Major International Business Headlines Brief::: 29 December 2020

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Major International Business Headlines Brief::: 29 December 2020

 


 

 

	
 


 

 


ü  China and EU 'on verge' of major investment deal

ü  Japan stocks lead Asian shares higher as U.S. stimulus fuels rally

ü  A historic oil price collapse, with worries headed into 2021

ü  Stock-picking hedge funds land investors double-digit gains in 2020

ü  Samsung Display extends South Korea LCD production for unspecified period

ü  Wall St follows European stocks higher on stimulus, Brexit

ü  Nigeria: 72 Hours to End of Year - Buhari Yet to Assent to 2021 Budget

ü  Nigeria Remains Largest Economy in Africa, 26th in the World - IMF

ü  Tanzania: Coffee, Tea Procurement Volume Surges, Says Bot

ü  Tanzania: Cross Border Trade Raises Over 30pc in Q3

ü  Kenya: Alarm Over New Wave of Locusts

ü  Kenya: Sh125bn Tax Deficit Bites As Treasury Struggles to Pay Staff

ü  Tanzania: Bank's 164.9m/ - Plough Back Supports School Buildings

ü  Tanzania: 13 Local Companies Now Manufacture Weighing Scales

 


 

 


China and EU 'on verge' of major investment deal

The EU and China are close to reaching a long-awaited business investment
deal, according to media reports.

 

The pact, expected to be finalised this week, will give EU firms better
access to the Chinese market and improve competition conditions.

 

Talks on the investment deal began in 2014 but have been stuck for years
over a number of issues.

 

But rising trade tensions between the US and China may have helped change
the Chinese position, officials said.

 

The deal comes hot on the heels of the UK's post-Brexit trade agreement with
the EU which was announced on 24 December.

 

According to multiple reports, the deal would open up China's manufacturing
sector to EU companies, as well as construction, advertising, air transport
and telecoms.

 

One of the sticking points was China's demands for access to the EU's energy
market given sensitivities over national security. The deal is expected to
give Beijing access to a small part of the European renewable energy sector
on a reciprocal basis.

 

The pact is also designed to remove barriers to investment in China such as
joint-venture requirements and caps on foreign ownership in certain
industries.

 

Once the expected deal is reached, it needs to be ratified by the European
parliament, a process that may not begin until the second half of 2021.

 

 

On Monday, the European Commission reported progress on the talks with
Beijing, including the core issue of workers' rights in China.

 

This is a contentious issue given reports that China uses Uighur Muslims
detained in large numbers in the Xinjiang province as forced labour. Beijing
denies these claims.

 

Under the agreement, China is being asked to pledge to subscribe to the
International Labour Organisation's rules on forced labour.An EU-China
agreement is expected to cause frictions with the incoming administration of
US president-elect Joe Biden.Earlier this month the EU published a
transatlantic strategy in which it urged the US to work with it to meet the
"strategic challenge" posed by China.

 

China and the US have been locked in a trade war since 2018 and the Trump
administration has targeted a number of Chinese tech companies as threats to
national security.EU-China relations themselves have been strained this
year, over China's imposition of a new security law in Hong Kong and
accusations it spread disinformation about the coronavirus.

 

 

 

Japan stocks lead Asian shares higher as U.S. stimulus fuels rally

TOKYO/NEW YORK (Reuters) - Asian shares rose on Tuesday, with Japanese
stocks hitting a 30-year high, as investor risk was encouraged by a Brexit
trade deal and hopes a long-awaited U.S. pandemic relief package will be
expanded.

 

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.45%.
Australian stocks ended up 0.53%. Japan’s Nikkei surged by 2.4% to its
highest since August 1990. Shares in China bucked the trend, falling 0.32%
on profit taking.

 

Futures for the S&P 500 added 0.4%.

 

Euro Stoxx 50 futures were up 0.42%, German DAX futures rose 0.53%, and FTSE
futures gained 1.12%, pointing to a bright start to European trade.

 

The dollar nursed losses against major currencies and Treasury yields rose
after U.S. President Donald Trump’s approval of a $2.3 trillion stimulus
package to counter the effects of the coronavirus pandemic.

 

While the package still has to pass the Senate, Trump’s approval on Sunday
sent shares on Wall Street to record highs on Monday amid increased optimism
about an economic recovery.

 

“With the Brexit ... and the U.S. stimulus deal now in the rear-view mirror,
there is a sense of relief that we have avoided the respective worst-case
scenarios,” said Stephen Innes, chief global market strategist at Axi, a
broker.

 

Britain clinched a narrow Brexit trade deal with the EU on Thursday, just
seven days before it exits one of the world’s biggest trading blocs.

 

Firmer demand for riskier assets kept the U.S. dollar, which is often seen
as a “safe-haven” asset, on the back foot. It was down 0.02% against a
basket of major currencies.

 

Shorting the dollar has been a popular trade recently and calculations by
Reuters based on data released by the Commodity Futures Trading Commission
on Monday suggested that trend could endure. Short positions on the dollar
swelled in the week ended Dec. 21 to $26.6 billion, the highest in three
months.

 

The dollar index against a basket of six major currencies fell to 90.137,
not far from the lowest in more than two years.

 

Sterling edged up to $1.3483 following the confirmation last week of a trade
UK-EU trade deal that was widely expected.

 

A sluggish dollar bolstered gold prices, which rose 0.33% to $1,877.56 an
ounce.

 

Jack Ma’s Alibaba Group Holding Ltd rose 6.4%, snapping six straight
sessions of declines. Analysts said those gains could be shortlived given
Chinese regulators have called for a shakeup of Ant Group, Alibaba’s mobile
payment and consumer finance arm.

 

Analysts also cited concerns that other large Chinese tech companies could
face more government scrutiny, which could curb investment in the sector.

 

Oil prices recovered after falling overnight because of concerns about
increased supply and lower demand amid fresh COVID-19 travel restrictions
around the world.

 

Brent crude rose 0.45% to $51.09 per barrel. U.S. crude was up 0.48% at
$47.85 a barrel.

 

More U.S. fiscal stimulus has also eased concerns about the threat posed by
new variants of the coronavirus identified in Britain and South Africa.

 

The yield on benchmark 10-year Treasury notes rose to 0.9381%, but the
two-year eased to 0.1270%.

 

 

 

 

A historic oil price collapse, with worries headed into 2021

Even as global prices end the year at about $51 a barrel, near the average
for 2015-2017, it masks a year of volatility. In April, U.S. crude plunged
deep into negative territory and Brent dropped below $20 per barrel, slammed
by the COVID-19 pandemic and a price war between oil giants Saudi Arabia and
Russia.

 

The remainder of 2020 was spent recovering from that drop as the pandemic
destroyed fuel demand around the world. While the short-lived decline of
U.S. oil futures below negative-$40 a barrel is not likely to be repeated in
2021, new lockdowns and a phased rollout of vaccines to treat the virus will
restrain demand next year, and perhaps beyond.

 

“We really haven’t seen anything like this - not in the financial crisis,
not after 9/11,” said Peter McNally, global sector lead for industrials,
materials and energy at research firm Third Bridge. “The impact on demand
was remarkable and swift.”

 

Fossil-fuel demand in coming years could remain softer even after the
pandemic as countries seek to limit emissions to slow climate change. Major
oil companies, such as BP Plc and Total SE, published forecasts that include
scenarios where global oil demand may have peaked in 2019.

 

World oil and liquid fuels production fell in 2020 to 94.25 million barrels
per day (bpd) from 100.61 million bpd in 2019, and output is expected to
recover only to 97.42 million bpd next year, the Energy Information
Administration said.

 

“Every cycle feels like the worst when you’re going through it, but this one
has been a doozy,” said John Roby, chief executive of Dallas, Texas-based
oil producer Teal Natural Resources LLC.

 

As coronavirus cases spread, governments imposed lockdowns, keeping
residents indoors and off the roads. Consumption of world crude and liquid
fuels fell to 92.4 million bpd for the year, a 9% drop from 101.2 million
bpd in 2019, EIA said.

 

The changing landscape poses a threat to refiners. About 1.5 million bpd of
processing capacity has been taken off the market, Morgan Stanley said.

 

Worldwide crude distillation capacity is expected to keep rising, according
to GlobalData, but falling demand and weak margins for gasoline, diesel and
other fuels has prompted refineries in Asia and North America to close or
curtail output, including several facilities along the U.S. Gulf Coast.

 

Shutdowns in more developed economies “increase refineries’ exposure to the
highly ‎competitive product export market,” BP said in its outlook, released
in September. ‎

 

VOLATILITY CLIMBS

The next several months are likely to be volatile as investors weigh tepid
demand against another potential spike in oil supply from producers,
including the Organization of the Petroleum Exporting Countries (OPEC) and
allies.

 

“Markets have been tumultuous and disorderly over the last 12 months with
long-lasting implications, as we begin to form new contours of normality
towards a post-virus equilibrium,” Mitsubishi UFJ Financial Group analysts
said.

 

The Cboe Crude Oil ETF Volatility Index surged to a record 517.19 in April.
The index has since dropped to around 40, but that is still about 60% higher
than this time a year ago, Refinitiv Eikon data shows.

 

 

 

Stock-picking hedge funds land investors double-digit gains in 2020

(Reuters) - The average hedge fund underperformed the wider stock market in
2020 but saw less volatility while stock-picking funds got a lift from
technology and stay-at-home shares in a year beset by a pandemic and
uncertainty around the U.S. election.

 

Hedge funds, which aim to protect assets in market downturns and have faced
criticism for many years for high fees and lacklustre returns, in 2020
showed a divergence in performance.

 

The average hedge fund made 7.3% in the first 11 months of the year. That
underperformed an index tracking the S&P 500, which would have made 14% over
the same time frame, according to data from Hedge Fund Research (HFR).

 

Investors said the performance was still solid given that many of the hedge
funds in their portfolios had produced double-digit returns or otherwise
preserved assets during the March rut when fears about coronavirus wiped $5
trillion from U.S. stocks.

 

“Hedge funds broadly managed the year up to March really well - certainly
much better than 2008 as a comparison - and they have ended in positive
territory,” said Robert Sears, chief investment officer at Capital
Generation Partners.

 

The standouts were long-short hedge funds, which proved to have the
top-performing strategy. So-called ‘long-short’ hedge funds, which take bets
on stocks rising and falling, raked in gains of 12% over the period,
according to recent data from HFR. While that underperformed the broader
market, a number of individual firms blasted past that number with high
returns.

 

“On average, hedge funds have done quite well,” said Cedric Fontanille,
director and head of investment mandates at investment manager Unigestion.
“Long-short equity benefited from the strong momentum of their tech
exposure. They had quite a bit at the beginning of the year and maintained
it.”

 

Many hedge funds were heavily invested in stocks that benefited from
consumers and workers staying at home during the pandemic, including Zoom
Video Communications Inc and Amazon.com Inc.

 

UK-based Marshall Wace was among the hedge funds to hold a position in Zoom,
U.S. filings compiled by Symmetric.io showed. It made 9.4% in its $20
billion strategy for the year to start of December, said a source with
knowledge of the firm.

 

Among the long-short hedge funds to generate double-digit returns were
RiverPark Advisors’ $391 million fund, which gained 41.2% through Oct. 31
while Wellington Management’s $1.37 billion financials-focused fund gained
21.2% to Nov. 30, according to data gathered by HSBC and seen by Reuters.

 

Britain’s Odey Asset Management made 37.3% through Nov. 30 in its long-short
fund managed by James Hanbury while Sandler Capital Management’s $2 billion
equities fund made 10.8% between the start of the year and Dec. 4, sources
close to the firms told Reuters.

 

Hedge fund peers that bet on mergers and acquisitions made 5.4% over the
same period while strategies that invest based on macroeconomic trends made
1.4%, the data showed.

 

While macro hedge funds generated lower gains on average, according to the
HFR data, investors said the strategies in their portfolios had outperformed
the market.

 

“A lot of the old guard performers did well again and most macro managers
have ended with a good year,” said Sears at Capital Generation Partners.

 

“Even the ones that didn’t do quite so well earlier in the year have done
well in the later year rally.”

 

Billionaire Alan Howard’s hedge fund firm made 24% in 2020 to Nov 30 in its
$4.3 billion macro master strategy, a source close to the firm told Reuters.

 

Paul Tudor Jones’s macro Global Fund made 11.9% through Nov. 30, the HSBC
data showed.

 

All of the hedge funds declined to comment on their performance or did not
respond to requests for comment.

 

($1 = 0.7487 pounds)

 

 

 

Samsung Display extends South Korea LCD production for unspecified period

SEOUL (Reuters) - Samsung Electronics’ display unit said on Tuesday it will
extend production of liquid crystal display (LCD) panels for TVs and
monitors, as more people sought home entertainment during the coronavirus
pandemic.

 

Samsung Display’s decision to extend LCD production in South Korea for an
unspecified period of time overrides its announcement in March that it would
end all production by the end of the year to focus on more advanced
technology.

 

Samsung Display said the length of the extension would depend on
profitability considerations and market conditions. It had said in late
October that it was considering a “short-term” extension.

 

Local media outlet IT Chosun reported earlier on Tuesday that production
would be extended by a year at the request of Samsung Electronics’ set
manufacturing division, citing unnamed tech industry sources.

 

A spokeswoman for Samsung Display declined to comment on the IT Chosun
report.

 

The stay-at-home trend sparked by the coronavirus pandemic led to a 30%
quarter-on-quarter spike in global panel demand in the third quarter of the
year amid more TV and notebook demand, according to technology research firm
TrendForce.

 

However, the firm added that the influx of more production capacities from
Chinese LCD makers was likely to worsen a supply glut next year.

 

Samsung had produced LCD panels in both South Korea and China, but it
earlier this year sold a majority stake in its Suzhou LCD production unit to
TCL Technology Group Corp’s China Star Optoelectronics Technology unit.

 

 

 

Wall St follows European stocks higher on stimulus, Brexit

NEW YORK (Reuters) -Wall Street was on track to close at record highs on
Monday, but crude prices lost ground as long-awaited pandemic relief and
Brexit trade deals fueled investors’ risk appetite.

 

 

U.S. equities followed the example of their European counterparts with a
broad rally, and communications services and consumer discretionary stocks
were leading the charge.

 

But crude prices slumped as weak demand and a potential increase in
production offset the effects of the fiscal aid package.

 

President Donald Trump reversed course on Sunday by signing a $2.3 trillion
stimulus and spending package into law, heading off a potential government
shutdown and setting the stage for congressional Democrats to push for more
robust direct payments of $2,000 to millions of Americans.

 

“Stocks are riding the coattails of the additional stimulus program and that
is for good reason,” said Terry Sandven, chief equity strategist at U.S.
Bank Wealth Management in Minneapolis. “If you look to year-end, it will be
a fairly light trading week but we seem poised to end the year on a high
note.”

 

While Wall Street still faces some uncertainties, Sandven sees conditions
remaining favorable as we enter 2021.

 

“Medical progress for COVID-19 continues to evolve and that will unfold at a
more accelerated rate now as you get into the new year,” Sandven added. “And
importantly, the macro environment is favorable for stocks.”

 

Britain reached a trade agreement with the European Union on Thursday, days
before leaving one of the world’s largest trading blocs, and urged
businesses to prepare for disruptions resulting from the completion of
Brexit.

 

The Dow Jones Industrial Average rose 235.6 points, or 0.78%, to 30,435.47,
the S&P 500 gained 36.57 points, or 0.99%, to 3,739.63 and the Nasdaq
Composite added 124.46 points, or 0.97%, to 12,929.20.

 

European shares had their strongest close in 10 months and German shares hit
an all-time high on U.S. stimulus and Brexit trade deals.

 

The ongoing rollout of coronavirus vaccines also buoyed sentiment, with
Pfizer Inc announcing it expects to complete distribution of 200 million
doses in Europe by September.

 

Markets in Britain were closed on Monday in observance of the Boxing Day
holiday.

 

The pan-European STOXX 600 index rose 0.66% and MSCI’s gauge of stocks
across the globe gained 0.62%.

 

Emerging market stocks lost 0.19%. MSCI’s broadest index of Asia-Pacific
shares outside Japan closed 0.18% lower, while Japan’s Nikkei rose 0.74%.

 

U.S. Treasury yields rose early in the session but gave up much of those
gains by late afternoon as the risk-on rally lost some steam.

 

Benchmark 10-year notes last fell 2/32 in price to yield 0.9364%, from 0.93%
late on Thursday.

 

The 30-year bond last fell 6/32 in price to yield 1.6743%, from 1.666% late
on Thursday.

 

The dollar was essentially flat against a basket of world currencies but the
euro gained strength as investors priced out Brexit risk.

 

The dollar index rose 0.01%, with the euro unchanged at $1.2204.

 

The Japanese yen weakened 0.34% versus the greenback at 103.86 per dollar,
while Sterling was last trading at $1.3449, down 0.73% on the day.

 

Crude prices dropped as the prospect of increased OPEC+ output in the face
of weak demand dampened stimulus cheer.

 

U.S. crude dropped 1.26% to settle at $47.62 barrel. Brent was last at
$50.92 per barrel, down 0.72% on the day.

 

Gold reversed its early gains as the dollar recovered its losses amid the
stocks rally.

 

Spot gold dropped 0.1% to $1,874.00 an ounce.

 

 

 

Nigeria: 72 Hours to End of Year - Buhari Yet to Assent to 2021 Budget

Seventy-two hours to the end of the year, the 2021 appropriation bill is yet
to be assented to by President Muhammadu Buhari, days after the National
Assembly passed the bill, Daily Trust reports.

 

The president's 'delay' in signing the fiscal document threatens the January
to December budget cycle, which was achieved last year, sources said.

 

It was learnt that pressure is being mounted on the president to sign the
fiscal document so as not to give room for condemnation.

 

Buhari signed the 2020 appropriation bill into law on December 17, 2019, 12
days after it was passed by the National Assembly.

 

The document was later revised mid- 2020 following the outbreak of COVID-19
pandemic, which battered the country's economy.

 

The National Assembly had, during an emergency session convened last week
Monday, passed a N13.58 trillion budget for the 2021 fiscal year.

 

The budget was passed after the two chambers considered and adopted the
reports of its committees on the 2021 Appropriations bill.

The legislature had since transmitted the fiscal document to President
Buhari for assent.

 

The Presidency has confirmed the receipt of the 2021 budget but said it is
studying the document for "consequential executive action."

 

If the January-December budget calendar is anything to go by, the president
has between today and Thursday, to assent to the appropriation bill.

 

The National Assembly had, on several occasions, vowed to maintain the
January-December budget calendar.

 

Senate President Ahmad Lawan had while fixing the date for the budget
passage, said the Red Chamber decided to hold a special session on Monday,
December 21, to consider and pass the budget 2021.

 

"This is in keeping with our legislative agenda of ensuring that the annual
budget has a January to December cycle. We did that last year, and by the
grace of God, we will do it again," Lawan had said.

We're studying approved budget - Presidency

 

The Presidency yesterday confirmed the transmission of the 2021
Appropriation Bill passed last week by the National Assembly to President
Buhari.

 

The Senior Special Assistant to the President on National Assembly Matters
(Senate), Senator Babajide Omoworare, confirmed the receipt to Daily Trust
last night.

 

He said the bill was being looked at by President Buhari for consequential
executive action.

 

"This is to confirm that the Appropriation Bill has been transmitted by the
National Assembly to Mr President in conformity with the provision of
Section 59 of the Constitution.

 

"The said bill is presently being looked at by Mr President and
consequential executive action will be taken in due course," Omoworare said.

He, however, did not disclose whether the president will append his
signature to the document before the end of the year.

 

Speaking on the development, an economist, Abba Ali Alhaji, said there was
the need for the president to also work at the speed of the National
Assembly.

 

"If the two chambers of the National Assembly had the courage to convene an
emergency sitting simply to give the appropriation legal backing, I see no
reason why the president should waste time in assenting to it.

 

"Honestly, the president has received the support of the legislature more
than any other in recent history and he should reciprocate.

 

"Of course, there is the need for him to study the document, more so,
members of the National Assembly have increased the total budget figure.
That notwithstanding, there should have been an active voice from the Villa,
a statement indicating the exact date it will be passed," he said.

 

A senator who does not want his name in print said they also expected that
the president will assent to the budget without delay.

 

"Different joint committees including the one that has representatives from
the Presidency and the National Assembly worked on the document in order to
be on the same page.

 

"The essence of working together is to ensure that there are no areas of
misunderstanding that would lead to any delay in giving the appropriation
legal backing.

 

"Our aim is to change the notion that budget is a yearly ritual. We want to
make its funding and timely implementation legally binding. And in all
honesty, we have started doing that. As you are aware, we extended the
implementation of the capital component of the 2020 budget to run
simultaneously with that of 2021.

 

"Our prayer is that we get a corresponding commitment from the Presidency
for the benefit of Nigerians," he said.

 

Budget highlights

 

The 2021 budget is predicated on the benchmark price of crude oil, fixed at
$40 USD per barrel; Crude Oil Production at 1.86 Mbps; Exchange rate at
N379/US$; and Gross Domestic Production (GDP) Growth rate at 3.00 percent.

 

Out of the total sum of N13,588,027,886,175 for the fiscal year 2021,
N496,528,471,273 is for Statutory transfers; N3,324,380,000,000 is for Debt
service; N5,641,970,060,680 is for Recurrent expenditure; and
N4,125,149,354,222 for Capital expenditure.

 

For Capital expenditure in the year 2021, the sum of N24,090,340,416 was
budgeted for the Presidency; N127,850,984,984 for Ministry of Defence;
N7,994,280,245 for Ministry of Foreign Affairs; N19,721,066,865 for Federal
Ministry of Information and Culture; N38,846,293,565 for Ministry of
Interior; N2,491,111,568 for Office of the Head of the Civil Service of the
Federation; N218,432,074 for Auditor General of the Federation;
N17,882,480,948 for Ministry of Police Affairs; N17,664,285,343 for Ministry
of Communication and Digital Economy; and N45,647,587,613 for the Office of
the National Security Adviser.

 

Others such as the Infrastructure Concessionary Regulatory Commission had
N353,678,953; Office of the Secretary to the Government of the Federation -
N45,637,061,225; Special Duties and Inter-Governmental Affairs -
N8,872,787,424; Federal Ministry of Agriculture and Rural Development -
N211,077,457,584; Federal Ministry of Finance, Budget and National Planning
- N376,359,450,498; Federal Ministry of Industry, Trade and Investment -
N64,760,781,172; Federal Ministry of Labour and Employment -
N63,526,109,193; Federal Ministry of Science and Technology -
N107,061,118,360; Federal Ministry of Transport - N209,736,113,910; Federal
Ministry of Aviation - N70,189,215,332; and Federal Ministry of Power -
N206,745,895,389.

 

N3,340,140,120 was approved for the Ministry of Petroleum Resources;
N12,605,747,806 for the Ministry of Mines and Steel Development;
N399,694,565,222 for the Federal Ministry of Works and Housing; N110,455,765
for the National Salaries and Wages Commission; N261,170,602 for the Fiscal
Responsibility Commission; N159,745,000,315 for the Federal Ministry of
Water Resources; N5,097,558,027 for the Federal Ministry of Justice;
N1,363,636,403 for the Independent Corrupt Practices and Related Offences
Commission; N37,330,762,421 for the Federal Capital Territory
Administration.

 

The sum of N22,024,592,197 was approved for the Ministry of Niger Delta
Affairs; N10,639,249,276 for the Federal Ministry of Youth and Sports
Development; N11,204,210,256 for Ministry of Women Affairs; N156,172,307,765
for the Federal Ministry of Education; N134,591,025,027 for Federal Ministry
of Health; N24,554,710,490 for Federal Ministry of Environment;
N4,839,951,093 for National Population Commission; and N75,768,539,782 for
the Federal Ministry of Humanitarian Affairs, Disaster Management and Social
Development.-Daily Trust.

 

 

 

Nigeria Remains Largest Economy in Africa, 26th in the World - IMF

The International Monetary Fund (IMF) has said that Nigeria maintained its
lead as the biggest economy in Africa, in terms of the size of the country's
Gross Domestic Product (GDP).

 

But globally, the IMF, in its recently released World Economic Outlook
(WEO), reviewed by THISDAY yesterday, ranked Nigeria the 26th largest
economy, with an average GDP of $442.976 billion.

 

The computation was based on nominal GDP, which does not take into account
differences in the cost of living in different countries.

 

The IMF ,recently returned a gloomy verdict on the Nigerian economy for
2020, declaring that the nation's economic outlook was challenging.

 

The multilateral institution, in its recently released 2020 Article IV
Consultation on Nigeria, had stated that the country's economy "is buffeted"
from side to side by a cocktail of issues, including the uncertainty over
the COVID-19 pandemic, low oil prices, capital outflows and balance of
payment challenges."

The IMF had stated: "The COVID-19 global pandemic is exacting a heavy toll
on the Nigerian economy, which was already experiencing falling per capita
income and double-digit inflation, with limited buffers and structural
bottlenecks.

 

"Low oil prices and sharp capital outflows have significantly increased
balance of payments (BOP) pressures and, together with the pandemic-related
lockdown, have led to a large output contraction and increased
unemployment."

 

In its estimation, the IMF said supply shortages have pushed up headline
inflation to a 30-month high.

 

It said: "Under current policies, the outlook is challenging. Real GDP is
projected to contract by 3¼ per cent in 2020. The recovery is projected to
start in 2021, with subdued growth of 1½ per cent and output recovering to
its pre-pandemic level only in 2022."

 

The IMF report, which acknowledged the efforts of the Central Bank of
Nigeria (CBN) to rein in inflation, however, maintained that despite an
expected easing of food prices, inflation is projected to remain in double
digits and above the CBN's target range.

 

"Following a significant decline in revenue collections - from levels that
were already among the lowest in the world - fiscal deficits are projected
to remain elevated in the medium term," the report stated.

 

Recognising various policy measures put in place by the federal government,
the Bretton Wood Institution still believes there is need to put in place
more broad market reforms in order to address the pressing balance of
payment pressures in Nigeria.-This Day.

 

 

 

Tanzania: Coffee, Tea Procurement Volume Surges, Says Bot

The volume of coffee and tea procured during the quarter ending September
this year was higher than the volume procured in the corresponding quarter
last year.

 

Coffee procured increased as a result of bumper harvest mainly due to high
coffee cycle production season of 2020/21.

 

The other factors that contributed to increase coffee procurement are
favorable weather conditions and improvement of farm gate coffee marketing
system which encouraged competition between cooperatives and private
companies.

 

According to the Bank of Tanzania (BoT) Economic Bulletin for the quarter
ending September this year, coffee procured increased to 57,206.0 tonnes
compared to 37,151.4 tonnes procured in the corresponding quarter last year
which is equivalent to 54 per cent change.

Procurement of tea increased mainly due to good weather conditions and
resumption of production of tea processing factories that scaled down after
the outbreak of Covid-19.

 

During the reference period, a total of 3,646 tonnes were procured compared
to 3,236.8 tonnes procured in the corresponding period last year which is
equivalent to 12 per cent change. Meanwhile, procurement of sisal, tobacco,
and cotton lint decreased in the same review period.

 

The decrease in procurement of sisal was caused by weak global demand,
following slow recovery of markets after Covid-19 outbreak. According to the
central bank report, sisal procurement declined by negative 23.6 per cent to
7,452.9 tonnes from 9,757.2 7 in the corresponding quarter last year.

 

The cotton lint procurement decreased by negative 57.4 per cent to 118,810
tonnes from 278,588 tonnes registered in the same quarter last year.

 

The procurement of cotton lint and tobacco decreases due to heavy rainfall
which caused floods that affected most cotton growing areas and decrease in
quality and price of tobacco.

 

The procurement of tobacco decreased by negative 27.6 per cent to 18,330.5
tonnes compared to 25,318.9 tonnes on the corresponding quarter last year.
Notably, as a result of decreasing prices, procurement of tobacco closed in
mid-August.-Daily News.

 

 

 

Tanzania: Cross Border Trade Raises Over 30pc in Q3

THE Bank of Tanzania (BoT) has said cross-border trade registered a surplus
balance, thanks to more increase in exports than imports.

 

The trade surplus increased by 35.1 per cent to 1.526tri/- in three months
to September from the value registered in a similar period last year.

 

Main contributors, according to the central bank, to the quarter three
surplus were two zones - the Lake Zone and the Southern Highlands Zone.

 

"Cross-border trade for zones with borders registered a surplus balance,
driven by faster increase in exports than imports," BoT, latest Consolidated
Zonal Economic Performance Report for Quarter ending September, showed.

 

 

The report showed that goods export went up by 28.8 per cent to 1.911tri/-,
while imports rose by 8.9 per cent to 384.5bn/-.

 

The report showed that Northern and Lake Zones continued accounting for the
largest shares of cross-border trade.

 

The Lake Zone registered a surplus of 77.5 per cent from 507.63bn/- in
quarters three last year to 900.81bn/- in quarter three this year.

 

The Lake Zone trade improvement to register the surplus was due to an
increase in the value of goods exported, particularly live cattle, goats and
other animal products.

 

Other goods were unrefined gold, fish and fish products, cotton seed cakes,
salt, foodstuffs and other consumer goods.

 

The second highly contributor to the cross-border trade surplus was the
Northern Zone despite registering a trade balance deficit of 3.4 per cent to
615.25bn/- in three months to September this year compared to those of last
year.

 

 

However, the Northern Zone registered a trade business surplus of 21.1 per
cent to 508.25bn/- compared to Q2 and Q3.

 

The Northern Zone trade largely involved exports of raw agro-goods and
plastic products.

 

The BoT report said the Southern Highlands Zone recorded a surplus of
8.8bn/- in Q3 up from a trade deficit of 22.9bn/-in Q2.

 

The Southern Highlands Zone, the surplus was driven by other exports, mainly
building materials, clothing and plastic products.

 

However, the Southern Highlands Zone recorded a deficit of 16.1bn/- in Q3
last year "owing to increased exports of consumer goods and cement".

 

Tanzania's cross-border exports include unrefined gold, livestock and
livestock products, cement, fertilisers, plastic products, seed cakes, fish
fillets and consumable and manufactured goods.

 

Imports consist of mining equipment, industrial raw materials, iron sheets,
electronics, soap and cosmetics, raw timber, medicaments, motor vehicles,
electronics, woven fabrics and clothes, and cooking oil.-Daily News.

 

 

Kenya: Alarm Over New Wave of Locusts

Kenya is staring at a possible crisis in the coming weeks as desert locusts
land in the country after breeding near the Tanzania, Ethiopia and Somalia
borders, where egg laying and hopper band formation has been reported.

 

Already, the pests have invaded farms and pastures, threatening the already
distressed vegetation in Taita-Taveta, Kilifi and Tana River counties.

 

In Taita-Taveta, agriculture officers have launched a campaign to combat the
infestation while in Kilifi and Tana River, residents have raised concern
over increasing numbers of insects in the area.

 

In Tana River, the most affected areas include Chara, Kilelengwani and
Kitere. In Chara, farmers are camping in their farms in an attempt to keep
the locusts away.

 

Over 3,000 acres of vegetation in the county have been ravaged, leaving more
than 1,000 families in food distress. Of the 3,000 acres, an approximate
1,200 acres are farmland, with Hola irrigation scheme also invadeed

 

"The adult locusts caused a little bit of damage to the crops but we
sprayed. However, we noted they were in the farm by dawn, we responded at
about mid-morning. They certainly may have laid eggs, hence a possibility of
the larvae emerging," said the scheme's agronomist, Johnson Muko.

 

Mandera, Isiolo, Wajir, Garissa and Kitui counties are also battling fresh
invasions by small immature swarms that migrated from Somalia in late
November and which continue to devour vegetation and grasslands.

 

Second generation hoppers

 

Samburu is dealing with second generation hoppers that continue to wreak
havoc on pasturelands with the possibility of sparking resource-based
conflicts.

 

The county has already turned to mobile technology to track and report the
destructive pests before spraying is done.

The ground team and scouts, upon sighting the locusts in the field, take
photos and videos and upload them onto the E-Locust app, developed by the
state in collaboration with the UN agency.

 

The gathered information is sent in real-time to a database at the locusts
control centre in Nairobi to guide in the control operations.

 

A large immature swarm was last week spotted at Kebri Dehar in the eastern
part of the Somali region of Ethiopia.

 

Immature swarms continue to form within a large area in eastern Ethiopia and
central Somalia and a big number of hopper bands are fledging to form new
immature swarms even with intensive ground and aerial control operations
underway in the two countries.

 

"The swarms are expected to move south anytime to southern Somalia, southern
Ethiopia and then Northern Kenya," Food and Agriculture Organisation (FAO)
said in a December 19 update.

Meanwhile, FAO has also warned that without additional funding, locust
control efforts could slow down or halt from the end of January 2021,
potentially allowing the numbers of the voracious pests to surge in some
places. Also, the agency says that farmers whose livelihoods have been
impacted require further support.

 

According to FAO, control operations have prevented the loss of an estimated
2.7 million tonnes of cereals worth nearly $800 million ( Sh89.2 billion) in
countries already hard hit by acute food insecurity and poverty, food enough
to feed approximately 18 million people a year.

 

Favourable conditions

 

Breeding continues in northern Somalia due to favourable conditions caused
by the heavy rains occasioned by the recent cyclone and hatching and band
formation is expected on the northwest coast and in the northeast in the
coming weeks.

 

While control operations are underway in the affected counties, FAO has
called for intensive surveys between Mandera and Turkana counties.

 

There are fears the expected wave of locusts will multiply further and wreak
havoc on farms and pasturelands in the arid and semi-arid counties that
continue to grapple with prolonged drought.

 

Millions of the desert locusts have caused destruction across East Africa in
what the agency has termed the worst outbreak in a quarter of a century.

 

The agency recently said the risk remained high in Northern Kenya where
existing locusts could lay eggs in sandy areas with hatching and band
formation having already started.

 

The government faces a difficult task in dealing with the impending invasion
which will cause further suffering to Kenyans adversely affected by the
Covid-19 pandemic.

 

Breeding is ongoing on both sides of the Red Sea and adult swarms have
started laying eggs on the coastal plains of Eritrea, Sudan and Saudi Arabia
where control operations have been intensified.

 

"Extreme vigilance and preparedness is required in Kenya and close
monitoring and control operations continue along both sides of the Red Sea,"
the agency noted.-Nation.

 

 

 

Kenya: Sh125bn Tax Deficit Bites As Treasury Struggles to Pay Staff

Kenya is pulling out of festivities into the New Year with a tax deficit of
Sh125 billion and is struggling to pay civil servants as revenue sources
thin in the midst of swelling expenditure and an expensive pandemic.

 

Despite the National Treasury putting up a brave face that the country is
not broke, all signs point to a government that is teetering on the brink
and whose accounts are drying up faster than they can be refilled.

 

Thousands of national and county government workers have celebrated
Christmas without pay, with some having not been paid for three months.

 

 

This as government suppliers continue to hurt in silence as parastatals,
ministries, department and other State agencies accounts dry up, as the
Kenyatta administration continues to grow its mountain of debt to meet the
shortfalls.

 

The most recent government accounts published last week show that in the
first five months of this current financial year that started on July, Kenya
has collected total revenues of Sh1 trillion, which works out to about Sh200
billion a month.

 

Read: Public debt is essential for functioning of government, economy

 

But only about a half, or Sh527 billion, came from tax revenue between
July-November 2020.

 

The rest came from domestic borrowing (Sh360 billion), external loans
(Sh26.2 billion) and other non-tax revenue (Sh37 billion).

 

The Sh527 billion collected by November is a drop of Sh100.72 billion or 16
per cent contraction compared to a similar period a year ago, reflecting the
impact of Covid-19 economic hardships that triggered a fall in company
earnings, layoffs and cuts on levies.

 

 

To put this numbers into perspective, the government has a full year budget
of Sh2.8 trillion, which means that on average, it should be raising about
Sh235 billion every month from all sources.

 

Its financial statement shows that it is targeting to raise Sh1.56 trillion
this year through taxes, Sh786.6 billion from domestic borrowing while
external loans will bring in Sh373 billion.

 

The rest of the money will come from other domestic financing (Sh36.8
billion) and non-tax revenue (Sh66 billion).

 

To meet the tax collection targets, the Kenya Revenue Authority is expected
to be collecting Sh130 billion every month.

 

But it has only been collecting Sh105 billion on average in the past five
months, leaving it with a deficit of Sh125 billion by November 30.

 

Kenya's financial year starts on July 1 and ends on June 30 of the following
financial year.

 

The financial nightmare has seen the country open its doors wide to the
International Monetary Fund (IMF) to come back with its stringent loan
conditions, which became unpopular during the Moi regime.

 

The Treasury is planning to push wealthy countries and multilateral lenders
like the World Bank to cancel part of Kenya's ballooning public debt,
reflecting concerns about the burden of paying creditors from taxes that
have been hit hard during the coronavirus pandemic.

 

When President Mwai Kibaki took over, one of his major tasks was to wean the
country off IMF and World Bank-loan dependency.

 

Treasury Cabinet Secretary Ukur Yatani says Kenya is actively holding
discussions with the IMF "for a programme to anchor its fiscal policy to
stabilise the economy and address emerging vulnerabilities".

 

The country is also looking at joining the G20 Debt Service Suspension
Initiative in January, which would place it in the unpopular league of debt
defaulters.

 

But the CS has strongly dismissed reports that Kenya is broke.

 

Read: Broke Treasury targets Sh161bn budget cuts

 

"Kenya has not applied for the G20 Debt Service Suspension Initiative. Some
countries have faced challenges re-arranging debt service with creditors
with undesirable outcomes," Mr Yatani said.

 

"In this respect, Kenya seeks a cautious approach in evaluating the costs
and benefits of the offer and make informed decision to safeguard the
economic and financial standing of the country," Mr Yatani said.

 

He said this decision is expected early in the year.

 

The IMF revealed in its November update that it had held discussions with
Kenyan officials on the extended fund facility programme to support the next
phase of Kenya's response to Covid-19.

 

"The programme would provide resources to protect vulnerable groups and
would reduce debt vulnerabilities over time through a multi-year fiscal
consolidation centred on raising tax revenues," IMF Director, Communications
Department, Gerry Rice said.

 

"It would also advance the structural reform and governance agenda, and
address weaknesses in some State-owned enterprises that had been exacerbated
by the Covid shock. And finally, it would strengthen the monetary policy
framework and support financial stability."

 

Debt is a first charge on the revenues and high debt expenditures leave the
country with very little to spend on development.

 

The financial statements show that Kenya has paid a third of the Sh904
billion budgeted for public debt expenditures.

 

The national government plans to spend a total of Sh355 billion, or about
Sh30 billion per month on average, on development expenditure this year.

 

But it is the county governments that have borne the brunt of the revenue
shortfalls. Five months into the year, the Treasury still owes counties
Sh29.7billion in arrears for the previous financial year, 2019/20.

 

In the new financial year, counties have complained that they have gone
without Exchequer disbursements for more than two months.

 

To deal with the cash shortfalls, the government has ended the tax reliefs
that were meant to soften the blow for Kenyans from the impact of the
Covid-19 pandemic.

 

Mr Yatani said by the end of the year, the government will have foregone tax
revenues totalling Sh65 billion, over the course of the preceding seven
months.

 

"This in due course has and will affect the implementation of the
government's priority programmes under the Big Four Agenda and the recovery
of the economy in general," he said in a statement explaining the reasons
why the government has been forced to end the tax reliefs next week.

 

This means that from January 1, the corporate and individual tax rates will
revert to 30 per cent from 25 per cent, while the Value Added Tax (VAT) will
revert to 16 per cent from 14 per cent.

 

The immediate impact of these is goods and services will become more
expansive, by at least two per cent while salaried employees should expect
less money in their accounts due to higher Pay As You Earn (PAYE)
taxes.-Nation.

 

 

 

Tanzania: Bank's 164.9m/ - Plough Back Supports School Buildings

PRIME Minister Kassim Majaliwa today (December 28, 2020) received 11
classrooms, two teachers' offices and one special room for girls, all
constructed at 164.9m/- by the TPB Bank at Ndagala Primary School in Ruangwa
District, Lindi Region.

 

He also received three more classrooms and one teachers' office for Mkata
Primary School in Namahema village, in the district.

 

The Premier received the buildings with four new classrooms as well as other
seven renovated, during his tour to the district, hailing the TPB Bank for
the support on the education sector.

 

Speaking at the event, Mr Majaliwa asked teachers, parents and pupils to
make better use of the infrastructures so that other coming generations also
inherit them.

 

 

"We want to see these buildings last for a long time, let's keep them so
that they can be used by other coming generations... for students, they
should abstain from drawing on the walls," he said.

 

Speaking on the performance of the school, the Prime Minister said 53 out of
63 pupils who sat for Standard Seven exams in the school this year passed
the exams.

 

He, therefore orders that all pupils who passed the exams should be admitted
to secondary school studies and those who didn't make it be registered to
the Vocational training in the college that will be opened next year in
Ruangwa District.

 

On his part, the managing director of TPB Bank, Mr Sabasaba Moshingi said
the implementation of the project is part of their community plough back and
strategy in supporting the education and health sectors.

 

"Apart from classrooms and staff offices, the bank renovated stores, 28 pit
toilets, and as well manufactured school furniture such as 13 chairs and 13
tables," he said.-Daily News.

 

 

Tanzania: 13 Local Companies Now Manufacture Weighing Scales

WEIGHT and Measures Agency (WMA) has empowered 13 local companies to produce
easily acquired mechanical weighing scales, which are cheap to the public.

 

WMA Surveillance Manager, Mr Almachius Pastory told 'Daily News' in an
interview that was part of the agency's role to enable the local
manufacturers to become sustainable in business with machines locally
manufactured instead of expensive ones imported from abroad.

 

He said the agency has also provided them with skills and trainings,
underway to empower more companies to continue supporting the locals.

 

A mechanical scale is a weighing device that is used to measure the mass,
force exertion, tension and resistance of an object without the need for a
power supply.

 

 

Types of mechanical scale include spring scales, hanging scales, triple beam
balances and force gauges.

 

This year, he said the agency has enabled one factory to start manufacturing
check pump equipment used to verify fuel dispensing pump for checking the
delivery of the quantity delivered before the device was imported.

 

"To date, the company can produce 30 machines per month, which meet
international standards in the sense that we can export and increase
national revenue and capacity for domestic industries," he said WMA is an
executive agency responsible for consumer protection through verification of
weights and measures in Tanzania mainland.

 

The Mandate of WMA is to protect consumers concerning legal metrological
control which includes legal control of measuring instruments, metrological
supervision and metrological expertise in trade, health, safety and
environment.

 

The agency had also introduced a toll-free number 0800110097 which enables
whistleblowers to give them information whenever they find some
businesspeople whose temper with weigh scales, and use it whenever they
needed advice on issues related to weight and measurements.

 

Section 340 of the Weights and Measures Act, 2002 which was revised in 2016
required them to verify and certify weighing scales used in businesses to
ensure fairness.- Daily News.

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

New Year’s Day

 

01/01/2021

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

Seed co Int.

Dairibord

 


Starafrica

Medtech

Turnall

 


Seed co

 

 

 


 

 

 

 


 <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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