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Thu, 23 Mar 2017
MTN appoints Rob Shuter as CEO following earnings loss

South Africa’s MTN Group has appointed Rob Shuter as chief executive after the mobile phone network company announced a R2.6bn ($198m) loss in earnings in 2016. Shuter, who previously worked for London-headquartered Vodafone, was appointed on Monday to head up the revamped senior management team, following the completion of a strategic review.

MTN’s earnings loss was the first time in its 23-year history that the telecoms giant had reported a fall in income. Meanwhile, pre-tax profits fell from R36.5bn ($2.8bn) in 2015 to R18.2bn ($1.4bn). However, MTN’s consolidated revenue increased year-on-year by 0.4% in 2016 to R146bn ($11.1bn), while its subscriber base in Africa and the Middle East grew by 3.3% to 240.3m over the course of the calendar year.

The Group executive chairman, Phuthuma Nhleko, commented: “MTN Group’s financial results for 2016 reflect the most challenging year in the company’s 22-year history, precipitated by a number of material regulatory, macro-economic and political challenges experienced across our regions. However, despite these difficulties, the business began to show encouraging first signs of a turnaround.”

The loss mainly stemmed from its tribulations with Nigeria’s telecoms regulator, the Nigerian Communications Commission. It was originally fined $5.2bn last year for its failure to disconnect unregistered SIM cards, as instructed by the regulator. Some of the SIM cards appear to have been used by Boko Haram.

MTN has since managed to negotiate a reduction in the fine to $1.7bn, which is to be paid over three years, while in another move that appears to form part of the settlement, the company is to seek a listing in Nigeria. MTN Nigeria lost a lot of subscribers as a result of the SIM scandal, but its revenue in January 2017 was 16% higher year-on-year, although the depreciation of the naira against the US dollar affected the earnings before interest, tax, depreciation and amortisation (EBITDA) margin and increased costs from transactions carried out in US dollars.

The firm has experienced other problems in Nigeria: its headquarters in Abuja were attacked by a mob last month, apparently in reaction against attacks on Nigerians in South Africa; while its network went down for a time in early February. The company has invested more than $16bn in Nigeria to date and it still has 62m active subscribers in the country, although its actual number of customers will be lower, as many people hold multiple accounts.

MTN admitted that it had had network, systems and customer service challenges in its main market, South Africa. MTN South Africa’s EBITDA, impairment of goodwill, net monetary gains and share of results of joint ventures and associates after tax were 31% higher in the second half of 2016 than in the first six months of the year.

As with other African telecoms operators, having attracted a large customer base in recent years, the company is now keen to increase its average revenue per user (ARPU) in order to boost income and profits. It is promoting mobile money services and encouraging greater data use. Group data revenue rose 19.7% to contribute 27% of Group [...]

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Thu, 16 Mar 2017
Fall in mining and manufacturing shrinks South Africa’s economic growth...

South Africa’s economy contracted to 0.3 percent in the last quarter of 2016, due to a fall in mining and manufacturing production.

According to the country’s statistics office, the shrinkage in the two key sectors of the economy pulled growth into negative territory.

Figures from the agency indicate, the mining industry’s 11.5 percent drop in production was the main contributor to the economy’s slowdown, brought about by a fall in production of coal, gold and other metal ores, such as platinum and iron ore. While manufacturing dropped by 3.1 percent.

Overall, the economy grew by 0.3 percent last year compared to 1.5 percent in 2015.

Africa’s most industrialised economy faces the risk of being downgraded to junk status owing to weak economic growth after it got a reprieve last year.

The country is also struggling with a volatile political climate, falling commodity prices and a chronically high unemployment rate.

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Thu, 16 Mar 2017
Tanzania offers Dangote land to mine coal to fuel cement production...

After last year’s deal by Tanzania’s government to supply natural gas to Dangote Cement Company in the south-eastern town of Mtwara, the state has offered land to the Nigerian company to mine coal for its operations.

Tanzania’s Ministry of Energy and Minerals on Saturday handed a 10-square-kilometre plot of land to the $500 million cement factory set up in 2015 with an annual capacity of 3 million tonnes.

According to local media The Citizen, the move was sanctioned by President John Magufuli to allow the company get a reliable supply of coal to fuel its activities.

Tanzania has banned the importation of coal from South Africa and Tancoal, the only one coal producing company in the country, cannot meet the entire market demand.

Dangote runs on expensive diesel generators and requested Tanzanian government support last year to supply natural gas at a reduced price.

President Magufuli later intervened after a meeting with Nigerian billionaire and the company’s owner Aliko Dangote over stalled negotiations on prices.

He blamed middlemen for the delay in supply plans and said Dangote “will now buy natural gas directly from the state-run TPDC (Tanzania Petroleum Development Corporation)”.

Dangote, Africa’s biggest cement producer, is seeking to double Tanzania’s annual output of cement to 6 million tonnes.

It plans to roll out plants across Africa.

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Thu, 16 Mar 2017
Has Mauritius’s growth stalled?

As Mauritius prepares to celebrate the 49th anniversary of its independence on 12 March 1968, a national debate has broken out over falling growth rates.

The economy grew by an average of 5.3% a year between 1969 and 2013, well ahead of the trend for Sub-Saharan Africa as a whole, but growth has averaged just 3.4% over the past six years, leading critics to assume that the economy has run out of steam. Yet it would be wrong to overlook just how well the country has developed.

The African Economic Outlook stated: “The Mauritian economy recorded actual growth of 3.7% in 2015, up from the 3.6% recorded in 2014 and is projected to grow by 3.8% in 2016 and 4.0% in 2017 on the back of stronger domestic and external demand.” The IMF blames recent weaker growth on a long decline in construction and weak external demand.

The Fund was also concerned about the size of the offshore banking sector. Yet given the fragility in the global economy, such a consistent growth rate seems reasonable if not spectacular.

The budget deficit is certainly higher than it should be given the state of the economy, at 4.65% in 2015. The government is worried about the country’s ageing population, as Mauritius adopts a similar demographic profile to the industrialised world, rather than one that is typical of Sub-Saharan Africa.

The population is growing by just 0.4% a year. Addressing this will require cultural changes: either immigration or encouraging more women into skilled work.

Long term context

A country that was originally highly dependent on sugar cultivation now has one of the most developed and diverse economies in Africa. Successive governments managed to encourage the emergence of new sectors, starting with textiles, then tourism, financial services and ICT.

Each new industry has not displaced the others but has help promote stable growth by ironing out variations in tourist numbers and sugar prices. Sugar cultivation now accounts for just 2% of GDP, down from 20% in the mid-1970s. This has created a more secure economy than in many other relatively prosperous African countries, such as Equatorial Guinea and Gabon, which are heavily dependent on the export of a single commodity: oil.

The government expects tourist numbers to rise from 1.28m in 2016 to 1.34m this year, generating R58bn ($1.64bn) in revenue in the process. The sector, which contributes 8% of GDP, is based on attracting wealthy tourists – a strategy that is made easier by the cost of travelling to the island.

Port Louis is continuing with its drive towards growth in the ICT sector that it began with the Cyber Cities initiative twelve years ago. It now hopes to oversee the development of eight Smart Cities and five ‘Techno Parks’. As other countries around the world have seen, it is easier to draft such initiatives than it is to see them brought to fruition. However, Mauritius has had a great deal of success to date in attracting financial and ICT investors, with GDP in the two sectors growing by 5.6% and 6.3% respectively [...]

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