Africa

Kenya’s government agreed to loan its cash-strapped national carrier 5 billion shillings ($49.5 million) for working capital and to enable it carry out a scheduled engine overhaul for its E190 Embraer fleet, Bloomberg News reported. Kenya Airways Plc., which is 48.9% owned by the government, is in discussions with the state and other entities in the nation’s aviation industry that include a “possible restructuring of the operations and corporate structure of KQ,” the company said in an emailed statement. The deal is subject to regulatory approvals, it said.

South Africa’s government has announced plans to slash its public sector wage bill, setting President Cyril Ramaphosa on a collision course with the country’s powerful trade unions as he seeks to fix the biggest ever fiscal deficit in the post-apartheid era and avoid another ratings downgrade, the Financial Times reported. Tito Mboweni, Mr Ramaphosa’s finance minister, said in a budget speech on Wednesday that the state plans to cut 160bn rand ($10.5bn) from civil-servant pay in the next three years in order to halt a rapid rise in public debts between 2020 and 2021.

Latin American and sub-Saharan African countries have taken out at least $152 billion in oil-, mineral- and metal-backed loans from China since 2004, easy money that has contributed to crippling debt levels, an NGO report said on Thursday, Reuters reported. The Natural Resource Governance Institute (NRGI) calculated that, including loans from other countries such as Russia and global commodity traders, the total amounted to $164 billion. Two Chinese state banks, China Development Bank and Eximbank, alone accounted for 77% of the loans, NRGI said in its report.

South Africa almost doubled the level of funding for the national airline to 16.4 billion rand ($1.1 billion), cash that will go toward supporting a restructuring plan for the technically insolvent carrier, Bloomberg News reported. The bailout will be used to service and pay debt previously guaranteed by the state over the “medium term,” Finance Minister Tito Mboweni said in his budget speech in Cape Town on Wednesday. The amount compares with 9.2 billion rand earmarked for South African Airways in October.

Domestic Ivorian cocoa exporters fear going bankrupt because they cannot compete with the higher prices multinational companies are paying for beans, the Ivory Coast’s traders association (GNI) told Reuters, Reuters reported. Western chocolate companies such as Lindt, Hershey and Ferrero pay a premium for sustainable cocoa made with fair trade certification, buying mainly from multinational companies such as Cargill, Olam and Barry Callebaut.

Ghana is considering to buy out the debts of independent power producers as a step toward restructuring contracts and reducing its power bill, according to people familiar with the matter, Bloomberg News reported. West Africa’s second-biggest economy currently pays as much as $500 million per year for power it doesn’t consume and is in talks to end the practice. Deals that obliged the government to pay for power regardless of whether or not the supplies were needed, have left the country with almost double the generation capacity it requires to meet peak demand of 2,700 megawatts.

Hard-currency bond investors have already downgraded South Africa to junk. The premium investors demand to the country’s dollar debt rather than U.S. Treasuries climbed above the emerging-market average in October, shortly before Moody’s Investors Service cut the country’s credit outlook to negative, Bloomberg News reported. It has now been above the mean for the longest period since Bloomberg started tracking the data in 1997. Previously, South Africa’s sovereign spread crossed above the average for brief periods only during times of stress.

Zimbabwe’s troubled national airline has failed to secure outside investment, dealing a blow to government plans to sell state-owned assets and secure much-needed revenue, Bloomberg News reported. The airline, which in Oct. 2018 was placed under administration, a form of bankruptcy protection, received expressions of interest from 10 international investors and had short-listed three bidders.

South Africa’s rising country risk is putting upward pressure on interest rates, even as inflation expectations decline, with credit-rating companies contributing to the negative sentiment, according to the central bank, Bloomberg News reported. Moody’s Investors Service cut its 2020 economic growth forecast for South Africa to 0.7% from 1% on Monday and said the nation’s relatively high real interest rates are constraining expansion.

The rand strengthened the most among emerging-market currencies on Friday as investors assessed President Cyril Ramaphosa’s pledges to overhaul South Africa’s electricity industry and curb government spending, Bloomberg News reported. While offering little that is new on the planned restructuring of Eskom Holdings SOC Ltd., Ramaphosa announced sweeping measures Thursday to address power shortages and reduce dependence on the debt-stricken utility.