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Africa’s GDP to grow by $300 billion a year should countries adopt technology

Finance Minister Ken Ofori-Atta says research has revealed that Africa’s Gross Domestic Product (GDP) will grow by $300 billion a year by 2025 should African countries adopt digital technology.

He said there is the need for African countries to fast-track policies and programmes towards leveraging on technology for economic growth.

“If we digitise as a continent, we can see 10 per cent growth of our GDP because of technology.
“South Africa reduced cost by 22 per cent and revenues picked up in Rwanda by six per cent because of digital technology,” he said.

Mr Ofori-Atta made these remarks when speaking at the launch of an Integrated ICT System for Microfinance and Small Loans Centre(MASLOC) at the Jubilee House, in Accra.

The IT system is an innovative solution to address payment and settlement challenges facing MASLOC to enhance transparency and accountability in the disbursement and recovery of loans.

Mr Ofori-Atta lauded Vice President Bawumia for championing the government’s digitisation agenda saying it is the way forward towards formalising and transforming the Ghanaian economy.

However, the Minister admitted that the country has not reached digital maturity yet, and underlined the need to continue pursuing digital infrastructure to accomplish that agenda.

Commenting on the impact of the COVID-19 pandemic on the Ghanaian economy, the Finance Minister admitted that it was practically impossible for government to sustain the economy following the imposition of a partial lockdown in Accra, Tema, Kasoa and Greater Kumasi.

He explained that it was largely due to the fact that, majority of the country’s population worked in the informal sector, therefore, after three weeks of lockdown, government was left with little choice to lift the restriction on movements.

“When you look at what happened during the lockdown. It was quite clear after a point that given that 90 per cent of our population is informal and they go out each day to earn wages, it became increasingly impossible to continue with such a policy,” he added.


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Global oil demand forecast slightly improves as lockdowns ease, says International Energy Agency

Global oil demand is likely to increase slightly during 2020 as lockdowns are gradually eased around the world, according to the International Energy Agency (IEA).

Better than expected mobility across the countries which form the Organisation for Economic Co-operation and Development has also helped increase demand, it said.

The IEA has now revised upward its global oil demand outlook for 2020.

The organization now expects oil demand to fall by 8.6 million barrels per day in 2020 instead of 9.3 million barrels per day which was the estimate in its previous forecast, published in April.

This is still sharply down on demand from 2019 and marks a record drop in global oil demand.

“The gradual relaxation of restrictions on movement is helping demand. We estimate that from a recent peak of 4 billion, the number of people living under some form of confinement at the end of May will drop to about 2.8 billion worldwide,” the organization said in a report.
“Mobility still remains limited for many citizens, but businesses are starting to reopen gradually and people are returning to work, which will provide a boost to oil demand, albeit a modest one at first.”
The IEA noted that economic activity was beginning a gradual but fragile recovery but warned that major uncertainties remain.

“The biggest is whether governments can ease the lockdown measures without sparking a resurgence of Covid-19 outbreaks,” it said.


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Storm clouds gather over U.S. stocks as hopes of quick recovery fade

(Reuters) – A lightning-quick rally in U.S. equities is showing cracks, as investors face mounting evidence that the economy’s coronavirus-fueled woes may be far longer-lasting than many had anticipated.

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, U.S., April 26, 2020. REUTERS/Jeenah Moon
For weeks, hopes that massive stimulus from the Federal Reserve and U.S. government would set the stage for a recovery later in the year fueled a blistering rebound in stocks even as the worst drop-off in jobs since the Great Depression slammed the economy.

But recent comments from top officials have undercut the case for a speedy economic recovery even as states ease lockdown restrictions, forcing investors to factor in a protracted downturn that would likely weigh on stocks while fueling flows to bonds and other safe-haven assets.

After surging over 30% in just over a month, the S&P 500 .SPX benchmark stock index has edged down about 4% since late April. Equity-focused funds have seen three straight weeks of outflows totaling around $30 billion, analysts at Deutsche Bank said in a report. In contrast, bond funds have notched inflows for four consecutive weeks, drawing nearly $47 billion, the bank said.

“There’s still a lot of uncertainty out there,” said Nela Richardson, investment strategist with Edward Jones. “There’s corporate earnings uncertainty, there’s economic uncertainty, and then there’s just the behavioral adjustment of consumers … facing down a health risk and trying to restart their lives.”

Federal Reserve Chairman Jerome Powell warned on Wednesday of an “extended period” of weak economic growth, citing concerns over how well future outbreaks of the virus can be controlled and how quickly a vaccine or therapy can be developed.

Those comments came a day after the nation’s top infectious disease expert, Dr. Anthony Fauci, told Congress that U.S. states lifting sweeping lockdowns could touch off new outbreaks of COVID-19, the respiratory disease caused by the coronavirus, which has killed over 80,000 Americans.

In addition, there are renewed tensions between the United States and China, a reminder of the trade tensions between the world’s two largest economies that rattled stocks throughout 2019, and some predictions of deflationary pressures on prices.

“Skepticism abounds regarding the likelihood the rally will continue,” analysts at Goldman Sachs said in a recent note to clients. “A single catalyst may not spark a pullback, but concerns exist that we believe … investors are dismissing.”

Concerns include $103 billion in expected bank loan losses over the next four quarters, a lack of stock buybacks and domestic and global political uncertainty, the bank said.

Several big-name investors have warned in recent days about the rally in equities becoming overextended. David Tepper of hedge fund Appaloosa Management told CNBC on Wednesday that the current market was the second most overvalued he has ever seen.

Famed hedge fund manager Stanley Druckenmiller told the Economic Club of New York here on Tuesday that the risk-reward here in today’s market was “maybe as bad as I’ve seen it in my career.”

The concentration of the market’s gains in a small group of technology and internet stocks, obscuring the underperformance of other areas, is also sending a cautionary note.

The average stock in the S&P 500 is down 8.7% since April 29, more than double the index’s losses since that date, according to an analysis by Bespoke Investment Group.

An extended resurgence of stock market volatility could accelerate flows into fixed-income assets, which have recently drawn investors seeking to benefit from the Fed’s expanded bond-buying program.

“The stock market is indicating that we are going to continue to move toward recovery whereas the bond market is just kind of sitting there,” said Walter Todd, chief investment officer at Greenwood Capital.

The yield on the benchmark 10-year Treasury note US10YT=RR has stayed in a tight range in recent weeks after falling sharply in late March. Bond yields move inversely to prices.

The rally in stocks may have left equities more vulnerable to bad news, including problems that U.S. states may encounter as they move to reopen their economies in coming weeks, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

“There is probably more downside in equity prices than there is in bond yields,” Samana said. “The bond market is already fairly cautious in its positioning in terms of the view of the world that it has.”

(This story has been refiled to correct typographical error in headline.)

Reporting by Lewis Krauskopf; Additional reporting by Ross Kerber in Boston; Writing by Ira Iosebashvili; Editing by Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

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Credit Suisse proposes crisis manager Meddings for board seat

ZURICH (Reuters) – Credit Suisse (CSGN.S) proposed on Monday Richard Meddings, a British banker with long experience of crisis management, for election to its board in its first non-executive nomination since the Swiss bank was rocked by a spying scandal.

Two incidents of spying on some of Credit Suisse’s top executives have drawn scrutiny of both the executive and non-executive management of Switzerland’s second-biggest bank.

Meddings, chairman of Britain’s TSB Bank, has wide experience helping lenders navigate challenging times, including previously at Deutsche Bank DBGKn.DE and Standard Chartered (STAN.L).

His appointment will need to be approved by shareholders at an annual general meeting on April 30.

Switzerland’s market supervisor FINMA is examining Credit Suisse’s oversight of Chief Executive Tidjane Thiam and his top lieutenants, as well as possible control failures at the bank’s board of directors.

Credit Suisse Chairman Urs Rohner, in a statement announcing Meddings’ nomination, highlighted the Briton’s record in the financial industry and managing risk.

“Through his wealth of knowledge and experience in the financial industry and his expertise in audit and risk management, Richard will make a valuable contribution as a new member of our board of directors,” Rohner said.

As chairman of Britain’s TSB Bank, Meddings assumed executive responsibility after the lender’s chief executive was forced out following a botched migration of customer data which locked out nearly 2 million customers and wiped millions off parent Sabadell’s (SABE.MC) 2018 profits.

Meddings also served on the board of Deutsche Bank when it paid more than $7 billion to settle U.S. allegations of mis-selling mortgage-backed securities.

He was finance director of Standard Chartered when it faced pressure from U.S. authorities over $250 billion worth of transactions tied to Iran.

Reporting by Brenna Hughes Neghaiwi and Silke Koltrowitz, editing by John Revill and Susan Fenton

Our Standards:The Thomson Reuters Trust Principles.


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Bloomberg ranks cedi as best performing currency in the world against the dollar by

Bloomberg ranks cedi as best performing currency in the world against the dollar

Bloomberg has adjudged the Ghana cedi as the best performing currency against the US dollar among the 140 currencies it currently tracks.

According to Bloomberg, the local cedi has so far appreciated by 3.4 percent against the dollar as at Monday, February 3, 2020.

The fortunes of the cedi look even brighter considering the country is on the verge of issuing a US$3 billion Eurobond which is expected to provide more dollar inflows that would further cushion the cedi from volatilities.

The local currency’s performance is a stark contrast to the 2019 performance where the cedi cumulatively depreciated by about 13 percent.

The cedi’s strong performance comes on the back of a number of measures put in place by the central bank as well as the Finance Ministry to resolve the cedi’s perennial struggles against its major trading partners.

The central bank, among other things, announced the commencement of forward fx auctions which basically allows banks and other dealers to make advance purchases of foreign currency to be supplied at an agreed rate later on.

The Bank of Ghana adopted this to help in regulating the supply of foreign currency and to stabilize the cedi for some time.

The central bank’s auction committee in a statement issued last week said it accepted less than fifty percent of the total amount of bids submitted by banks in the forex forward sales for Tuesday, January 28, 2019.

The forty million dollars accepted by the central bank is about 38 million dollars less than the amount the banks bid for.


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Absa Group concludes agreement with MIGA to bolster financing

Absa Group Ltd., one of the largest diversified financial service providers in Africa, has concluded an agreement with the Multilateral Investment Guarantee Agency (MIGA) – a member of the World Bank Group, helping Absa expand financing across seven countries in sub-Saharan Africa.

In terms of the agreement, MIGA will issue guarantees of US$497million to Absa. The guarantees are valid for as long as 15 years and apply to Absa’s subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia.

The guarantees will help to protect Absa against risks related to the mandatory capital reserves that Absa and other banks are required to hold with central banks. They will free-up financial capacity, enabling Absa’s subsidiaries to provide additional lending and generate more revenue. The subsidiaries will increase sustainable financing for corporates and small- and medium-sized businesses, as well as projects with co-climate benefits.

“We are pleased to work with MIGA. Their guarantees allow us to provide additional financing in our subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia,” said Jason Quinn, Absa Group Financial Director.

Absa is the first African banking group to enter into this type of guarantee transaction with MIGA.


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Ghana signs deals worth GH¢2.35 billion at ongoing UK-Africa Investment Summit

The government of Ghana has signed commercial deals with UK firms worth more than GH¢2.35 billion for some five projects including an upgrade of the Kumasi Teaching Hospital in the Ashanti Region.

The deals, which were signed on the sidelines of the UK-Africa Investment Summit, according to the UK’s Department for International Development and Department for International Trade, are estimated at £326.8 million, which translates to about GH¢2.35 billion using the prevailing BoG exchange rate.

The breakdown of the projects given by the UK’s Department for International Development and Department for International Trade is as follows:

Africa win £26m export contract to supply solar-powered water filtration systems
BHM £80.3m work on the Tema-Aflao Road Project
Contracta Construction UK wins £120.5m export contract to upgrade Kumasi teaching hospital
Contracta Construction UK wins £40m export contract to develop Kumasi Airport
Tyllium and Ellipse win an export contract worth £60m to provide 250 new beds for a general hospital in Koforidua
The five deals are part of some 27 commercial deals signed with African entities on the opening day of the UK-Africa Investment Summit taking place in London.

The UK-Africa Investment Summit, hosted by the Prime Minister, brings together 21 African countries with UK and African companies.

This is the first time governments and businesses from the UK and Africa have come together for an event of this scale.

“The commercial deals are expected to drive jobs and growth in all parts of the UK and in Africa, benefiting a range of British companies from family firms to major multinationals. All new investments will reflect the Prime Minister’s commitment to building long-term, sustainable relationships in Africa underpinned by our values and high standards,” a press statement issued by the UK High Commission said.


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Air France-KLM proposes buying 49% of Malaysia Airlines, JAL seeks smaller stake: sources

Liz Lee, Anshuman Daga

KUALA LUMPUR/SINGAPORE (Reuters) – Proposals to invest in ailing Malaysia Airlines include one from Air France-KLM (AIRF.PA) which wants as much as 49% while Japan Airlines (9201.T) is looking at a 25% stake, people with knowledge of the matter said.

FILE PHOTO: Malaysia Airlines planes are pictured at Kuala Lumpur International Airport in Sepang, Malaysia, July 22, 2019. REUTERS/Lim Huey Teng
Domestic carrier AirAsia Group Bhd (AIRA.KL) and Malindo Air, the Malaysian arm of Indonesia’s Lion Air, have also submitted proposals, the people added.

Malaysia’s government has found the proposals from foreign airlines more attractive but the sovereign wealth fund that owns Malaysia Airlines favors a deal with AirAsia, one of the sources said.

“The bids from the foreign carriers are more comprehensive and strategic as both plan to capitalize on the strategic location of Malaysia for their operations,” said the source.

The Malaysian government has been seeking a strategic partner for its national airline, which has struggled to recover from two tragedies in 2014 – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.

That year, it was taken private by sovereign wealth fund Khazanah Nasional Bhd, which paid 1.4 billion ringgit ($345 million) for the 30% of shares it did not already own.

The sources declined to be identified as the discussions are confidential. Representatives for Air France-KLM, AirAsia and Malindo did not immediately respond to requests for comment.

Japan Airlines (JAL) said it was looking to expand its partnership with Malaysia Airlines through their joint venture but declined to comment on reports of a potential investment in the company.

The government has received five proposals as part of a review that started last year, Malaysian Prime Minister Mahathir Mohamad said on Monday, although he declined to name the suitors.

There is no official timeline for a deal, but one source has said the government wants to get an investor finalised this quarter.

Malaysia Airlines last year signed a joint venture agreement with JAL covering flights between Malaysia and Japan, which the Japanese airline said could be expanded in the future to cover U.S. flights.

Malaysia Airlines and JAL are both members of the oneworld airline alliance, while Air France-KLM is part of the rival SkyTeam alliance.

Sources said Air France-KLM had proposed setting up a hub for maintenance, repair and overhaul services in Malaysia, while Japan Airlines had offered to make the Southeast Asian country its regional hub, including for low-cost flights.

“An international solution is probably better in this situation as AirAsia would have competition concerns,” one of the sources said.

“This is still a work in progress but the story is around the potential for a massive hub in Southeast Asia and it’s clear that international airlines see value in Malaysia Airlines because of this,” the source said.

Business news website Focus Malaysia said on Monday, citing an official document, that Khazanah had been pushing for AirAsia to merge with Malaysia Airlines.

It also said AirAsia boss Tony Fernandes had proposed a three-way merger between the company, its long-haul unit AirAsia X (AIRX.KL) and Malaysia Airlines.

Khazanah, which appointed Morgan Stanley last year to advise on potential options for the airline, said it was working closely with the government.

FILE PHOTO: Airport staff works beside a Malaysia Airlines plane at Kuala Lumpur International Airport in Sepang, Malaysia, July 22, 2019. REUTERS/Lim Huey Teng
“While there have been several proposals in this regard, a review of the options available to us is still ongoing,” it said in a statement.

But Mahathir, who is also chairman of the board at Khazanah, said he was “not completely happy” with the way the fund had been evaluating the proposals.

“Unfortunately, Khazanah has got its own agenda so I have to check them,” he said.

Reporting by Liz Lee in Kuala Lumpur and Anshuman Daga in Singapore; Additional reporting by Jamie Freed in Sydney; Writing by Krishna N. Das; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.