Major International Business Headlines Brief::: 31 March 2021

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Major International Business Headlines Brief::: 31 March 2021

 


 

 


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ü  The businesses counting the cost of Brexit red tape

ü  Xiaomi to invest $10bn in electric vehicle race

ü  Google Maps to start showing eco-friendly routes

ü  Liberty Steel nationalisation 'an option' to save jobs

ü  Goldman Sachs managers paid for hampers for staff

ü  Retailers call for 'Shop Out to Help Out' scheme when stores reopen

ü  Easter egg sales 'soar by almost 50%'

ü  In Archegos fire sale, Credit Suisse, Nomura burned by slow exit

ü  Asian stocks poised for first monthly loss since Oct on bond rout

ü  Google to contribute $25 mln to new EU fund to fight fake news

ü  Fujifilm CEO Komori, who oversaw push into healthcare, to step down in June

ü  Oil rises on expectations OPEC+ will maintain supply discipline

ü  Mozambique: Offshore Gas Finds Offered Major Promise for Mozambique - What Went Wrong

ü  Nigeria: What to Know About Naira 'Devaluation', Nigeria's Unclear Exchange Rate Policy

ü  Kenya: Wealthy Households Add to Kenya Power Theft Migraine

ü  Ethiopia to Trial GERD's Electricity Generation

 

 

 

 


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The businesses counting the cost of Brexit red tape

The UK's new trading relationship with the European Union (EU) might only be a few months old.

 

But some businesses are struggling to adjust to the new trading landscape outside of the customs union and single market.

 

Firms across four different sectors share their stories of rising costs, extra paperwork and packages that never arrive.

 

Ben Taylor and Alice Liptrot have come a long way since they founded their knitwear brand Country of Origin straight out of university.

 

The couple now employ four other people and sell clothes wholesale to independent shops and to customers online.

 

About a third of sales, Ben says, came from customers in the EU.

 

"But since the end of January, it's tailed off completely."

 

Ben says the firm has been caught up in an "onslaught of admin" and about 80% of orders to the EU after Brexit have seen customers having to pay extra charges.

 

What are the new rules?

New rules have come into force for those in the UK either importing from, or exporting to, Europe.

 

Exactly what licenses are needed or what duties must be paid depends on what is being exported, its value, where the product originates from and to which country it is being sent, according to government guidance.

 

>From 1 January, the UK government introduced a rule that VAT must be collected at the point of sale rather than the point of import.

 

This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).

 

One customer in the Netherlands was asked to pay an additional €100 (£88) on their order, Ben says, for "government fees", with no further explanation from customs agents.

 

Ben adds that the firm is not an "inexperienced" exporter, having shipped goods to Japan and the US. He says the lack of clarity on why certain charges are being raised is "frustrating".

 

The next step? "To get some kind of operation going in Europe - moving stock to dispatch from there because this just isn't sustainable," he says.

 

"I just hope this doesn't put off any other young person who wants to start a small business today."

 

Diane Collison has been responsible for helping her firm, Collison Cut Flowers, adapt to post-Brexit changes.

 

The Norfolk cut flower producer imports 35 million bulbs a year - mostly tulips from Holland, scented stock and lilies.

 

The government recently pushed back introducing new checks on most imported plants until 2022. But some of the bulbs imported by Collison's Cut Flowers count as "high-risk", so they have already had to make some changes.

 

Diane has registered the business as a "place of destination", where plants could be checked by local health teams, and for an EORI number so the firm can bring EU goods into the UK.

 

Day-to-day, she must email a freight forwarding business details of expected deliveries before they hit UK ports. That's on top of registering invoices and plant health certificates with UK authorities.

 

"Each load is probably costing us about £200 extra now - and at about 150 per year that's not an insignificant amount of money," Diane says.

 

The firm may soon need to increase costs for customers.

 

"But I'm just pleased we've managed to get our imports in and what we've done is working," Diane says, adding the firm has only seen deliveries delayed by a few hours so far.

 

Steve Howell's Foodlynx sells British sausages, bacon and bread to hotels and restaurants across the EU.

 

Typically it sends one or two trucks out a week and up to six in the peak summer season. But the Dorset-based firm suffered a three-day delay to the one shipment it has made since Brexit.

 

Its truck was held up at the port of Le Havre in France as customs officials questioned whether certificates for some animal products had been filled in correctly.

 

It was moved to another cold storage unit nearby while the issue was sorted out. Steve was charged €3,914 for storage and admin costs.

 

Although recent statistics show that UK exports to the EU dropped significantly in January, Steve believes other factors are at play.

 

"Demand dropped off due to Covid last year anyway, plus we, like many others advised our customers to stock up before Christmas to avoid these types of delays.

 

"Now, the customers are running low on stock and we're still trying to battle through paperwork, new labelling regulations and compliance."

 

"The whole point [of Brexit] was to take back control of our country," Steve says.

 

"We have succeeded in doing exactly the opposite because British exporters are completely and utterly blown out the water."

 

Martyn Wilson set up his classic car parts firm 12 years ago and about 60% of orders are shipped to the EU.

 

VAT is now applied at the point of sale for parts under £135 - on top of duty charged on car parts at 24%.

 

Citroen Classic Car Parts typically sends out 130 items per month - but difficulties arose quickly.

 

"For couriers, I have to supply customers' contact details - and often have to write to them in French and German to get those, which is a bit of a drama we never had to deal with before."

 

Deliveries into Italy, for example, have never arrived and others have been returned due to customers not paying the new charges.

 

"It has impacted us certainly from the mental point of view. It's a lot of additional stress and you're continually on deadlines, trying to get good reviews from customers and make sure things get delivered."

 

Martyn points out that he is able to deliver car parts to the US in less than 24 hours - and no tariffs are applicable on those under $700.

 

"I will muddle on through in the best possible way I can and maybe it'll push me to think outside the box a bit.

 

"Perhaps in the long-run it might be good for us, but we're going through the pain barrier."--BBC

 

 

 

Xiaomi to invest $10bn in electric vehicle race

Chinese phone maker Xiaomi is wading into electric vehicles with a $10bn (£7.3bn) investment over ten years.

 

The Chinese tech giant's goal is to "offer quality smart electric vehicles," it said on Tuesday.

 

Xiaomi is the world's third largest smartphone maker behind Apple and Samsung, according to data firm Canalys.

 

The company will be entering a fiercely competitive electric car market that also includes rivals Apple and Huawei.

 

Xiaomi will set up a wholly-owned subsidiary with an initial investment of about $1.5bn, with the company's chief executive Lei Jun heading up the new venture.

 

"The decision was made after numerous rounds of deliberation among all our partners, and this will be the final major entrepreneurial project of my life," he said in a statement.

 

So far, the company has given no indication about whether it will produce budget models or target the top end of the market.

 

There are already hundreds of companies in China jostling for a share of the world's leading market for electric cars.

 

Planned or existing models in China range from the tiny Hong Guang Mini EV, which retails for $4,500 to the new high-end electric brand Zeekr, which is owned by China's biggest carmaker Geely.

 

Foreign manufacturers are also looking to build EVs for Chinese consumers.

 

Tesla is already delivering its Model Y to China from its Shanghai factory, while Ford has plans to manufacture the electric version of its Mustang there.

 

Partnering up

Other Chinese technology companies have also signalled their intention to make cars, or to partner with existing carmakers to produce new driving technologies.

 

Search engine giant Baidu announced in January it would also launch an electric car business.

 

China's e-commerce giant Alibaba has formed an EV joint venture with SAIC, while ride-hailing app Didi Chuxing has partnered with automaker BYD to make electric vehicles specifically designed for its services.

 

Data provider S&P Global Platts estimates that "new energy vehicles" will account for 20% of total new car sales in China by 2025.--BBC

 

 

 

Google Maps to start showing eco-friendly routes

Google Maps will start directing drivers to routes it calculates to be the most eco-friendly based on a list of factors.

 

The search engine said it will highlight journeys that generate the lowest carbon footprint using mainly traffic data and road inclines.

 

Google said the feature would launch first in the US later this year "with a global expansion on the way".

 

The new feature is part of its commitment to fight climate change.

 

When launched, the default route on the Google Maps app will be the "eco-friendly" option, unless users choose to opt out of it.

 

When alternative routes are significantly faster, Google will offer choices and let users compare estimated emissions.

 

"What we are seeing is for around half of routes, we are able to find an option more eco-friendly with minimal or no time-cost trade-off," Russell Dicker, a director of product at Google said.

 

The search engine, owned by Alphabet, said it uses emissions data based on testing across different types of cars and road types, drawing on insights from the US government's National Renewable Energy Lab (NREL).

 

Its road data factors in slopes and inclines from its own Street View cars feature along with aerial and satellite imagery.

 

Zone warnings

>From June, Google will start warning drivers about to travel through low emissions zones where some vehicles are restricted. These are common in countries such as Germany, France, the Netherlands, Spain and the UK.

 

"From Amsterdam to Jakarta, cities around the world have established low emission zones - areas that restrict polluting vehicles like certain diesel cars or cars with specific emissions stickers to help keep the air clean," Google said in a blog post.

 

 

media captionThe Google chip that lets users make tiny hand gestures to control devices

"To support these efforts, we're working on alerts to help drivers better understand when they'll be navigating through one of these zones."

 

Google Maps users will be also able to compare car, cycling, public transport and other travel options in one place instead of toggling between different sections in a new feature being launched this year.

 

The US tech giant says it has long developed sustainable practices to benefit the environment, and has pledging to be carbon-free by 2030 to helping cities track greenhouse gas emissions.--BBC

 

 

 

Liberty Steel nationalisation 'an option' to save jobs

The UK government has restated it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

 

On Sunday, the government rejected a request for £170m in financial support for the firm.

 

But that is due to concerns about the "very opaque" structure of its owner GFG, a minister said.

 

Business Secretary Kwasi Kwarteng said the government could not put money into a "black box".

 

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

 

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

 

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

 

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

 

There are about 3,000 staff directly employed at Liberty's UK sites, which include Rotherham, Motherwell and Newport, and a further 2,000 jobs at GFG Alliance in the UK.

 

The £170m request was made for working capital for Liberty Steel plants.

 

Mr Gupta's empire employs 35,000 people worldwide.

 

GFG Alliance said most of its businesses around the world "are performing well and generating positive cash flow, supported by the operational improvements we've made and strong steel, aluminium and iron ore markets."

 

"We are taking prudent steps across our global portfolio to manage resources while we try to negotiate a formal standstill agreement with Greensill's administrators and refinance the businesses.

 

"In the UK, GFG Alliance has invested significantly to rescue steel and aluminium plants saving thousands of jobs in industrial communities across the United Kingdom, that would have otherwise been lost."

 

The GFG spokesperson added that Liberty Steel had been hit by the coronavirus crisis due to a drop in demand for aerospace products compounded by energy prices.

 

The company plans to restart steelmaking in the UK around the 6 April.

 

Green plans

Mr Kwarteng said "all options are on the table" to keep Liberty Steel jobs and plants going, including nationalisation.

 

"We think that the steel industry has a future in the UK," he said.

 

The UK's industrial decarbonisation strategy means the government wants to see "clean steel" produced, he said.

 

"Electric arc furnace-produced steel of the kind that Liberty makes - we think that has a future in the UK," Mr Kwarteng said.

 

He said that while the future of the steel market is "uncertain", the government's "net zero" carbon plan "has changed the dynamics in terms of the government's relationship to parts of the economy."

 

Map of Liberty Steel plants and employees

Alasdair McDiarmid, operations director at the Community union, said options open to the government included directly supporting the business, facilitating a takeover as happened with British Steel, or nationalisation.

 

He said it was "far from clear how a nationalisation of Liberty Steel would work or what the costs of that would be to the taxpayer".

 

"Liberty Steel is a very complicated organisation with lots of different entities, all loaded with millions if not billions of debt, and mortgaged to the hilt with many different creditors having a call on different parts of the business.

 

"It seems to us that the first option to look at would be whether the business can be supported as is, because that would be likely to be the least disruptive, and probably the least costly to the taxpayer," Mr McDiarmid added.

 

Steel industry analyst Kathryn Ringwald Wildman said GFG had "found a difficult patch" in their finances after the Greensill collapse which meant they were no longer able to service their debts.

 

Both companies were now in "a very precarious position" she said, with GFG finding it "quite difficult" to find alternative sources of funding due to how much debt it has, the complexity of its structure, and the future of the steel market.

 

"All three of the major steel companies in the UK are hoping to secure government funding for the medium to long-term development of the industry," she said.

 

"It is extremely difficult for the company at the moment even though they have been a model of steel-making in the industry."--BBC

 

 

 

 

Goldman Sachs managers paid for hampers for staff

Managers at investment bank Goldman Sachs have paid for sympathy hampers to be sent to over-worked staff.

 

Team leaders at the bank paid out of their own pockets for the one-off hampers, full of fruit and snacks, as first reported by the Guardian.

 

The story comes after a group of 13 US employees mocked up a presentation in which they told of 95-hour working weeks and "inhumane" conditions.

 

Goldman Sachs declined to comment on the story.

 

But the BBC understands that team leaders at the investment bank sent the sympathy hampers to all their team members.

 

The Guardian quoted one unidentified staff member as saying Goldman should be doing more to recognise the gruelling demands placed on the lowest-ranking staff rather than "a gesture" from managers.

 

Rival investment firms have also been handing out upmarket perks.

 

Jefferies offered 1,124 of its lowest-ranking staff free workout equipment including Peloton bikes worth nearly £2,000, while investment bankers at Credit Suisse are getting a one-time $20,000 bonus for dealing with an "unprecedented" workload during the pandemic.

 

Serious complaints

Last week, Goldman chief executive David Solomon addressed concerns raised by a leaked presentation by 13 aggrieved first-year bankers, who claimed that 95-hour working weeks and abuse from co-workers had created "inhumane" working conditions for new staff.

 

In a company-wide message sent to staff, Mr Solomon said he took the complaints "very seriously" and promised to improve working conditions at the firm.

 

"We want a workplace where people can share concerns freely... if there are any issues, do not hesitate to reach out to ask for help," he said.

 

He pledged that the bank would ramp up efforts to hire more junior bankers, transfer staff to stretched teams, and strengthen the enforcement of a no-work-on-Saturday rule.—BBC

 

 

Retailers call for 'Shop Out to Help Out' scheme when stores reopen

A group of big names in fashion and retail are campaigning for the government to provide more support for small independent shops.

 

They want the chancellor to offer a "Shop Out to Help Out" scheme to get consumers spending again when non-essential shops reopen on 12 April.

 

It would cover 50% of a shopper's costs, up to £10, on Monday to Wednesdays for a month.

 

And it would only apply at physical stores with fewer than 10 staff.

 

The "Save The Street" campaign says independent retailers won't survive without it. The Treasury did not comment on whether it would pursue the idea, but said it had protected "millions" of retail jobs during the pandemic.

 

The proposed scheme - which would work like the Eat Out to Help Out restaurant discounts last year - is backed by the likes of beauty entrepreneur Charlotte Tilbury, fashion designer Henry Holland and retail consultant Mary Portas.

 

"We would be kidding ourselves to think that everything will be fine for independent retailers once they reopen on 12 April," says Ross Bailey, the entrepreneur leading the campaign.

 

"Now it is the government's responsibility to support these businesses and ensure they are given a fighting chance to bounce back - the government needs to show that all businesses matter, not just big businesses."

 

The small shops in battle with the retail giants

Retail sales stage partial recovery in February

Easter egg sales 'soar by almost 50%'

The British Retail Consortium estimates that non-essential retail stores lost around £22bn in sales in 2020 due to lockdown measures, as footfall declined by 40%.

 

Independent shops - many of which lack a strong online presence - were hit particularly hard as they faced prolonged closures and restrictions.

 

'We really badly need the support'

Clare Oakey is the co-founder of Frippery Lifestyle Boutique, an independent fashion and homeware retailer in Colchester.

 

She and her business partner Kim will spend up to £1,000 on reopening promotional activities, including printing a hundred 10%-off discount vouchers for the local barber to give away, putting flower arrangements and sweets in the shop, and offering customers who make a purchase goodie bags.

 

Ms Oakey says that five retail chain outlets on the same high street will not be reopening on 12 April, along with a number of independent stores. So even though people in Colchester generally like supporting small retailers, more needs to be done to get the public spending on the High Street again.

 

"We've prioritised keeping our business open by paying invoices to suppliers to keep the company running long term, but the honest truth is that it's been financially tough on a very personal level for me and my business partner," Clare tells the BBC.

 

"We really badly need the support - any form of help to let us catch up and break even, in terms of a scheme that incentivises the customers. We're nothing without customers."

 

The only nice thing, she says, is that local independent businesses have come together to help each other out.

 

For example, while the Frippery has been closed in the most recent lockdown, a nearby artisan coffee shop, Sir Isaacs Coffee House, has offered a click-and-collect service on its behalf.

 

It meant the Frippery could continue serving its customers online, while the coffee shop got more exposure and hopefully sold a few extra coffees.

 

'Immediate action needed'

Retail analysts are also seriously concerned about the situation facing Britain's independent shops.

 

"Independent retailers have had a tumultuous year and immediate action is needed to avoid a high street apocalypse," says Natalie Berg, retail analyst at NBK Retail.

 

A Shop Out to Help Out Scheme would encourage consumers to "ditch their screens" and support their local shops, she says.

 

"This is a unique opportunity to redefine our high streets, but without government support we'll be bracing for a retail bloodbath."

 

Retail expert Kate Hardcastle agrees, pointing out that independent retailers were the ones who "really demonstrated their worth" in the early days of the pandemic in coming to their communities' aid when other retailers didn't have their online shopping offerings ready.

 

She is concerned that everyone will forget about them now.

 

"Just telling people to shop small as has been previous campaigns might serve as a reminder, not an action," she tells the BBC.

 

"Just as the case was with Eat Out to Help Out, we need to see our government support small businesses longer term.

 

"I'd love to see initiatives to make it easier for small businesses to open up on the High Street and rejuvenate."

 

She says the collaborative approach used by the Frippery and its neighbours is the right one: "The future of small businesses has to be one of collaboration and not feeling they have to justify their worth to consumers all the time, but being able to focus on a brilliant offer because they can afford to survive."

 

A Treasury spokesman said: "We've supported retailers across the UK though out the outbreak, protecting millions of jobs - and will continue to do so in the months ahead.

 

"Shops won't pay any business rates until July, can continue to furlough staff until September, and are receiving Restart Grants of up to £6,000."--BBC

 

 

 

Easter egg sales 'soar by almost 50%'

Consumers have been splashing out ahead of Easter as people prepare for weekend celebrations amid eased lockdown restrictions, research suggests.

 

Easter egg sales have climbed £48m, soaring almost 50% to £153m compared with last year, according to figures from analysts Kantar.

 

Meanwhile shoppers have already spent £37m on hot cross buns.

 

M&S, Asda and Thorntons are among those reporting a big rise in demand.

 

"There are signs of people making a special, even symbolic, effort this year," said Fraser McKevitt, head of retail and consumer insight at Kantar.

 

"Grandparents might be showing up with additional treats after 12 months of restrictions."

 

Shoppers rush to buy Easter trees as lockdown eases

Retail sales stage partial recovery in February

M&S said sales of its enlarged range of online Easter gifts are up 3,000%, while Easter egg sales are up 86%.

 

Meanwhile an Asda spokesman said: "We've seen many customers choosing to buy their Easter eggs early and buying more than they would normally - the average number of eggs bought ranging between three-five eggs per person.

 

"As a result, we're predicting sales of over 19 million Easter eggs together with 33 million individual hot cross buns as Brits prepare for what looks to be their biggest Easter yet."

 

Thorntons said it had seen 200% rise in sales online compared to 2019, before the pandemic began.

 

It said consumers were purchasing "extra special" treats for loved ones, such as handcrafted Easter eggs, while "more people than ever" are using its icing service to share personal messages on eggs.

 

Eating outdoors

According to Kantar's survey, 61% of people are looking forward to socialising with friends again this Easter, and 23% of households are planning to dust off the barbecue over the weekend if the weather allows.

 

Research from Sainsbury's published last week suggested three out of five people plan to host Easter lunch outside, while four out of five said if there was wet weather it would not stop them going ahead with their outdoor plans.

 

Meanwhile more than half of households said they will swap an Easter roast for a less traditional lunch this weekend, to make the most of the rule of six, which allows families and friends to celebrate in their garden.

 

A third are planning barbecues, according to Sainsbury's, while a quarter will order takeaways and a fifth will have picnics.

 

Beyond the Easter boost, grocery sales rose 7.4% in the 12 weeks to 21 March compared with a year earlier, although that was a marked slowdown compared with previous months.

 

In fact sales slipped 3% in the four weeks to 21 March compared with a year earlier.

 

But that marked the first national lockdown when concerned shoppers stripped supermarket shelves bare at the start of the pandemic.

 

"This time last year, Brits were adjusting to schools and offices closing and making extra trips to the supermarket to fill their cupboards for lockdown," pointed out Mr McKevitt.

 

"To put that into context, shoppers made 117 million fewer trips to the supermarket this month compared with those fraught weeks in March 2020."

 

He said for the bigger picture it was important to look at the numbers in relation to two-year growth figures.

 

"While grocery growth has slowed against 2020, sales are still much higher than the same 12 weeks in 2019 - up by 15.6%," he said.

 

"As restrictions on dining out continue, the average household spent an extra £134 on take-home groceries compared with this period two years ago."

 

Supermarket performance

Iceland saw the strongest growth during the period - excluding online-only Ocado - with a jump in sales of 14.3%.

 

Aldi was the worst performer with growth of just 1.5% in the 12-week period.

 

Tesco increased sales by 8.5% and gained share to capture 27.1% of the market, up by 0.3 percentage points year.

 

Asda inched up its market share from 15.0% to 15.1%.

 

Ocado's sales surge saw its growth climb 33.9%, but online grocery sales slowed in the past four weeks, with signs that shoppers are returning to physical stores.

 

Kantar's figures suggest shoppers made 13 million additional trips to supermarkets this month compared with February.

 

It said confidence had returned particularly among the over-65s, with the age group making 143,000 fewer online orders.—BBC

 

 

In Archegos fire sale, Credit Suisse, Nomura burned by slow exit

While banks including Goldman Sachs, Morgan Stanley and Deutsche Bank were able to exit their trades with Archegos Capital relatively unscathed, Credit Suisse and Nomura have been burned in the fire sale.

 

The blowup of the Archegos fund, a family office run by former Tiger Asia manager Bill Hwang, is still reverberating across the financial system, with global banks so far standing to lose more than $6 billion.

 

Switzerland's Credit Suisse (CSGN.S) and Japan's Nomura (8604.T) are expected to bear the brunt of that.

 

They had hoped that rival banks that had also financed and processed trades for Archegos would hold off from exiting their positions, but were left exposed when Goldman Sachs and Morgan Stanley began unwinding their trades with the fund, according to three people with direct knowledge of the matter.

 

So far, it appears the banks that got out of the trades the quickest have suffered the least and Goldman Sachs may even have profited, said three sources familiar with the trades.

 

Goldman Sachs declined to comment.

 

 

Credit Suisse has yet to confirm its losses, but the sources said the Swiss bank faces losses of up to $4 billion. Nomura, Japan’s largest investment bank, warned on Monday of a possible $2 billion loss.

 

The Archegos saga is a major blow for both banks, which had been trying to expand their investment banking and trading businesses in the United States, and underscores the challenges of striving to compete with hefty U.S. rivals on their own turf.

 

"Goldman Sachs and Morgan Stanley got out quicker and got better prices. They know more about what's going on. Credit Suisse and Nomura don't have the same standing," said Viola Risk Advisors analyst David Hendler.

 

Morgan Stanley and Nomura declined to comment. Credit Suisse did not respond to requests for comment.

 

 

Free from regulatory scrutiny as a family office gambling Hwang’s personal fortune, Archegos had amassed large positions in stocks, including ViacomCBS, using risky derivatives known as “total return swaps.”

 

Those swaps allow investors to bet on stock price moves, often with high levels of leverage, without owning the underlying shares. Instead, banks buy and hold the stocks and give the fund a performance-related return. The fund has to secure the trades by giving the bank collateral, such as cash or equities.

 

Archegos had assets of around $10 billion but held positions worth more than $50 billion, according to one of the sources, suggesting Hwang was highly leveraged. Leverage is risky because just as it magnifies potential returns, it magnifies losses too.

 

Archegos declined to comment beyond its statement on Monday when it said this was a "challenging time."

 

SHARE SALE SPIRAL

 

Investor disappointment in last Wednesday's stock sale by media giant ViacomCBS (VIAC.O), to which Archegos was heavily exposed, appeared to be the catalyst for its meltdown, the sources said.

 

As ViacomCBS's stock slumped last week, falling 30% from last Monday's close to around $68 on Thursday morning, alarm bells went off at Archegos' banks, the sources said.

 

They called on Archegos for more collateral to cover the increased exposure on its swap positions, but the fund did not have enough liquidity. By failing to meet the margin call, the fund had defaulted under the terms of its trades with the banks.

 

In a bid to stave off a crisis, Hwang arranged a conference call with the banks later on Thursday to ask them to agree to hold off selling the shares that underpinned his swap trades in the hopes they would bounce back, two of the sources said.

 

Some of the banks, including Credit Suisse, favored holding off, but Goldman Sachs and others were keen to start selling shares to free up cash so Archegos could pay them what was owed.

 

No agreement was reached and Goldman began offloading shares before the market opened on Friday. It sold more than $10.5 billion of shares held in Viacom, Baidu Inc (9888.HK) and Tencent Music Entertainment Group (TME.N), among others.

 

Morgan Stanley also offloaded $8 billion worth of shares.

 

All told, Archegos' banks sold millions of shares in companies the fund had bet on, dragging down stocks across the media and other sectors.

 

That left other banks, primarily Credit Suisse and Nomura, sprinting for the exit before it slammed shut. By the time they decided to start selling, the stocks had fallen too far for the banks to avert major losses.

 

“The first one out is not panicking,” said Matt Freund, co-chief investment officer at Calamos Investments. “It doesn’t make sense to join a panic but sometimes it makes sense to start one.”-The Thomson Reuters Trust Principles.

 

 

 

Asian stocks poised for first monthly loss since Oct on bond rout

Pedestrians wearing facial masks, following the coronavirus disease (COVID-19) outbreak, are reflected on an electric board showing stock prices outside a brokerage at a business district in Tokyo, Japan, January 4, 2021. REUTERS/Kim Kyung-Hoon

 

 

Asian stocks were on track for their first monthly loss since last October though markets were up on Wednesday and the U.S. dollar stood tall as investors focused on growing signs of a sure-footed global economic recovery.

 

MSCI's broadest index of Asia-Pacific shares outside of Japan (.MIAPJ0000PUS) climbed for a fourth consecutive day to a one-week high of 682.36 points. The index, last up 0.4%, was still a fair distance away from an all-time peak of 745.89 touched just last month.

 

For the month so far, the index is down 1.6% to be on track for its first loss in five months. It is also poised for its smallest quarterly gain since a 21% fall in March 2020 when the coronavirus pandemic brought the world to a standstill.

 

As many countries rolled out the coronavirus vaccine, investors wagered on a quicker-than-anticipated economic recovery by dumping safe haven bonds, triggering a sudden and massive jump in yields that in-turn spooked equity investors.

 

Technology shares were at the receiving end of the so-called "term premium tantrum" as they were seen as being vulnerable to rising interest rates.

 

Analysts at Blackrock said that view was "too simplistic", adding they still liked tech stocks.

 

Wall Street ended lower overnight as higher yields weighed on tech shares, but financial stocks rose helped by signs the fallout from the Archegos meltdown would be largely contained.

 

"Tech is a diverse sector and the driver of higher yields matters more than the rise itself," Blackrock said in a note to clients.

 

"Our new nominal theme implies central banks will be slower to raise rates to curb inflation than in the past, supporting our pro-risk stance and preference for tech."

 

Over a 6-12 month period, Blackrock is "overweight" equities in the United States, Emerging Markets, Asia ex-Japan and UK. It is "underweight" U.S. Treasuries, expecting a nominal increase in yields.

 

"The 'term premium tantrum' mostly reflects investors requiring higher compensation for the now greater risks to portfolios presented by government bonds and inflation, in our view," Blackrock said.

 

"This makes equities even more appealing than bonds in a multi-asset context – and suggests any further sell-offs in tech may present opportunities."

 

Sentiment in Asia got a further lift from data showing China's factory activity expanded at a faster-than-expected pace in March while the country's services sector surged too. read more

 

Despite the strong data, however, Chinese shares started in the red with the blue-chip index (.CSI300) off 0.5%.

 

Japan's Nikkei (.N225) slipped 0.4% as the country's industrial output fell in February due to declines in the production of cars and electrical machinery. read more

 

Australia's benchmark index (.AXJO) jumped 1.7%, New Zealand rose 0.3% while South Korea's KOSPI index (.KS11) added 0.75%.

 

E-mini futures for the S&P 500 rose 0.15% in early Asian trading.

 

There were some jitters over news over the soured bets at New York-based Archegos Capital Management, which had left global banks that financed its trades nursing at least $6 billion in losses. read more .

 

In foreign exchange markets, currencies were mostly a sea of red against the U.S. dollar which hit a one-year high of 110.48 against the yen as investors bet that massive fiscal stimulus and aggressive vaccinations will boost the U.S. economic recovery.

 

The dollar is on track for a third straight monthly rise against the yen and its biggest since end-2016.

 

The dollar index held above 93 after surging as high as 93.357 on Tuesday. It has climbed from close to 90 at the start of March, on course for its best month since 2016.

 

Australia's dollar edged up to $0.7610, consolidating after its drop to $0.7564 last week, the lowest level seen this year.

 

In commodities, Brent crude rose 33 cents, or 0.5%, to $64.47 a barrel while U.S. crude added 12 cents to$60.68 barrel.

 

Gold prices slipped a touch to 1,682.15 an ounce.-The Thomson Reuters Trust Principles.

 

 

Google to contribute $25 mln to new EU fund to fight fake news

Alphabet (GOOGL.O) unit Google will contribute $25 million to the newly set up European Media and Information Fund to combat fake news, the company said on Wednesday, amid criticism tech giants are not doing enough to debunk online disinformation.

 

The COVID-19 pandemic and the U.S. election last year spurred a massive spike in misinformation, with some blaming social media for not being more proactive in tackling the issue while regulators have indicated they may take action via heavy-handed restrictions.

 

 

The European Media and Information Fund, launched by the Calouste Gulbenkian Foundation and the European University Institute last week, aims to enlist researchers, fact-checkers, not-for-profits and other public interest-oriented bodies to help in the fight against fake news.

 

"While navigating the uncertainty and challenges of the last year, it has proven more important than ever for people to access accurate information, and sort facts from fiction," Matt Brittin, head of Google's EMEA Business & Operations, said in a blog post.

 

The fund has a duration of five years. The European Digital Media Observatory, which is a European Commission project set up last year and whose members include fact checkers and academic researchers, will evaluate and select the projects.-The Thomson Reuters Trust Principles.

 

 

 

Fujifilm CEO Komori, who oversaw push into healthcare, to step down in June

Fujifilm Holdings Corp (4901.T) said on Wednesday that Shigetaka Komori, who oversaw the company's transition from film business to healthcare, would step down as chairman and chief executive in June.

 

Komori, 81, will take a new role as chief adviser while Teiichi Goto becomes CEO and Kenji Sukeno the chairman. The transitions are subject to approval by shareholders, Fujifilm said in a release.

 

Komori is credited with helping Fujifilm transform its business and survive the collapse of the film industry that drove its main rival Eastman Kodak Co into bankruptcy.

 

Fujifilm's push into healthcare has become all the more apparent amid the pandemic, as its antiviral drug Avigan is being studied as a COVID-19 treatment.

 

The company has invested heavily in Europe and the United States to expand factories involved in making ingredients for vaccines and drugs. read more

 

Komori joined Fuji Photo Film Co in 1963 and was appointed CEO in 2003, according to the company.- The Thomson Reuters Trust Principles.

 

 

 

Oil rises on expectations OPEC+ will maintain supply discipline

Oil prices rose on Wednesday, paring overnight losses a day ahead of a meeting of OPEC and its allies, with investors betting the producers will largely agree to extend their supply curbs into May.

 

Brent crude futures rose 15 cents, or 0.2%, to $64.29 a barrel at 0202 GMT, after falling 1.3% on Tuesday.

 

 

U.S. West Texas Intermediate (WTI) crude futures jumped 15 cents, or 0.3%, to $60.70 a barrel, after falling 1.6% in the previous session.

 

"The expectation is OPEC+ is going to show supply discipline, so that's pivoting the market," said Commonwealth Bank commodities analyst Vivek Dhar.

 

The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are set to meet on Thursday, following a month in which oil prices have whipsawed on concerns about extended pandemic lockdowns in Europe, slow vaccine rollouts and rising COVID-19 cases in India and Brazil, pitted against growing optimism on growth in the United States.

 

OPEC+ last month surprised the market by agreeing to agreed to extend supply curbs, with small exceptions for Russia and Kazakhstan, at a time when fuel demand appeared to be recovering.

 

 

"Given what's happened since then, the rationale is even less so to add supply. So we think they'll maintain that discipline in that meeting (on April 1)," Dhar said.

 

Under existing curbs, OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have cut just over 7 million barrels per day (bpd), while Saudi Arabia has made an additional voluntary reduction of 1 million bpd.

 

Saudi Arabia is prepared to back an extension of the supply cuts into June, including its own voluntary cut, to boost prices, a source briefed on the matter told Reuters this week. read more

 

Adding to the view that they should hold back supply, data from the American Petroleum Institute industry group on Tuesday showed U.S. crude oil stocks rose by 3.9 million barrels in the week to March 26, well above analysts' forecasts in a Reuters' poll for a build of about 100,000 barrels.

 

 

Data on U.S. inventories are due on Wednesday from the U.S. Energy Information Administration.-The Thomson Reuters Trust Principles.

 

 

Mozambique: Offshore Gas Finds Offered Major Promise for Mozambique - What Went Wrong

Recent events in Palma, a town in the volatile Cabo Delgado province in the north of Mozambique, have taken bloodshed in the region to new levels. Dozens of people were killed when hundreds of Islamist militants stormed the town on Wednesday, 25 March. They targeted shops, banks and a military barracks.

 

The attack has been devastating for the people living in the area - as well as the country. The escalating violence has already left at least a thousand dead and displaced hundreds of thousands more.

 

The conflict has put a temporary lid on plans that have been in the making for more than a decade since rich liquefied natural gas (LNG) deposits were discovered in the Rovuma Basin, just off the coast of Cabo Delgado. Western majors like Total, Exxon Mobil, Chevron and BP entered the Mozambique LNG industry as well as Japan's Mitsui, Malaysia's Petronas and China's CNPC.

 

The gas projects are estimated to be worth US$60 billion in total. Some observers recently predicted that Mozambique could become one of the top ten LNG producers in the world.

The development of the projects had led to the area becoming a hive of economic activity.

 

The plan was for Palma to become a LNG manufacturing hub where hundreds of skilled workers would be located. And, more broadly, the hope was that it would drive the rapid advancement of a country that ranks close to the bottom of the United Nations Human Development Index. More than 70% of the population have been classified as "multidimensionally poor" by the United Nations Development Programme.

 

The LNG projects in the northern Cabo Delgado area represented a silver lining of hope. Since 2012 the major multinational energy companies have spent billions of dollars on developing the offshore gas sites. Today, offshore exploration in the Cabo Delgado area includes Africa's three largest LNG projects. These are the Mozambique LNG Project (involving Total and previously Anadarko) worth $20 billion; the Coral FLNG Project (involving Eni and Exxon Mobil) worth $4.7 billion; and the Rovuma LNG Project (involving Exxon Mobil, Eni and CNPC) worth $30 billion.

Production was scheduled to start in 2024 but intensifying attacks near the gas site on the Afungi peninsula are now posing serious challenges to the production time lines.

 

There have been no material benefits for the people of Cabo Delgado thus far. Moreover, many local people feel deeply aggrieved because many were evicted and had to relocate soon after the discovery of gas in Cabo Delgado to make way for LNG infrastructure development.

 

History of instability

 

Cabo Delgado is Mozambique's most northern province. Neglected over many years, the people who live there have been politically marginalised. And the area is underdeveloped.

Since independence in 1975 investment, and rising incomes, were largely confined to the capital Maputo in the south as well as the southern parts of the country.

 

In addition, the central government in Maputo has only had a fragile and precarious control over the territory and borders of the country. A 16-year civil war that involved clashes between the central government and Renamo, a militant organisation and political movement during the liberation struggle and now opposition party, claimed more than a million lives.

 

More recently, since 2017, the militant Islamic movement, Ansar al-Sunna, locally known as Al-Shabaab, has been active in Cabo Delgado. It now poses the biggest security threat in the country, rendering some of the northern parts almost ungovernable.

 

The militants took advantage of the Mozambican government's failure to exercise control over the entire territory of the country.

 

Ansar al-Sunna reportedly pledged allegiance to the Islamic State of Iraq and Syria (ISIS) in April 2018. It was acknowledged as an affiliate of ISIS-Core in August 2019. In view of this, the US Department of State has designated Ansar al-Sunna Mozambique, which it refers to as ISIS-Mozambique, as a foreign terrorist organisation.

 

What makes this armed force so significant is that the movement has orchestrated a series of large scale and targeted attacks. In 2020 this led to the temporary capturing of the strategic port of Mocimboa da Praia in Cabo Delgado.

 

In addition, the turbulence caused by the militants' attacks has displaced nearly 670,000 people within northern Mozambique. Obviously, foreign companies in the LNG industry with their considerable investments feel threatened, especially at the current stage where final investment decisions have to be taken.

 

In recent months the situation in Cabo Delgado has gone from bad to worse. In November 2020, dozens of people were reportedly beheaded by the militants. Now the bloodshed has spread to Palma.

 

Amid the development of an increasingly alarming human rights situation towards the end of last year, the United Nations High Commissioner for Human Rights, Michelle Bachelet, appealed for urgent measures to protect civilians. She described the situation as "desperate" and one of "grave human rights abuses". Bachelet also stated that more than 350,000 people had been displaced since 2018.

 

Growing risk

 

There is little doubt that Islamist insurgents are increasing the scale of their activities in Cabo Delgado. A lack of governance and a proper security response by both the Mozambican government and southern African leaders make this a case of high political risk for the LNG industry.

 

The escalation of the insurgency can potentially jeopardise the successful unlocking of Mozambique's resource wealth. Until now, the main LNG installations and sites have not been targeted, but the attacks in Palma have brought the turbulence dangerously close to some of the installations.

 

The Mozambican armed forces are clearly stretched beyond the point where they can protect the local communities. A part of the solution lies in Southern African Development Community or at least South African military support to stabilise Cabo Delgado and restore law and order in the short term. Wider international support might even be necessary.

 

But this would require the Mozambican government to change its stance by allowing multinational foreign military forces on its soil.

 

At the same time, a long term solution should be pursued. This will require better governance of the northern areas and the local people in what has been called a forgotten province.

 

It is clear that Cabo Delgado is an area which the central government in Maputo is unable to control, govern effectively, or even influence. In short, weak state institutions - including weak armed forces - are key to the problems of Mozambique and specifically the turbulence in the northern parts.

 

Theo Neethling, Professor of Political Science, Department of Political Studies and Governance, University of the Free State

 

 

Nigeria: What to Know About Naira 'Devaluation', Nigeria's Unclear Exchange Rate Policy

One takeaway from a recent controversy between the CBN and the finance ministry is that the bank appears to be concealing its current exchange rate.

 

Over a week ago, Nigeria's finance minister, Zainab Ahmed, stirred controversies when she said that Nigeria had adopted a new flexible exchange rate policy for official transactions.

 

"The government will start to use the flexible rate, that has until now applied to investors and exporters, for government transactions too," a report by Bloomberg quoted Mrs Ahmed as telling journalists at the State House in Abuja.

"Within the government and the central bank, there is only one official rate and that's the Nafex rate."

 

The minister, by implication, suggested that the government had effectively devalued the naira yet again, just barely a year after the local unit was devalued twice. But the Central Bank of Nigeria swiftly denied the claim.

 

Speaking at the end of the Monetary Policy Committee's meeting last Tuesday, the CBN governor, Godwin Emefiele, said the report suggesting the bank had embraced a flexible exchange rate regime and harmonised the different rates was false. Mr Emefiele said the central bank still maintained 'managed float', which allows it to intervene in the market occasionally.

 

"Let me repeat that Nigeria had not changed from its foreign exchange management policy. Nigeria remains on a managed float," he said.

 

"What the managed float regime means is that the CBN, being the institution that has the core mandate for forex administration in the country would watch the market and see how the market operates. Depending on its reading, it would come from time to time to intervene in the forex market."

Within the same period, Vice President Yemi Osinbajo was also quoted to have said that payments made as part of the federal allocation would use the market foreign exchange rate.

 

"To the questions around whether we're just going to float the currency, what the finance minister said is that payments for federal allocation will use the ... market rate," Mr Osinbajo said.

 

In the middle of the contradictions in policy statements on the part of the CBN and finance ministry, here are eight things to note about the nation's foreign exchange regime:

 

1. CBN won't disclose the official rate it now operates: The first takeaway from the controversy is that the CBN appears to be concealing the exchange rate it now operates as the official rate. At the press briefing on Tuesday, the CBN governor, Mr Emefiele, merely implied that the apex bank still maintains the "official rate" of N379 as listed on its website, while the NAFEX rate of N410 is adopted for certain government businesses as claimed by Mr Osinbajo.

When PREMIUM TIMES reached out to the CBN spokesperson, Osita Nwanisobi, for clarity on the actual rate the apex bank now adopts for its businesses, he insisted that the CBN governor had done the "clarification". This newspaper's review of the CBN governor's speech showed that no specific rate was mentioned in the briefing, yet Mr Nwanisobi claimed otherwise.

 

What Mr Emefiele spoke about was the CBN operating a "managed float" policy, which allows it to watch market dynamics and intervene in the market whenever necessary. He effectively denied that it had adopted the flexible rate, NAFEX (Nigerian Autonomous Foreign Exchange Rate Fixing).

 

2. Nigeria attempting to harmonise multiple rates as part of World Bank's conditions for $1.5 billion facility

 

Despite the apex bank's stance that it has not officially migrated to NAFEX, it is clear that the government is trying to harmonise its multiple exchange rates. This is no surprise, given what is essentially at stake for the nation.Nigeria typically runs multiple exchange rates, beginning effectively in 2017, in the wake of the oil crash of 2014/15. There is the official rate, listed by the CBN as N379/N380; there is the NAFEX, a market-determined rate for investors and exporters which hovers around N410; and there is a "black market" rate, typically ignored by the government, which moves around N480.

 

The Nigerian government is seeking a $1.5 billion loan from the World Bank, as part of measures to bridge its huge budget deficits. However, the World Bank has called on Nigeria to fix its multiple exchange rates, including the official rates and NAFEX, as part of the conditionality for the facility.

 

With a budget deficit of about N5.6 trillion in 2021, the new move toward NAFEX by the government shows an attempt to harmonize these multiple exchange rates, ostensibly to resume talks on the World Bank facility. The finance minister, Mrs Ahmed, confirmed that in February when she said the government had taken steps to meet World Bank's conditions. She said the bank should understand that adopting the NAFEX is progress and it would take time to unify the rates. "Their view is that despite the fact that we have adjusted the official exchange rate from N305 to N360 and we further on moved to I&E or the Nafex window, and as we speak, federal government inflows and outflows are monetized at the Nafex window rate. So, we feel we have met that requirement but the World Bank is saying that we have to close that gap between the black market and Nafex window."

 

3. Government appears ready to use selective adoption of NAFEX, which would be 'net positive' for it

 

The movement towards a weaker NAFEX is to some degree a devaluation, but its selective adoption means there would be positive effects on government records. Adoption of NAFEX for conversion of dollar inflows and outflows will be 'net positive' for the government and this will help boost government revenue.

 

Nigeria essentially relies on crude for a significant chunk of its foreign exchange revenues, even though at about 9 per cent, the nation's mainstay contributes not so much to its GDP.

 

The sale of Nigerian crude is done in USD and the revenue is converted to naira, for local use. Should such USD inflows be converted using a weaker NAFEX, it means the government would have more money to fix its budgetary (deficit) concerns.

 

4. Nigeria's debt shows the government may be hoping to have its cake and eat it

 

On the flip side of the NAFEX adoption for USD inflows conversion, however, is that there are indications that Nigeria's debt figures would still be calculated using the CBN's "official rate". Checks by PREMIUM TIMES Monday showed that as of its last publication, the nation's Debt Management Office adopted an exchange rate of 380 naira to the dollar in its calculation of debt.

 

To be sure, if the NAFEX is adopted in debt calculation, interest costs on the dollar component of the nation's debt would shoot skywards in naira terms, and this may erase some of the gains garnered in its adoption for calculation of USD inflows.

 

By choosing not to adopt the NAFEX rate in other businesses like calculation of debt figures, while adopting it for USD inflows, the Nigerian government may be planning to have its cake and eat it.

 

There are indications that such opacity may erode confidence in the financial system, and the ability of CBN to instill confidence in the market.

 

5. Naira stability still hinged on oil revenues

 

About 90 per cent of Nigeria's foreign exchange earnings come from oil export, which is tied to the vagaries of international politics. Last year, amid turbulence in the global economy and a crash in the price of oil-induced by Covid-19, PREMIUM TIMES reported how Nigeria devalued its currency twice. The government is also making efforts to improve its diaspora remittances, another significant source of foreign exchange. But analysts opine that the ability of the government to manage naira is tied to the revenues from oil, which remains largely unpredictable.

 

Last month, this newspaper found that Nigeria's foreign reserves depleted despite oil price rally. This happened at a time the nation settled a major debt obligation. In essence, Nigeria's dollar reserves would continue to nosedive amid the settlement of debt except there is a significant rally in oil prices.

 

In a "managed float" system, all of these would impact the ability of the apex bank to intervene in the market, and ultimately, ensure stability.

 

6. Liquidity Vs. Inflationary risks

 

It remains unclear whether the Nigerian government would indeed toe the path of adopting a flexible exchange rate. One thing the controversies surrounding the exchange rate kerfuffle thrown up is the seeming incoherence in government's policy, especially on the fiscal and monetary sides of economic management. While those in government appear open to the adoption of a flexible exchange regime, the CBN seems laid-back in its own adoption of the option. The enthusiasm shown by the ministry and the government may not be unconnected to the fact that its adoption would help address the challenge of low liquidity, but the CBN is concerned that it may also worsen Nigeria's inflation rate, which peaked at 17.33% in February according to the nation's statistics bureau.

 

7. Conflicting signals and Power play

 

Another major takeaway from the developments is the subtle "power tussle" among managers of the Nigerian economy. The result is the conflicting signals investors and other concerned stakeholders get from policymakers and how that may impact the frail economy.

 

In his intervention last Tuesday, the CBN governor suggested that the media and other market watchers should rather listen to the CBN, and not any other entity.

 

"When Bloomberg begins to conclude statement of the Minister, which I doubt because I have not heard the audio, that we have moved into the flexible exchange regime, I will just try to appeal to members of the press community to seek clarification, particularly from the authority," Mr Emefiele said.

 

"Section 4(2) of the CBN Act places the authority of forex management on the CBN."

 

Interestingly, the finance minister has not spoken publicly again on the matter ever since the controversy began. She has neither come out to defend her earlier position or align with the CBN's new position.

 

8. Nigeria foreign exchange policy remains fuzzy

 

For now, it does appear that the policy direction with respect to the exchange rate remains fuzzy, given the CBN's taciturnity. If the nation's talks with the World Bank turn out well in the coming weeks/months, it is safe to aver that Nigeria may be heading toward adopting a single exchange rate, as Mr Osinbajo recently said.

 

In a nutshell, foreign investors can only hope that there is some harmony in policy appreciation, and, ultimately, implementation--on the parts of the CBN on the one hand, and the finance ministry/government on the other hand.-Premium Times.

 

 

 

Kenya: Wealthy Households Add to Kenya Power Theft Migraine

Rich households have joined the electricity pilferage bandwagon often associated with informal settlements aggravating Kenya Power's commercial losses.

 

The estates particularly in Nairobi metropolitan area, have become hotspots that harbour electricity stealing tricks, with their solid fences and gates providing comfortable cover, away from Kenya Power's inspection radar.

 

The power distributor now says its crackdown to eliminate power pilferage has been heightened even as wealthier households whose consumption is much higher now add to the wattage of power likely to be lost.

"The illegal connections in informal settlement still surpass those in formal settlements. Having said that, we have devised a mutually beneficial, collaborative strategy that will involve the community, law enforcement and other players in order to safeguard our network in informal settlements, with the goal being to purge the network off illegal connections," Kenya Power said in response to queries over emerging trend of illegal connections.

 

Consumers employ a more sophisticated meter-related theft where they make illegal connections by bypassing the gadget to evade paying the utility company.

 

This has left innocent customers paying for power which their crafty neighbours have used especially in high-rise flats and terraced houses.

 

Instead of tapping electricity within their own wiring line, culprits tap the neighbouring meter line, reflecting the high consumption rate and billing experienced by gullible clients.

A phone call and a connection fee of Sh5,000, residents and shop owners two of the estates in Athi River can enjoy free and unlimited electricity.

 

With the faltered economy fuelled by Covid-19, it even became more pressing for these consumers to engage in various power illegalities to cut costs of their business operations.

 

Electricians plying their trade within the estates, some unlicensed, are hired to execute the scheme in full knowledge of the estate management and, in some cases, with the help of informants within Kenya Power.

 

The trend stretches to bordering regions such as Lukenya, Mavoko, and Mlolongo.

 

Following a recent inspection on all installations and meters in Athi River, several households and businesses were found to have meter-related irregularities.

Although none of the defaulters were referred for a criminal prosecution, the utility took a hard line on the illegal connections switching off the power until they settled the fines and their meters bills adjusted.

 

Suspicious connections

 

The inspection came after the utility company detected anomalies in the customers' meters, raising a red flag about the several suspicious connections that could be presenting a loophole for power and revenue losses to the company.

 

A similar operation has been previously witnessed in Imara Daima estate, Tassia, Embakasi, and Makongeni.

 

Shop owners also liaise with the estate management to tap power from the security light lines.

 

Kenya Power sales manager Margret Kanini said registered meter owners are held liable for breaches, making the scheme a risk for some consumers who may not be aware their connections have been breached by those seeking to consume free electricity.

 

"The contractual responsibility to ensure that the meter is in good working condition and free from interference lies with the account holder," Ms Kanini said.

 

An ex-Kenya Power employee who sought anonymity has been in the scheme for over three years now confides that the matter is a "widespread theft largely proliferated by KPLC staff." Some staff, especially those in field operations, aid the fraudulent practices such as direct connections, faking meter reading, and meter tampering, among other irregularities for personal financial gain.

 

To ensure theft goes unnoticed, he says that "informants within KPLC constantly brief customers about impending inspections and link them with brokers to temporarily rectify tampered meters."

 

Power pilferage

 

Between June 2020 and Dec 2020, just when the country experienced a spike in Covid-19 cases that locked most people at home, Kenya Power conducted a nationwide inspection that targeted 365, 930 meters across different customer categories. Out of these, 10, 622 meters had anomalies were rectified.

 

The anomalies ranged from faulty meters to bypassing, power loss, and illegal connections, among other deviations. At the same time, stay-at-home orders increased electricity consumption by households by five percent, according to Kenya Power.

 

Read: Kenya Power moves to cut off all illegal connections

 

However, by June 2020, the firm had already lost Sh5.6 billion in electricity sales, citing Covid-related interruption that hit power consumption by commercial-industries and SMEs customers who contribute 90 percent of the revenue.

 

In early 2020, the firm announced a nationwide plot to meter all transformers to keep tabs on power pilferage. It is yet to be actualised. The idea was to narrow down specific locations and estates where people are enjoying stolen electricity.-Nation.

 

 

 

Ethiopia to Trial GERD's Electricity Generation

ADDIS ABABA-- Close to 79 percent of the construction of the Grand Ethiopian Renaissance Dam (GERD) has been accomplished and the dam would conduct preliminary energy generating trial this year, according to GERD project management.

 

In connection with 10th anniversary of the commencement of the GERD , the GERD project Manager Kifle Horo said the Dam, which is 1,780 meters high and expected to generate 15,695 GWh annually, would start pre-operational energy generation pilot this year.

 

Kifle noted that over 91 percent of the civil works, 54 percent of hydro-steel structure and 53 percent of the electro-mechanical progresses have been completed.

 

"The dam is expected to reverse the long standing problem of low access to basic services due to shortage of energy supply the country has been encountering," he said.

 

Kifle added that the dam can also serve for fishery, tourism, sediment trap, reduce evaporation, regulates fluctuation of water volume, energy uplift, and creating economic integration among African countries.

"Besides, the dam has environmental relevance by reducing the carbon emission by replacing thermal power plants.

 

The filling mechanism can be adjusted to seasonality and delay of filling during depending on hydrological condition of the year. "

 

Preliminary energy generation trial and second dam filling are the two decisive momentous to be completed in 2021, it was learnt.

 

Engineer Sileshi Bekele (Ph.D), stressed that Ethiopia tributes about 77 billion cubic meter of water to the Nile river annually being Tekeze and Abay rivers the major contributors.

 

Sileshi added that Ethiopia as a landlocked country should make use of its domestic rivers to well exploit the water trade potential with a view to getting rid of rain-fed agriculture.

 

Prof. Yakob Arsano, on his part, stressed that Ethiopia resides the right to rule over its natural resource so long as it is in line with the international law.

 

The GERD is a developmental project to quench Ethiopia's piled up electricity supply thirst and should not be perceived as a cause for conflict, he noted.-Ethiopian Herald.

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


CFI

AGM

Farm & City Boardroom, 1st Floor Farm & City Complex, 1 Wynne Street

31/03/21 | 11am

 


 

Good Friday

 

02/04/21

 


 

Easter Sunday

 

04/04/21

 


 

Easter Monday

 

05/04/21

 


 

Independence Day

 

18/04/21

 


 

Public Holiday in lieu of Independence Day falling on a Sunday

 

19/04/21

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

Dairibord

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <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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