Major International Business Headlines Brief::: 27 February 2019

Wed Feb 27 09:16:57 CAT 2019

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Major International Business Headlines Brief::: 27 February 2019

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*  Zimbabwe limits dollar sales to foreign payments only

*  Shoprite cautious on improving outlook after worst first half in more than a decade

*  Nigerian stocks drop to one-week low as funds eye election outcome

*  South Africa's startup TymeBank could break even by 2022

*  Sudan's gum arabic dealers shrug off strife to tap fizzy drink market

*  Shell says Nigeria tax claims may delay major offshore field

*  Casablanca stock exchange expects one or two IPOs this year- CEO

*  Cupric Canyon's Khoemacau secures funding for Botswana copper mine

*  Britain, S.Africa finalising interim post-Brexit trade deal

*  Spotify launches in India to tap growing digital market

*  Brexit: No-deal impact assessment published

*  Fiat Chrysler to invest $4.5bn in US production plants

*  Pfizer: Countries free-riding on US innovation

*  Trump doesn't understand economics, says former Fed chair Janet Yellen

*  Pound rises amid Brexit delay speculation

*  Rail franchise model cannot continue, says review chief

*  Zimbabwe introduces RTGS dollar to solve currency problem

 <mailto:info at bulls.co.zw> 

Zimbabwe limits dollar sales to foreign payments only

HARARE (Reuters) - Zimbabwe’s commercial banks are under orders to restrict U.S. dollar transactions to companies and individuals with foreign payments to make, according to a central bank directive that demonstrates the slow progress of currency reforms.

The document, a measure of the foreign exchange controls that remain in place six days after authorities announced moves to ease chronic cash shortages, also states such transactions should be aimed at stimulating economic growth.

It was sent to banks on Friday and seen by Reuters on Tuesday.

Zimbabwe abandoned a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars last week, merging them into a lower-value transitional currency called the RTGS dollar.

It launched the RTGS dollar in a “managed float” at 2.5 per U.S. dollar, but as of Tuesday, banks had yet to start selling hard currency in cash.

Banks were only selling U.S. dollars to firms and individuals with invoices or receipts for imports deemed a priority, such as fuel and medicines.

“All interbank market sales to individuals and corporates shall be restricted to funding of external obligations,” and banks should submit dealing reports every two hours, the Reserve Bank of Zimbabwe (RBZ) directive said.

Dealers were encouraged to take steps “to ensure efficient utilisation of foreign currency that is tilted towards the productive sectors of the economy,” it added.

The state-owned Herald newspaper reported that Botswana had offered to lend Zimbabwe $600 million to support its diamond industry and private firms.

Economists say the RTGS reform shows promise provided the government makes good on a plan to let the new currency fluctuate.

Finance Minister Mthuli Ncube told Reuters in an interview on Monday that, while the market should determine the RTGS rate, the government wanted to avoid excessive volatility.

However, the current official rate values the RTGS far higher than on a thriving black market that many ordinary Zimbabweans use to buy and sell U.S. dollars.

‘SEED U.S. DOLLAR CAPITAL’The central bank has sold small amounts of U.S. dollars to banks at 2.5 RTGS in recent days, and a currency dealer told Reuters the RBZ had authorised banks to buy and sell U.S. dollars at 2.5 percent either side of that rate.

Tellers at two banks in downtown Harare said they could help clients make payments for overseas purchases at 2.5625 RTGS, the rate that other banks offered on Monday.

However, “the RBZ hasn’t given us any U.S. dollars in cash yet,” a teller at a CABS bank branch said.

The central bank sold what it called “seed foreign currency capital” to banks, but the sums in question appear to be tiny.

A senior RBZ official told The Standard newspaper around $5 million had changed hands on the interbank market on Friday.

Bureaux de change can in theory sell people U.S. dollars in cash, but they are few and far between and the central bank directive said some would have to re-apply for operating licences.

One exchange bureau at the Road Port bus station in Harare was not selling U.S. dollars in cash yet but hoped it would start making sales next Monday.

Exchange rates on the black market for the bond note - which many people still use in shops - were at 3.6 to the U.S. dollar, unchanged from Monday, informal currency traders said.

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Shoprite cautious on improving outlook after worst first half in more than a decade

JOHANNESBURG (Reuters) - Africa’s largest supermarket group, Shoprite Holdings, said its outlook could improve after its worst first-half performance in more than a decade, hit by supply problems in South Africa and a currency devaluation in Angola.

Since January 2019, an improved sales trend is evident,” the group said in a statement on Tuesday, adding though that its weak trading in July-December last year meant it was unlikely to achieve growth for the full year ending in June 2019.

The supermarket and furniture retailer also said it aimed to simplify its share structure and was in talks with Thibault Square Financial Services Proprietary Limited to buy, redeem or cancel deferred shares held by Thibault, which owns 32.3 percent of voting rights.

South African retailers have struggled to lift earnings at home as high unemployment and household debt have squeezed consumer income.

Shoprite had fared better than many thanks to its focus on budget-conscious consumers, but it was hit in July-December by deflation in basic food categories and supply constraints stemming from strikes last May and June at its largest distribution centre in South Africa and a new IT system.

The company also faced rising costs across markets although investors took the view that the worst may be over and Shoprite shares, which have lost more than 10 percent since the start of this year, were up 5 percent by 1045 GMT.

Total group sales across Shoprite’s more than 2,800 outlets in Africa rose just 0.2 percent in July-December to 75.8 billion rand ($5.5 billion), while like-for-like sales declined by 2.7 percent from a year earlier.

More than half of the group’s business went live on an IT system, which covers inventories, orders and store operations, in the six months and that adversely affected product availability for customers, Shoprite said.

Estimated lost store sales resulting from stock issues exceeded 1 billion rand ($72.15 million) in the period, the retailer said.

In Angola, its fourth biggest market, an 85 percent currency devaluation against the dollar since the beginning of 2018 has depressed revenues.

The company had flagged much of the first-half weakness in a trading update last month, but diluted headline earnings per share for the 26-weeks to Dec. 30 of 398.5 cents, down from 525.6 cents a year earlier, fell short of a forecast of 419 cents in a poll of analysts by Refinitiv.

“Our first half performance is below expectations, but not a reflection of the fundamental strength of the business,” Chief Executive Pieter Engelbrecht said in a statement.

Cost increases in rentals, electricity, security, transport and additional labour costs, also taking into account inflation in Angola, hit the company’s bottom line, with trading profit down 19 percent to 3.3 billion rand.

Outside South Africa, the group’s Rest of Africa business reported a trading loss of 61.8 million rand, versus a trading profit of 552.7 million rand a year earlier, mainly due to the weak trading in Angola.

In a separate statement, the retailer said its talks with Thibault Square Financial Services would simplify its share structure and voting rights.

Shoprite’s capital structure currently consists of two share classes - Shoprite Holdings ordinary shares and Shoprite Holdings deferred shares - which carry about 32.3 percent of the voting rights of Shoprite, it said.

“The proposed transaction will simplify the company’s voting share structure and align the company with international best corporate governance practice,” it said.

Furthermore, the deal will ensure that all remaining shares in the company have equal economic and voting rights, it added.

Thibault is an investment vehicle of Christo Wiese, who is Shoprite’s majority shareholder.

($1 = 13.8597 rand)

Nigerian stocks drop to one-week low as funds eye election outcome

LAGOS (Reuters) - Nigerian stocks dropped to a one-week low in late trades on Tuesday as investors stayed on the sidelines waiting for the outcome of Saturday’s presidential election, traders said.

Stocks fell 0.78 percent in thin volumes to 32,444 points, after mixed trading in the past week due to the election.

Incumbent Muhammadu Buhari had an early lead over his main opponent, businessman Atiku Abubakar, with results from a third of election districts counted. [nL5N20L2JX]

South Africa's startup TymeBank could break even by 2022

JOHANNESBURG (Reuters) - TymeBank, one of several digital-only startups aiming to shake up South Africa’s banking industry, could break even by 2022, the bank’s executives said on Tuesday.

The lender, backed by billionaire Patrice Motsepe’s investment group African Rainbow Capital (ARC), has attracted 80,000 customers since a soft launch in November and is targeting 21 million people it says are not adequately served by established rivals.

Deputy CEO Tauriq Keraan told a presentation on Tuesday that TymeBank, which officially launched this week, could break even in 2022 if it attracted 2.2 million active customers and lent to 6 percent of them.

“We really believe that if we push it that hard it is possible for us to get to those kind of numbers in that period,” CEO Sandile Shabalala told Reuters, adding that this was earlier than previous expected.

TymeBank can offer much lower fees than rivals because it has no branches and has used technology to cut costs.

Shabalala said the majority of the bank’s income would come from lending. TymeBank was in talks with a major bank to offer a credit card, and planned to launch a separate unsecured lending pilot in the second half of this year, he said.

Customers can set up accounts and get a debit card over 700 automated kiosks in supermarkets Boxer, owned by the country’s largest chain Shoprite and Pick N Pay, where account holders benefit from the store’s rewards programme.

The bank aims to set up kiosks at universities and small, informal shops, and aims to offer more products from other financial service companies backed by Motsepe’s ARC, as well as other partners.

Shabalala told Reuters that, with a customer’s consent, it would use their transaction data to suggest suitable partner products, and could earn a fee from partners in return, a model adopted by digital-only banks in Britain and elsewhere.

Eventually, the bank could be rolled out in other countries in Africa and Asia, executives said.

Sudan's gum arabic dealers shrug off strife to tap fizzy drink market

KHARTOUM (Reuters) - Sudan has faced multiple armed conflicts, economic slumps and nationwide protests, but one of its little known exports has proved resilient through all the turmoil: gum arabic, an essential ingredient in fizzy drinks.

The gum, tapped from acacia trees, is a bonding agent and emulsifier crucial for soft drinks such as Coca-Cola and Pepsi, keeping the sugar from separating and sinking to the bottom of the bottle.

It is so crucial to the world beverages industry that the United States specifically exempted it from the economic sanctions it imposed on Sudan in 1997 over allegations of human rights abuses and supporting terrorism.

Gum arabic is grown mainly in Darfur, Kordofan and Blue Nile - Sudan’s poorest and most strife-ridden regions, where insurgencies have simmered for years, in a country awash with other economic obstacles.

“There has been a lack of petrol, diesel, electricity, plus the ability to transfer funds,” said Hisham Salih Yagoub, whose company Afritec cleans, dries and processes 17,000 tonnes a year before sending it to France for further processing.

The gum, also used in paints, pharmaceuticals and cosmetics, comes from two species of acacia tree native to the Sahel, the narrow strip of arid land along the Sahara’s southern border.

Sudan, with the densest acacia forests of them all, is the world’s largest exporter, accounting for two-thirds of the total, according to a 2018 UNCTAD report.

Despite the problems, Sudan’s gum arabic exports have grown from $33.1 million in 2009, when the government ended a state monopoly on the business, to $114.7 million in 2017, according to central bank statistics.

TRADING OBSTACLES

But getting that product to international markets has not been easy.

Last year a new problem emerged, a shortage of Sudanese banknotes needed to pay the gum collectors, most of whom live in remote and rudimentary conditions at the edge of the desert.

The collectors are often family groups of about ten members who begin tapping the trees in late September by making a cut in the trunk using a special knife.

About 40 days after the acacias are wounded, the sap oozes out and hardens into beads. The tree requires daily attention. If left unpicked for two or three days the beads cover up and the tree stops bleeding, maybe for the rest of the season, which lasts until May or June.

Tapped correctly - no more than 2 cm deep at the right time - the best trees will produce up to 1.5 kg (3.3 lbs) per day. Deeper wounds can cause a tree to stop producing for months.

Afritec’s Yagoub said the banknote shortage has largely stopped him from buying this season. “Some farmers have been accepting checks but it costs 15 percent more,” he said.

But Azhari Eltigani Elsheikh, whose company Migana Industries exports 10,000 tonnes of gum a year, continues to buy, saying his 20-year relationship with his pickers and agents has created trust, allowing him to buy with promises to deliver cash later.

The gum is taken from the auctions for cleaning, drying and processing at plants in Khartoum, then loaded into containers for shipment to Europe.

Yet despite the exemption from sanctions, exporters have had to work around separate U.S. financial sanctions imposed on Sudanese banks.

Yagoub exports to Nexira, a specialties food company based in Rouen, France.

To avoid settling in dollars and exposing themselves to U.S. scrutiny, both Nexira and Yagoub’s bank, the Bank of Khartoum, have opened euro-denominated accounts in KBC, a Belgian bank, with funds moved discreetly within the bank, Yagoub said.

Elsheikh has followed an even more circuitous route, setting up trading companies in Britain and the UAE and channelling payments through the Emirates. Transfers can take six months.

Even with Sudan’s political turmoil, both Yagoub and Elsheikh have plans to expand their operations.

“The land, the studies are ready,” Yagoub said.

Shell says Nigeria tax claims may delay major offshore field

LONDON (Reuters) - Royal Dutch Shell said on Tuesday that Nigeria’s claims that it was owed billions in taxes could delay the development of a major oil field off the coast of the West African nation.

Nigeria ordered several major foreign oil and gas companies to pay nearly $20 billion in taxes it says are owed to local states, industry and government sources told Reuters.

Shell, the largest investor in the West African nation, would likely dispute the charges, Shell’s head of upstream Andy Brown told Reuters on the sidelines of the International Petroleum Week conference.

“It is something that has gone through the courts in Nigeria which relates to an original clause within the original PSCs (production sharing contracts),” he said in an interview.

“We will have to take it seriously but we think it has no merits,” said Brown, who steps down from his role this year.

The outstanding tax issue will delay the final investment decision (FID) on developing Shell’s Bonga Southwest deepwater oil field, one of Nigeria’s largest with production expected to reach 180,000 barrels per day, Brown said.

“We’ll need to resolve that before we ever FID the Bonga Southwest project,” he said.

Shell has made progress with the government on some basic terms for operating the field but a decision on its development was now unlikely to be made in 2019. “Bonga Shouthwest’s FID may slip into next year.” Brown said.

In the Gulf of Mexico, Brown said Shell planned to move swiftly to develop the Whale discovery, which it announced in January 2018. Shell holds a 60 percent stake in the field and Chevron the remaining 40 percent.

“We’re going to crack on with the development of this project,” he said, without giving a specific timeline for the development except to say it would be “fast”.

He said the field had the potential to be developed into a new production hub for Shell in the Gulf of Mexico.

Shell and many of its peers have been cutting costs sharply for developing large offshore fields to compete with cheaper sources of oil such, as U.S. shale.

Casablanca stock exchange expects one or two IPOs this year- CEO

CASABLANCA, Morocco (Reuters) - Casablanca’s stock exchange expects one or two small or medium sized (SMEs) companies to launch initial public offerings (IPO) this year, its chief executive officer said.

    Few companies have gone public in Morocco in recent years, with just two doing so in 2018, when the combined market capitalisation of companies listed on the exchange fell 8.27 percent.

It launched a programme to prepare around 70 SMEs for listing in 2016, but so far none of them have launched IPOs.

"We expect to have around one or two companies a year to be listed from the ...programme,” from this year, exchange CEO Karim Hajji told Reuters in an interview. He gave no details.

He said funding for the economy remained dominated by banks in Morocco, where the lowest interest rates in Africa meant few companies were inclined to resort to the stock market.

Analysts say the Casablanca exchange been affected by a campaign on social media to boycott the Moroccan subsidiary of French diary company Danone and Les Eaux Minerales d’Oulmes - a listed bottled water company - over high prices.

A broad pull-back by foreign investors from emerging markets, has also had an impact.

    Hajji said that the exchange, as well as promoting itself as a gateway to Africa in roadshows in the West, aimed to strengthen its ties to other bourses on the continent.

    He also heads the African Securities Exchange Association (ASEA), whose African Exchange Linkage project (AELP) promotes closer links between bourses in Abidjan, Casablanca, Cairo, Johannesburg, Lagos, Mauritius and Nairobi with African Development Bank assistance.

Cupric Canyon's Khoemacau secures funding for Botswana copper mine

GABORONE (Reuters) - Private equity firm Cupric Canyon’s Khoemacau Copper Mines said on Monday it has secured $565 million of funding for the construction of its copper and silver mine in Botswana.

Sparsely-populated Botswana is the world’s top diamond producer by value, but the government of the southern African country is trying to diversify the economy to reduce its dependence on the precious stone.

The funding for the Khoemacau Copper Silver Project includes a $275 million senior debt facility from Red Kite Mine Finance, as well as an advance payment of $212 million by Royal Gold for 80 percent of the silver produced from Khoemacau until “certain delivery thresholds” are met.

Royal Gold, a subsidiary of Royal Gold Inc, would - at Cupric’s option - pay up to an additional $53 million for the remaining 20 percent of the silver produced at the mine, it said in a separate statement.

It added that it would pay 20 percent of the spot price of silver for each ounce delivered and will make available up to $25 million of subordinated debt towards the end of project development to fund potential cost overruns.

Khoemacau Copper Mines said that the first copper concentrate production was expected in the first half of 2021, with initial annual output averaging 62,000 tonnes of copper and 1.9 million ounces of silver.

“Securing the project funding package by partnering with two of the industry’s leading global providers of mine finance, Royal Gold and Red Kite, allows us to move forward energetically with all project development activities,” Khoemacau Copper Mines Chief Executive Johan Ferreira said in a statement.

Construction of Khoemacau was meant to start in 2017, but it was held up by delays in acquiring environmental permits as well as uncertainty around power supply.

Botswana currently has no operating copper mine after the closure and liquidation of state-owned BCL mining group in 2016 and the suspension of operations at Mowana open cast copper mine in 2018.

Britain, S.Africa finalising interim post-Brexit trade deal

JOHANNESBURG (Reuters) - South Africa is close to signing an interim trade agreement with Britain that would replicate arrangements with Europe and ensure trade will not be disrupted in the event of a hard Brexit, South African Trade Minister Rob Davies said on Monday.

With just a month to go before Britain is due to leave the European Union, London has been trying to strike agreements with trade partners around the world to replicate the terms it now has as a member of the bloc.

“We are very, very close to concluding a bilateral agreement with the UK which is essentially a roll over ... of the partnership agreement,” he said in a phone interview, referring to South Africa’s current agreement with the EU.

South Africa is Britain’s biggest partner in Africa with trade worth over 9 billion pounds ($11.77 billion) in 2017. Metals and other commodities, cars and car parts, machinery, fruit and beverages are among the main traded goods.

Without an agreement in place, that trade would become subject to higher tariffs that would hit key industries in both countries essentially overnight in the event of a hard or no-deal Brexit on March 29.

The deal being finalised would create a transition period for the two sides to reach a more permanent deal, once Britain’s future relationship with the EU and its new trade profile becomes clear.

Davies said some elements couldn’t simply be recreated in the bilateral agreement, and required negotiation.

Some of those provisions were still being discussed, he said, though other difficult issues including tariff quotas on agricultural exports had already been settled.

However, some Brexit risks, such as the impact of an economic slowdown in the EU, could not be mitigated against, he said.

“If supply chains in Europe are adversely affected and Europe starts to have some kind of external shock challenges, there’s not too much we can do about that,” he said, adding this could hit industries like South Africa’s auto sector.

($1 = 0.7648 pounds)

Spotify launches in India to tap growing digital market

Music streaming giant Spotify has launched its service in India, hoping to tap into millions of consumers in a rapidly growing market.

Multilingual music recommendations and playlists featuring music from popular Bollywood movies are among the features on offer to attract users.

The music streaming powerhouse will face stiff competition from rivals already in India.

It is branching out beyond music and recently launched in the Middle East.

The Swedish firm will compete with other services already operating in India, such as Gaana, Saavn, Google Play and Apple Music.

"Indians love music. It's an inherent part of our lifestyle and culture, whether we pray, work, or relax," Spotify India's managing director Amarjit Singh Batra said in a statement.

"The mobile internet revolution has led to a rapid rise in the number of connected Indians, making music streaming the preferred way to enjoy music here."

Spotify launches Middle East service

How Spotify came to be worth billions

Spotify spends millions on podcasts

Spotify Premium will be priced at 119 rupees ($1.68, £1.27) a month, which is broadly comparable with prices offered by other services in India.

The firm said playlists will be curated by Indian music experts, while "city playlists" will use algorithms to spot trends in the country's main cities like Mumbai, Delhi and Bangalore.

Earlier this month Spotify posted its first quarterly profit, and said operating income, net income, and free cash flow were all positive for the first time.

Spotify also has plans to move beyond music into the growing podcast market.

It bought Gimlet Media, the company behind a string of popular podcasts including Reply All, and podcast publishing platform Anchor.

It has pledged to spend up to $500m this year on further podcast-related acquisitions.

Spotify, which was first launched in 2008, is available in 79 markets and has 207 million active users.--BBC

Brexit: No-deal impact assessment published

The government has published its assessment of the impact of a no-deal Brexit on business and trade.

The report said "some food prices are likely to increase" and customs checks could cost business £13bn a year in a no-deal scenario.

It also said there was "little evidence that businesses are preparing in earnest".

But the government said it had undertaken "significant action" to prepare for no deal on 29 March.

It comes as the PM has promised MPs votes on delaying Brexit or ruling out no deal, if her deal is rejected again.

Theresa May's Brexit deal was comprehensively rejected by MPs on 15 January and she has said they will get a second chance to vote on it - possibly with some changes - by 12 March.

The UK is currently due to leave the EU on 29 March - with or without a deal.

May offers MPs Brexit delay vote

Brexit will make UK worse off, government warns

Pound rises amid Brexit delay speculation

The government's report, which was drawn up for the cabinet, said: "One of the most visible ways in which the UK would be affected by delays in goods crossing the Channel is our food supply, 30% of which comes from the EU."

Possible disruption to cross-Channel trade "would lead to reduced availability and choice of products", the document said.

"This would not lead to an overall shortage of food in the UK, and less than one in 10 food items would be directly affected by any delays across the short Channel crossings.

"However, at the time of year we will be leaving the EU, the UK is particularly reliant on the short Channel crossings for fresh fruit and vegetables.

"In the absence of other action from government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario.

"As of February 2019, many businesses in the food supply industry are unprepared for a no-deal scenario."

It repeated analysis suggesting a no-deal scenario could leave the UK economy 6.3% to 9% smaller after 15 years, compared to what it would have been.

It said the worst-hit areas economically in a no-deal scenario would be Wales (-8.1%), Scotland (-8.0%), Northern Ireland (-9.1%) and the north east (-10.5%).

The document said slightly more than two-thirds of the government's most critical preparation projects - and fewer than 85% overall - were "on track" for completion in time for 29 March.

It also warned that a no-deal Brexit would "affect the viability of many businesses across Northern Ireland", and said some businesses could relocate to the Republic of Ireland.

The publication of the document follows a proposed amendment last month from former Conservative MP Anna Soubry and backed by ex-Labour MP Chuka Umunna - who are both now members of the newly-formed Independent Group.

In the Commons, Ms Soubry told MPs that the document was only a summary and she asked for access to the papers "which actually go into the detail", which she was shown in privy council terms (confidential terms).

"It's the detail that actually fully explains the impact of a no-deal Brexit, leaving the Brexit Secretary to comment that it would be 'ruinous' for this country," she said.

Deputy speaker Lindsay Hoyle said he was "sorry" that Ms Soubry felt she had been "slightly short-changed on what would be available".

"I would expect ministers to take on board your request and hopefully... you will pursue it other than on this point of order," he said.

And Mr Umunna said the report painted "a disastrous picture of the catastrophe which would befall our country if there is a no-deal Brexit".

"In light of what she knows, it is utterly irresponsible for the Prime Minister to keep a no-deal Brexit on the table given the extreme damage it will do," he said.

"These papers set out how food prices will rise, we may see panic buying, there will be severe disruption at the border, and jobs and livelihoods would immediately be put at risk.

"Today she told the House of Commons she is listening, but MPs have passed a motion rejecting a no-deal Brexit and yet she refuses to request an extension of the Article 50 process in order to stop no-deal happening."

Ms Soubry's amendment instructed the government to publish within seven days "the most recent official briefing document relating to business and trade on the implications of a no-deal Brexit presented to cabinet".

It drew the backing of some mostly Remain-supporting Labour and Conservative backbenchers.

But Ms Soubry withdrew the amendment after Brexit Minister Chris Heaton-Harris indicated that Cabinet Office Minister David Lidington would meet her and would be publishing the relevant information.--BBC

Fiat Chrysler to invest $4.5bn in US production plants

Fiat Chrysler Automobiles has announced plans to pump $4.5bn (£3.4bn) into the Michigan vehicle industry which will create 6,500 new jobs.

The carmaker said it will build the first new assembly plant in Detroit for nearly three decades.

It is a boost to the area after General Motors announced it would shut two Michigan sites as part of a wider restructuring plan costing 14,000 jobs.

GM's decision late last year drew fire from US President Donald Trump.

The US President has put pressure on the car industry to build vehicles inside the US.

GM blamed the move on a shift in consumer preference from sedan cars to larger SUVs.

Bigger vehicles such as SUVs and trucks now make up nearly 70% of car purchases in North America,

Fiat Chrysler said its investment in Michigan was part of its strategy expand its Jeep SUV and Ram truck brands.

The company will convert two of its plants, one of which has been idle since 2012, into the assembly site for its new Jeep Grand Cherokee as well as a new three row Jeep SUV.

It will also be equipped to build plug-in electric hybrid vehicles.

Fiat Chrysler said that the new facility will be the first assembly plant to be built in the city of Detroit since 1991 when its Jefferson North site was constructed.

As a result of the investment across five of its plants in Michigan, Fiat Chrysler said it would now no longer move production of its Ram Heavy Duty truck from Saltillo, in Mexico, to the US.

Trump trade talks

The company had promised to shift production of the model to its Warren plant, near Detroit, by 2020, a move which had won praise from Mr Trump.

Meanwhile, the President threatened to "tariff the hell out of" the European Union as part of trade talks which could see the US lift duties on European car imports from 10% to 25%.

The US wants to include agriculture as part of the trade talks, but Brussels has refused. The EU wants to negotiate lower car tariffs.

In a meeting with US governors on Monday, Mr Trump said: "The European Union is very, very tough. Very, very tough. They don't allow our products in. They don't allow our farming goods in."--BBC

Pfizer: Countries free-riding on US innovation

The chief executive of Pfizer has said US President Donald Trump should use trade deals to fight price controls on medicines in other countries.

Albert Bourla told a US Senate hearing that other nations are "free-riding on American innovation".

His proposal was one of several put forward by the pharmaceutical industry at a hearing in Washington where firms were grilled about high US drug costs.

Senators told the companies the current pricing system is "unacceptable".

What is the issue?

Pharmacy prices for brand prescriptions in the US increased by almost 60% from 2012 to 2017, according to analysis by research firm IQVIA.

While many Americans are shielded from those prices by health insurance plans that cover parts of the cost, experiences vary widely, which has prompted widespread public dissatisfaction.

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Trump: Other nations extort drug-makers

Last year, Mr Trump proposed allowing certain government programmes to pay for some medicines based in part on their cost outside of the US.

Other lawmakers have focused on easing approval of rival drugs, looking at the patent system, or allowing imports from other countries.

"All of you that are here today are here because the way you've been doing business is unacceptable," Senator Ron Wyden, Democrat of Oregon said, accusing them of "profiteering and two-faced scheming".

What did executives say?

Tuesday's Senate Finance Committee hearing saw seven top drug makers - AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck & Co, Pfizer and Sanofi - testify .

They defended their pricing, arguing that after discounts and rebates, the payments they receive for medicines in the US have in many cases declined in recent years.

But they conceded that the overall system has problems and pledged to support efforts by Congress to act.

"No one in the system can do it by themselves," said Pascal Soriot, chief executive of AstraZeneca. "The government has to step up and change the rules."

Mr Trump's proposal is widely opposed by the industry.

Instead, executives urged Congress to focus its efforts on simplifying the price negotiation system and regulating companies that engage in "price-gouging".

Mr Bourla, whose products include Advil, Viagra and Lipitor, also said the US should look outside its borders.

"The administration should try for trade agreements to protect American innovation," he said.

"These price control mechanisms of multiple well-developed countries is in reality a free-riding on American innovation."

Prices in Europe are generally lower, thanks to a combination of government intervention and increased competition from certain kinds of drugs, known as biologics.

Analysts have said they do not think US customers would benefit from higher prices elsewhere.--BBC

Trump doesn't understand economics, says former Fed chair Janet Yellen

A former chair of the US central bank has sharply criticised President Trump's economic knowledge.

On American Public Media's Marketplace programme, Janet Yellen said Mr Trump did not understand economic policy or the US Federal Reserve's purpose.

She also said that Mr Trump's focus on the US-China trade deficit was misguided.

The US and China have been in a year-long dispute, which has seen the imposition of trade tariffs.

Ms Yellen, who left the Fed in 2018 and is now at the Brookings Institution research group, also said President Trump's attacks on current Fed chair Jerome Powell were harmful to the public's confidence in the central bank.

Asked on Marketplace, the BBC's US radio partner, if she thought the president had a grasp of macroeconomic policy, she replied: "No, I do not."

She went on to say Mr Trump did not seem to understand the Fed's two responsibilities of controlling inflation and supporting employment.

"Well, I doubt that he would even be able to say that the Fed's goals are maximum employment and price stability, which is the goals that Congress have assigned to the Fed," Ms Yellen told the programme.

On the trade gap with China, she said: "When I continually hear focus by the president and some of his advisers on remedying bilateral trade deficits with other trade partners, I think almost any economist would tell you that there's no real meaning to bilateral trade deficits, and it's not an appropriate objective of policy."

Trump says US-China deal 'very very close'

You're hired: Who is Trump's Fed pick?

Mr Powell declined to comment on his predecessor's remarks about Mr Trump.

Appearing in front of the Senate Banking, Housing and Urban Housing Affairs Committee, Mr Powell told Democratic Senator Sherrod Brown who asked about Ms Yellen's remarks: "I won't have any comment on that for you senator."

Ms Yellen was appointed as Fed chair by President Obama in 2014 and was the first woman to hold the position.

Presidents traditionally keep the Federal Reserve chair who is in charge when they take office in place, but President Trump, as in so many cases, did not stick with that.

One reason was thought to be her perceived resistance to deregulating the financial sector.

Binding agreement?

The president was involved in a public spat with his own trade adviser during a media conference on the US-China talks late last week.

Mr Trump professed himself not "a fan" of the standard Memorandum of Understandings (MOU) that are used when drawing up trade deals.

Six MOUs have been drawn up between the US and China as part of their moves towards a new trade deal.

But Mr Trump said: "I don't like MOUs because they don't mean anything. To me they don't mean anything. I think you're better off just going into a document. I was never... a fan of an MOU."

His trade representative, Robert Lighthizer, contradicted him, saying: "An MOU is a contract. It's the way trade agreements are generally used... A Memorandum of Understanding is a binding agreement between two people.

"It's a legal term, it's a contract."--BBC

Pound rises amid Brexit delay speculation

The pound has hit a 21-month high against the euro, following increased speculation about a delay to Brexit.

Prime Minister Theresa May said in the Commons that if no deal was agreed and if a no-deal exit was rejected, then there could be a short extension to the date for Britain to leave the EU.

At one point, sterling hit €1.1643, its highest level since May 2017.

However, Mrs May's concession was not as wide-ranging as investors had hoped, causing sterling to dip again.

Pound v euro

Against the US dollar, it reached $1.3239 at one point, its highest level since the end of January, before starting to lose ground.

Pound v dollar

Analyst Jane Foley at Rabobank said Mrs May's remarks in the Commons had been "discouraging for investors", giving the impression that even if Brexit were delayed, "the cliff-edge could be even sharper in three months' time".

"The markets have not particularly liked what they've heard," she said.

However, she added that there was still a consensus among investors that a no-deal Brexit would be avoided, because "neither Parliament, the electorate or Europe want it".

How Brexit hit the pound in your pocket

Why did the pound gain after May's Brexit defeat?

The value of the pound fell sharply in the aftermath of the Brexit referendum result in 2016.

On Tuesday, Bank of England governor Mark Carney told MPs on the Treasury Committee that the Bank would provide more support for the economy in the event of a no-deal Brexit.

He said the Bank's Monetary Policy Committee had emphasised that its response to the shock of a no-deal Brexit would depend on the economic situation.

"Given the exceptional circumstance associated with Brexit, I would expect the committee to provide whatever monetary support it can consistent with the price stability remit given to the committee by Parliament. But there are clearly limits to its ability to do so," he said.

He also warned that interest rates might have limited scope to support any damage to activity or jobs in event of a no-deal scenario, as they may have to rise instead to curb inflationary pressures.

He added that if Britain left the EU with no deal, "I guarantee you the path of GDP in our forecast will be materially lower than it is in our February forecast, which assumes that there is a deal and there is a smooth transition".--BBC

Rail franchise model cannot continue, says review chief

Britain's rail franchise system no longer delivers clear benefits and cannot continue as it is, says the man leading a review of the network.

Keith Williams said in a speech to industry leaders that firms are not adapting to changing consumer demands.

Rail franchising - contracting out passenger services - has drawn heavy criticism, with some contracts failing and customer complaints rising.

The rail industry said it accepts that the status quo cannot continue.

Mr Williams was appointed by the government last year to lead a "root-and-branch" review of the rail network.

Speaking in London, he said: "I have heard a great deal about the franchising model… driving growth in passengers and benefits to services. But with this growth, the needs of passengers have changed, whilst many of the basic elements of our rail system have not kept pace.

"Put bluntly, franchising cannot continue the way it is today. It is no longer delivering clear benefits for either taxpayers or farepayers."

The current "one-size-fits-all" approach to franchising does not work for every part of the country and every passenger, he said in the annual Bradshaw Address, named in honour of George Bradshaw, who developed the Bradshaw's Guide to the railways.

'Underlying causes'

However, the former British Airways chief executive, who is now deputy chairman of John Lewis, acknowledged that "there's real hunger for change within the industry as well as outside".

Train firms want overhaul of ticket system

Thousands of trains axed due to lack of staff

'Broken' rail system to be reviewed

The Rail Review was set up to recommend the most appropriate organisational and commercial framework for the network.

The government will publish a White Paper in the autumn based on the review's recommendations, with the implementation of reforms planned to start from 2020.

Last year's timetable fiasco, failed franchises and delays caused by strikes have put the spotlight firmly on the UK's ailing rail network. Punctuality across Britain sank to a 13-year low in 2018, with one in seven trains delayed by at least five minutes as a series of major issues plagued the railway.

Mr Williams said: "I see our role not just to tackle those recent problems that passengers have experienced, but also to tackle the more fundamental underlying causes of those problems."

'Lasting change'

Passenger groups welcomed Mr Williams' comments. Independent watchdog Transport Focus said: "At the halfway point of his root-and-branch review, Keith Williams is right to acknowledge that the rail industry has lost sight of its passengers and must put their needs and experience at the heart of what it delivers.

"Having consulted Transport Focus promptly, he also knows that our research shows that passengers want to know someone is in overall charge of the railway and answers for the quality of services.

"Passengers will judge the success of the Rail Review on how far it meets their priorities for improvement: more punctual and reliable services, more chance of getting a seat or standing in comfort and better value for money."

The Rail Delivery Group (RDG), which represents train operators and Network Rail, accepted that there was a need "for big and lasting change".

RDG chief executive Paul Plummer said: "As we've long argued, maintaining the status quo on the railway is not an option."

Last week, the RDG published proposals to change the fares and ticketing system, suggestions that it has fed into the Williams Review.

Broken model

The majority of rail services in Britain are operated by fixed-term franchises, which involve the Department for Transport (DfT) setting out a specification covering areas such as service levels, upgrades and performance.

Train companies then submit bids to run the franchise and the DfT selects one of the applicants.

A report by the Commons Public Accounts Committee (PAC) in April last year claimed the DfT's management of the Govia Thameslink Railway (GTR) and Virgin Trains East Coast franchises was "completely inadequate".

The GTR network was marred by an "appalling level of delays and cancellations" while the department "failed to learn the lessons from previous failings" on the East Coast route, according to the committee.

PAC chairwoman Meg Hillier said at the time that passengers are paying the price for the "broken model" of rail franchising.--BBC

Zimbabwe introduces RTGS dollar to solve currency problem

"Nobody knows what it is," is the verdict of Zimbabwe's former trade minister and now opposition politician Nkosana Moyo.

He was talking about what appears to be a new currency in the country.

It has been introduced over the last few days but its impact is not yet clear.

Why is it needed?

Zimbabwe has a troubled history with currency.

In 2009 it ditched the Zimbabwe dollar and adopted the US dollar after hyperinflation destroyed its value. At its height prices were almost doubling every day and the reserve bank printed notes worth 100tn Zimbabwe dollars to try and keep up.

But because more US dollars were leaving the country - in the form of payments for exports - than coming in, US dollar cash was in short supply. This led to long bank queues as people struggled to get their money out.

In 2016, the government introduced bond notes and coins, which were supposed to be worth the same as the US dollar, to make up for the cash shortage.

But no-one had faith that they were equivalent and, on the black market, bond notes have lost value against the dollar.

And now the government has introduced the Real Time Gross Settlement (RTGS) dollar, which is being described by some as a new currency.

RTGS dollar?

It's not a phrase that exactly rolls off the tongue, but the initials are familiar to Zimbabweans who have been using them to describe money that has been electronically transferred into their bank accounts.

As well as paying for goods in US dollars, Zimbabweans have been able to use other foreign currencies such as the South African rand, plus bond notes, debit cards drawing on bank accounts and money stored on a mobile phone app.

But each of them had a different exchange rate, meaning that customers were sometimes charged different prices depending on what payment method they chose.