Latest news with #DuncanMiriri
Zawya
29-05-2025
- Business
- Zawya
Mauritania's Sidi Ould Tah wins AfDB presidency, CNBC Africa reports
Former Mauritanian finance minister Sidi Ould Tah has been elected as president of the African Development Bank Group, CNBC Africa reported on Thursday. (Reporting by Loucoumane Coulibaly and Duncan Miriri; writing by Bate Felix; editing by Mark Heinrich)
Yahoo
15-04-2025
- Business
- Yahoo
Analysis-Oil price drop turns up heat on emerging market crude exporters
By Duncan Miriri and MacDonald Dzirutwe NAIROBI/LAGOS (Reuters) -A steep drop in crude oil prices largely due to U.S. President Donald Trump's tariffs will squeeze budgets of emerging market oil exporters, analysts said, while the potential economic slowdown could also curb any benefits for importers. Concerns about the impact of a tit-for-tat trade war on global growth and demand for oil sent Brent crude prices plummeting by more than 20% within a week to a four-year low after Trump announced his sweeping tariffs on April 2. Prices have since recovered some ground to around $66 per barrel from below $60. Turkey, India, Pakistan, Morocco and much of emerging Europe relying on oil imports are set to see some benefits from lower prices of crude. But oil exporting states including Gulf countries, Nigeria, Angola, Venezuela and to some degree Brazil, Colombia and Mexico will feel the pain of losing a chunk of hard-currency revenues, investors said. "Losers will be hit relatively harder than the upside seen in importing countries," said Thomas Haugaard, portfolio manager for emerging market debt at Janus Henderson Investors. "Oil exports often contribute considerably to public finances which will spill over into credit risk premiums." Current oil prices are well below the average budget assumptions of $69 across main oil exporters' year-ahead projections, as calculated by Morgan Stanley, flagging Angola and Bahrain as the countries most sensitive. Angola is already feeling the pinch. It had to pay $200 million last week after JPMorgan issued a margin call on the southern African nation's $1 billion total return swap, the finance ministry said. The total return swap is a loan issued by the lender last December, backed by Angola's dollar bonds. "The current context has affected the commodities market and emerging market Eurobonds, including the trading level of Angolan Eurobonds, and has triggered a margin call. Angola fulfilled its obligation on time and in cash," the ministry told Reuters on Monday. Angola opted for the collateralised loan to manage liabilities at a time when its Eurobond market access faced uncertainties due to high external debts to a range of foreign creditors including China and other commercial lenders. Like other so-called frontier issuers, average yields on Angola's dollar bonds have surged to double digits in the selloff of risky assets following the U.S. tariffs. The International Monetary Fund classifies Angola's debt as being at risk of high debt distress, but the Angolan government said the country's debt trajectory remains solid and on a stable path. SOME DEBT TRADES UNRAVEL The drop in the price of crude is also undoing frontier markets debt trades that had held up for at least a year, JPMorgan said in a research note. It cited the Nigerian carry trade, which involved investing in the oil exporter's Treasury bills on bets the naira currency will not depreciate quickly against the dollar. Investors now risk incurring losses if the lower crude price hits the naira. "The central bank has had to increase its dollar sales interventions in order to avoid convertibility risks and limit a disorderly move," JPMorgan said in a note to investors. A sustained drop in the price of oil could undermine recent progress on economic reforms, and even reverse progress, said analysts. Oil accounts for about 90% of Nigeria's exports and crude earnings were set to fund 56% of this year's budget. The government forecast oil at $75 a barrel in the 2024 budget but has been forced to change its plan. "We are going back to the drawing board to look at our budget all over again," Finance Minister Wale Edun told reporters last week. Gulf oil producers like Saudi Arabia and the United Arab Emirates could weather the storm better given higher reserve levels, relatively low debt and some strides in economic diversification, economists said. Still, a drop in revenue could complicate their ability to spend on new projects, including de facto OPEC leader Saudi Arabia. On paper, emerging market oil importers should enjoy benefits from lower import bills, improved current account deficits and a positive impact on inflation pressures - but they also face risks. "The lower oil price outlook is positive for oil importers, albeit unlikely to counterbalance the significant headwinds from the trade war and the significant downside risks," said Monica Malik, chief economist at Abu Dhabi Commercial Bank. Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Small emerging market dollar bonds resume selloff, Pakistan drops more than 6 cents
By Colleen Goko and Duncan Miriri JOHANNESBURG/NAIROBI (Reuters) - International bonds issued by smaller, riskier, emerging economies suffered another sharp selloff on Wednesday after President Donald Trump's eye-watering 104% tariffs on China took effect, re-igniting turmoil across global markets. Pakistan's longer-dated dollar-denominated bonds tumbled more than 6 cents to be bid below the 70-cent threshold where debt is seen as distressed, Tradeweb data showed. Longer-dated bonds, issued by Sri Lanka, Nigeria and Egypt, were all down between 3.5-4.5 cents, although trading was thin, according to market participants. Debt in smaller emerging markets, known as frontier markets, has suffered sharp selloffs since Trump announced a raft of sweeping tariffs last Wednesday, with many bonds in the asset class losing 10 cents or more over the past week. The latest rout is boosting the cost of borrowing for those economies sharply, with many of the bonds seeing their yields in the double digits, a threshold that makes it unpalatable for them to tap international capital markets. "There are some concerns in the market that Frontiers will find it more difficult in the future to raise external funding due to the external market developments and possibly persistent loss in risk appetite," said Gergely Urmossy, senior frontier markets strategist at Societe Generale. This could lead to more currency weakness in those economies over the medium term and curtail the space for central banks to lower interest rates to shore up their economies, he added. Many frontier market governments, especially African sovereigns, had only recently returned to Eurobond markets. They had lost access for some two years when the fallout from COVID-19 and Russia's full-scale invasion of Ukraine sent inflation sharply higher and fuelled a global interest rate-hiking cycle that priced those governments out, and helped push Ghana and Zambia into default. Razia Khan, head of research, Africa and the Middle East at Standard Chartered said the latest set of tariffs had fuelled more concerns over global growth. "Frontier markets, especially at the lower end of the ratings spectrum, are seen as more vulnerable when risk-off sentiment grips markets," she said. Sign in to access your portfolio
Yahoo
07-04-2025
- Business
- Yahoo
Kenya thinks it can win from U.S. tariffs, but global recession risk looms
By Duncan Miriri NAIROBI (Reuters) - Kenya is among those exporters hoping a smaller Trump tariff blow vis-a-vis competitors might help them emerge as winners in the nascent global trade war, but translating the disparity into an advantage will be an uphill struggle. As governments around the world reeled from U.S. President Donald Trump's new tariffs, Kenya voiced optimism about potential advantages over rival textile manufacturers in Asia. Imports from the East African nation, which sent goods worth $737 million to the United States last year, will be charged the minimum 10% compared with 46% for Vietnam, 44% for Sri Lanka and 37% for Bangladesh. "With other textile-exporting countries facing much higher tariffs, Kenya could position itself as an alternative sourcing hub for buyers," Trade Minister Lee Kinyanjui said last week. Economists said up-and-coming manufacturers in East Africa like Tanzania and Ethiopia could also benefit, as could Latin American countries like Brazil, which also received the baseline 10% tariff. Any gains for Kenya, however, could be offset by the damage from tariffs to the global economy plus deep-seated weaknesses in its domestic business environment. J.P. Morgan raised its odds of global recession by year-end to 60% from 40% on Friday after China retaliated against the U.S. tariffs, while Goldman Sachs has raised the odds of a U.S. recession in the next 12 months to 45% from 35%. The chairman of Kenya's biggest garments manufacturer said the tariffs would pile expenses on companies already facing costs roughly 20% higher than global competitors because of steep electricity prices and taxes, and questioned whether international brands would rush to shift operations. "A temporary tariff disparity does not create real competitiveness," said Pankaj Bedi, whose United Aryan Ltd. supplies U.S. retailers including Target, Walmart and Levi's. Stresses for manufacturers are compounded by the grim outlook for the African Growth and Opportunity Act (AGOA), a U.S. trade initiative passed in 2000 that allows duty-free exports for thousands of products from Africa. Trade experts said the U.S. tariffs were likely to signal the end of AGOA, which expires in September and had been widely expected to be renewed in some form. NEGOTIATIONS WITH WASHINGTON The tariffs sent chills through the global economy, affecting nearly all of Kenya's trading partners. Most African countries have relatively small export balances with the U.S. but more significant trade relations with the European Union and China, J.P. Morgan said in a note on Monday. Kenya exported $1.35 billion in goods to the EU and $228 million to China in 2023, according to U.N. data. "While the direct impact with the U.S. might be limited, the indirect impact from potential growth slowdown in the EU and China, depending on the veracity of the impact from U.S. tariffs, could yet weigh on these economies," J.P. Morgan said. As well as his bullish initial assessment, Kenya's trade minister Kinyanjui did also take sober note on Monday of the havoc on global markets. "We anticipate there will be a serious impact across all sectors and I think the fears of recession become a very clear challenge, especially for third world countries," he said. Some manufacturers said Kenya would struggle to take advantage of any opening provided by the tariffs because their higher costs largely cancel out the edge from U.S. tariff rate differentials versus competitors. "Kenya's exports to the USA, previously duty-free under AGOA, will now be subject to additional costs, reducing their market competitiveness," the Kenya Association of Manufacturers said in a statement. Other manufacturers were nevertheless looking on the bright side. Jaswinder Bedi, whose company makes clothes for American wholesalers, said he planned to press ahead with a new factory that would triple his employees to more than 3,000. "Our comparative advantage has actually increased," he said. "Look at our competing countries ... those tariffs are very high." Much will depend on the ability of Kenya - and its competitors - to secure better terms through direct negotiations with Washington. U.S. Treasury Secretary Scott Bessent said on Sunday that more than 50 nations had started negotiations with the U.S. since Trump announced the tariffs last Wednesday. It was not known if Kenya was among them. At least one textile manufacturing competitor was moving aggressively to try to roll back the tariffs, with Vietnam's leader To Lam agreeing during a phone call on Friday with Trump to discuss a deal. Kenya opened trade deal negotiations with the first Trump administration in 2020. New talks were opened under President Joe Biden's administration on a trade and investment partnership aimed at lifting non-tariff barriers to trade but were not completed before Trump returned to office.
Yahoo
12-03-2025
- Business
- Yahoo
African payments system PAPSS plans to launch FX market platform this year
By Duncan Miriri and Karin Strohecker NAIROBI (Reuters) - A pan-African payments infrastructure provider designed to facilitate trade on the continent is piloting an African currency market platform to boost commerce across borders in the region, its chief executive said. The Pan-African Payments and Settlement System (PAPSS), backed by 15 central banks on the continent, expects to add the platform later this year to complement its payments infrastructure that it says is currently integrated with 150 commercial banks. "The rates will be market driven, and our system is able to do a matching based on the rates offered by the different participants in our ecosystem," Mike Ogbalu, the CEO of PAPSS, told Reuters in an interview from Cairo. Africa's foreign exchange markets are often shallow and liquidity is limited, with South Africa and Nigeria dominating geographically and much of the wider trading centred around local and hard currency pairs. Those seeking other African currencies must typically secure dollars first. However, the region has also seen some major currency reforms with countries such as Nigeria, Egypt and Ethiopia pushing ahead with efforts to move to more market-based regimes. The Africa Currency Marketplace, as the platform will be known, will allow parties to exchange local currencies directly, Ogbalu said. He cited the example of an Ethiopian airline selling naira-denominated tickets in Nigeria, which could then exchange its naira revenue with a Nigerian company trading in Ethiopia using the birr. "Our system will intelligently match them and then party A will get Naira in Nigeria and party B will get birr in Ethiopia. The transaction just completes without any third-party currency being involved at all," Ogbalu said. There have been frequent case of companies not being able to repatriate their revenue from other countries in the region, whenever violence or economic problems cause dollar shortages in markets like South Sudan or the Central African Republic. Companies operating in the region have been forced to take a writedown every financial year to account for currency revaluations in markets with volatile currencies, Ogbalu said. Others have invested in assets like real estate to try to preserve the value of their assets in such markets. There have been attempts to use cryptocurrencies like Bitcoin to get around that problem but their usage is still low, partly due to lack of legal frameworks to support their use in markets like Kenya. "Those are some of the things we think that this African currency marketplace will unlock," he said, saying it would be "transformational" without giving details on expected size or trading volumes.
