account was narrowing, which would lessen the impact of any reversal of portfolio flows.
“This is the fourth month in row of surpluses so it will definitely reduce the current account deficit in the second quarter,” said senior economist at Nedbank Isaac Matshego.
“But remember, the current account is structural so we really do need those portfolio flows to keep coming in,” Matshego added.
The rand responded to the news of the widening surplus by rising slightly on the data, trading at $1 =13.1350 at 1300 GMT, about 0.2 per cent firmer.
The rand has rallied in the past month to become one of the top performing emerging market currencies, due mainly to positive turn in sentiment, but analysts warn it remains at risk to offshore events, particularly the ongoing trade tiff between the United States and China.
Africa’s most industrialised country ran a large current account deficit of 4.8 per cent of GDP in the first quarter.
Source: News24
Published in Business
A limited liability company Reagan Cement Limited alleged to have suffered economic misfortune as a result of breach of contract occasioned by Bank of Industry limited, has renewed its N2.8 billion legal battle against the bank.
In an amended statement of claims accompanied by written statement on oath sworn to by the Chief Executive officer of the company, Chief Reagan Ufomba and filed before a Federal High Court in Lagos by a Human Right Lawyer, Festus Keyamo SAN on behalf of Reagan Cement Limited, Chief Ufomba alleged that by a letter dated 1st of November 2012, Bank of Industry Limited offered his company a long term loan of N2,875,583,735 for the purchase of equipment and machinery for the building of Cement Chinke Grinding Mill in Calabar.
In line with conditions precedent to the disbursement of the loan, the company submitted a bank guarantee from the Unity Bank Plc as receiving bank as part of the condition for the disbursement of the said loan.
However, from the total sum of N2,875,583,735 only the sum of N316,314,210.85 was capitalized interest and paid upfront to Bank of Industry and the balance of the loan facility in the sum of N2,559,269,514.15 was transferred into the company’s account domicile with Unity Bank Plc. The capitalized interest represents the interest on the loan facility for one year.
The company has been paying interest on the facility to the bank between January and May 2014. The duration of the loan was for seven years.
When the loan was still subsisting and no breach whatsoever on the part of the company, the bank called back the whole sum of the loan, a total sum of N2,875,583,735 via transfer out of the account of the company with Unity Bank Plc on the 5th of august 2014 in favour of Bank of Industry.
Chief Ufomba averred further that on the premise of the said loan, Shangai Minggong Heavy Equipment Company Limited of China HAXMI engineers was contracted to build and manufacture the various equipment and machine for the grinding mill, saying some of the equipment and machine are already in Calabar for installation while others have been manufactured but yet to be shipped into Nigeria.
The bank demanded for 1% letter of credit commission to be paid upfront before the equipment can be paid for,1% legal, 1% processing fees and another 1% commitment fees. Meeting all the obligations set by the bank and terms of the loan agreement still subsisting, the bank called back the loan through the company’s bank guarantee, Unity Bank Plc without informing the company.
He said the grinding mill project in Calabar is on a stand still as contractors are calling for their money and the remaining equipment set for shipment but yet to be paid for because the funds have been withdrawn by the bank.
According to him, when the company noticed that Bank of Industry had called back the loan after paying the sum of N885,282,452 as fees to the bank for services, it wrote to the bank querying its action, as they acknowledged the letter but never responded to the plea of the company
He said the loan was for seven years and that the company was still enjoying a two year moratorium and interest paid as when due but the breach of the bank has caused huge damages to the project which was ongoing as monies owed by contractors could not be paid due to the frustrations of the said facility by the bank.
Consequently, the company claims against the bank are as follows:
-A declaration that the called back of the loan facility by the bank was a breach of contract between the company and Bank of Industry Ltd.
-An order of the court mandating the bank to reimburse the account of the company domicile with the bank with the balance from the loan sum of N2,875,735 after payment for the cost of production and manufacturing of the equipment and machine for the grinding mill has been deducted and paid to the contractor.
-An order that the sum of N2 billion be paid to the plaintiff as damages for the bank charges, loss of business, loss of reputations and loss of profit.
Published in Business
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