Major International Business Headlines Brief::: 20 April 2020

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Major International Business Headlines Brief::: 20 April 2020

 


 

 


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ü  Kenya's Safaricom forecasts 7% coronavirus hit to M-Pesa revenue

ü  South African rand opens weaker as growth fears hurt riskier assets

ü  South32 Q3 metallurgical coal output rises, South African coal ops to
restart

ü  Nigeria's oil hub frees 22 quarantined Exxon Mobil workers

ü  South Africa's SAA offers severance packages to all staff after state
pulls plug

ü  IMF, World Bank urge action to cover $44 bln gap in Africa's pandemic
needs

ü  Developing countries unlock key industries to safeguard earnings and jobs

ü  S.Africa's Implats plans gradual return to operation after regulations
eased

ü  Implats executive in court on charges of contravening lockdown provisions

ü  Total working with Mozambique to manage COVID-19 cases at LNG site

ü  500 firms to stop pension top-ups over coronavirus

ü  Millions to claim as UK furlough scheme goes live

ü  Government unveils £1.3bn scheme to help start-ups

ü  IMF head: Dire economic forecasts may be too optimistic

ü  Disney stops paying 100,000 workers during downturn

ü  US oil prices drop to 21-year low as demand dries up

 

 

 


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Kenya's Safaricom forecasts 7% coronavirus hit to M-Pesa revenue

NAIROBI (Reuters) - Kenya’s Safaricom expects a 5.5 billion shilling ($51.64
million) hit to its revenue from M-Pesa in the three months from mid-march
after it adjusted prices because of the coronavirus crisis, its chief
executive told Reuters.

 

The foregone revenue, equating to 7.3% of the mobile money platform’s annual
earnings, will be caused by the removal of all charges on small peer-to-peer
transfers to facilitate cashless payments to help to contain the coronavirus
pandemic.

 

The company, which is part owned by South Africa’s Vodacom and Britain’s
Vodafone, is not worried by the projection, said CEO Peter Ndegwa, who took
the helm on April 1.

 

“When Kenya gets back on track, our business should get back on track,” he
told Reuters.

 

“We are in a good place to be able to weather this storm, but our business
is linked to how the country comes out on the other side.”

 

The East African nation has 270 confirmed cases of COVID-19. The government
has restricted movement of people and expects the nation’s economic growth
to halve to 3% this year.

 

Under an initial 90-day deal with the government, all charges for cash
transfers of less than 1,000 shillings ($9.39) have been removed by all
operators.

 

M-Pesa, which was launched by Safaricom in 2007, is one of the most popular
modes of payments in Kenya. The platform is used to send money, save, borrow
and make payments for goods and services.

 

Ndegwa said that the M-Pesa business could benefit from increased usage as
customers shun bank notes during the crisis, but cautioned that it was too
early to say for certain.

 

“We are not factoring in any upside until we see how customers cope with
this crisis,” he said.

 

Safaricom has experienced a surge in data traffic as people work from home
and students turn to e-learning services.

 

It has doubled Internet speeds for its fibre customers - about 300,000 homes
- and is accelerating installation of new fibre connections to meet growing
demand, the CEO said.

 

Ndegwa, who was Diageo’s managing director for continental Europe before
taking his new role, said the coronavirus crisis will present new
opportunities in the data business, which Safaricom needs to pick up the
slack from declining volumes in traditional mobile telephony.

 

“People are discovering they can work from home. Education and learning will
change. Small businesses are going to learn they can digitise their
operations and operate more smartly,” he said.

 

($1 = 106.5000 Kenyan shillings)

 


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South African rand opens weaker as growth fears hurt riskier assets

JOHANNESBURG (Reuters) - The South African rand opened weaker on Monday,
mirroring moves elsewhere in emerging markets as fears over global economic
growth dented appetite for riskier assets.

 

At 0600 GMT, the rand traded at 18.9100 versus the U.S. dollar, roughly 0.6%
weaker than its close on Friday.

 

The rand fell more than 4% versus the dollar last week, hurt by a surprise
central bank interest rate cut and predictions that the domestic economy
would suffer a severe contraction because of the COVID-19 pandemic.

 

On Monday, President Cyril Ramaphosa’s cabinet is due to meet to discuss new
measures to contain the economic impact of COVID-19, including whether to
close ailing state airline South African Airways, which has been a major
drain on state resources.

 

South Africa’s public finances were in bad shape before it detected its
first case of the new coronavirus in March, constraining its ability to
provide stimulus.

 

The country had recorded 3,158 coronavirus cases and 54 deaths as of Sunday.

 

South African government bonds were mixed in early trade, with the yield on
the 2030 instrument down 6 basis points to 10.29% after rising earlier.

 

 

 

South32 Q3 metallurgical coal output rises, South African coal ops to
restart

(Reuters) - Australia’s South32 on Monday posted a near 18% rise in
third-quarter metallurgical coal output and said it had received approval to
restart its South African coal operations during a coronavirus-related
lockdown, although at a reduced rate.

 

Production of the steel-making ingredient rose to 1.2 million tonnes during
the quarter ended March 31, meeting a UBS forecast, and was higher than the
990,000 tonnes of output a year earlier.

 

South32 also said it had received government approval to restart limited
activity at its South African energy coal operations during the lockdown
period, albeit at a reduced pace.

 

The unit had been in care and maintenance mode since the government
announced a lockdown in late March.

 

“We have acted to protect our strong financial position,” Chief Executive
Officer Graham Kerr said, referring to a range of measures the company has
taken, including suspension of buybacks, slashing capital spending and a
separate review expected to control costs from fiscal 2021.

 

While a majority of South32’s operations have escaped relatively unscathed
from the outbreak, the miner withdrew 2020 guidance for its Colombian and
South African operations in March owing to coronavirus-related restrictions.

 

The company on Monday maintained 2020 production guidance for all other
operations, with the exception of Australian manganese output which is
expected to be about 5% lower due to similar restrictions.

 

 

 

 

Nigeria's oil hub frees 22 quarantined Exxon Mobil workers

YENAGOA, Nigeria (Reuters) - Nigeria’s Rivers State has freed 22 Exxon Mobil
Corp. employees quarantined last week after their arrest for violating an
order restricting movement into the state to curb the spread of the
coronavirus, the state government said on Sunday.

 

Port Harcourt, capital of the southern state, is the hub of the oil industry
in Africa’s biggest producer of crude.

 

On Friday, Rivers State Governor Nyesom Wike said the workers were arrested
after entering the state from neighbouring Akwa Ibom State in violation of
an executive order restricting movement into the state as part of measures
imposed last month to curb the spread of the coronavirus.

 

He said the workers, whose coronavirus status was unknown, were quarantined
in line with relevant health protocols and would be charged in court.

 

“The Rivers State Government on Sunday released the 22 Staff of Exxon Mobil
who were arrested for violating the State Executive Order restricting
movement in the state,” said a statement issued by the governor’s spokesman,
Simeon Nwakaudu.

 

They were released without charge “following interventions by well-meaning
Nigerians” and no charges will be pressed, the statement said.

 

Exxon Mobil did not immediately respond to an email requesting comment.

 

Rivers State has recorded two cases of coronavirus so far. Nigeria has 541
confirmed cases nationwide and 19 deaths. The most high profile victim was
the president’s chief of staff, Abba Kyari, who died on Friday.

 

Nigeria’s petroleum regulator has ordered oil and gas companies to reduce
their offshore workforce and move to 28-day staff rotations, instead of the
usual 14 days, to help to curb the spread of the coronavirus.

 

 

 

South Africa's SAA offers severance packages to all staff after state pulls
plug

CAPE TOWN (Reuters) - South African Airways (SAA) is offering severance
packages to its entire workforce of around 5,000 workers, a proposal by the
airline’s administrators showed, after the government said it wouldn’t
provide more funds for rescue efforts.

 

The proposal, which was put to trade unions this week and hasn’t been agreed
with them, is the latest sign that state-owned SAA is on the brink of
collapse. Talks with unions will resume on Monday.

 

SAA entered a form of bankruptcy protection in December, since when it has
had to suspend all commercial passenger flights due to the global
coronavirus pandemic.

 

This week the government told administrators that it wouldn’t provide more
funds, lending guarantees or allow foreign financing of a business rescue
plan.

 

According to the proposal, seen by Reuters, employees would see their
employment terminated by mutual agreement on April 30. They would be
entitled to one week’s pay for every year of service, one month’s pay in
lieu of notice pay and pay for outstanding annual leave.

 

The proposal said it seemed “unlikely that the company will be successfully
rescued as a result of the business rescue process”.

 

“In order to make payment of the severance packages ... the company is
required to sell and dispose of its assets,” it added.

 

An SAA spokesman declined to comment. Two unions confirmed the proposal had
been made and said they would discuss it with their members.

 

The Department of Public Enterprises, which oversees the airline, said no
agreements have been concluded about potential mass retrenchments as talks
with creditors and unions continue.

 

“There are discussion with the unions on alternatives to the current SAA
business model, the success of the business rescue process and the best
possible outcome for the airline’s employees,” the department said in a
statement.

 

SAA has not been profitable since 2011 and has received more than 20 billion
rand ($1.1 billion) in bailouts in the past three years, providing a drain
on public resources at a time of weak economic growth.

 

The talks with unions were originally about job cuts, but one union involved
said they had developed into a discussion about winding down the airline.

 

($1 = 18.7333 rand)

 

 

 

IMF, World Bank urge action to cover $44 bln gap in Africa's pandemic needs

WASHINGTON (Reuters) - African leaders, the IMF and the World Bank on Friday
appealed for rapid international action to help African countries respond to
the coronavirus pandemic that will cause the continent’s economy to shrink
by 1.25% in 2020, the worst reading on record.

 

IMF Managing Director Kristalina Georgieva told ministers, U.N. officials
and others that the African continent lacked the resources and healthcare
capacity to address the crisis, and needed at least $114 billion to cover
urgent fiscal needs.

 

Even after pledges of support from bilateral, multilateral and private
creditors, Africa faced a gap of around $44 billion, officials told the
“Mobilizing with Africa” conference held online during the spring meetings
of the World Bank and IMF.

 

“This pandemic has already had a devastating impact on Africa and its
effects will deepen as the rate of infection rises. It is a setback for the
progress we have made to eradicate poverty, inequality and
underdevelopment,” said South African President Cyril Ramaphosa, who chairs
the African Union.

 

“Large financing gaps remain and greater support is needed to ensure that
African countries are able to respond effectively to the health crisis and
address economic challenges,” he said in a joint statement release by the
IMF and World Bank.

 

It said official creditors had mobilized up to $57 billion in emergency
support for Africa in 2020 alone, including upwards of $18 billion each from
the IMF and the World Bank, and private creditor support could amount to an
estimated $13 billion this year. That still left a gap of $44 billion, and
that would remain elevated next year, it said.

 

In a joint briefing paper, the IMF and World Bank warned that the widespread
lack of basic sanitation in Africa and a large share of the population with
pre-existing medical conditions risked a wider and more lethal spread of the
disease.

 

Costs could rise substantially if the health shock was prolonged, forcing
containment policies to remain in place longer and making economic recovery
slower and less robust, it said. Estimates showed that it would cost about
$36 billion to treat patients if 10% of Africa’s population became infected
with COVID-19, the respiratory disease caused by the virus.

 

BROADER DEBT RELIEF MAY BE NEEDED

Officials welcomed a decision this week by G20 countries and the Paris Club
to suspend bilateral official debt service payments for the poorest
countries through year-end, and underscored the importance of private sector
buy-in.

 

In Africa, eligible countries owed private sector creditors $16 billion in
payments in 2020, or 10% of fiscal revenue, compared to $6 billion owed to
official bilateral creditors, the IMF and World Bank briefing paper said.

 

“Contingent on a more severe growth and revenue downturn, a broader group of
countries may require debt relief and existing arrangements extended,” it
said.

 

World Bank Group President David Malpass said the Bank had already provided
emergency support to 30 countries across Africa, with more to come, and it
would continue to advocate for debt relief and increased resources.

 

“No one can stand on the sidelines; we cannot leave any country behind in
our response,” he said. Of $160 billion in emergency funding the World Bank
expects to provide over the next 15 months, $55 billion would go to Africa,
he said.

 

United Nations Secretary-General Antonio Guterres estimated Africa’s
financial needs ranged as high $200 billion. He urged creditors to grant a
debt standstill for all developing countries, not just the poorest.

 

Nonprofit groups have called for the IMF to raise additional resourcing by
selling some of its gold reserves or issuing an allocation of Special
Drawing Rights, the currency of the global lender. Washington opposes an SDR
allocation, which is akin to a central bank “printing” new money.

 

 

 

 

Developing countries unlock key industries to safeguard earnings and jobs

(Reuters) - From Africa to Asia and Latin America, emerging countries
disproportionately bruised by the COVID-19 pandemic are allowing some key
industries to start back up in a bid to soften the economic blow.

 

This tentative unlocking highlights the balancing act for developing nations
as they seek to protect their people while averting an economic collapse
some fear could do more damage than the disease itself.

 

While academic study of COVID-19 containment policies is in its infancy, one
model by Yale economists argues social distancing measures deliver far fewer
benefits, at much greater economic cost, in poorer countries.

 

“They’re battling competing tensions. It’s being framed as lives versus
livelihoods,” said Ronak Gopaldas, director of Africa-focused consultancy
Signal Risk.

 

Unlike wealthier economies, developing countries cannot afford to spend
trillions of dollars protecting people and businesses from the economic
fallout of the pandemic. That has prompted some to start reopening key
sectors.

 

“What’s clear is that lockdowns can’t go on forever and they’re having to
strike a balance between safety and productivity,” said Gopaldas.

 

South Africa announced on Thursday it will allow mines to operate at 50%
capacity during its lockdown, allowing workers to be called back gradually.

 

Mining contributed 360.9 billion rand ($19.74 billion), around 7% of GDP, to
the economy in 2019. Amid mass unemployment, it provides more than 450,000
jobs.

 

Getting mines back to full production will take weeks, said Jacques Nel, of
research firm NKC African Economics. But opening them early is essential.

 

“Some countries are going to recover quicker than others, so you have to
position yourself as one of the more attractive ones when this blows over,”
he said.

 

SHOCK ABSORBERS

Other governments are making similar calculations, generally favouring large
employers or generators of crucial foreign exchange. JPMorgan calculates
that emerging market FX reserves fell by more than $190 billion in March.

 

“They won’t be able to borrow anymore,” said Wayne Camard, an ex-IMF
official in Africa and Latin America who now heads the Camard Group, a
business intelligence consultancy. “Mining and agricultural commodities are
the main foreign exchange earners for a lot of developing countries.”

 

Investors pulled a record $83.3 billion from emerging market stocks and
bonds in March. At the same time, borrowing costs have soared, making it
effectively impossible for many countries to raise funds on international
capital markets.

 

Malaysia has allowed its palm oil industry — the world’s second-biggest — to
operate during a six-week lockdown. Its electronics industry, which produces
nearly 8% of the world’s semiconductors, is running on a third of its normal
workforce.

 

Colombia, the world’s fifth-biggest coal exporter, allowed coal producer
Drummond to partially restart on April 9.

 

Coal is Colombia’s second-largest source of foreign exchange, and royalties
paid by coal firms are “fundamental” to coping with the health emergency and
reviving the economy, the energy ministry told Reuters.

 

Governments that cannot afford to replace workers’ lost incomes are under
pressure to reopen labour-intensive sectors.

 

Pakistan on Tuesday extended its lockdown by two weeks but said some
industries, starting with construction, would reopen in phases.

 

“If the construction sector can be stimulated in these testing times, it can
prove to be an important shock absorber,” said Sakib Sherani, chief
executive of Islamabad-based economics research firm Macro Economic
Insights.

 

Construction and related sectors account for about 8-10% of Pakistan’s GDP,
he estimated, and 10-12% of jobs.

 

Ugandan President Yoweri Museveni is keeping open factories, which he called
“the life-blood of the country”, provided employees live in on-site
accommodation. Manufacturing employs 10% of the formal workforce.

 

TARGETED MEASURES

Other countries have implemented targeted quarantines to isolate critical
industries from the pandemic.

 

Nigeria, Africa’s top crude producer, is allowing staff to travel to
oilfields only when essential in a bid to avoid infections that could force
a broad shutdown.

 

In Chile, where mining constituted 50% of exports last quarter, the
government’s preference for targeted, local action has helped keep large
mines of Atacama and Antofagasta open.

 

The northern desert provinces account for most of Chile’s copper and lithium
output but fewer than 2% of its COVID-19 cases as of April 12, health
ministry figures showed.

 

But in an interconnected world, damage limitation policies can only go so
far.

 

Mexico’s president last week said the auto sector, which contributes 3.8% of
GDP, would only reopen when the U.S. industry ramps up again.

 

Developing countries also have large informal sectors which are harder to
measure and lack financial safety nets.

 

In Jakarta, Indonesia’s capital, COVID-19 restrictions ban motorbike taxis
from carrying passengers, threatening the livelihood of thousands who work
for ride-hailing apps.

 

“We pleaded for the president’s help,” said Igun Wicaksono, who heads “Garda
Nasional”, an association of 100,000 motorbike taxi drivers.

 

“Of course we’re worried and we’re scared. But if we stay at home, we won’t
have food.”

 

($1 = 18.2778 rand)

 

 

 

S.Africa's Implats plans gradual return to operation after regulations eased

JOHANNESBURG (Reuters) - South Africa’s Impala Platinum (Implats) said on
Friday it would gradually return to work after the government relaxed
regulations on miners during the coronavirus lockdown.

 

The platinum miner said it would begin the process from Friday taking
precautionary measures to protect employees.

 

“Implats’ operational strategy is aimed at securing the integrity of key
infrastructure and facilitating a safe start-up once operations are cleared
to resume,” it said in a statement.

 

South Africa said on Thursday it would allow mines to operate at up to 50%
capacity after it had previously ordered most underground mines and furnaces
to be put on care and maintenance, apart from coal mines supplying state
power utility Eskom.

 

London-listed Jubilee Metals also said on Friday its Inyoni surface platinum
group metals (PGM) and chrome operation had recommenced production while its
Windsor joint venture planned to restart shortly.

 

South Africa is the world’s biggest producer of chrome ore, accounts for
around 70% of global mined platinum supply, and is a major producer of other
minerals and metals.

 

The lockdown, which started on March 27 and has been extended until the end
of April, has hit global commodities markets since several local miners have
cut production plans or declared force majeure, which exonerates them from
contractual obligations.

 

Implats said it had placed its Canadian mining operations, which were
previously allowed to operate, into care and maintenance on Monday after
seven coronavirus cases were confirmed at its Lac des Iles mine over the
past week.

 

“The majority of employees have left the site and are in self-quarantine
until April, 27 2020. Management continues to collaborate with the health
authorities and operations will resume when it is safe to do so,” Implats
said.

 

 

 

Implats executive in court on charges of contravening lockdown provisions

JOHANNESBURG (Reuters) - Impala Platinum (Implats) said on Friday that the
chief executive of its Rustenburg operations had appeared in court on
charges of contravening South Africa’s lockdown rules by calling
non-essential workers back to work.

 

The platinum miner said it had been in consultations, through the Minerals
Council, with the mines ministry as to the need to bring some non-essential
workers gradually back to work under agreed precautionary measures to ensure
the integrity of its mines is not compromised.

 

Mark Munroe appeared in the Bafokeng Magistrate’s Court on Friday, it said.

 

“There is clearly a difference in interpretation in the regulation with the
police on one side and the DMRE (Department of Mineral Resources and Energy)
and the mining industry on the other side,” Implats spokesman Johan Theron
said.

 

The North West provincial police spokesman could not immediately be reached
for immediate comment.

 

 

 

 

Total working with Mozambique to manage COVID-19 cases at LNG site

PARIS (Reuters) - French energy major Total said on Friday it was working
with the government of Mozambique to manage a number of COVID-19 cases at
its $20 billion liquefied natural gas (LNG) project site in the north of the
country.

 

Total said the first case was detected this month.

 

“A large number of staff have been tested for the virus and a small
proportion of them tested positive,” Total said in a statement, adding that
staffing has been reduced to essential services.

 

The company did not give details of the number of cases.

 

Mozambique’s Health Ministry said on Friday the number of coronavirus cases
in the country stands at 34. At least 18 of those are Total workers, the
government said.

 

“To minimise the risk of further transmission, the company and its
contractors have implemented strict protocols and have progressively moved
to temporarily reduce the number of personnel at the project site,” Total
said.

 

The company added that it was working with partners on the Mozambique LNG
project to support the government’s response to the pandemic, including
procuring personal protective equipment, ventilators and testing kits.

 

 

 

 

500 firms to stop pension top-ups over coronavirus

Hundreds of companies are expected to abandon attempts to fill shortfalls in
their pension schemes during the coronavirus crisis.

 

The finding from pension experts suggests "top-up" contributions will be cut
by at least £500m.

 

Debenhams has already missed a payment and the Arcadia group, which owns
Topshop, plans to stop them temporarily.

 

Regulators are permitting the suspensions to help businesses survive.

 

The pension schemes affected are the most valuable for staff because they
guarantee a retirement income based on your salary while working.

 

But there has to be a fund in place to back the promise.

 

In many cases, these funds have huge shortfalls and the current crisis has
made the situation worse.

 

Employers are supposed to be making emergency contributions, in addition to
their normal ones, to try to close the gap.

 

A leading pension consultancy firm, LCP, has estimated that more than 500
companies will take advantage of an emergency measure under which the
trustees of pension schemes can allow them to put off paying for three
months.

 

The idea is that they will get short term breathing space and catch up with
the contributions later.

 

Jill Ampleford, a partner at LCP said: "The ability to agree with trustees a
delay in making pension contributions will help firms to weather the present
storm and continue their support to the scheme in the long-term.

 

"But it will be vital to get things back on track once the crisis is over,
so that a realistic plan is put in place to deal with the shortfall."

 

Weakened security

The Pensions Regulator told BBC News it was vital to support businesses
through the crisis, and where one did fail, staff would be supported by the
UK's Pension Protection Fund.

 

David Fairs, executive director of policy at the regulator, said: "We are
clear that the best support for a pension scheme is a strong employer.

 

"It is vital that we support businesses and trustees through this crisis
while balancing the risks to members," he added.

 

It is also being pointed out in the industry that if the loss in
contributions is limited to £500m, it will be small in comparison to the
overall cost of paying pensions.

 

But LCP warns that if the economic damage from the virus is long-term, the
security of retirement incomes will be weakened.

 

The Pension Protection Fund does provide a safety net but if a scheme has to
be rescued, pensions for many members, especially the younger ones, would be
reduced.--BBC

 

 

 

Millions to claim as UK furlough scheme goes live

A government pay scheme to keep staff on the payroll despite not working due
to coronavirus has gone live.

 

Under the Coronavirus Job Retention Scheme, the government will cover 80% of
workers' wages, up to £2,500 a month, if they are put on leave.

 

Chancellor Rishi Sunak said: "We promised support would be available by the
end of April - today, we deliver our promise."

 

Millions of workers are expected to be "furloughed" because of the lockdown.

 

The Treasury says the system can process up to 450,000 applications an hour.
Employers should receive the money within six working days of making an
application, it says.

 

'Payday approaching'

On Friday, Mr Sunak announced that the wage subsidy scheme would be extended
by a further month, until the end of June.

 

The move came after the government confirmed that lockdown restrictions in
the UK would continue for "at least" another three weeks.

 

Adam Marshall, director general of the British Chambers of Commerce, said:
"With April's payday approaching, it is essential that the application
process is smooth and that payments are made as soon as possible.

 

"Any delay would exacerbate the cash crisis many companies are facing and
could threaten jobs and businesses," he added.

 

How does the scheme work?

Under the Coronavirus Job Retention Scheme, the government will cover 80% of
workers' wages, up to a maximum of £2,500 per worker, per month before tax.

 

Bosses will pay workers and reclaim the money from HM Revenue and Customs
(HMRC) online after the service goes live on 20 April.

 

The minimum amount of time that an employee can be furloughed is three
weeks, and firms are not expected to start receiving money until at least
the end of April.

 

According to new research by the Resolution Foundation, the take-up of the
scheme has been higher than initially anticipated.

 

It estimates that eight million workers could be furloughed over the coming
weeks.

 

It found that those working in low-paid sectors - such as hospitality or
retail - are worst-affected, with almost half of the workforce expected to
be put on paid leave.

 

Daniel Tomlinson, economist at the Resolution Foundation, said: "The
government's welcome Job Retention Scheme is what stands between Britain
experiencing high unemployment over the coming months, and catastrophic
depression-era levels of long-term joblessness.

 

"It is proving particularly essential in big, low-paying sectors like
hospitality and retail, where around half the workforce are no longer
working."

 

High Street chains such as Oasis and Warehouse, as well as fast food firms
KFC and McDonald's, have all furloughed staff as their work has come to a
standstill under lockdown.

 

Rain Newton-Smith, chief economist at the CBI business lobby group, welcomed
the launch of the online application service for firms.

 

"Rolling out the job retention scheme will make a huge difference to tens of
thousands of firms and millions of people, protecting jobs and living
standards throughout the UK," she said.

 

"Ensuring support gets to where it's needed most - fast - is of the utmost
importance."--BBC

 

 

 

Government unveils £1.3bn scheme to help start-ups

The government has announced a £1.25bn package to support innovative new
companies that are not eligible for existing coronavirus rescue schemes.

 

It will match up to £250m of private investment and add £550m to an existing
loan and grant scheme for smaller firms that focus on research and
development.

 

Adding it up, that totals £800m of new money to support fledgling firms.

 

Chancellor Rishi Sunak said start-ups would help power the UK's growth after
the coronavirus crisis.

 

"This new, world-leading fund will mean they can access the capital they
need at this difficult time, ensuring dynamic, fast-growing firms across all
sectors will be able to continue to create new ideas and spread prosperity,"
he said.

 

Newly-founded companies often lose money in their early years, which makes
them ineligible for the government's emergency loan scheme. But it also
makes them a risky investment.

 

It took some of the world's most well known and valuable firms - including
Amazon and Tesla - years to turn a profit. Uber is yet to make any profit at
all.

 

However, the government is keen to ensure that the economic impact of the
coronovirus does not kill off some of the UK's fastest growing and most
innovative companies.

 

What's the catch?

Nevertheless, the rescue package comes with strings attached.

 

To qualify to receive the government money, a company must have raised
£250,000 privately in the last five years.

 

On top of that, any money put in by the government must be matched by
private investors. And, if the money is not repaid, the government will take
an ownership stake in the company.

 

The package has been broadly welcomed by the entrepreneur community but some
have warned that - as with other coronavirus support mechanisms - complexity
is the enemy of speed. And it's speed that is all important.

 

As of last week, just over £1bn in government-backed loans had been approved
out of a total support package of £330bn.

 

Under the scheme, the government guarantees 80% of each of the loans, which
are issued by banks. But many firms have complained that those banks have
been slow to lend cash because they would be left to cover 20% of losses on
loans that cannot be repaid.

 

That has put pressure on the Treasury to increase the government guarantee
to 100% to accelerate the approval process.

 

Treasury officials have raised the spectre of widespread abuse of the
programme if the government were to fully guarantee all loans to
coronavirus-affected companies. But the Bank of England Governor, Andrew
Bailey, has said that increasing the government guarantee would make the
process "less complicated".

 

And a former senior Treasury official, who did not want to be named, warned
that Mr Sunak's department was trying to be "too clever by half", a tacit
admission - perhaps - that in a time of economic crisis, there is no such
thing as a blunt instrument.

 

Meanwhile, the head of the International Monetary Fund, Kristilan Georgieva,
told the BBC that governments around the world should pay out money as fast
as possible but, she said, "keep the receipts".

 

The emergency is now. The reckoning can come later.--BBC

 

 

 

 

IMF head: Dire economic forecasts may be too optimistic

How do you co-ordinate economic policy across the globe, when an invisible
enemy that behaves in unknown ways systematically erodes the very way
economies function?

 

That is the tricky challenge facing the relatively new managing director of
the International Monetary Fund, Kristalina Georgieva, who sat down with me
to discuss this in her first British broadcast interview.

 

The IMF is now a fire fighting service battling multiple infernos, almost
everywhere. This discussion was meant to take place face to face at the
IMF's annual meetings in Washington DC. But for obvious reasons, those
meetings became virtual, as did my interview with her.

 

First up, a refreshing admission. Just three months ago, the IMF's January
economic forecast update projected that the base unit of living standards -
the per person size of the economy or GDP per capita - would be going up in
160 countries. That would have meant 82% of nations becoming better off in
2020.

 

'World faces worst decline since 1930s depression'

IMF provides $50bn to fight coronavirus outbreak

Now, in April, because of Covid-19, she says: "We are projecting 170
countries to see income per capita shrinking during 2020" - 87% of the atlas
of the world.

 

And yet this detail - which is part of a broader forecast that sees world
GDP dive 3% in 2020, creating "a global recession we have not seen in our
lifetimes" - may not be the end of it.

 

"I want to stress this may be actually a more optimistic picture than
reality produces," Ms Georgieva told the BBC.

 

"Epidemiologists are now helping us making macroeconomic projections. Never
in the history of the IMF have we had that. And what they're telling us is
that the novel coronavirus is a big unknown, and we don't know whether it
may return in 2021."

 

'Accountability and transparency'

It is small wonder that the IMF is in rescue mode. The organisation
traditionally tasked with being a fiscal watchdog and ambulance for the
world now has a rather different message - that the priority everywhere has
to be lives and livelihoods.

 

"It is the time that governments should spend as much as they can afford and
more, but keep the receipts. We don't want to lose accountability and
transparency during this crisis," Ms Georgieva says.

 

"We will see some countries being able to do more, and actually, the UK has
already done quite a lot. And we will see some countries that will need more
help because they have much more limited capacity to act. And this is where
the IMF and other international financial institutions come into play."

 

In these times of ultra-low interest rates, she says, the IMF can help
countries to get more ammunition to fight the health crisis, but also to
deal with the economic fallout.

 

"We need to target support to the most vulnerable people in the most
vulnerable parts of the economy," Ms Georgieva says.

 

Cautious approach

Interventions now will help spur a rapid bounce-back in growth and reduce
permanent economic scars. But despite the depth and breadth of the downturn,
she is very cautious about prematurely lifting shutdowns around the world.

 

"Saving lives and saving livelihoods go hand in hand with stopping the
pandemic. We simply cannot restart the economy to the fullest, and without
restarting the economy, finance ministers are not going to have the revenues
they need, including for their health services," Ms Georgieva says.

 

"So we have to, of course, listen to the health professionals and design
protocols that allow us over time to reopen segments of the economy and do
that cautiously. We have to then carefully calibrate how we're doing this
reopening."

 

She suggests that automated factories and rural areas might be easier to
reopen, but there is still some "figuring out" to do around reopening busy
cities and towns.

 

'We need each other'

Ms Georgieva warns against what has been dubbed "pandemic protectionism",
where some advanced countries have sat on medical equipment and
pharmaceutical supplies for use domestically.

 

"It's a very simple message - you cannot beat the virus unless you beat it
everywhere. When one country is suffering from an epidemic, then it makes
sense to be protective and keep what the country needs domestically.

 

"But when we are all hit by an epidemic... we need to act together. And we
would very much encourage countries to actually integrate their capabilities
rather than trying to keep it each one for itself."

 

But her central message is to look beyond the understandable concern for
what is happening in the world's advanced nations, to the problems facing
poorer ones. The G20's decision to suspend debt repayments from the world's
most deprived countries was a start, but she says we must remain mindful.

 

"Poor countries in the world are hit multiple times. They're hit by the the
pandemic. They're hit by the spillover from economic contraction elsewhere.
They're hit by the flight to safety," Ms Georgieva says.

 

"$100bn has left emerging markets in developing countries just in two
months, much more than during the global financial crisis. They're hit
because remittances are drying up. And those that are commodity exporters
are hit by prices of their exports dropping."

 

She says "lifelines" are needed now for such countries, such as the debt
standstill which would free billions for health services. "We need each
other. It is a moment testing our humanity and being together acting with
solidarity. We will get to the other side of this."--BBC

 

 

 

Disney stops paying 100,000 workers during downturn

Walt Disney will stop paying more than 100,000 employees from this week as
it struggles with coronavirus closures.

 

The world's biggest entertainment group operates theme parks and hotels in
the US, Europe and Asia.

 

Stopping pay for almost half of its workforce will save Disney up to $500m
(£400m) a month, according to the Financial Times.

 

Disney made operating income of $1.4bn for its parks, experiences and
products in the last three months of 2019.

 

The company said it will provide full healthcare benefits for staff placed
on unpaid leave and urged its US employees to apply for government benefits
through the $2tn coronavirus stimulus package. 

 

Disney Plus racks up 50m subscribers in five months

 

US jobless claims surge for third week

 

Why Bob Iger's Disney departure is a big deal

 

The number of Americans seeking unemployment benefits has been surging since
its national lockdown, rising above six million. Protesters have taken to
the streets in the US, demanding the reopening of economies.

 

The travel and leisure sectors were the first to be hit financially from
coronavirus shutdowns. Airlines have been struggling to survive with many
asking for financial assistance from governments.

 

But Disney's fortunes for its online streaming site Disney Plus are much
better, with more than 50m subscribers in just five months since it was
launched.

 

Last month Walt Disney said its executive chairman Bob Iger would give up
his entire salary during the pandemic while chief executive Bob Chapek will
take a 50% pay cut. Mr Iger is one of highest paid executives in the
entertainment sector, earning $47.5m last year as chairman and chief
executive.

 

When the theme parks reopen, Mr Iger has forecast that temperature checks of
visitors could become part of its normal routine along with bag checks.--BBC

 

 

 

 

US oil prices drop to 21-year low as demand dries up

The price of US oil has fallen to a level not seen since 1999, as demand
dries up and storage runs out.

 

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US
oil, dropped 14% to $15.65 in Asia trading on Monday.

 

The oil market has come under intense pressure during the coronavirus
pandemic with a huge slump in demand.

 

US storage facilities are now struggling to cope with the glut of oil,
weakening prices further.

 

The oil industry has been struggling with both tumbling demand and
in-fighting among producers about reducing output.

 

Earlier this month, Opec members and its allies finally agreed a record deal
to slash global output by about 10%. The deal was the largest cut in oil
production ever to have been agreed.

 

But some analysts said the cuts were not big enough to make a difference.

 

"It hasn't taken long for the market to recognise that the Opec+ deal will
not, in its present form, be enough to balance oil markets," said Stephen
Innes, chief global market strategist at Axicorp.

 

Meanwhile, concern continues to mount that storage facilities in the US will
run out of capacity, with stockpiles at Cushing, the main delivery point in
the US for oil, rising almost 50% since the start of March, according to ANZ
Bank. "We hold some hope for a recovery later this year," the bank said in
its research note.

 

Mr Innes said: "It's a dump at all cost as no one, and I mean no one, wants
delivery of oil with Cushing storage facilities filling by the minute."

 

Brent oil, the benchmark used by Europe and the rest of the world, was
slightly weaker, down 0.8% to $27.87 a barrel.--BBC

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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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
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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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