Africa Briefs

SARB will intervene to protect currency

South Africa's central bank will only intervene to protect the currency if "excess volatility or abrupt and disorderly adjustments" threaten the orderly functioning of the market, the deputy governor said on Tuesday.

"Policy flexibility requires that foreign exchange intervention continues to be part of the monetary policy toolkit to support economic and financial stability," deputy governor Daniel Mminele said in a speech delivered in New York that was posted on the bank's website.

The Reserve Bank two weeks ago resisted political pressure and kept benchmark rates unchanged at 6.5 percent. The rand has fallen close to 20% against the US dollar this year while yields on bonds have also spiked.

The 4-3 decision to keep rates pat rather than hike also exposed tensions between policymakers and the ruling party which has previously argued for a closer alignment of fiscal and monetary policy.

"The SARB has allowed the exchange rate to act as a shock absorber and adjustment mechanism," Mminele said.

"This does not mean that we are totally indifferent to exchange rate movements. It also does not mean that there cannot be circumstances where the cost of not intervening to dampen excess volatility or abrupt and disorderly adjustments, could be higher than that of intervening." – Nampa/Reuters

Zambia mines to pay royalties in US dollars

Zambia has asked mining companies to pay mineral royalties directly to the central bank in dollars as one of the measures to help stabilise its kwacha currency, its finance minister said on Tuesday.

Margaret Mwanakatwe said in parliament that pressure on the currency of Africa's No.2 copper producer had lately mounted due to demand for US dollars from importers of petroleum products and external debt servicing obligations.

Mozambique cuts 2018 GDP forecast

Mozambique's economy will grow more slowly in 2018 than initially expected, by 4.1% compared to an earlier estimate of 5.3%, finance minister Adriano Maleiane told reporters on Tuesday.

The small southern African country's economy saw gross domestic product expand by 3.7% in 2017.

Mozambique is battling to source finance for its large debt after being cut off by international donors over US$1.4 billion of previously undisclosed loans. – Nampa/Reuters

Kenya's sluggish credit growth not sustainable

An annual private sector credit growth rate of less than 5% cannot sustain Kenya's required economic development, the CEO of Standard Chartered Kenya said on Tuesday.

The government should consider repealing its cap on commercial rates in the long run to boost credit growth, which plunged to close to zero from double digit expansion after the cap was imposed in September 2016, Lamin Manjang told Reuters.

The cap, at four percentage points above the central bank's policy rate, was a bid to lower credit costs. An attempt by finance minister Henry Rotich to repeal the cap in June was blocked by lawmakers in August.

"In the long run it is better to have market forces determine interest rates," Manjang said.

Lawmakers have removed a floor on commercial deposit interest rates, which had been set at 70% of the central bank rate, a move that Manjang said was a "step in the right direction". He said it would help lenders to boost their margins, without providing details. – Nampa/Reuters

SA mining body ‘welcomes’ new industry charter

The industry body representing South African mining companies said yesterday that its members "broadly" supported a new regulatory charter for the sector but had concerns about a number of clauses including procurement targets.

Local content procurement targets include 70% of goods and 80% of services to come from black-owned companies, a tough goal for mechanised mines that rely heavily on imported capital equipment.

The Minerals Council South Africa said in a statement that it "remains concerned about some key issues" including the "practicality of the inclusive procurement provisions relating to local content targets for mining goods, the targets for services, and the turnover threshold for junior miners". – Nampa/Reuters

More African ivory being smuggled into China

More African ivory is being smuggled into China from Myanmar and Beijing's ban on trade in ivory has failed to dampen imports, a report by conservation group Save the Elephants said on Tuesday.

Wildlife activists said they welcomed China's ban this year on the ivory trade, arguing the step by a country that is the world's largest importer and end user of tusks was vital to reducing the slaughter of the endangered species.

But it has not stopped what Save the Elephants called the "prolific growth" in trading in a town in the "Golden Triangle" area, where Thailand, Laos and Myanmar meet at the confluence of the Ruak and Mekong Rivers, south of China.

There has been a 60% growth in new ivory items seen for sale in the Myanmar-China border town of Mong La in the past three years and 90% of buyers are Chinese wishing to smuggle the ivory home, the report said.

It gave no separate figures for the period since the ban was introduced. – Nampa/Reuters