Major International Business Headlines Brief::: 08 November 2020

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Major International Business Headlines Brief::: 08 November 2020

 


 

 


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ü  Jack Ma's terrible week

ü  Five questions for Joe Biden on the economy

ü  US jobs growth slows in October as unemployment dips below 7%

ü  Self-employed people 'are being left in the dark'

ü  The foul-smelling fuel that could power big ships

ü  Amtrak, automakers vow to work with future Biden administration

ü  Factbox: How a Biden presidency would transform the U.S. energy landscape

ü  Volkswagen truck unit Traton finalises $3.7 billion Navistar acquisition
deal

ü  Buffett's Berkshire suffers in pandemic even as Apple boosts profit

ü  U.S. job growth slows; millions experiencing long bouts of unemployment

ü  African Development Bank Signs Grant Agreement to Support the Rwanda
Coding Academy

ü  Mozambique: Forestry Company to Abandon Rights to 54,000 Hectares

ü  Nigeria: Why Price of Onions Skyrocketed Across Nigeria

ü  East Africa: Weaker Currencies Increasing EA Debt Payments Burden

ü  Nigeria: Dangote Cement Posts N761.4 Bn Revenue in 9 Months

ü  Ethiopian Takes Delivery of A350-900 New Airbuses

 

 


 <http://www.nedbank.co.zw/> 

 


 

Jack Ma's terrible week

This week should have made Jack Ma China’s richest man again, and the stock
market debut of his company Ant Financial should have been the largest ever.

 

Things didn’t quite go according to plan though.

 

Ant was set for a dual listing on Thursday in Hong Kong and Shanghai worth
about $34.4bn (£26.5bn).

 

Instead, the listing was suspended after a last-minute grilling from China’s
financial regulators.

 

Mr Ma’s shares were reportedly worth about $17bn, and would have taken his
net worth to roughly $80bn.

 

“This deal was not only cleared for take-off, the wheels were literally off
the ground,” says Drew Bernstein, co-managing partner at Marcum Bernstein &
Pinchuk, which advises Chinese companies.

 

Some analysts saw the move as an attempt by Beijing to humble a company that
had become too powerful and a leader who had become too outspoken.

 

So how had Mr Ma - a man who came from meagre beginnings to become a symbol
of China’s potential and its growing technological strength - become a
threat?

 

Rags to riches

Mr Ma raised the ire of Chinese government officials at a financial
technology conference last month in Shanghai, where he likened China’s
state-dominated banking sector to “pawn shops” and lamented their lack of
innovation.

 

In some ways it was vintage Jack Ma, according to Duncan Clark, the author
of Alibaba: The House that Jack Ma Built.

 

“This is not the first time he’s gone off the leash. He just doesn’t like to
follow a particular script or narrative. And he likes to be provocative,
like any great storyteller,” he says.

 

Five things about Alibaba's Jack Ma

And like many great storytellers, he often draws on autobiographical detail.
He tells his own story as a tale of perseverance, but he never omits his
failures and struggles.

 

He grew up poor in Hangzhou, struggled in school and failed his university
entrance exams twice. When he tried to get work, he was knocked back by
dozens of employers. He applied to Harvard 10 times, but never got in.

 

Perhaps most famously, he applied to work at KFC, only to discover later
that of the 24 people they interviewed, he was the only one that didn’t get
a job.

 

He passed his university entrance exam at the third attempt and went to
teachers college. He stayed on for several years afterwards as an English
teacher. And it was on a trip to the US as a translator that he first
discovered the internet.

 

After one failed internet venture, he founded Alibaba in 1999 with loans of
$60,000 he cobbled together from friends.

 

Alibaba went on to enormous success, dominating Chinese e-commerce and
raising $21.8bn in its own initial share sale in 2014. He formally retired
from Alibaba last year.

 

Nowadays, of course, he is not always regarded as David taking on Goliath.

 

“He’s made his living out of being underestimated. That’s getting harder. As
you get more rich, and more powerful, expectations build,” says Mr Clark.

 

'Sheer scale of interest'

Expectations had certainly built for Ant Group’s market debut.

 

Ant’s best known service, Alipay, started as Alibaba’s payment platform. It
held payments in escrow until buyers had received their purchase. It was
central to Alibaba’s growth, because it enabled buyers to feel safer
shopping online. Now, it’s more widely used than cash or credit cards in
China.

 

The company was spun off in 2011 and later rebranded as Ant Financial and
then Ant Group. Alibaba suggested at the time the move was due to regulatory
changes in China. Jack Ma took a large stake in the spin-off company, which
expanded into other financial services such as insurance, wealth management
and consumer loans.

 

Many analysts think it’s not vindictiveness by officials that scuppered
Ant’s debut. Mr Ma’s comments may have been impolitic, Mr Clark says, but
they weren’t the only reason regulators were concerned.

 

“My gut feel was that it was the sheer scale of the interest in the
offering, and the way in which people were raising money, often through
debt, to invest,” he says.

 

News agency Reuters reported that banks were lending vast amounts of money
to retail investors.

 

Ant’s consumer finance division is more of a matchmaker than a bank. It
makes loans to small businesses and retail customers, but passes those loans
on to banks, which underwrite them.

 

Ant earns fees from the banks, but without the requirement to hold on to
reserves, and with less risk to its own balance sheet.

 

Cautious Chinese regulators have been concerned for some time about the
growing number of online lenders in China, and how they might affect the
broader financial system.

 

Under draft rules published on Monday by the People’s Bank of China, online
lenders must provide at least 30% of any loan they fund jointly with banks.

 

When the IPO was suspended the Hong Kong Stock Exchange said it was because
the company “may not meet listing qualifications or disclosure requirements”
and also suggested “recent changes in the fintech regulatory environment”
might have been an obstacle.

 

“This is a really, really big deal. But I don’t think that China is going to
bend for any one deal. They’re not going to put their financial systems at
risk for one deal,” says Drew Bernstein.

 

The way ahead

It seems almost inconceivable that Ant won’t come back with a new prospectus
and attempt another share market debut.

 

“The company’s going to have to restructure somewhat. Maybe commit some more
capital to the loan division, apply for more licences. Then they’ll be able
to come back to market,” says Mr Bernstein.

 

Some analysts think there will be pressure to spin off the consumer lending
division altogether.

 

According to some estimates, Mr Ma personally lost billions when the share
launch failed. But determination is a defining feature of his story.

 

A man who applied to Harvard 10 times seems unlikely to be dissuaded by a
single rejection from regulators.—BBC

 

 

 

Five questions for Joe Biden on the economy

Joe Biden will become America's 46th president after defeating incumbent
Donald Trump in a bitterly divisive election conducted with the country
still reeling from the coronavirus pandemic.

 

His plans for the next four years are likely to confront the challenge of a
divided government, however, as Republicans claimed key victories in
Congress. It's a situation that many analysts say leaves the most ambitious
parts of his agenda dead on arrival.

 

Here are five questions facing him when it comes to the US economy.

 

1. How will he save the US economy?

For months, economists have pleaded with Washington to fund more coronavirus
relief. But talks have been at an impasse, as Republicans reject the size of
the spending plans put forward by Democrats, despite some pressure from Mr
Trump for his party to compromise.

 

Republicans have indicated they will strike a deal before Mr Biden enters
office, claiming a final win for Mr Trump.

 

But if that deal falls short of Democratic hopes, as is likely, or the
recovery starts to falter, how much more will Mr Biden, who is known for
being relatively moderate, seek?

 

On the campaign, Mr Biden backed plans to forgive student loans, increase
Social Security cheques for pensioners, and provide money for small
businesses. He also offered more ambitious proposals, like investing $2tn in
areas such as clean energy, infrastructure and public transit.

 

But Republicans are likely to be even more steadfast in their resistance to
spending proposals from a Democratic White House, promising a tough fight.

 

2. How will he address inequality?

As income inequality in the US increases to its highest in more than 50
years, liberals have pressed for higher taxes on the rich, a proposal that
polls suggest is widely supported among the public.

 

During the campaign, Mr Biden called for reversing parts of the 2017 tax
cuts signed by Donald Trump, promising to raise the rate on corporations
from 21% to 28%, among other changes.

 

Outside groups estimated his plan could raise more than $3tn over the next
decade - money that could be welcome as the pandemic swells America's
national debt.

 

But while Mr Biden's proposals were not as far-reaching as some of the other
plans backed by members of his party, any effort to raise rates will face a
fierce fight from Republicans and business groups, who say higher taxes will
hurt the economy.

 

With the economy in a precarious state, will Mr Biden even bother pushing
the issue?

 

3. Can he convince America to take action on climate change?

CHINO HILLS, CA - OCTOBER 27: Herman Termeer (cq) watches the brushfire at
Chino Hills State Park from the roof of his house on Tuesday, Oct. 27, 2020
in Chino Hills, CA.

 

Climate change activists were disappointed when Mr Biden unveiled his first
plan to fight climate change.

 

But this spring he returned with a sweeping proposal, crafted with help from
some of his former critics, that has been described as the most ambitious
ever put forward by an American presidential candidate.

 

It included investing $400bn in renewable energy research, tightening car
pollution regulations, cracking down on corporate polluters, building
500,000 electric vehicle charging stations and eliminating carbon pollution
from power plants by 2035.

 

Republicans warn the plan will "bury" the US economy. But enacting even a
limited version, or focusing on regulation he can enact as president, would
mark a stark turn from the Trump years, when the White House opened public
lands to oil drilling, slashed regulations and walked away from global
efforts, like the Paris Climate Accord.

 

So which proposals will Mr Biden prioritise?

 

4. Will he end Donald Trump's trade wars?

BEIJING, CHINA - DECEMBER 04: Chinese President Xi Jinping (R) shake hands
with U.S Vice President Joe Biden (L) inside the Great Hall of the People on
December 4, 2013 in Beijing, China. U.S Vice President Joe Biden will pay an
official visit to China from December 4 to 5. (Photo by Lintao Zhang/Getty
Images)

 

 

Donald Trump's aggressive trade posture - attacking allies, criticising
international organisations, and applying new border taxes on imports from
countries around the world - was perhaps his most distinctive economic
policy.

 

There's little doubt Mr Biden will seek a reset, re-asserting America's role
as an ally and leader on the world stage, but how much will the substance
differ?

 

When it comes to China, he has pledged "aggressive" action and few expect
him to remove the tariffs Trump imposed on Chinese goods during his trade
war anytime soon. As my colleague Karishma Vaswani wrote before the
election, China expects no favours, regardless of the winner.

 

The former vice president has also endorsed the idea of tariffs in other
circumstances, outlining plans to charge a fee to countries that do not meet
climate and environmental obligations. And like Trump, he's promised to
revive American manufacturing, with stronger "Buy American" requirements for
government spending that could bring the US in conflict with international
trade rules.

 

International organisations and long-time allies alienated by Trump, like
Canada and Europe, can probably expect fewer attacks. But some tensions are
likely to linger. And in the case of the UK specifically, agreeing a trade
deal may become more difficult - not less - as Mr Biden has made clear such
a pact is not a high priority and may depend on what Brexit means for the
Irish border.

 

5. Will he break up Big Tech?

The practices of America's tech giants are under major scrutiny around the
world - and at home, where politicians on the left and right have called for
tougher rules in areas such as competition and consumer privacy.

 

Mr Biden has backed the break-up of companies as a "last resort" and
criticised Facebook and others for not doing enough to police disinformation
and other malign content on their platforms. He has said he supports
revoking the US law that protects tech firms from liability for content
posted on their platforms.

 

But he and his vice president Kamala Harris, who have received widespread
support in Silicon Valley, have been unusually quiet on this subject. They
did not, for example, showcase such positions on the campaign website.

 

Some of the changes under discussion require Congress to act. But the White
House wields significant power on its own to conduct competition probes,
enforce privacy and other regulations and can decide whether to fight
international actions, like efforts in the UK and elsewhere to collect more
tax from tech companies.

 

So, with his powers in other areas limited by the Republican presence in
Congress but pressure remaining to deliver to Democrats' liberal base, will
Mr Biden champion tech regulation or will the issue take a back seat?--BBC

 

 

 

US jobs growth slows in October as unemployment dips below 7%

The US economy added 638,000 jobs in October, which was the slowest growth
in five months but still helped to push the unemployment rate below 7%.

 

Jobs were added in leisure and hospitality as US lockdown measures were
eased, according to the US Bureau of Labor Statistics.

 

The unemployment rate fell to 6.9% from 7.9%, with 11.1 million Americans
out of work.

 

September's data was revised up to show that 672,000 jobs were created.

 

The results were better than expected. Economists polled by the Reuters
newswire had expected growth of 600,000 jobs in October.

 

unemployment

"Overall, there is probably more in this for the optimists than the
pessimists, but not by much," said Neil Birrell, chief investment officer at
money manager Premier Miton.

 

"The unemployment rate fell quite sharply and the labour force participation
rate ticked up, although hourly earnings were a bit weaker than expected."

 

But stocks on Wall Street opened down, with the Dow Jones Industrial Average
falling 0.4%, and the larger S&P 500 down 0.5%.

 

claims

The data came as US ballot counts indicated that a victory by challenger
presidential candidate Joe Biden was now more likely than a win by incumbent
president Donald Trump.

 

The race for the White House is coming down to who wins the few remaining
battleground states - Georgia, Pennsylvania, Nevada and Arizona.

 

A win in just Pennsylvania or two of the other four remaining states would
be enough to confirm Mr Biden as president-elect, barring any legal
challenge.

 

Mr Trump, meanwhile, needs to win Pennsylvania and three of the remaining
four states.

 

The US economy emerged quickly from the depths of the crisis triggered by
coronavirus lockdowns this spring, but full recovery remains a long way off.

 

Official figures published last week show the economy grew at a record 7.4%
in the three months to 30 September from the prior quarter, when it suffered
a severe decline.

 

But output remained 2.9% lower compared with the same period a year ago, and
some analysts have warned that the rebound could be running out of
steam.—BBC

 

 

 

 

Self-employed people 'are being left in the dark'

Chancellor Rishi Sunak has dramatically changed course by extending the
furlough scheme until the end of March and pledging more generous help for
self-employed people.

 

Support through the Self-Employment Income Support Scheme (SEISS) will be
increased, with the third grant covering November to January calculated at
80% of average trading profits, up to a maximum of £7,500.

 

But not everyone has welcomed the new measures. While some see them as a
lifeline, others are dismayed that they fail to qualify for much-needed
assistance.

 

Nick Rewcastle, of Peacehaven in Sussex, is one of the latter. Before the
pandemic struck, he was head of the communications team at Harlequins Rugby
Club.

 

He spent three months on furlough before being made redundant, then decided
to strike out on his own by founding his own sports PR consultancy, NRPR.

 

"The fact that I'm newly self-employed means I don't qualify for any
support," he told the BBC.

 

"I've managed to find a few clients and that's keeping me busy until
mid-December, but then in January it's looking pretty scary.

 

"I'm doing my own thing and it's brilliant, but as far as the government is
concerned, they don't care.

 

"It's disappointing. It doesn't make sense that people like me are being
left in the dark."

 

Mr Rewcastle is unimpressed by Mr Sunak's assurance that anyone made
redundant after 23 September can be rehired and put back on furlough.

 

"Harlequins aren't in a position to take anyone back," he says.

 

"He's saying all these people can go back into work, but businesses are so
unstable at the moment, people who've been made redundant are going to stay
redundant."

 

Greg Wilson, 35, of Wells in Somerset, has managed to qualify for some
support, although his income has taken a hit from the pandemic.

 

He is the owner and director of a "one-man band" company, Chew Valley
Generators, which supplies electricity to weddings and other events.

 

He would normally service about 120 events a year, but that fell to just six
this year. As a result, he took the decision to furlough himself.

 

"Furlough has been a lifesaver for myself and my small company, as we missed
every other grant," he told the BBC.

 

'One-size-fits-all'

However, like many other company directors, he normally pays himself a
salary of £1,000 a month and takes the rest of his income in dividends,
which are not included in his furlough.

 

That means the government is paying him 80% of his salary - that is, £800 a
month.

 

Mr Wilson objects to what he sees as the government's "one-size-fits-all"
approach to company directors.

 

"They class me as the same sort of director as Richard Branson," he says.
"But as well as being director, I'm also the tea-boy, the delivery driver
and the service engineer."

 

He describes the furlough extension as "amazing news". With the scheme now
ending in March and the events season running from April to October, he
hopes it will tide him over.

 

"We get to wait until April to see what happens," he says. "Fingers crossed,
we will be back."

 

'Head above water'

Jewellery designer Sarah Herriot, 58, also runs her one-woman set-up as a
limited company, but decided that furloughing herself would be bad for her
business in the long term.

 

"I've been working six days a week trying to keep my business afloat," she
told the BBC. "I've worked very hard at it and to be fair, I've managed to
keep my head above water."

 

Before the onset of coronavirus, she mainly sold her jewellery at shows and
fairs, but these have all been cancelled, so she is now left with her
website.

 

"That's not really working, so I've been surviving on commissions and bits
and pieces of work," she says.

 

The only support she has received is a local discretionary business grant
from Camden council in London, because she was able to demonstrate that she
had lost 70% of her income during the pandemic.

 

Ironically, she says, she would have been able to make a claim under the Job
Support Scheme, which had originally been set to replace the furlough scheme
this month, but that has now been postponed.

 

"I would have had to go down to one day a week to get that. That's the first
thing that I could have applied for," she says.

 

"But now we're back to furlough, so I'm out in the cold again.

 

"It makes me angry. It's so depressing, it beggars belief. All these
businesses going to the wall and you wonder whether you're going to be
next."—BBC

 

 

 

The foul-smelling fuel that could power big ships

An enormous engine, the height of three floors, growls loudly at a test
centre in Copenhagen. Nearby a team of engineers supervise it from a control
room resembling a ship's bridge.

 

Usually such an engine would be propelling a large ship across the sea, but
this one is being prepared to take part in a ground-breaking project.

 

Engineers want to see if they can make it run on liquid ammonia.

 

Ammonia has long been a key component in fertiliser, cleaning products and
refrigerators.

 

But in the search for new cleaner fuels, the foul-smelling substance has
emerged as a frontrunner to power ocean-going ships.

 

Around 90% of all goods traded globally are transported by sea. But ships
are gas guzzlers. Marine transport produces around 2% of global greenhouse
gas emissions.

 

The International Maritime Organization (IMO) wants to halve emissions by
2050, from 2008 levels. That requires a substantial shift to green
technology.

 

Brian Soerensen, a research and development chief at Man Energy Solutions,
says several fuels are being explored: "One of the options we believe will
be ammonia. Methanol could be another one, biofuel could be a third."

 

Ammonia has an advantage as it contains no carbon, so can burn in an engine
without emitting carbon dioxide.

 

By early 2024, Man Energy Solutions plans to install an ammonia-ready engine
on a ship. The first models will be dual-fuel, able to run on traditional
marine gas oil as well.

 

While it is less energy-rich than today's marine fuels, liquid ammonia is
more energy-dense than hydrogen, another zero-emission fuel.

 

Hydrogen has already powered cars, planes and trains. It's cheaper to
produce than ammonia, but harder to handle as it has to be stored at minus
253C. Ammonia becomes liquid below minus 34C and at higher temperatures if
under pressure.

 

"Ammonia sits very nicely in the middle," says Dr Tristan Smith, an expert
in low carbon shipping from University College London. "It's not too
expensive to store and not too expensive to produce."

 

There are challenges. Burning ammonia can create polluting nitrous oxides,
therefore the exhaust needs cleaning up. It is also toxic, so requires
careful handling and storage.

 

However, safety know-how and some port infrastructure are already in place,
says Mr Soerensen, because the fertiliser industry is well-established.

 

"It's being transported seaborne today. We know how to handle ammonia on
board a ship, not as a fuel, but as a cargo."

 

Meanwhile, Norwegian shipping company Eidesvik plans to install ammonia fuel
cells on a vessel by late 2023. Like batteries, these generate electrical
energy to power a motor. Project partner Prototech has already begun
developing a test version.

 

The supply ship, Viking Energy, will sail round-trips of 345 miles (555km).
The hybrid vessel will also use liquefied natural gas (LNG).

 

Vermund Hjelland, vice president of technology and development at Eidesvik,
says fuel cells are more efficient and cost-effective, for such short,
predictable routes. "You can have smaller tanks and get more kilowatt-hours
out of the same amount of fuel.

 

"The picture is different compared to a super-tanker," he adds. "It very
much depends whether weight is an issue."

 

Around $55bn (£42bn) of ammonia is manufactured annually, mostly for
fertiliser. But the industry has a heavy environmental footprint, accounting
for 1.8% of global CO2 emissions. Fertilisers can also harm water and air
quality.

 

Manufacturing ammonia requires nitrogen and hydrogen gases. Often this
hydrogen is extracted from natural gas (methane). The process releases
carbon and needs lots of power.

 

New, cleaner ways to make ammonia are emerging. One method, blue ammonia,
involves capturing and storing the carbon. More promising, green ammonia,
eliminates the use of fossil fuels altogether.

 

In the heart of rural Jutland, western Denmark, research is under way at a
brand new pilot plant in Foulum.

 

Haldor Topsoe, which makes catalysts used in the production of ammonia,
together with scientists from Aarhus University, is aiming to make ammonia
from water, air and renewable electricity.

 

"Those three feedstocks you can find in many places around the world," says
Pat Han, Haldor Topsoe's director of research.

 

"Instead of utilising fossil energy... we simply take wind and solar energy,
and within minutes, we have a liquid fuel at the other end," says Mr Han.

 

Inside a transparent box, the size of a shipping container, sits a maze of
pressure gauges and insulated silver pipes.

 

Haber Bosch process diagram

"We use electricity to electrolyse water and generate hydrogen. And then
we're using air to add nitrogen to the system," explains Behzad Partoon, a
postdoctoral researcher from Aarhus University. Later these gases will be
combined to make ammonia.

 

New technology called a solid oxide electrolysis cell (SOEC) streamlines
these steps, by combining the nitrogen purification system with the hydrogen
production process,

 

"We're going to save more energy and reduce the energy intensity of ammonia
production," says Mr Partoon. "It makes the whole process much cheaper."

 

Now they're testing the technology's stability over longer periods of time
and making adjustments, before scaling up to industrial quantities of
production.

 

Currently power comes from the grid. "It's not far from reality with real
green energy," says Anne Mette Frey, an associate professor at Aarhus
University. "Everything is set up."

 

Green ammonia is being developed elsewhere, including in Australia and
Chile.

 

There are other potential uses including cleaner fertiliser production and
the storage of surplus wind and solar energy.

 

Haldor Topsoe expects green ammonia to be commercially available as early as
2022 or 2023.

 

But marine transport may face other hurdles. A Global Maritime Forum report,
suggests that meeting the IMO's 2050 goal, by shifting primarily to green
ammonia fuel, would need more than a $1 trillion of investment.

 

Dr Tristan Smith, one of the report authors, says that is achievable. As
renewable electricity and technology costs come down, green ammonia will
become more competitively priced, he says. "By the late-2020s, maybe
mid-2030s, we will have some relatively low prices. But that could still be
more expensive than oil."

 

Man Energy Solutions' Brian Soerensen believes governments will have to help
drive the transition. "A certain amount of emission tax will have to be in
place."--BBC

 

 

 

Amtrak, automakers vow to work with future Biden administration

WASHINGTON (Reuters) - U.S. passenger railroad Amtrak and American
automakers on Saturday pledged to work with the incoming administration of
Democrat Joe Biden, who wants to boost mass transit and green vehicles.

 

“To get the economy moving and help Amtrak and our employees through this
unprecedented situation, Congress must act now on pandemic relief and
economic stimulus funding,” said Amtrak’s chief executive, Bill Flynn.

 

Flynn told Congress last month he expects Amtrak’s revenue to fall by more
than 70% from pre-coronavirus levels in 2021, as it considers new sweeping
cuts and says it needs up to $2.9 billion in additional U.S. support.

 

Flynn said Amtrak looks forward to working with Biden, a regular Amtrak
rider for decades who has a train station named after him in Wilmington in
his home state of Delaware.

 

U.S. transit and airline demand has been devastated by the coronavirus
pandemic. Congress had considered but did not provide another $25 billion to
airlines in October that would have kept at least 32,000 workers on
payrolls.

 

Major airlines are considered making a new push for assistance when Congress
takes up the issue again, but declined to comment on Saturday after U.S.
television networks declared Democrat Biden the winner of the presidential
election over Republican incumbent Donald Trump.

 

Mass transit systems want $32 billion in federal assistance. Biden has vowed
to provide U.S. cities with 100,000 or more residents “high-quality,
zero-emissions public transportation options” by 2030.

 

U.S. automakers also promised to work with Biden, who has pledged to spend
billions of dollars to add 500,000 electric charging stations, fund battery
research and to restore the full $7,500 EV tax credit for buyers of Tesla
Inc TSLA.O and General Motors Co GM.N vehicles that has expired.

 

Automakers may clash with Biden over the fate of fuel efficiency
requirements through 2025 and penalties for not meeting mandates.

 

GM said on Saturday it looks forward to working with his administration and
Congress to “advance our vision of an all-electric, zero-emissions future.”

 

Fiat Chrysler Automobiles NV FCHA.MI said it looks forward to working with
Biden and the new Congress "to strengthen the automotive industry and build
a more secure future for our employees, customers and society."

 

Biden wants to help cities invest in “e-scooters and other micro-mobility
vehicles and integrate technologies like machine-learning optimized traffic
lights,” and wants Congress to approve a big infrastructure package next
year.

 

Biden also backs providing incentives for consumers to trade less efficient
vehicles for U.S.-built electric vehicles and tax breaks for automakers and
parts manufacturers to build or retool factories for EVs.

 

 

 

Factbox: How a Biden presidency would transform the U.S. energy landscape

(Reuters) - Democrat Joe Biden has won the November U.S. presidential
election, according to several major networks. Here are some of the changes
that could occur in U.S. energy policy under his administration:

 

Biden has shown an interest in multilateral diplomacy similar to previous
Democratic administrations. That could mean an eventual path for OPEC
members Iran and Venezuela to get out from under Washington’s sanctions and
start pumping again, if the right conditions are met.

 

In Iran, that path could include a partnered approach between Washington and
Europe, similar to a deal struck under Obama’s administration.

 

In Venezuela, Biden appears likely to continue to favor sanctions to
pressure the regime of President Nicolas Maduro, but could increase
diplomatic efforts to end the impasse by negotiating a new election or
power-sharing with the opposition.

 

Outgoing President Donald Trump’s unilateral sanctions on the two countries
have taken around 3 million barrels per day of crude oil off international
markets, a little more than 3% of world supply.

 

Biden’s campaign has not detailed how it would approach these issues.

 

LINE TO OPEC

Biden lacks the chummy rapport that Trump had developed with Saudi Arabia’s
defacto leader Crown Prince Mohammed bin Salman. That country is the biggest
voice in the Organization of the Petroleum Exporting Countries, meaning
Biden may not engage as closely on the group’s production policy. He is also
more likely to rely on quiet diplomatic channels for influencing OPEC than
Trump’s Twitter-centered approach.

 

Biden’s campaign has not yet detailed how it would approach these issues,
but any influence he would wield as president would likely be in service of
the same goal - a moderate oil price. Any U.S. president needs affordable
fuel for consumers. And for Biden, the price would need to be high enough to
make clean energy alternatives to fossil fuels competitive in support of his
ambitious climate plan.

 

Trump had been more engaged with the Organization of the Petroleum Exporting
Countries than most of his predecessors. He has sometimes influenced OPEC
policy with his tweets and phone calls, arguing for an oil price low enough
for consumers but high enough for drillers.

 

His sanctions also weakened the influence of OPEC hawks Venezuela and Iran
within the group, removing two big historical hurdles to a pro-Washington
OPEC policy. That concentrated power with leading producer Saudi Arabia,
along with Russia, part of the group known as OPEC+.

 

A GREEN TRANSITION?

A Biden administration would look to re-enter the Paris Climate Agreement,
an international pact negotiated during the Obama administration to fight
global warming that Trump pulled away from saying it could hurt the U.S.
economy.

 

Biden has also vowed to bring U.S. emissions down to net zero by 2050,
including by bringing emissions from the power industry to net zero by 2035
- a goal that will be tricky to accomplish without a Democratic majority in
Congress.

 

Biden’s view is that climate change is an existential threat to the planet,
and that a transition from fossil fuels can be an economic opportunity if
the United States moves fast enough to become a leader in the clean energy
technology.

 

Trump’s administration had acted to weaken or eliminate emissions targets,
including the U.S. Environmental Protection Agency’s softening of vehicle
emissions standards, and its rescinding of former President Barack Obama’s
Clean Power Plan requiring cuts from the electric power industry. Transport
and electricity together make up around half the country’s greenhouse gas
emissions.

 

While European oil and gas companies like BP BP.L and Royal Dutch Shell
RDSa.L have already begun implementing strategies for a global energy
transition, U.S. majors like Exxon Mobil XOM.N and Chevron CVX.N have
remained focused on the traditional energy business - sheltered politically
by Trump's leadership in Washington.

 

FEDERAL DRILLING

While Trump had sought to maximize domestic oil and gas production, Biden
has promised to ban issuance of new drilling permits on federal lands and
waters in order to fight global climate change.

 

The United States produced nearly 3 million barrels of crude oil per day
from federal lands and waters in 2019, along with 13.2 billion cubic feet
per day of natural gas, according to Interior Department data.

 

That amounts to about a quarter of total domestic oil output and more than
an eighth of total U.S. production of gas. A federal ban on new permits
would mean those numbers trend toward zero over a matter of years.

 

There would also be an impact on public revenue federal oil and gas
production produced about $12 billion in public revenue in 2019, divided
between the U.S. Treasury, states and counties, tribes, and cleanup funds.

 

New Mexico, for example, received $2.4 billion in disbursements last year,
much of it going to its historically underfunded education system. The
state’s Democratic Governor Michelle Lujan Grisham told Reuters this spring
she would seek a waiver from Biden’s government to allow continued drilling
if he was elected.

 

Biden’s camp has been mum on whether such a waiver program would exist.

 

 

 

Volkswagen truck unit Traton finalises $3.7 billion Navistar acquisition
deal

(Reuters) - Volkswagen AG's VOWG_p.DE truck unit Traton SE has agreed to pay
about $3.7 billion for the outstanding shares of U.S. truck maker Navistar
International Corp in a deal announced on Saturday that would extend its
reach in North America.

 

Finalisation of the deal comes after Traton said on Oct. 16 it had agreed to
raise its bid for Navistar to $44.50 per share, up from $43, as it closed in
on an acquisition that would create a global manufacturer.

 

The agreement which brings Navistar together with the MAN, Scania and
Volkswagen trucks brands is in tune with trends in the truck industry which
has been seeking ways to share the costs of developing low emissions
technology.

 

Traton already holds a 16.7% stake in Navistar and at the increased offer
price Traton would be paying about $3.7 billion for the shares in Navistar
it doesn’t already own, valuing the U.S. business as a whole at around $4.4
billion.

 

Major shareholders in Navistar including Icahn Capital LP and MHR Fund
Management LLC have agreed to vote in favor of the deal, the U.S. truck
maker said in a separate statement bit.ly/3ezUrUS.

 

The Volkswagen group will give Traton a loan of 3.3 billion euros, repayable
over 12-18 months, to fund the deal.

 

 

 

 

Buffett's Berkshire suffers in pandemic even as Apple boosts profit

(Reuters) - Warren Buffett’s Berkshire Hathaway Inc reported lower quarterly
operating results on Saturday and said the coronavirus pandemic may cause
further damage, even as gains in stocks such as Apple Inc fueled a more than
$30 billion overall profit.

 

Some Berkshire operating businesses have rebounded from their spring depths,
and analysts were encouraged that revenue fell just 3% from a year earlier.

 

But COVID-19, hurricanes and low interest rates hurt profit from insurance
businesses, which include the Geico auto insurer, and the Precision
Castparts aircraft parts unit projected thousands of additional job losses.

 

Berkshire also repurchased a record $9.3 billion of its underperforming
stock in the third quarter, as Buffett remained unable to find the huge
acquisitions the 90-year-old billionaire wants to spur growth.

 

Buybacks totaled $16 billion from January to September, and appeared to
total at least $2.3 billion in October because Berkshire’s share count
dropped.

 

“The market will be encouraged by the buybacks,” said Cathy Seifert, an
analyst at CFRA Research with a “hold” rating on Berkshire. “Many companies
halted buybacks to preserve resources during the pandemic, though because
Berkshire doesn’t pay a dividend the amount it is returning to shareholders
pales bit.”

 

Third-quarter operating profit fell 32% to $5.48 billion, or about $3,488
per Class A share, from $8.07 billion a year earlier.

 

Net income rose 82% to $30.1 billion, or $18,994 per Class A share, from
$16.5 billion, or $10,119 per share. Revenue totaled $63 billion.

 

NEW USES FOR CASH

Berkshire reported $24.8 billion of gains from investments such as Apple,
whose stock rose 27% in the quarter and at $111.7 billion is by far
Berkshire’s biggest stock holding, comprising 46% of its portfolio.

 

Nevertheless, it appears Berkshire may have sold some Apple stock because
the stake should have been a few billion dollars higher, based on previously
disclosed stakes, if none was sold.

 

Net results are volatile because an accounting rule requires Berkshire to
report unrealized gains and losses on its stocks. The company posted a $26.3
billion second-quarter profit, but lost nearly $50 billion in the first
quarter.

 

Despite the buybacks, Berkshire ended the quarter with $145.7 billion of
cash and equivalents.

 

The Omaha, Nebraska-based company has also found new ways to spend cash,
investing $6 billion in five Japanese trading houses and backing the initial
public offering of data storage company Snowflake Inc.

 

“It’s a good quarter, and I’m pleased by the level of cash deployment,” said
Jim Shanahan, an Edward Jones analyst with a “buy” rating on Berkshire. “If
we have a second wave of the pandemic, Buffett is still positioned to take
advantage.”

 

JOB LOSSES

Precision, which Berkshire bought in 2016 for $32.1 billion in its
largest-ever acquisition, has been hit hard by the downturn in the aerospace
industry, including in the second quarter when Berkshire took a $9.8 billion
writedown.

 

Third-quarter pretax profit fell 80%, and Berkshire expects the unit will by
year end have shed 40% of its workforce from the end of 2019.

 

That equates to roughly 13,400 jobs, or 3,400 more than Berkshire previously
disclosed had been lost.

 

While Berkshire took no major third-quarter writedowns, it said the pandemic
could force additional writedowns.

 

Insurance profit fell 58% to $802 million, reflecting lower premiums at
Geico, COVID-19, Hurricanes Laura and Sally, and lower income from
investments as interest rates tumble.

 

Geico awarded drivers $2.5 billion of credits on policy renewals this year,
and Berkshire said its accounting for those credits should hurt underwriting
results through March 2021.

 

Profit fell just 8% at the BNSF railroad, as cost-cutting helped offset
lower shipping volumes. “That positions it well for when revenue and volumes
recover,” Shanahan said.

 

Results improved in Berkshire’s energy businesses, and profit at its
real-estate brokerage more than doubled as low interest rates drove more
people to buy homes.

 

 

 

U.S. job growth slows; millions experiencing long bouts of unemployment

WASHINGTON (Reuters) - The U.S. economy created the fewest jobs in five
months in October and more Americans are working part time, underscoring the
challenges the next president faces to keep the recovery from the pandemic
on track as fiscal stimulus dries up and new COVID-19 cases explode across
the country.

 

 

The Labor Department’s closely watched employment report on Friday also
showed 3.6 million people out of work for more than six months. Democratic
presidential candidate Joe Biden took the lead over President Donald Trump
in the battleground states of Pennsylvania and Georgia for the first time on
Friday, putting him on the verge of winning the White House.

 

“Initially, the recovery was breathtaking, but has lost much steam,” said
Sung Won Sohn, an economics professor at Loyola Marymount University in Los
Angeles. “With no fiscal stimulus and the resurgence of coronavirus, job
gains will be tougher to achieve in the future.”

 

Nonfarm payrolls increased by 638,000 jobs last month after rising by
672,000 in September. That was the smallest gain since the jobs recovery
started in May and left employment 10.1 million below its peak in February.

 

Employment was held back by the departure of 147,000 temporary workers hired
for the 2020 Census. A 271,000 increase in leisure and hospitality jobs
accounted for about two-fifths of the payrolls gain last month. Employment
in professional and business services increased by 208,000, with about half
in temporary help services. Manufacturing added 38,000 jobs, while
construction payrolls increased 84,000.

 

The loss of temporary Census jobs and further layoffs at cash-strapped state
and local governments cut overall government employment by 268,000 jobs.
Economists polled by Reuters had forecast payrolls advancing by 600,000 jobs
in October.

 

Though private payrolls increased 906,000 last month, the labor market
recovery has a long way to go.

 

“Employment is still only at its late 2015 level,” said Gus Faucher, chief
economist at PNC Financial in Pittsburgh, Pennsylvania. “And at October’s
pace, it would take about 16 months for employment to return to its
pre-pandemic level.”

 

A contested election reduces the chances of another coronavirus rescue
package from the government this year. Even if more fiscal stimulus is
agreed on, it will likely be smaller than had been anticipated before the
election.

 

That shifts the spotlight to the Federal Reserve. The U.S. central bank kept
interest rates near zero on Thursday. Fed Chair Jerome Powell acknowledged
the pace of improvement in the economy and labor market had moderated,
noting that the recovery would be stronger with more fiscal support.

 

“The Federal Reserve is going to end up doing more stimulus rather than
scaling it back,” said James Knightley, chief international economist at ING
in New York. “This is especially so if political tensions remain high and
get in the way of a swift fiscal response.”

 

Stocks on Wall Street were trading lower. The dollar slipped against a
basket of currencies. U.S. Treasury prices fell.

 

RISE IN PART-TIME WORKERS

More than $3 trillion in government coronavirus relief for businesses and
workers fueled a historic 33.1% annualized rate of economic growth in the
third quarter. That followed a record 31.4% pace of contraction in the
April-June quarter.

 

Lack of fiscal stimulus and spiraling new coronavirus infections put the
economy on a sharply slower growth path heading into the fourth quarter.
Restaurants and gyms have moved outdoors, but cooler weather and the
resurgence in COVID-19 infections could leave many in trouble.

 

Even if state and local governments do not impose new restrictions on
businesses, consumers are likely to stay away, fearing exposure to the
respiratory illness. The United States set a one-day record for new
coronavirus cases on Wednesday with at least 102,591 infections, according
to a Reuters tally.

 

Though small and medium-sized businesses have suffered most from the
pandemic, large corporations have not been spared. Exxon Mobil last month
announced 1,900 layoffs in the United States. Boeing said it expected to
eliminate about 30,000 jobs, 11,000 more than previously planned, by
end-2021.

 

The unemployment rate fell to 6.9% from 7.9% in September. But it continued
to be biased down by people misclassifying themselves as being “employed but
absent from work.” Without this recurring mistake, the government estimated
the jobless rate would have been about 7.2% in October.

 

The number of people out of work for more than six months surged by 1.2
million in October. There were 6.7 million people working part time for
economic reasons, reflecting reduced hours because of slack work or business
conditions. That was up 383,000 from September.

 

The share of permanently unemployed increased to 40.9% in October from 35.6%
in the prior month.

 

“A rising share of temporary layoffs are becoming permanent, signaling the
long-lasting scarring effects from the crisis,” said Kathy Bostjancic, chief
U.S. financial economist at Oxford Economics in New York.

 

 

 

African Development Bank Signs Grant Agreement to Support the Rwanda Coding
Academy

The African Development Bank has signed a grant agreement with the Ministry
of ICT and Innovation in Rwanda to support the Rwanda Coding Academy, set up
to develop top technology talent to drive a booming, innovation-driven
digital economy in the East African nation.

 

The Rwanda Coding Academy was set up as a proof-of-concept model school for
developing ICT and other 21st century skills for high school level students
who want to pursue a career in coding and computer science. The Academy
selects high performing students and trains them in advanced software
programing and cyber security skills to facilitate their emergence as
world-class programmers.

 

The grant funding of $150,000, from the Rockefeller Trust Fund which the
Bank administers, will be directed to the implementation of activities,
including acquisition of computers and furniture equipment for an
ultra-modern innovation center of excellence, internet connectivity, teacher
training and organization of job career orientation events.

 

The Academy's learning approach aims to strengthen the school-to-work
transition by focusing on competency-based learning and providing technical
skills as well as soft skills, such as agile learning, critical thinking and
self-leadership.

 

Rwandan Minister for ICT and Innovation, Paula Ingabire, said her government
welcomed the partnership with the African Development Bank. "The Rwanda
Coding Academy is part of our broader vision to grow a local pool of highly
talented Pan-African workforce in science, technology and innovation," she
said adding that the Academy's learning model requires robust digital
infrastructure and a dynamic teaching approach from the instructors

 

The grant will also be used to finance on-job training for teachers and
equipping the school with the necessary tools to facilitate the learning
experience of students.

 

"This collaboration between the Bank and the Government of Rwanda aims to
demonstrate that empowering African youth with demand-driven skills and
providing them with opportunities to be part of the ICT ecosystem as early
as possible, will enable them to claim their space in the digital sector and
be equal drivers of innovative ideas that are shaping the present and the
future of Africa and the globe," said Nnenna Nwabufo, Acting Director
General for the African Development Bank's Eastern Region.

 

"This proof-of-concept has profound implications on how the education sector
can adapt an effective response to the persistent skills mismatches in the
labour market, not only in Rwandan but in Africa at large," she added.

 

About The Rwanda Coding Academy

 

The Rwanda Coding Academy (RCA) is a special model school established in
2019 by the Government of Rwanda as a hybrid of general education, and
technical and vocational training (TVET). The RCA specializes in teaching
software development, embedded systems programming and cyber security to
students who are "born to code". http://www.rca.ac.rw/

 

About the African Development Bank:

 

The African Development Bank Group is Africa's premier development finance
institution. It comprises three distinct entities: the African Development
Bank, the African Development Fund and the Nigeria Trust Fund. On the ground
in 41 African countries with an external office in Japan, the African
Development Bank contributes to the economic development and the social
progress of its 54 regional member states. www.afdb.org-African Development
Bank.

 

 

 

Mozambique: Forestry Company to Abandon Rights to 54,000 Hectares

Maputo — The Norwegian owned forestry company Green Resources has renounced
the occupation of 54,000 hectares of land, in four districts in the northern
Mozambican province of Niassa, in order to avoid conflicts over land,
according to a report on Radio Mozambique.

 

Green Resources had rights to pine and eucalyptus plantations in the
districts of Lichinga, Chimbunila, Lago, Sanga, Muembe, Mandimba and Ngaúma.

 

The renunciation occurred on Tuesday through an agreement that involves
communities of four of these districts - Sanga, Chimbonila, Ngaúma and
Mandimba - as well as district governments and other stakeholders involved
in the management of natural resources.

The Niassa delegate of the NGO, the Rural Mutual Aid Association (ORAM),
Leonardo Abilio, said the transfer of the land to the communities will be
supported by the United States Agency for International Development (USAID)
to the tune of seven million meticais (about 96,000 US dollars) up to
November next year.

 

"Green Resources wants to work in a very responsible way and we, as ORAM,
are ready to support through the funds that we have", he said.

 

Green Resources operates monoculture tree plantations in Mozambique,
Tanzania and Uganda. Green Resources Mozambique says that its guiding goals
are to establish and manage sustainably commercial forestry plantations, in
order to generate forestry products for domestic use and export, as well as
to conserve natural forests and biodiversity, and to ensure the social and
economic development of the areas where it operates.

 

But Green Resources has frequently been involved in land disputes with local
communities, accused of usurping community land that was mostly used for
food production, and of establishing its commercial plantations alongside
rivers and other water sources, next to roads and housing, and even inside
areas of native forest.

 

 

 

 

Nigeria: Why Price of Onions Skyrocketed Across Nigeria

The price of a bag of onions has shot up by over 200 per cent in many
places.

 

Soaring demands, flooding and poor storage facilties are the main causes of
the skyrocketing price of onions in Nigeria, a PREMIUM TIMES check has
revealed.

 

Households in Nigeria now have to dig deeper into their pockets to buy
onions, one of the most commonly consumed vegetables in the country as
prices have risen sharply due to a biting shortage.

 

In the past month, prices have been on a steady rise as scarcity hits
markets across the country.

 

Consumers have taken to social media to trade complaints about the surging
prices, comparing price rates in different regions of the country.

 

The price of a bag of onions has shot up by nearly 200 per cent, according
to price checks done by this reporter in markets in at least five states
across Nigeria.

Market insight

 

During a visit at the Olojudo market, Ido Ekiti in Ekiti State, both sellers
and buyers who believe the spike is seasonal gave an insight into how onion
prices and availability is increasingly becoming a problem.

 

Prices differ in different regions depending on the availability of onions.

 

"The price of onions is usually higher this time of the year, November to
December because this is the time when farmers grow this crop," Mallam Dogo,
an onion dealer, said.

 

"A bag of onions sold at the rate N18,000 before is now sold for N58,000,"
he said.

 

Meanwhile, Angela Nwokeforo, a civil servant who was at the market to buy
onions, lamented that a N100 worth of onion would no longer be enough to
cook a meal for her family due to the hike in price.

"N100 worth of onion is not enough for me to prepare a meal for my family
again," she said. "As you can see now this onion I am holding is N500 but
before I can get this quantity at the rate of N100."

 

"I think this increase is happening every year. I've seen that by the end of
the year, onions are disappearing from the market," she said

 

Another consumer, Idown Agbaje, said "Government should try to find a
solution to this inflation and make the crop available to the people.

 

"During the ember months, onions are usually very scarce and the ones you
can see are always very high and our government is not even making any plans
in providing any storage facilities for the produce to be available all year
round," she said.

 

In Oko market in Asaba, Delta State, dealers attributed the scarcity of
onions to a lack of storage facilities resulting in the price hike.

 

Musa Aliyu, an onion dealer, said "because of inadequate storage facilities,
onion storage has been a major challenge especially by this time this year".

 

"As (of) at last year, a bag of onion was sold for N6,000, at the beginning
of this year it was sold at the rate of N25,000 and now a bag is sold at
N70,000," he said.

 

He urged the government to build storage facilities for traders to store
their perishable crops.

 

Other markets

 

At Dei Dei market in Abuja, a bag of onions which was previously sold for
N15,000 now costs an average of N40,000 to N42,000, Mallam Lawal, an onion
dealer at the market said.

 

Saidu Baba, who trades the commodity at Ose market in Onitsha, Anambra
State, linked the hike to flooding and seasonal scarcity.

 

"This is the period of onion scarcity but I will like to let you know that
flooding also affected it this year," he said. "The price has gone up from
N22,000 to N70,000 now," he said.

 

Checks also revealed that in Ondo State, a bag of onions, which was
previously sold at the rate of N20,000 now costs N62,000.

 

At Farin-Gada market in Jos, Plateau State, a bag of onion which sold for
N17,000 before now costs an average of N60,000.

 

Why are the prices rising?

 

Meanwhile, the vice president horticulture, in the All Farmers Association
of Nigeria (AFAN), Nana Bashir, also affirmed the position of the retailers.

 

Speaking with this reporter on Wednesday, she said the high cost of onion is
caused by flooding and lack of storage facilities.

 

"Storage facilities are what is causing the increment. Apart from that,
COVID-19 and flooding also affected the production this year.

 

"The major onion producing states are Kano, Jigawa, Kaduna, Bauchi, Plateau,
Sokoto and Kebbi. And most of these areas are affected by flooding this
year," Mrs Bashir said.

 

"Onions production is from February, March and April, you will find out
that, in this period we were in total lockdown and people could not access
their farmland.

 

"So production was also slowed down but with the little one, we had to
produce in the rainy season floods set in although by this time each year,
we experienced an increase in the prices of onions. But it has never been
bad like this year," she said.

 

"Most of the onion production is done in the dry season but farmers still
produce during the rainy season but not at the large scale. The reason is
that onions don't like too much rain. Unfortunately, this year, many areas
where onions were planted have been affected by the floods," she said.

 

According to her, Nigeria can stop the yearly increment of the prices of
onions "if there is a good storage facility for onions in the country."

 

She urged the government to provide storage facilities and "also try
empowering the onion sector".

 

"You know, onion is very perishable up till now I don't think we have gotten
a commercialised way of storing onions," she added. "But the government can
provide storage facilities for the farmers and also empower the sector as
they did for rice and in other sectors."

 

Onions

 

Onion, which belongs to the family Alliaceous, is one of the consumed
vegetable crops in Asia and Africa, especially Nigeria.

 

It is a perishable crop that cannot be stored for long after harvest in an
ordinary state.

 

It is used in the preparation of popular delicacies and almost every family
in the country use it as a major ingredient in their diet.

 

In Nigeria, onions are grown mainly in the northern part of the country,
namely Kano, Kaduna, Sokoto, Jigawa, Plateau, Bauchi and Kebbi.

 

Some of its numerous health benefits include lowering of cholesterol, blood
sugar and blood pressure levels.-Premium Times.

 

 

 

East Africa: Weaker Currencies Increasing EA Debt Payments Burden

East African economies are facing a potential rise in debt servicing burden
owing to the depreciation of regional currencies currently weighed down by
uncertainties in the global economy, disruption of global trade by the
Covid-19 pandemic and political jitters linked to the region’s election
cycles.

 

Monetary authorities are concerned about stability of the currencies, with
fears their persistent fall in value against major foreign currencies could
make repayment of external loans in foreign currencies an arduous task.

The resultant increase in interest payments is expected to be a substantial
drain on resources which could have otherwise been used to finance
development programmes.

 

By June this year, EA economies (Kenya, Uganda, Tanzania and Rwanda) had
accumulated over $86 billion worth of public debt, with Kenya holding 77.11
per cent of the debt, followed by Uganda (17.4 per cent), Rwanda (five per
cent) and Uganda (0.4 per cent).

The increase in the EA debt is largely explained by the countries’ attempts
to grow the economies through borrowed funds spent mainly on infrastructural
development amid revenue shortfalls.

Kenya’s public debt stands at Ksh7.06 trillion ($70.6 billion) of which
domestic and external debt stands at Ksh3.4 trillion ($34 billion) and
Ksh3.66 trillion ($36.6 billion) respectively.

 

TO THE GREENBACK

 

The Kenya shilling has lost 7.4 per cent of its value against the dollar for
the last 10 months to stand at Ksh108.82 on October 28 from Ksh101.3 against
the greenback on December 31, 2019.

 

Ugandan shilling depreciated by 1.77 per cent against the US dollar to trade
at Ush3,730.43 from Ush3,665.21 while Rwandan Franc lost 1.96 per cent of
its value to rwf953.39 from Rwf935 against the greenback during the period
under review. The Tanzania shilling gained marginally by 0.2 per cent
trading Tsh2,297.65 against the dollar from Tsh2,303 December 31, 2019.

The Bank of Uganda (BoU) cautiously noted in its state of the economy report
(September 2020) that while the country’s currency is expected to remain
stable on the account of matched corporate activity there is already a bias
to depreciation due to Covid-19-related market uncertainty.

“The economic outlook is extremely uncertain largely because of the
unpredictable intensity and duration of the Covid-19. The pandemic could
persist beyond the second half of 2020 or there could be a more severe
second wave, with adverse consequences for the global economy,” the Bank
said.

 

“Going forward, the exchange rate is likely to remain stable on account of
matched corporate activity; with a bias towards depreciation due to
Covid-19-related market uncertainty.”

 

According to BoU the Ugandan shilling has been adversely impacted by o lower
foreign direct investment inflows coupled with sustained portfolio
investment outflows both occasioned by the impact of the coronavirus on
business activity, investor confidence and risk appetite.

The World Bank through its Africa Pulse Report dated October 2020 classified
Kenya and Rwanda’s risk of debt distress as ‘high’ and ‘moderate’
respectively while Tanzania and Uganda were considered as ‘low’ risk.

GLOBAL TRADE SHRINKAGE

 

In 2018, Kenya’s risk of debt distress increased from low to moderate,
having breached three indicators (external debt service-to-export ratio,
external debt service-to-revenue ratio, and the present value (PV) of
external debt to export ratio).

Analysts at Cytonn Investments Ltd attributed the shilling depreciation to
the uncertainty in the global economy and also the decline in dollar in
inflows as global trade is impacted.

 

“Going forward the shilling shall remain under pressure due to continued
uncertainty globally making people prefer holding dollars and other hard
currencies and a deteriorating current account position,” the market report
said.

 

However, the depreciation by the Rwanda Franc was relatively subdued in the
beginning of this year due to lower economic activities caused by Covid-19
pandemic.

 

In June the Franc weakened by 1.6 per cent against the dollar although this
was slower compared to the 2.2 per cent depreciation in the same period
(June) last year, according to the National Bank of Rwanda (NBR).

According to the Bank of Tanzania, the country’s stock of public debt,
(domestic and external), increased to Tsh824.5 billion ($353.38 million) on
June 30, from Tsh808.8 billion ($346.66 million) in the same period last
year, largely on account of exchange rate depreciation.

 

It is argued that the Covid-19 pandemic, volatilities in the financial
markets and the global disruptions of demand and supply in international
market will likely weigh on local currencies in the region.

 

The EAC’s annual headline inflation is projected at 4.5 percent in 2020
compared with 3.8 per cent in 2019 according to the NBR.

In August, Moody's Investors Service downgraded the foreign and local
currency issuer ratings of the Government of Tanzania to B2 from B1 and
changed the outlook to stable from negative.

 

The downgrade to B2 in Moody’s view is that governance remains very weak,
raising risks to Tanzania's credit profile. According to the agency the
stable outlook balances it’s relatively large and diversified economy
against institutional weaknesses which undermine fiscal strength.-East
African.

 

 

 

Nigeria: Dangote Cement Posts N761.4 Bn Revenue in 9 Months

Dangote Cement Plc on Saturday posted a revenue of N761.4 billion in nine
months ending September 30, 2020, indicating a 12 percent increase over
revenues for the corresponding period in 2019, according to a statement by
Mr Michel Puchercos, Group Chief Executive Officer, Dangote cement.

 

The statement made available to the News Agency of Nigeria (NAN) in Lagos
also announced sales totaling 19.21 million tonnes for the period which
ended on Sept. 30, 2020 as against 18.02 million in 2019, showing a 6.6 per
cent increase for the period.

 

Puchercos, who expressed delight over the achievements of the company in
terms of EBITDA and strongest third quarter volumes, said: "The Cement
Group's revenue went up by 12 per cent to N761.4 billion compared to N679.8
billion in 2019 with domestic operations accounting for N535.51 billion
which compared to N467.88 billion up by 14.5 per cent. Pan-Africa operations
contributed N232.61 indicating a 9.1 percent increase over N213.20 billion
in 2019.

Despite a challenging environment, Group volumes for the nine months were up
by 6.6 per cent and group EBITDA was up 17.1 per cent, at a 46.6 per cent
margin.

 

"This quarter has really shown the ability of Dangote Cement to meet the
strong recovery of the cement market in Nigeria and Pan-Africa after a
challenging Q2. In Nigeria, we have witnessed a strong appetite for real
estate investment and the recovery of infrastructure spending, including
more concrete roads.

 

"Sales volumes in Nigeria were up 40 per cent in the quarter and Pan-Africa
reached a record high EBITDA margin of 24 per cent in the quarter.

"We continue to focus on our export strategy and are on track to ensure West
and Central Africa become cement and clinker independent, with Nigeria as
the main supply hub. Clinker exports have steadily been ramping up in Q3
after our maiden shipment in June 2020, whilst land exports have also
resumed," he said.

 

"In the period under consideration, Dangote Cement has exported 7 clinker
vessels from Nigeria via the Apapa export terminal, while plans are on track
to commission the Port Harcourt export terminal before the end of the year,"
he added.

 

Puchercos said: "Dangote Cement's strategy to offer high quality products at
competitive prices is meeting customers' expectations in Nigeria and across
the continent, where we continue to deploy excellent marketing initiatives
and operational excellence.

 

"We remain committed to protecting our staff and communities by being fully
compliant with health and safety measures in all our territories of
operation. We are focused on adapting to the rapidly evolving markets in
which we operate.

 

Analysis of the company's unaudited results for the period indicated that
Nigerian operations accounted for 11.92 million tonnes, an increase of 10.2
per cent compared to 10.82 million tonnes in the corresponding period in
2019. Pan-Africa operations accounted for the balance of 7.47 million
tonnes, an increase of 3.7 percent over the same period in 2019.

 

On quarter basis comparison, Nigerian sales volumes went up by 39.9 per cent
in the third quarter driven by strong demand and pull effect of its Bag of
Goodies Season 2 National Consumer Promotion. (NAN)-Vanguard.

 

 

 

Ethiopian Takes Delivery of A350-900 New Airbuses

Addis Ababa — Ethiopian Airlines has received today two of the 10 new Airbus
A350-900 it ordered in 2017, bringing the total number of its Airbus fleet
to 16.

 

Chief Operating Officer at Ethiopian, Mesfin Tasew said the airline has been
operating A350-900 for the last four years and the addition of these two new
aircraft will increase the total to 16.

 

Ethiopian is taking delivery of these aircraft at a time when the entire air
transport industry is under a big challenge due to COVID-19, he noted.

 

According to reports, many airlines have been down-sizing their operations.
But Ethiopian on the other hand is adding new aircraft and expanding
operation.

"This shows that Ethiopian Airlines is founded on a strong vision, capacity
to execute its vision even though it has similar challenges to other
airlines. "

 

The Chief Operating Officer pointed out that Ethiopian had, among others,
transported around five tons of humanitarian aid, medical supplies and IT
equipment from France to Addis Ababa in partnership with Airbus foundation
and other donors from Europe.

 

The humanitarian aid, medical supplies and equipment were accordingly
delivered to Ministry of Health and a humanitarian organization which runs
children's hospital in Ethiopia.

 

Health State Minister, Seharela Abdullahi said on the occasion such kinds of
support are crucial in countries like Ethiopia with poor infrastructure.

 

Citing the critical role played by the Ethiopian since the beginning of
COVID-19 outbreak, she said "I would like to thank the tremendous support of
Ethiopian Airlines for the fight against COVID-19."-ENA.

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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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
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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