African Business Briefs

JOHANNESBURG – The head of the International Monetary Fund (IMF) on Tuesday defended plans to create a US$100 billion fund to help countries mitigate the effects of climate change. “The problem of climate change itself is not really in the mandate of the IMF,” Dominique Strauss-Kahn told a group of students in South Africa’s economic hub Johannesburg. “What is in the mandate of the IMF is to help financing, in a sustainable way, what has to be done – especially in the developing countries – to deal with it.” Climate change “has a lot of macro-economic consequences”, he said, including “consequences on the social security, a threat to democracy and sometimes a threat to peace”. The late January announcement of the “Green Fund” had raised worries that the Strauss-Kahn was trying to extend the IMF’s mandate beyond its traditional sphere. He said the IMF would in about two weeks release a working document to explain the proposed scheme.

Uganda opposition to revoke oil deals

KAMPALA – Uganda’s opposition will revoke existing production sharing agreements and force oil companies in the country to renegotiate their deals, a senior official said.
The east African country struck vast oil deposits around the Lake Albert region along the border with Democratic Republic of Congo in 2006, prompting a giddy scramble by foreign oil firms for stakes in the nascent sector.
Civil society organisations have attacked the deals, saying they favour the companies and have asked for more transparent and equitable revenue sharing with the Ugandan government.
“These agreements have a lot of loopholes and that’s why the government has obstinately defied the wishes of its citizens and refused to disclose them,” Beatrice Atim Anywar, shadow minister for natural resources and environment, told Reuters.

SA business confidence up

JOHANNESBURG – South African business confidence improved at its fastest pace in 16 years in the first quarter of 2010, led by better sentiment among car dealers, a survey showed on Tuesday. But the quarterly confidence index sponsored by Rand Merchant Bank (RMB) and the Bureau for Economic Research (BER) remained well below 50 at 43 points, meaning most businesses are still negative about current economic conditions. The index jumped 15 points compared to the previous quarter, adding to a recovery seen towards the end of 2009, when the economy pulled out of its first recession in nearly two decades. RMB said in a statement the latest increase put the index back at levels seen before the height of global economic crisis 18 months ago, but warned the recovery in the economy was still fragile.

Merc expands bus business

EAST-LONDON – Mercedes-Benz South Africa (MBSA) will expand its bus sales region to include all right-hand drive markets in Southern Africa, including Zimbabwe, Zambia, Mozambique, Malawi, Namibia, Botswana, Swaziland, Lesotho, Mauritius, as well as Tanzania, Kenya and Uganda, Engineering News reported. The means that where buses were previously procured and looked after from Brazil and Germany, they will now be assembled by the MBSA bus plant, in East-London, with sales and service support to flow from South Africa, says MBSA bus and coach divisional manager Jan Aichinger. MBSA has already received an order from a transport company in Zimbabwe for 26 buses. He believes the Southern African market may add another hundred units a year or more to MBSA’s bus business.

JSE questions ArcelorMittal

JOHANNESBURG – ArcelorMittal’s South Africa unit said it was answering questions from the Johannesburg Stock Exchange (JSE) about why it had delayed making public a change in its iron ore supply deal. ArcelorMittal South Africa informed the market on Feb. 26 of a change in its iron ore supply deal – three weeks after its main supplier told it that it would stop selling the metal at a discount. ArcelorMittal South Africa spokeswoman Marion Green-Thompson said the steelmaker had given an explanation for the delay after which the JSE had sent another request for further information. She declined to give details.

Metropolitan profit down

JOHANNESBURG – South African insurer Metropolitan Holdings posted lower 2009 profit after more consumers defaulted or cancelled life insurance policies and the value of its investment assets dropped.
The country’s fourth-biggest insurer said yesterday diluted core headline earnings per share for the year to end-December fell 7 percent to 141 cents from 151 cents in 2008, in line with its own forecast of a five to ten per cent drop.
The insurer, heavily exposed to the lower end of the retail market which is more sensitive to changes in the cost of basic items, said food and transport inflation remained its biggest challenges.
Metropolitan’s total new recurring premium business fell nine per cent to R1,159 billion, while its embedded value climbed to R12 billion from R11,3 billion in 2008.

Nigeria’s fuel subsidy a ‘waste’

ABUJA – Nigeria’s fuel importers claim the government owes 880 billion naira (US$6 billion) in subsidies accrued over the past five years, highlighting the urgent need for deregulation, the finance minister said on Tuesday.
Despite vying with Angola as Africa’s top oil producer, Nigeria imports some 85 per cent of its fuel needs because of the disrepair and mismanagement of its four state-owned refineries.
Fuel subsidies – one of the few benefits most Nigerians see from their country being a major oil producer – cost it more than US$4 billion a year and the government has repeatedly said they will be abolished as part of deregulation of the sector.
Previous efforts to deregulate the sector led to widespread fuel shortages and threatened to bring sub-Saharan Africa’s second biggest economy to a grinding halt as importers refused to keep up shipments in protest.

Tullow upgrades reserves

LONDON – London-based explorer Tullow Oil Plc upgraded its estimate of reserves at its Tweneboa field in Ghana by 60 per cent and said yesterday the field could prove to be much bigger yet. Tullow added it had agreed a framework deal to bring China’s CNOOC and French oil major Total in as equal partners in its Ugandan assets, which would involve Tullow selling more of its share than earlier planned.
The company said successful drilling in the past year showed potential resources of 4,5 billion barrels across all its prospects and fields in Ghana. The company upped its ‘proved plus probably’ reserves estimates – the most likely estimate of recoverable reserves – for its Tweneboa field to 400 million barrels from 250 million.
Exploration director Angus McCoss told Reuters in a telephone interview the field could be as big as the nearby Jubilee field which has proved plus probable reserves of 1,2 billion barrels.
The company added that Jubilee remained on budget and was on track for start-up in the fourth quarter of 2010.

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