Major International Business Headlines Brief::: 18 July 2018

Wed Jul 18 10:10:53 CAT 2018

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Major International Business Headlines Brief::: 18 July 2018

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*  Kenya's EABL to start production at new $150 mln brewery

*  Brexit vote: Government defeats EU customs union bid

*  Google hit with record EU fine over Shopping service

*  Farnborough Airshow: Aircraft sales to hit $6.3tn on China trade

*  AstraZeneca to stockpile drugs for Brexit

*  EU signs its biggest free trade deal with Japan

*  Farnborough Airshow: A380's 'best years still to come'

*  UK holidaymakers hit with £1bn of card fees

*  Egypt's parliament passes $11 billion sovereign wealth fund

*  South Africa's Solidarity union to agree wage deal with Eskom: source

*  Nigeria's Buhari sends $750 mln supplementary budget to lawmakers

*  Tullow Oil says may have to halt operations at northern Kenyan oilfields

*  South Africa's Amplats, PIC create venture fund to lift PGM industrial demand

*  South African consumer confidence dips, but still higher than expected - survey

*  Kenya's Safaricom taking M-Pesa to Ethiopia, sources say

 <mailto:info at bulls.co.zw> 

Kenya's EABL to start production at new $150 mln brewery

NAIROBI (Reuters) - East African Breweries said on Tuesday its new 15 billion shilling ($149.25 million) brewery in western Kenya is ready to start production after a successful test run.

The brewer, which is controlled by Britain’s Diageo, will kick off activity at the site with a two-year production run of its Senator Keg beer, a low-priced lager made from locally grown sorghum.

It will then move on to mainstream brands like Tusker.

Senator Keg has been one of the fastest growing brands for EABL in recent years due to huge demand from price-sensitive consumers, some of whom are switching from illegal drinks into more formal ones.

EABL’s main plant is located in the capital Nairobi. It announced the investment in the new brewery in the western city of Kisumu last year, saying it wanted to meet growing demand in that region.

The company, which also operates in neighbouring Tanzania and Uganda, has also started to produce some spirits like Captain Morgan rum in Kenya in response to growing demand in that segment.

($1 = 100.5000 Kenyan shillings)

 <mailto:info at bulls.co.zw> 

Brexit vote: Government defeats EU customs union bid

The government has survived an attempt by pro-EU Conservative MPs to change its post-Brexit trade strategy.

The MPs wanted the UK to join a customs union if it does not agree a free-trade deal with the EU.

But the government, which says a customs union would stop it striking new trade deals, won by 307 to 301.

Ahead of the vote, Tory MPs were told a defeat would lead to a vote of no confidence in the government, sources told the BBC's John Pienaar.

The government did, however, lose a separate vote on its Trade Bill on the regulation of medicines after Brexit.

MPs backed an amendment by 305 votes to 301 that would keep the UK in the European medicines regulatory network.

There were 12 Tory rebels in both the customs and medicines votes - but the government's total was boosted by four Labour MPs in the customs vote.

The customs union allows for tariff-free trading between members with a common tariff set for imports from the rest of the world.

The UK is due to leave the EU on 29 March 2019 but the two sides have yet to agree how their final trading relationship will work.

The Commons has been debating two pieces of legislation - on customs and trade - and there have been several attempts to change them by both pro-Brexit and pro-EU MPs.

The latest key vote was on customs, with a debate sparked by Tory MP Stephen Hammond's amendment to the Trade Bill.

It stated that if a free trade area had not been negotiated by 21 January, ministers must change tack and start discussions on joining a customs union.

Labour backs the idea of a customs union with the EU after Brexit - but the government says this would mean the UK is unable to strike its own international trade deals.

During the debate on the Trade Bill, a minister tried to persuade Mr Hammond and his supporters to back down, promising to deal with the "essence" of their concerns when the bill goes to the House of Lords.

Although this was rejected by Mr Hammond, the government won the vote and the bill was later approved by the House of Commons.

The 12 MPs that voted against the government on customs and trade were: Heidi Allan, Guto Bebb, Ken Clarke, Jonathan Djanogly, Dominic Grieve, Stephen Hammond, Philip Lee, Nicky Morgan, Bob Neill, Antoinette Sandbach, Anna Soubry and Sarah Wollaston.

On the other side, four Labour MPs voted with the government: Frank Field, Kate Hoey, John Mann, and Graham Stringer.

Lib Dem leader Sir Vince Cable and his predecessor Tim Farron - who were criticised after missing Monday night's knife-edge Brexit votes - were back at Westminster and voted against the government.

But a former Lib Dem minister, Jo Swinson, complained that Tory MP Brandon Lewis participated in the votes despite having agreed to abstain.

Ms Swinson, a Remain supporter who has recently given birth and was unable to vote, tweeted Mr Lewis did not keep to their arrangement to balance out her effective abstention - known as "pairing" - and accused the government of "desperate stuff".

Laura Kuenssberg's analysis

They didn't escape defeat for long.

Having squeaked through last night the government was beaten for only the second time ever in the Commons on key Brexit legislation.

And guess what, it was on a vote they didn't expect to lose - Dr Phillip Lee, who quit the government to speak out on Brexit, put forward his own amendment to protect the links between the UK and the European Medicines Agency to ensure the smooth flow of medicines and new drugs for British patients after Brexit.

And he had enough to support to win it, just. An embarrassment for the government certainly.

It is another reminder of how difficult it is for Theresa May to get her way in the House of Commons where she doesn't have her own majority.

It is serious. A defeat is a problem. But it wasn't a complete disaster tonight for two reasons.

First, the amendment isn't a million miles away from the government's own policy. While not straightforward, the vote hasn't forced a screeching U-turn.

The more important reason is that the vote that followed, on keeping the UK in a customs union, went the other way.

Read Laura's blog

The medicines vote explained

The vote on medicine regulation was only the government's second defeat on Brexit in the House of Commons.

MPs voted for the UK to take "all necessary steps" to participate in the regulatory network operated by the European Medicines Agency after it leaves the EU.

The agency, which evaluates and supervises medicines and helps national authorities authorise the sale of drugs across the EU, is currently based in London but is moving to Amsterdam after Brexit.

There have been warnings that Brexit may cause delays in UK patients getting new drugs.

The government says it is "seeking participation" in the agency after Brexit and would make an "appropriate financial contribution" in return.

But it has not agreed to take "all necessary steps" to secure this.

Responding to the defeat, the government said: "We will now reflect on this amendment and seek to revisit in the Lords."--BBC

Google hit with record EU fine over Shopping service

Google has been fined 2.42bn euros ($2.7bn; £2.1bn) by the European Commission after it ruled the company had abused its power by promoting its own shopping comparison service at the top of search results.

The amount is the regulator's largest penalty to date against a company accused of distorting the market.

The ruling also orders Google to end its anti-competitive practices within 90 days or face a further penalty.

The US firm said it may appeal.

However, if it fails to change the way it operates the Shopping service within the three-month deadline, it could be forced to make payments of 5% of its parent company Alphabet's average daily worldwide earnings.

Based on the company's most recent financial report, that amounts to about $14m a day.

The commission said it was leaving it to Google to determine what alterations should be made to its Shopping service rather than specifying a remedy.

"What Google has done is illegal under EU antitrust rules," declared Margrethe Vestager, the European Union's Competition Commissioner.

"It has denied other companies the chance to compete on their merits and to innovate, and most importantly it has denied European consumers the benefits of competition, genuine choice and innovation."

Ms Vestager added that the decision could now set a precedent that determines how she handles related complaints about the prominence Google gives to its own maps, flight price results and local business listings within its search tools.

Google had previously suggested that Amazon and eBay have more influence over the public's spending habits and has again said it does not accept the claims made against it.

"When you shop online, you want to find the products you're looking for quickly and easily," a spokesman said in response to the ruling.

"And advertisers want to promote those same products. That's why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both.

"We respectfully disagree with the conclusions announced today. We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case."

Fast growth

Google Shopping displays relevant products' images and prices alongside the names of shops they are available from and review scores, if available.

The details are labelled as being "sponsored", reflecting the fact that, unlike normal search results, they only include items that sellers have paid to appear.

On smartphones, the facility typically dominates "above-the-fold" content, meaning users might not see any traditional links unless they scroll down.

Google also benefits from the fact the Shopping service adverts are more visual than its text-based ads.

One recent study suggested Shopping accounts for 74% of all retail-related ads clicked on within Google Search results. However, the BBC understands Google's own data indicates the true figure is smaller.

Seven-year probe

The European Commission has been investigating Google Shopping since late 2010.

The probe was spurred on by complaints from Microsoft, among others.

The rival tech giant has opted not to comment on the ruling, after the two struck a deal last year to try to avoid such legal battles in the future.

However, one of the other original complainants - the British price comparison service Foundem - welcomed the announcement.

"Although the record-breaking 2.42bn euro fine is likely to dominate the headlines, the prohibition of Google's immensely harmful search manipulation practices is far more important," said its chief executive Shivaun Raff.

"For well over a decade, Google's search engine has played a decisive role in determining what most of us read, use and purchase online. Left unchecked, there are few limits to this gatekeeper power."

This is a big moment in a clash between the EU and the US's tech giants, which has been going on for more than a decade.

The commission believes it has struck a blow for consumers and for little firms at a time when online advertising - particularly on mobile phones - is dominated by Google and Facebook.

Google believes the regulator has a weak case and has failed to provide evidence that either consumers or rivals have been harmed.

In essence, it sees this as a political move rather than one based on competition law. You can be pretty confident that the Trump administration will share that view.

There's mounting anxiety in European capitals about something called Gafa - Google, Apple, Facebook and Amazon - the four American giants that play such a huge role in all of our lives.

That means we can expect further action to try to limit their powers, with the potential for growing political tension between Brussels and Washington.

Although the penalty is record-sized, it could have been bigger.

The commission has the power to fine Alphabet up to 10% of its annual revenue, which was more than $90bn (£70.8bn) in its last financial year.

Alphabet can afford the fine - it currently has more than $172bn of assets.

But one expert said the company would be more concerned about the impact on its future operations.

"If it has to change the appearance of it results and rankings, that's going to have an impact on how it can monetise search," said Chris Green, from the tech consultancy Lewis.

"Right now, the way that Google prioritises some of its retail and commercial services generates quite a lot of ad income.

"When you consider the sheer number of search queries that Google handles on a daily basis, that's a lot of ad inventory going in front of a lot of eyeballs.

"Dent that by even a few percentage points, and there's quite a big financial drop."

Europe v US tech:

At her press conference, Margrethe Vestager insisted her action was "based on facts" rather than any prejudice the European Commission might have against US tech companies.

"We have heard allegations of being biased against US companies," she said.

"I have been going through the statistics... I can find no facts to support any kind of bias."

But this is far from the first time the European Commission has penalised US tech giants for what it views to be bad behaviour.

Others to have been targeted include:

*         Microsoft (2008) - the Windows-developer was fined €899m for failing to comply with earlier punishments, imposed over its refusal to share key code with its rivals and the bundling of its Explorer browser with its operating system. Five years later, it was told to pay a further €561m for failing to comply with a pledge to provide users a choice screen of browsers

*         Intel (2009) - the chip-maker was ordered to pay €1.06bn for skewing the market by offering discounts conditional on computer-makers avoiding products from its rivals. Intel challenged the fine, and a final court ruling in the matter is expected in 2018

*         Qualcomm (2015) - the chip-maker was accused of illegally paying a customer to use its technology and selling its chipsets below cost to push a rival out of the market. If confirmed, it faces a fine that could top €2bn, but the case has yet to be resolved

*         Apple (2016) - Ireland was ruled to have given up to €13bn of illegal tax benefits to the iPhone-maker since 1991, and was ordered to recover the funds plus interest from the company. However, Dublin missed the deadline it was given to do so and has said it will appeal

*         Facebook (2017) - the social network agreed to pay a €110m fine for saying it could not match user accounts on its main service to those of WhatsApp when it took over the instant messaging platform, and then doing just that two years later

*         The commission is also investigating Amazon over concerns that a tax deal struck with Luxembourg gave it an unfair advantage.

The European Commission continues to pursue two separate cases against Google.

The first involves allegations that the technology company has made it difficult for others to have their apps and search engines preinstalled on Android devices.

The second covers claims Google took steps to restrict rivals' ads from appearing on third-party websites that had installed a Google-powered search box.--BBC

Farnborough Airshow: Aircraft sales to hit $6.3tn on China trade

China will pass the US as the biggest air travel market within 10-15 years, driving a big rise in aircraft sales, the world's largest jet maker says.

Boeing's latest global industry report predicts airlines will need 42,700 aircraft over the next 20 years, up 3% on last year's forecast.

Boeing valued the sales at $6.3 trillion (£4.8tn) at today's prices

The closely-watched report was unveiled on day two of the Farnborough Airshow, where more orders were announced.

Despite trade tensions, rising oil prices, and hikes in interest rates, the Boeing forecast suggests no end to the near-decade long boom in aircraft sales. The production lines at Boeing and its European rival Airbus are already booked up for years ahead.

New Tempest fighter jet model unveiled

Qatar Air boss 'hopeful about travel ban'

On Tuesday, Russian airline Volga Dnepr committed to buying Boeing freight aircraft worth $11.8bn at list prices, while Airbus announced a provisional deal with an unnamed customer for 100 of its A320 jets.

And US aircraft leasing company Air Lease Corp announced a commitment to order as many as 78 Boeing single-aisle and wide-body airplanes in a deal valued at $9.6bn at catalogue prices.

Boeing's upbeat sales forecast underlined the importance of China to the aircraft industry. One in four of Boeing's passenger aircraft went to Chinese customers last year.

The company's commercial marketing chief, Randy Tinseth, told a press conference at Farnborough that he expected China to overtake the US as the world's largest domestic air travel market within 10-15 years.

Also, he said, demand for cargo aircraft would also increase on the back of e-commerce, with Chinese traders and consumers accounting for the biggest single rise.

However, Mr Tinseth declined to comment on whether Boeing's growth in China could be hindered by a trade war. "We are going to focus on what we can control," he said.

The company's sales forecast for the next two decades predicts a 5% rise to 31,360 in demand for single-aisle aircraft, such as the Boeing 737 and Airbus A320 families, which are popular with low-cost airlines.

Sales in the larger, wide-bodied bracket were expected to fall by just 140 to 8,070 aircraft over the next 20 years, but only because longer-range single-aisle jets were eating into the market, Mr Tinseth said.

Boeing trimmed its forecast for the regional jet fleet to 2,320 deliveries. Competition in this sector is expected to intensify, as Airbus has taken over Bombardier's C-Series aircraft programme and Boeing is buying Embraer.--BBC

AstraZeneca to stockpile drugs for Brexit

AstraZeneca is to increase its stockpiles of drugs by about 20% in preparation for a no-deal Brexit,

The European regulator has told companies to be ready for a possible hard Brexit in April 2019.

That requires companies to duplicate drugs testing, replicate licences and take other steps to ensure the smooth supply of medicines.

The FTSE 100 drugs giant said it had already spent £40m preparing for "no-deal".

Juliette White, vice-president of global external manufacturing at AstraZeneca, told the BBC's Newsnight programme that the company had been planning for a potential no-deal Brexit ever since the 2016 referendum.

"Ultimately - and as a safety net - we will increase the amount of finished medicines available to pharmacies and hospitals in those countries," said Ms White, referring to both the UK and the European Union.

"We always have an additional amount of medicines available. We are increasing that by about 20%."

Drug flows

About 45 million packs of medicine go from the UK to Europe every month and 37 million packs travel in the other direction. They need to be licensed, tested and certified by qualified staff recognised by the relevant medicines regulator.

At the moment, a test in the UK is valid in the EU and vice versa. After a no-deal Brexit that wouldn't be the case. And the European regulator has already told companies to plan on that basis.

Drugs would need to be authorised and tested within the EU to be legally valid.

AstraZeneca employs nearly 7,000 people in the UK. It is working on duplicating labs between its UK and European manufacturing facilities, moving technology and methods between countries, shifting key members of staff, and moving or duplicating regulatory approvals - known as marketing authorisations - into different jurisdictions.

The company, the second-largest UK drug maker by market value, has a team of more than 30 people working on Brexit preparations, split between its Macclesfield manufacturing campus and its operations in Sweden.

Its £40m bill for no-deal preparations will rise the longer there is uncertainty about the terms on which the UK will leave the EU, the company said, funds that could be spent on research and development into new medicines.

Time pressure

Big regulated sectors like pharmaceuticals and banking had to start planning for the possibility of a hard Brexit early. But in the pharma industry, there remains a lot of work to do in a limited time.

One industry source told Newsnight that it is acknowledged within the sector that there are products where companies will struggle to get everything over the line by April 2019.

Last week, the European Medicines Agency said it had "serious concerns" about the required work getting done for 108 drugs that are solely manufactured in the UK.

AstraZeneca's Ms White said the company had warned regulators that the industry could encounter problems.

"In the event of a hard Brexit and a particular product that we couldn't complete all of those complex activities in time for, then we'd ask for a specific time extension from those regulatory authorities," she said.

When asked if regulators had said they would be flexible, she said: "We've certainly made those requests of the regulatory authorities, yes".

The industry would like an early agreement that the UK and the EU will recognise each others' rules and testing, with continued regulatory alignment in the longer-term.

It is something the government has said is part of its Brexit plan. But without an iron-clad commitment from both sides, companies' preparations must continue.

Smaller companies

AstraZeneca is one of the big beasts of the UK pharma sector, with plenty of people and resources to throw at this problem. But some smaller companies have been waiting and hoping that a deal will emerge.

They, too, now need to start making decisions.

Quay Pharma employs 130 people and is based in north Wales. It has put plans to build a new lab there on hold while it decides whether it will need its own European facility to duplicate testing.

Without sufficient time left to build a new testing lab and get it signed off by regulators, the company is instead talking to European competitors about testing and releasing their products after next April.

That isn't ideal for the company. But nor is spending money on duplicate facilities or staff that may turn out not to be needed in the event of an agreed Brexit deal.--BBC

EU signs its biggest free trade deal with Japan

The European Union and Japan have signed one of the world's biggest free trade deals, covering nearly a third of the world's GDP and 600 million people.

One of the biggest EU exports to Japan is dairy goods, while cars are one of Japan's biggest exports.

The move contrasts sharply with actions by the US Trump administration, which has introduced steep import tariffs.

EU Commission head Jean-Claude Juncker said the deal underlined the "win-win" solutions offered by free trade.

Mr Juncker said: "[The] impact of today's agreement goes far beyond our shores. Together we are a making, by signing this agreement, a statement about the future of free and fair trade.

"We are showing that we are stronger and better off when we work together. And we are leading by example, showing that trade is about more than tariffs and barriers. It is about values, principles and finding win-win solutions for all those concerned."

US tariffs

The US was in talks with Japan and other Asian countries 18 months ago about a wide-ranging free-trade agreement, the Trans-Pacific trade agreement, but Donald Trump withdrew from this in one of his first moves after becoming president.

Since then, his "America First" policy has seen tariffs introduced on a range of items, including steel, which both Japan and the EU export to the US.

Firms in the EU, the world's biggest free-trade zone, currently export more than $100bn (£75bn) in goods and services to Japan, the world's third-biggest economy, every year.

Japan's Minister for Economic Revitalisation, Toshimitsu Motegi, said: "At a time when protectionist measures are gaining steam globally, the signing of the Japan-EU deal today will show the world once again our unwavering political will to promote free trade."---BBC

Farnborough Airshow: A380's 'best years still to come'

The head of Airbus' aircraft operations has mounted a strong defence of the troubled A380 super-jumbo jet, claiming its "best years are ahead of us".

Tom Williams insisted the A380's absence from the Farnborough Airshow had nothing to do with falling sales.

It's the first time in more than a decade that the flagship aircraft has been absent from the global showcase.

Mr Williams, who also warned about a possible trade war, told the BBC Airbus decided to display its latest products.

An Emirates Airline order for A380s earlier this year has helped bolster the programme, but speculation about its future won't go away.

The European aircraft manufacturer, whose wings are made in the UK, has become dependent on the Dubai-based airline to keep A380 production alive.

Mr Williams, chief operating officer for Airbus Commercial Aircraft, rejected suggestions that selling the A380 was just too hard.

"We are bringing the newest products [to Farnborough] to show them off, and there is a limit to how many aircraft we can bring.

"That doesn't mean, by any means, that we have given up on the A380. We are still fully committed. It's my personal belief that the A380 still has its best years ahead of us, which I think will come as we go into the next decade."

The A380 debut was in 2005 at the Paris Airshow, and it showcased at Farnborough the following year.

But one of the costliest aircraft projects ever undertaken has been battling for customers ever since the first plane was delivered to Singapore Airlines in 2007.

Production has been cut several times as airlines shunned the plane due to high operating costs and competition from more efficient, but smaller, rival aircraft. Airbus is expected to make just eight A380s next year.

But Mr Williams believes a rise in global air travel over the next decade, coupled with increasingly congested airports, will help increase demand for the 550-seat A380.

Brexit

Mr Williams repeated Airbus' belief that Prime Minister Theresa May's Chequers statement on leaving the European Union showed the government was going in the right direction.

Airbus had issued a stark warning about the consequences of a Brexit deal that could disrupt the movement of components and people around its pan-European operations.

"From an Airbus point of view I am very encouraged" by the Chequers statement, Mr Williams told the BBC.

"We also have to make sure we send the same message to the European Commission so that they understand the importance of finding a practical solution."

He also warned about the consequences of a trade war between the US and China. Airbus has production facilities in both countries, and about a quarter of the aircraft it is currently building will go to Chinese customers.

"A trade war is in no one's interests," Mr Williams said. "It's a zero-sum game."--BBC

UK holidaymakers hit with £1bn of card fees

UK holidaymakers are being collectively charged £1bn a year by their banks for paying by credit or debit card while they are abroad.

Standard credit and debit cards slap fees of nearly 3% on all spending, plus extra costs for using cash machines.

Customers are being encouraged to apply for cards with zero charges to make their holiday money go further.

But banks say using cards overseas is a safe, flexible and cost-effective way of paying.

Tourists warned over exchange rate costs

Staycation trend cuts use of cards abroad

Holidaymakers we spoke to in Malaga were shocked to be told about the billion pound figure, which has been calculated exclusively for BBC News.

"That is outrageous! They are surcharging us for going on our holidays," said Val Pollard who was sunning herself on the beach.

"You are likely to be spending €500-€800 a week. 3% of that is a lot of money."

For those using a standard credit card, the average "non-sterling transaction fee" is 2.8%, added to the amount you have spent, with some banks charging 2.99%.

The average fee on standard debit cards is nearly as much.

And there are multiple charges if you use a debit card to withdraw cash: an average of 2.5% on the whole amount, plus an extra fee of £1.39 on average just for using a foreign cash machine.

The charges appear on your bank statements when you return home.

'Rip off'

Alan and Marie Carman from King's Lynn, taking Malaga's open-top bus tour, told me that banks are "on to a winner" because people use their cards without thinking.

"I don't think they should do that charge," says Marie, "I don't think they should rip people off, because nowadays everybody uses cards."

Even the proprietor of the Shakespeare Pub, a British outpost in the centre of Malaga, believes he is affected.

"It has a knock-on effect on me," explained Peter Edgerton, "The customer is less likely to spend here if they know they're likely to be charged 3% every time they use their card."

The most recent figures from the banks themselves show that UK holidaymakers are spending a total of more than £32bn a year on their cards while overseas.

The charges on that spending are having a "huge impact on consumers' pockets", according to the foreign exchange specialists, FairFX, which analysed the charges for BBC News.

"When we're on holiday it's easy to turn a blind eye to what we think is just a few quid," said Ian Strafford-Taylor, FairFX's chief executive.

Cards do have advantages. A spokeswoman for UK Finance, the body which represents banks, describes them as an "extremely safe, flexible and cost-effective way to pay".

"If you do not get what you paid for, if the goods or services turn out to be faulty or you are a victim of card fraud, you will get your money back".

UK Finance points out that some banks offer alternative credit cards which have no fees when you spend overseas.

Among them are cards from Halifax, Santander, Nationwide and Barclays, though there is no guarantee that you will be accepted for one of these if you apply.

Savings

You can also buy pre-paid currency cards which have zero charges, though the exchange rates they use can vary.

Joanna Styles, who runs a tourist website guidetomalaga.com, wants banks to be forced to text customers whenever they levy a foreign currency charge, to encourage them to shop around.

"I know for a fact that in Malaga you could have several good meals out for the amount that you have effectively given to the bank," she said.

Most people do not shop around. They obtain their credit cards from the bank which handles their current accounts.

So FairFX also looked at what annual charges would be if all customers at least switched to the lowest-cost card which their own bank had on offer.

The result? Charges for foreign spending would be lower, by nearly £300m. But the total would still add up to £738m a year.--BBC

Egypt's parliament passes $11 billion sovereign wealth fund

CAIRO (Reuters) - Egypt is setting up a sovereign wealth fund with a capital of 200 billion Egyptian pounds ($11 billion), the state news agency said on Tuesday.

Former Public Enterprise Minister Khaled Badawi said in March that Egypt was discussing setting up a sovereign wealth fund to manage state companies it plans to list on the stock exchange.

The agency, MENA, did not specifically mention the privatisation programme, but said: “The fund aims to contribute to sustainable economic development through management of its funds and assets.”

The fund will be eligible to participate in all economic and investment activities, including setting up companies, investing in financial instruments, and other debt instruments in Egypt and abroad, the statement said.

The law, passed by parliament on Monday, approved a 5 billion Egyptian pound start-up capital for the fund called “Egypt Fund”, with 1 billion pounds to be transferred immediately from the treasury, MENA said.

Al-Borsa, a local financial newspaper, quoted Amr el-Gohary, a member of the parliament’s economic committee, as saying that the balance from the start-up capital will be paid over three years as part of the government investment plans.

MENA said the law allowed the president to transfer ownership of any unutilised state assets to the fund or any of its subsidiaries.

It gave no details of when it the fund was envisaged to reach 200 billion Egyptian pounds.

Egypt’s parliament last year passed a long-delayed investment law to streamline doing business in Egypt and to create incentives it hopes will bring back investors’ dollars after years of turmoil.

Egypt floated its pound currency in November 2016 under a three-year $12 billion IMF programme tied to ambitious economic reforms, part of a bid to restore capital flows that dried up after its 2011 uprising drove away investors and tourists.

($1 = 17.8800 Egyptian pounds)

South Africa's Solidarity union to agree wage deal with Eskom: source

JOHANNESBURG (Reuters) - South Africa’s Solidarity trade union will accept a three-year wage offer from state-run power utility Eskom that would see pay hikes of 7 percent this year followed by annual increases of 7 and 6.5 percent, a union source told Reuters on Tuesday.

Officials from Eskom and one of the two other unions involved in the wage talks, the National Union of Metalworkers of South Africa, were not immediately available for comment.

An official from the National Union of Mineworkers said his union was yet to decide whether to accept Eskom’s wage offer.

Nigeria's Buhari sends $750 mln supplementary budget to lawmakers

ABUJA (Reuters) - Nigerian President Muhammadu Buhari submitted a 228.9 billion naira ($750 million) supplementary budget for 2018 to parliament on Tuesday after a six-month delay in getting the main budget approved.

In a letter accompanying the draft supplementary budget, Buhari said implementing the main 9.12 trillion naira ($29.92 billion) budget for the year “will be extremely challenging,” without elaborating.

Buhari’s administration has struggled to pass its annual budgets, some delayed by as much as half a year, as lawmakers and the presidency have waged politically charged battles over items like infrastructure projects.

Parliamentary deputies often vie to cut federal projects - much to the ire of the presidency - and add others in their own constituencies, seeking to win votes in the run-up to elections.

The new supplementary budget includes 164 billion naira to prepare for the 2019 elections and 64.7 billion to reinstate projects cut by lawmakers from the main 2018 budget, signed into law last month after over a half a year of wrangling.

Nigeria, Africa’s biggest energy producer and most populous country, next goes to the polling booths in February 2019 when Buhari will seek a second term against a divided opposition.

($1 = 304.8000 naira)

Tullow Oil says may have to halt operations at northern Kenyan oilfields

NAIROBI (Reuters) - Britain’s Tullow Oil said on Tuesday that it may be forced to shut down operations at its northern Kenyan oilfields after the local community stopped its oil trucking for weeks due to protests over insecurity in the area.

“Essential supplies necessary to run Kapese Integrated Operation Base (IOB) will run out in the next 14 days after which we will have no option other than a complete shutdown of the camp,” Martin Mbogo said in a statement.

South Africa's Amplats, PIC create venture fund to lift PGM industrial demand

JOHANNESBURG (Reuters) - World no. 1 platinum producer Anglo American Platinum has spun off an internal fund and invested $100 million in a new venture capital fund with an aim to stimulate industrial demand for platinum group metals (PGMs), the company said on Tuesday.

Associated with jewellery and emissions-capping autocatalysts, about a third of platinum demand comes from other industrial applications. Producers are keen to expand this market in the face of falling diesel usage and depressed prices.

The South African state pension fund, Public Investment Corp (PIC), is a partner with a matching $100 million investment in the new company, AP Ventures LLP, which takes over from Amplats’ internal Anglo Platinum Marketing Ltd.

“For industrial uses we have had an internal fund that over a number of years has invested in eight different projects to the value of $60 million. But we were getting to a stage where we couldn’t grow that much ourselves,” Amplats Chief Executive Chris Griffith told Reuters.

He said “we also see the potential for new partners” to join

AP Ventures LLP, which will put its initial investment in two UK-based venture capital funds.

These in turn will invest globally in companies that support the development of innovative technological uses of PGMs.

Griffith said companies that Amplats’ internal fund had invested in along these lines included hydrogen producer United Hydrogen and Food Freshness Technology, which produces filters to keep food fresher for longer.

South African consumer confidence dips, but still higher than expected - survey

(Reuters) - Consumer confidence in South Africa dipped slightly in the second quarter, but remained “extraordinarily high” in the face of a weak economy, a survey found on Tuesday.

The consumer confidence index (CCI) compiled by the Bureau for Economic Research fell to +22 in the second quarter from +26 in the first quarter, pushing it further below the 50-mark separating the net positive and negative territories.

But the researchers said that was a strong performance given the current circumstances, and they would have typically expected a “negative correction” after the index saw its biggest single quarter rise in the first quarter.

“This time around, consumer confidence remained extraordinarily high – and this in the face of a generally weak economy and significant drop in business confidence levels during the second quarter,” the report said.

Mamello Matikinca, chief economist of South Africa’s First National Bank (FNB), which sponsored the report, said the figures had come in the face of several adverse developments in recent months, such as petrol price hikes between March and June, higher personal income taxes from the end of March and an increase in the valued-added tax (VAT) rate in April.

The slight fall in consumer confidence followed a 6-point drop in a South African business confidence index, a reminder of the challenges faced by President Cyril Ramaphosa who has promised to deliver long term economic growth.

The survey showed that the dramatic rebound in consumer sentiment during the first quarter of 2018 came on the back of massive jumps in all three sub-indices of the CCI.

Kenya's Safaricom taking M-Pesa to Ethiopia, sources say

ADDIS ABABA/NAIROBI (Reuters) - Kenya’s Safaricom is in advanced talks with the Ethiopian government to introduce its popular M-Pesa mobile money service, a major step towards establishing a toe-hold in the market of 100 million people, two sources said on Tuesday.

M-Pesa could transform Ethiopia’s economy, as it has done in Kenya, by allowing people to sidestep a decrepit and inefficient banking system and send each other money and make payments at the touch of a button.

As such, it could bolster the bold political and economic reform drive of new Prime Minister Abiy Ahmed against opposition from hardliners in the ruling EPRDF coalition.

Started in 2007, M-Pesa has around 20 million active users in Kenya and has become the principal driver of profit growth for the dominant telecoms provider in East Africa as revenue from traditional voice and text services has flattened off.

Over the last decade, it has evolved from a basic money transfer service to a financial platform offering savings, loans and insurance products in conjunction with local lenders.

The deal could also give Safaricom and its parent companies, South Africa’s Vodacom and Britain’s Vodafone , a head-start when the Ethiopian government follows through on its stated intention to open up its telecoms sector to foreign companies.

“This is an important milestone for Safaricom,” said Eric Musau, head of research at Nairobi-based Standard Investment Bank.

Vodafone will license the use of the M-Pesa brand to an Ethiopia-based bank while Safaricom will host the servers in Nairobi, one Kenyan telecoms industry source told Reuters.

Ethiopia’s state telecommunications monopoly, Ethio Telecom, will carry the service, the source added.

Vodafone had no immediate comment.

Safaricom was likely to be paid 10-25 percent of annual revenue from the new M-Pesa business in Ethiopia for providing the back-end of the technology, analysts said, citing the arrangement in place when Safaricom itself had to pay another company that hosted its M-Pesa servers in Germany before 2015, when they were moved in-house to Kenya.

The rate would start at 25 percent when user numbers are low and go down to a minimum of 10 percent when the user numbers climb and revenue grows, said Musau.

Revenue from Safaricom’s 20 million active M-Pesa users in Kenya, which has less than half the population of Ethiopia, was 63 billion shillings ($630 million) last year, a 14 percent increase on the previous year.

MODERN MONEY

The ability to access digital banking services is likely to be a game-changer for Ethiopians whose banking sector is stuck in the 1900s, with no way to transfer funds from one bank to another.

“New products, new services such as digital banking and investment banking are required because the banking sector is archaic and is not up to what the economy is requiring,” said Addis Ababa-based economist Eyob Tesfaye.

“Financial sector reform is key to continued economic growth.”

M-Pesa could also improve the flow of external remittances, helping assuage the chronic foreign currency shortages that have emerged as a threat to Ethiopia’s pacy economic growth.

M-Pesa’s move also suggests Kenyan businesses, from telecoms to banking to farming, are well placed to take advantage of a wave of political and economic liberalisation unleashed in the last three months by Abiy.

Nairobi-based firms have had their eye on Ethiopia for years due to its huge population and lack of economic development. However, until Abiy’s arrival this year, Addis has kept foreign involvement in the economy at arms’ length.

The head of Kenya’s biggest bank by assets, KCB Group, told Reuters last week the lender could seek a partner in Addis after Abiy announced his intention to liberalise key parts of the economy.

Ethiopia’s banking sector is currently dominated by Commercial Bank of Ethiopia, which holds around 70 percent of assets in the sector, according to analyst estimates.

Safaricom declined to comment. Its chief executive Bob Collymore, who is on leave due to a long illness, has told Reuters the firm wanted to use M-Pesa to expand into other African markets.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

NicozDiamond

shares delist from the ZSE

06/07/2018

Zimbabwe

Heroes’ Day

Zimbabwe

13/08/2018

Zimbabwe

Defence Forces Day

Zimbabwe

14/08/2018

The Harare Agricultural Show

The Harare Agricultural Show

The Harare Agricultural Show

August 27- September 1

 <mailto:info at bulls.co.zw> 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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