October 2018 / South Africa
A Turkish-African business meeting in Istanbul bore fruit Wednesday in the form of three new pacts with both private and public concerns.
Zimbabwe, Senegal, and the African Union all signed deals with parties in Turkey during the 2nd Turkey-Africa Economy and Business Forum in Turkey's economic hub.
The first agreement -- a memorandum of understanding (MoU) -- was signed by Senegal’s Mines and Geology Ministry and Turkey’s Tosyali Holding for the company to invest in iron and steel in the West African country.
Another MoU was signed between Turkey's Trade Ministry and the African Union Commission for collaboration on trade and investment.
The last trade cooperation pact was signed by the Turkish and Zimbabwean governments.
The two-day forum, which started on Wednesday in Istanbul, is bringing together 3,000 African and Turkish businesspeople.
The forum was organized by Turkey’s Foreign Economic Relations Board in coordination with Turkey’s Trade Ministry and the African Union.
High Grand Falls DamConstruction of the High Grand Falls Dam, which is also one of the largest undertaking by the government after the Standard Gauge Railway project, and is among President Uhuru Kenyatta’s legacy projects, conceived in 2009 during former President Mwai Kibaki’s regime as part of an ambitious effort to build 1,000 water reservoirs across the country in an attempt to revolutionize irrigation-based farming. The dam is set to produce 700MW of hydropower and facilitate irrigation in more than 250,000ha of land Kitui, Garissa and Tana River counties. It is also part of the Sh1.5 trillion Lamu Port and Southern Sudan-Ethiopia Transport Corridor (Lapsset) projects and will be built downstream the Seven Folks dams along River Tana. “The benefit to the region is enormous. Because first, it is going to form a large man made lake, where it will be easy introducing fishing and tourism activities to the communities around it,” said Prof Fred Segor.
Perennial floodingMr Fred further added that the dam will also address the perennial flooding at the Kenya’s Coast region while also serving 1.5 million people living downstream. The dam will hold more than 5.6 billion cubic metres of water with construction expected to take six years. Plans to roll out the project will begin in earnest after the Treasury agrees with the contractor on the timelines in implementing the project.The ruling also paves the way for the next phase of land acquisition where affected persons will be relocated.
Egypt has reached an agreement on a new $3 billion financing deal with the World Bank, the country’s investment and international cooperation announced yesterday.
Sahar Nasr said that she had agreed with the World Bank officials on the final arrangements for a new loan for Egypt.
Nasr’s statement neither provided details on whether the loan will be offered on one tranche nor its interest rate. However, she stressed that the funding would be secured in “the next few months.”
The Egyptian minister noted that the new funding “comes within the framework of the World Bank’s confidence in Egypt’s economic reform measures and its keenness to continue to support the implementation of the nation-wide economic and social reform programme.”
The new loan, Nasr pointed out, is expected to raise the country’s total external debt, which was reported to have registered $92.64 billion at the end of last June.
In March, Egypt announced that it had received the third and final $1 billion tranche of a World Bank $3 billion loans, which was aiming to support the government budget and the country’s economic reform programme.
Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolution and to ease a dollar shortage that has crippled import activity and hampered recovery.
In November 2015, Egypt won a three-year $12 billion International Monetary Fund (IMF) loan, which aimed at reviving the country’s struggling economy, bringing down public debt and controlling inflation while seeking to protect the poor.
A Turkish construction company will start building Sudan's biggest airport early next year, according to the firm's chairman.
"We will lay the foundation for the Khartoum International Airport in the first quarter of 2019 and complete it in less than 36 months," Selim Bora, the chairman of construction firm Summa, told Anadolu Agency.
Bora stated that the three-phase project is worth $1.15 billion.
"First we will built a terminal with a 6 million-person [annual] capacity along with all infrastructure services, runways, and airport aprons," he said.
Bora added the airport's annual capacity will reach 9 million in the second phase and 12 million in the third phase.
The project, developed on the build-operate-transfer model, is currently in the design phase, he said.
Saying that Sudan has the largest surface area in Africa, Bora added the airport will also serve other countries in the region.
"Currently airports in Cairo and Addis Ababa are the most important and effective ones on the continent," he noted.
Investing in Africa since 2007
Bora said he hoped the air passenger traffic in those airports will shift to Khartoum International Airport, which enjoys geographical advantages.
He said Summa entered the African market in 2007 by doing several projects in Libya and then in Equatorial Guinea.
The company has continued African projects in such countries as Senegal, Rwanda, Congo, Niger, Sudan, and Benin, he added.
"Niger will host next year's African Union Summit next July, so the country needs infrastructure services and investments," Bora said.
He said the renovation of an airport and construction of a five-star hotel in Niger will be completed in July 2019.
This March Summa signed the deal with Sudan’s Finance Ministry to build the new Khartoum airport.
Piotr Matys, analyst with Rabobank:
- Mboweni’s budget was “the opposite of what the market was hoping” for
- “It’s also a timely reminder that the country faces tremendous fiscal challenges amid weak economic activity constrained by structural issues”
Win Thin, strategist at Brown Brothers Harriman:
- “I was clearly too optimistic that Mboweni would announce enough fiscal tightening to keep the ratings agencies at bay”
- “Risks of downgrades have gone up significantly”
Bernd Berg, strategist at Woodman Asset Management:
- “South Africa remains stuck in a low growth, high-debt environment and it is difficult to get euphoric about the outlook for the rand at this juncture”
- “With little positive domestic drivers and a challenging external environment, especially for South Africa’s main export partner China, it is hard to see the ZAR outperform its EM peers in the short run”
Razia Khan, chief Africa economist at Standard Chartered:
- “The initial, knee-jerk reaction of the market to the budget was understandably negative” and investors started to price in less benign ratings reviews
- Still, “we believe that the tax-buoyancy assumptions in the medium term are deliberately conservative”
- “Even the revenue ‘miss’ in the current year is arguably due more to VAT rebates -- a good thing, which ultimately strengthens tax compliance -- rather than just the growth slowdown”
- “Although the higher debt path outlined may trigger some concern, this is no justification for a downgrade in itself” from Moody’s
Hans Gustafson, strategist at Swedbank
- It will be a “very challenging” for South Africa with “a higher borrowing requirement in an environment with tight U.S. liquidity and weaker growth globally”
- “The rand needs to incorporate a higher risk premium”
Mehul Daya, analyst at Nedbank:
- It’s a “double whammy” for the rand and local-currency bonds as the budget was disappointing and a weaker euro is strengthening the dollar
- This means South African assets face internal as well as external headwinds
Kevin Daly, money manager with Aberdeen Standard Investments:
- South Africa’s budget was “somewhat of a disappointment” given that the deficit target for 2018-19 was increased to 4 percent from around 3.5 percent
- “But we don’t think this is enough to prompt action by Moody’s to change the outlook to negative”
Marek Drimal, analyst at Societe Generale:
- “The headline figures are discouraging, but they will not necessarily lead to a Moody’s downgrade to non-investment grade”
- “That being said, South Africa is facing a prolonged period of weak growth, elevated inflation, sizeable current-account deficits, and longer-term risks of a downgrade”
- Reserve Bank should raise rates in November
- Rand will probably fall to 16 per dollar by the end of the year and 17 by the end of September 2019
- The land-reform debate will “periodically stress financial markets”