Markets: Latest News
Dana Sanchez, 10:46 am AFKI Original
Currency depreciation and rising inflation have made investing a challenge in some African countries. A global private-sector development group identifies four African countries that have potential for climate-smart investment. These investments will make energy more accessible and infrastructure more resilient as climate change threatens to undermine developmental gains. South Africa is ahead of the game. With 90% of its electricity from coal, SA has approved 79 renewable energy projects by independent power producers. The cost of wind and solar has decreased more than 70%, and is now competitive with new-build coal, IFC reported.
Kevin Mwanza, 8:44 am
Foreign investors in Tanzania are considering pulling out of the nation or expanding operations into other countries due to higher taxes introduced by President John Magufuli in efforts to drive the economy by cracking down on revenue evasion and corruption. Magufuli’s government has already increased taxation on mobile money transfers, banking, and tourism and cargo transport service providers.
Dana Sanchez, 7:13 pm AFKI Original
Angolan attorney Zandre Campos quit his job with Sonangol, Angola’s giant state-run oil company, to start a private international investment firm. He wants to bring the best of the world to Africa. “We want to participate in the future of this continent. We’re talking about international standards,” he told AFKInsider. His latest investment is his company’s first in the U.S. He’s investing in U.S. technology. “Most of our investors are local Angolans — young guys like us,” Campos said.
Dana Sanchez, 3:56 pm
Donald Trump’s election could not have been better news for the economic and political ambitions of China. Suddenly, all roads lead to China from Africa, Europe, most of Asia and most of South America. African manufacturers could profit from China’s growing power, but that may have more to do with rising labor costs in China than it has to do with retreating U.S.-Africa trade. Manufacturing salaries are rising fast in China, which is starting to outsource production to other countries. China has become a victim of its own success.
Kurt Davis Jr., 12:26 pm AFKI Original
Egypt floated its currency earlier this month. The Egyptian pound dropped nearly 50%. Early signs show increased investment in the country. Despite diverging perspectives on the methodology, most economists buy the long-term upside. If the Egyptian story is any indication of success, letting the naira hit rock bottom on a fully-floated basis will result in greater investment in the country and a recovering naira over time. As one local put it, Nigeria should be able to do this (and many other things) better than Egypt. Maybe this is the opportunity to back up such bold statements.
Dana Sanchez, 11:17 am
Hyperinflation in 2008 had Zimbabweans paying 50 billion Zimbabwean dollars for an egg and 100 trillion dollars for a weekly bus ticket. The U.S. dollar has been Zimbabwe’s main currency since 2009 but those are in short supply. Now it’s deja vu all over again as the Zimbabwe government forces bond notes into circulation, a move many feel is a ploy to bring back the Zimbabwean dollar. The central bank promised to keep a lid on issuing bond notes, insisting they are not an official currency and will have no value outside of Zimbabwe. The first test will be in the informal foreign exchange markets on the streets.
Dana Sanchez, 5:24 pm
Credit ratings agency Fitch on Friday revised its outlook for South Africa from stable to negative, citing political risks. Moody’s was also expected to release its outlook Friday, but had not done so by late afternoon. There are fears that South Africa will be downgraded to junk status. Junk status means high risk, and therefore, high borrowing costs. For fund managers representing investors, a downgrade to junk status means they will have to sell the assets (bonds) they hold. Their mandates require that they only invest in investment-grade assets. For ordinary South Africans it means paying more interest, leaving less money for savings or food.
Staff, 5:34 pm
South Africa this week put on hold proposals to introduce a national minimum wage as part of an effort to stabilize the labor market. Labor upheaval is a potential risk factor to the country’s credit rating, which faces in the next two weeks a possible downgrade to junk status by ratings agencies. The economy has grown slowly in the last six years — too slowly to recoup the 1 million jobs lost during the 2008-2009 recession. Despite the gloomy numbers, the rand held its ground, propped up by firmer metal prices which boosted commodity currencies.
Dana Sanchez, 3:26 pm
South Africa has seen a massive adoption of North American retail trends, and Black Friday is no exception, a trend analyst says. “It is tested, it works and is already embedded in the minds of South Africans.” Other research analysts are more critical. “Black Friday…is an attempt to cash in on the hype surrounding the day in the U.S.,” said Arthur Goldstuck, managing director at tech research firm World Wide Worx. “It is a classic example of self-inflicted cultural colonialism, except that here the motive is unashamedly commercial. That, in turn, means it represents blatant exploitation of the consumer at its worst.”
Dana Sanchez, 10:31 am
Bond notes will not be forced on consumers, the Zimbabwe government has said. This is not about re-introducing the Zimbabwean dollar, which became worthless in 2008 due to hyperinflation. The public has been warned not to adopt a negative attitude towards bond notes because they’ll ease the country’s cash shortage. Zimbabweans fear bond notes will trigger a repeat of 2008 hyperinflation. Adopting the U.S. dollar as the official currency in 2009 helped stop the bleeding. For Zimbabweans, cash isn’t the only thing running low. There’s a shortage of trust.
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