JOHANNESBURG (Reuters) &#8211; South Africa has doubled to six months the term of loans to small and medium-sized businesses to help them survive the COVID-19 recession and made other changes to make the credit easier to access, the treasury said on Sunday.



President Cyril Ramaphosa announced the 200 billion rand ($12.00 billion) loan scheme in April to help businesses, as part of stimulus measures to lessen the pandemic impact on South Africa’s already shrinking economy.



The loans are intended to meet urgent requirements, such as salaries, rents and contractual obligations.



Many of South Africa’s small and medium-sized firms were thrown into disarray when the government introduced a lockdown at the end of March to try to contain the spread of the novel coronavirus that causes COVID-19.



They lost much of their revenue but still faced fixed costs, and many have struggled to recover even as the lockdown lifted.



Sunday’s changes to the scheme include making “bank credit assessments and loan approvals more discretionary and less restrictive,” the treasury said in a statement.



They extend the draw-down period and the interest and capital repayment holiday to six from three months and replace the 300 million rand turnover cap with a maximum loan amount of 100 million rand.

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South Africa extends COVID-19 loans for struggling businesses

As households and businesses in South Africa struggle to cope with the current economic turmoil and uncertainty brought upon by the COVID-19 pandemic, the Prudential Authority (PA) has welcomed the measures taken by banks to support their customers financially.



In addition to the South African Reserve Bank’s (SARB) deployment of monetary policy tools to alleviate the impact of COVID-19, the PA announced it will support the banking system by providing regulatory relief measures and guidance to banks to help manage the crisis.



The following is a statement by the Prudential Authority:



06 April 2020



Press release on regulatory relief measures and guidance to the banking sector in response to COVID-19



The impact of the coronavirus disease 2019 (COVID-19) is likely to have a lasting and detrimental effect on the economy. While the depth and length of the economic downturn remain uncertain, there is already evidence of stress at both the household and business levels, with small businesses of particular concern.



South Africa has a strong and resilient banking system with adequate levels of capital and significant liquidity buffers to manage this stress. The Basel framework, around which bank regulations are structured, has built-in buffers on both the capital and liquidity elements of the regulation for banks to draw on during times of financial stress.



The Prudential Authority (PA) welcomes the measures taken by banks to support their customers during this period of economic turmoil and uncertainty. A safe, sound and robust banking system is a key part of South Africa’s shock absorbers during these times.



In addition to the actions taken by the South African Reserve Bank (SARB) on deploying monetary policy tools to mitigate the impact of COVID-19, the PA has decided to support the banking system in response to the needs of banking customers. The PA will provide for regulatory relief measures as well as guidance to banks in managing the crisis. The regulatory relief measures are provided for in three areas, namely capital relief on restructured loans that were in good standing before the COVID-19 crisis, a lower liquidity coverage ratio (LCR) and lower capital requirements.



The PA is temporarily amending Directive 7 of 2015 on Restructured Exposures, which means that for the duration of the crisis, loans restructured as a result of the impact of COVID-19 will not attract a higher capital charge. This amendment covers loans to households, small- and medium-sized businesses and corporates, and for specialised lending.



For the duration of the crisis, the LCR, a ratio setting out the liquid assets a bank has to maintain in relation to its anticipated outflows, is being lowered from 100% to 80%.



In relation to capital relief, the Pillar 2A capital buffer, which is set at 1% of risk-weighted assets, is now set at zero. The PA has also provided clear criteria that provide for banks to dip into their capital conservation buffer, which is set at 2.5% of risk-weighted assets.



The PA plans to announce a timetable according to which banks can restore these buffers once the COVID-19 crisis has abated. This timetable will be sensitive to the need to balance the rebuilding of buffers to ensure a resilient banking system, with the negative effect that such measures could have on credit extension and economic growth.



While it should be noted that the PA is not the accounting standards regulator, it has provided guidance to the banking industry on how International Financial Reporting Standard (IFRS) 9 could be implemented during this period of volatility and stress. IFRS 9 is an important accounting standard applicable on expected credit losses in the banking sector and calculates expected credit losses over a business cycle.



The Basel framework, which provides clear rules on when discretionary dividend and bonus payments can be limited, is likely to be impacted. These constraints generally kick in when a bank breaches or is about to breach its capital buffer, which could become progressively tighter, leading it to dip into its capital buffers. With the high probability that the impact of COVID-19 will result in heightened stress in the banking system, the PA is issuing a guidance note advising banks not to distribute discretionary ordinary dividends during this period. Similarly, bonuses for senior executives should also be put on hold during this period.



The measures taken by the PA complement the steps taken by the SARB. These measures are being taken to mitigate the impact of COVID-19, while at the same time pointing out that South Africa’s banking system is robust and well-capitalised.



Today, the PA issued the following two Directives and one Guidance Note, which can be accessed on the website:



·&nbsp;&nbsp;&nbsp;&nbsp; D2/2020 &#8211; Matters related to temporary capital relief to alleviate risks posed by the Covid 19 pandemic;



·&nbsp;&nbsp;&nbsp;&nbsp; D3/2020 &#8211; Matters related to the treatment of restructured credit exposures due to the Coronavirus (Covid-19) pandemic;&nbsp; and



·&nbsp;&nbsp;&nbsp;&nbsp; G4/2020 &#8211; Recommendations on the distribution of dividends on ordinary shares and payment of cash bonuses to executive officers and material risk takers, in light of the negative economic impact of the Coronavirus Disease&nbsp; (Covid-19) pandemic and the temporary regulatory capital relief provided by the Prudential Authority.



For further information, contact Unathi Kamlana at <a href="mailto:Unathi.Kamlana@resbank.co.za">Unathi.Kamlana@resbank.co.za</a> or Ziyanda Mtshali at <a href="mailto:Ziyanda.Mtshali@resbank.co.za">Ziyanda.Mtshali@resbank.co.za</a>.



Issued by the Prudential Authority



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Clarification on COVID-19 “hotspots” as SA moves to level 3 lockdown

Prudential Authority offers relief measures, guidance to South African banks amid COVID-19 crisis

You may find yourself juggling a lot financially in your 30s, like purchasing a home, switching jobs, and even having children.



“The greatest thing is to have options, and when you establish a good [financial] plan in your 30s and work that plan, it allows you to build those options for your 40s,” says Leslie Thompson, a chartered financial analystand the founder of Spectrum Management in Indianapolis.



Here are four money moves you can make in your 30s that experts say can leave you wealthier in your 40s.



<h2 class="wp-block-heading">1. Update your emergency fund</h2>



Financial planners suggest you aim to build an emergency fund that can cover three to six months’ worth of living expenses. You may have started this effort in your 20s, but in your 30s, it’s time to revisit your savings goal. As your expenses increase, so should your emergency fund.



While you’re evaluating your emergency fund, reconsider where you’re keeping it. Experts recommend putting money for a rainy day in a savings account, or another easily accessible account.



More from Grow: <a href="https://grow.acorns.com/why-keeping-a-100-bill-in-your-wallet-can-curb-spending/" target="_blank" rel="noreferrer noopener">Why you should always keep a $100 bill in your wallet</a><a href="https://grow.acorns.com/items-you-should-rent-not-buy/" target="_blank" rel="noreferrer noopener">3 items that can be a better value to rent, not buy</a><a href="https://grow.acorns.com/side-hustles-you-can-do-from-anywhere/" target="_blank" rel="noreferrer noopener">4 side hustles you can do from anywhere (that pay up to $85 per hour)</a>



Look for accounts offering high-interest yields, but note that savings account interest rates can vary widely: The national average is <a rel="noreferrer noopener" href="https://smartasset.com/checking-account/average-savings-account-interest" target="_blank">0.09%</a>, according to SmartAsset, but some high-yield savings accounts offer as much as <a rel="noreferrer noopener" href="https://www.bankrate.com/banking/savings/rates/" target="_blank">2.55%</a>, according to Bankrate.



<h2 class="wp-block-heading">2. Prepare to buy a home</h2>



A home is the biggest purchase most people will ever make, so it’s good to start planning early. First steps:&nbsp;<a href="https://grow.acorns.com/2-ways-to-check-your-credit-score-for-free/" target="_blank" rel="noreferrer noopener">monitoring your credit score</a>&nbsp;and saving for a down payment.



“The higher your [credit] score, the lower your interest rate will likely be” on your mortgage, says Thompson. Aim for a score of&nbsp;<a href="https://grow.acorns.com/the-credit-score-you-need-to-get-the-best-rate-on-a-mortgage/" target="_blank" rel="noreferrer noopener">760 and above</a>&nbsp;to get the best interest rate on a 30-year fixed loan, which could save you&nbsp;<a href="https://grow.acorns.com/the-credit-score-you-need-to-get-the-best-rate-on-every-kind-of-loan/" target="_blank" rel="noreferrer noopener">thousands&nbsp;</a>in interest over the lifetime of your loan.&nbsp;<a href="https://grow.acorns.com/matt-schulz-shares-3-ways-to-boost-your-credit-score/" target="_blank" rel="noreferrer noopener">Improving your score</a>&nbsp;takes time, but moves like paying bills on time and keeping balances low can help.



Then set a savings goal for your down payment. Experts typically recommend <a rel="noreferrer noopener" href="https://grow.acorns.com/how-much-money-you-actually-need-to-put-down-to-buy-a-home/" target="_blank">aiming for 20%</a>, although the median is 7.6% — and you may qualify for certain mortgages that let you put down as little as 3%, or nothing. To prepare for the purchase, set up <a rel="noreferrer noopener" href="https://grow.acorns.com/set-up-automatic-bill-payments/" target="_blank">automatic</a> saving contributions. “Saving up for a down payment can make your mortgage more manageable, and perhaps allow you to buy a more expensive home,” she says.



<h2 class="wp-block-heading">3. Get—and stay—on track for retirement</h2>



Having a solid foundation for retirement is “the single best move” you can make, says Stephen O’Hara, a certified financial planner and vice president of Wealth Enhancement Group based in Minneapolis, Minnesota. He says the best way to get ahead on retirement savings is by&nbsp;<a href="https://grow.acorns.com/what-is-a-401k-match/" target="_blank" rel="noreferrer noopener">maximizing your employer 401(k) match</a>, ifyou have a job thatoffers one.



By the time you’re 30, Fidelity <a href="https://www.cnbc.com/2019/05/23/how-much-money-americans-have-in-their-401ks-at-every-age.html">recommends</a> having a retirement fund that’s equal to your starting salary. By age 35, your retirement savings should be <a href="https://www.cnbc.com/2018/11/12/how-much-money-to-have-saved-by-age-35.html">twice your annual salary</a>. While that benchmark is just a guideline, it can help you gauge if you should be boosting your contributions. In general, a good retirement contribution target is 15% of your annual salary.



The difference annual increases can make



Automatically adding 1% to your 401(k) contribution each year can make a big difference by the time you retire.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="600" height="418" src="https://www.cnbcafrica.com/wp-content/uploads/2020/02/grow-1.png" alt="" class="wp-image-355714" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/02/grow-1.png 600w, https://cms.cnbcafrica.com/wp-content/uploads/2020/02/grow-1-300x209.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/02/grow-1-100x70.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></figure>



<a href="https://grow.acorns.com/how-to-save-for-retirement-when-you-dont-have-a-9-5/" target="_blank" rel="noreferrer noopener">If you don’t have a workplace retirement account</a>, you can explore different options like&nbsp;<a href="https://grow.acorns.com/how-an-ira-can-help-you-grow-your-wealth-and-retire-comfortably/" target="_blank" rel="noreferrer noopener">opening an IRA</a>, says O’Hara. “Each time you experience a pay raise, try to raise what you’re putting away [for retirement],” he says. If you can’t put in 15% of your annual salary initially, then try increasing your&nbsp;<a href="https://www.cnbc.com/2019/05/23/how-much-money-americans-have-in-their-401ks-at-every-age.html">contribution by 1%-2%</a>&nbsp;every year until you get there.



<h2 class="wp-block-heading">4. Balance your long-term financial goals</h2>



Your 30s can be full of big financial changes, so you’ll want to be mindful of how you spend and save money, says Thompson. The first thing you should do is look at your big-picture goals,and pick&nbsp;<a href="https://grow.acorns.com/money-lessons-everyone-should-know-by-age-30/" target="_blank" rel="noreferrer noopener">three to focus on</a>.



Let’s say you want to buy a home, take an international trip with the whole family, and chip away at student debt. Start by calculating&nbsp;<a href="https://grow.acorns.com/how-to-make-a-personal-budget/" target="_blank" rel="noreferrer noopener">the amount you need&nbsp;</a>to put aside each month in order to achieve each goal by a target date. Then look at your bills, says O’Hara. By taking a hard look at your expenses, you can figure out where you’re overspending, and what areas, like dining out or entertainment, you may need to cut back on in order to stay on track to meet your goals.



“If you want to take a 10-day trip to Greece, you’re going to start looking at your happy hour bills and go, ‘This is not in alignment with meeting that goal,’” says O’Hara.



Though many people have a tendency to tackle financial goals one at a time, it makes sense to work on a few at once. “It all starts with putting those first dollars away,” and letting those savings habits build on each other, he says.



This article was first published on CNBC <a href="https://www.cnbc.com/2020/02/10/do-these-4-things-with-your-money-in-your-30s-to-be-richer-in-40s-finance-experts.html">https://www.cnbc.com/2020/02/10/do-these-4-things-with-your-money-in-your-30s-to-be-richer-in-40s-finance-experts.html</a> and is republished with its permission.

Do these 4 things in your 30s if you want to be richer in your 40s, money experts say

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The Japan International Cooperation Agency (JICA) has a long history with African countries, Mutsuya Mori, Vice President of JICA told CNBC Africa’s Kopano Gumbi. The Agency provides technical assistance, grant aids and loans for construction and infrastructure. Although it has previously focused on governments, it now realises that the private sector is an important partner in the social and economic development of Africa.

Africa Investment Forum:  JICA President Mutsuya Mori on the private sector as an important partner in Africa’s growth

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The South African economic landscape has been tainted, with the effects showing in business confidence levels, inflation and now in South Africans spending .The South African industry insights report for the second quarter of 2019 has shown that citizens are increasingly relying on credit and loans to finance their lives. Carmen Williams, Director of Research and Consulting at TransUnion Africa joins CNBC Africa for more.

South Africans relying more and more on loans, credit cards to survive

DAR ES SALAAM (Reuters) &#8211; The World Bank has approved a $450 million loan to Tanzania, the bank said on Friday, signalling the release of the first tranche of funds to the East African nation that were frozen last year because of concern over government policies. 



Those concerns included passing a law that made it illegal to question official statistics and expelling pregnant girls from public schools.



The government amended the statistics law in June to remove the threat of jail. But has yet to announce changes to the rules on teenage pregnancy.



    The financing comes from the bank’s International Development Assistance (IDA), which gives grants or low-interest loans to the world’s poorest countries. It covers a poverty- reduction programme that will help around five million Tanzanians, the bank said in a statement.



“The World Bank has been engaging with the government of Tanzania on a range of policy issues that led to a hold-up of financing since 2018”, the World Bank said in a statement.&nbsp;



&nbsp; &nbsp; “Approval of this project acknowledges efforts by the government of Tanzania to address the policy issues by amending the statistics law (2018) in line with international practice, as well as the government’s commitment to facilitate all girls to complete their education.”



&nbsp; &nbsp;The government has been working to unlock $1.7&nbsp;billion in funding from the bank that was frozen last year. In July, Tanzania’s statistics agency said it may review its economic growth figure for 2018 after the World Bank came up with a significantly lower one. It has not released updated figures.



&nbsp; &nbsp; The World Bank is Tanzania’s biggest external lender. Foreign loans and grants are a key source of foreign exchange for East Africa’s third-largest economy.



&nbsp; &nbsp; “This new support will be critical to improve the lives of many more people in need and overall raise the country’s human capital index, which is still very low at 0.40,” said Bella Bird, the World Bank’s country director for Tanzania.



&nbsp; &nbsp; &nbsp;“We will continue to work with the government and engage with citizens and other stakeholders on the complex set of development issues facing the country and its people.”



Reporting by Fumbuka Ng&#8217;wanakilala; editing by Maggie Fick, Larry King

World Bank approves $450 million loan for Tanzania, what you need to know

WASHINGTON (Reuters) &#8211; The U.S. Export-Import Bank said on Thursday its board intends to vote on a $5 billion direct loan for the development of a liquefied natural gas (LNG) project in Mozambique, the bank’s biggest export financing deal in years.



The government export lender said it has notified the U.S. Congress of the transaction, which will be ready for a final board vote in 35 days.



If approved, the transaction would support U.S. exports of goods and services for the engineering, procurement and construction of the onshore LNG plant and related facilities on the Afungi Peninsula in northern Mozambique.



EXIM said over the five-year construction period the financing could support 16,400 American jobs among suppliers in Texas, Pennsylvania, Georgia, New York, Tennessee, Florida and the District of Columbia.



It estimated interest and fee income from the transaction of more than $600 million from a consortium led by Occidental Petroleum Corp.’s recently acquired Anadarko Petroleum Co.



U.S. exports to supply the project, however, face competition from financing offered by foreign export credit agencies.



The project would be the single biggest financing deal since EXIM’s full lending powers were restored in May with the confirmation of three new board members. That ended a drought of nearly four years in which the bank could not approve loans and guarantees of more than $10 million due to a protracted fight in Congress over its future.



The bank, seen by some conservatives as providing taxpayer-backed “corporate welfare” and “crony capitalism,” was unable to finance major infrastructure projects like the Mozambique LNG plant and commercial aircraft built by Boeing Co. It needs Congress to renew its charter before Sept. 30 to keep operating.



U.S. President Donald Trump’s administration views the bank as a tool to boost U.S. exports in an increasingly competitive trade environment.



“This critical project is not only a win for American companies and workers, supporting over 10,000 jobs in the United States, but also for the people of Mozambique as well,” U.S. Commerce Secretary Wilbur Ross said in a statement.



EXIM said the Mozambique LNG project would begin to develop the Rovuma Basin, one of he world’s most extensive untapped reserves of natural gas, with a major impact on Mozambique’s economy.



Reporting by David Lawder; Editing by Dan Grebler

What you need to know about U.S. EXIM Bank seeking vote on $5 billion loan to LNG project in this African country

JOHANNESBURG (Reuters) &#8211; South Africa’s public debt, which is approaching rating agencies’ red line of 60% of economic output, is reaching uncomfortable levels, an IMF official said on Thursday.



Public finances in Africa’s most industrialised economy are under strain as growth has proved weaker than expected and a clutch of state companies have needed large cash injections.



In July, the government said it would give power utility Eskom 59 billion rand ($4.1 billion) of additional financial support over the next two years, on top of an already-promised bailout of 230 billion rand spread over the next decade.



That spooked investors and credit agencies.



Finance Minister Tito Mboweni warned shortly afterwards that this and other bailouts for state firms would almost certainly push up the budget deficit as well as state borrowing, raising the prospect of emergency external loans.



“South Africa has not requested an IMF-supported programme. We do not see a balance of payments need &#8230; so as far as we are concerned there’s no need for South Africa to approach the IMF,” the lender’s senior resident representative in South Africa, Montfort Mlachila, told a conference in Johannesburg.



Mlachila, however, said the debt trajectory, forecast at 55% of GDP in February by treasury but likely to be revised upwards at the October mini-budget, was worrying.



“South Africa has the highest level of debt in its history,” he said. “This is actually quite concerning without a doubt &#8230; The public debt trajectory is not favourable and becoming uncomfortable.”



Reporting by Olivia Kumwenda-Mtambo; Writing by Mfuneko Toyana; Editing by Hugh Lawson and Andrew Cawthorne

IMF says South Africa’s debt is “becoming uncomfortable”, but no bailout requested, what you need to know

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Ghana’s Inflation for the month of June rose to 10 percent, compared to the 9.8 per cent recorded in May this year. Collins Appiah, Economic Advisor at Services Integrity Savings and Loans joins CNBC Africa from Ghana to discuss the economic events that may have influenced the recent inflation figures.

Ghana June inflation rises to 10%

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While many small and medium enterprises may think collaterals are the only prerequisite for borrowing from banks, there are more important requirements which must be met prior to disbursement of these loans.

Hurdles SMEs face when trying to get funding

Lee Mhlongo| FNB 
First time home buyers often get caught by surprise when banks ask for a deposit in order to secure a home loan.
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“When applying for a home loan, banks will access your credit status to establish whether you will be able to meet the bond payments. Depending on the outcome, you are either given a 100% bond or required to put down a deposit of between 5 and 20% of the loan amount,” says Lee Mhlongo, FNB Housing Finance CEO.
To assist lower income first-time home buyers, most banks and FNB in particular, will grant the majority of customers 100% bonds without the need for deposits where customers meet affordability considerations.
However, when a deposit is required by the bank, many home owners who fear not being able to qualify, mistakenly compromise their chances of getting the home loan by taking out an alternative loan to cover the deposit.
“Taking out any form of loan while applying for a bond or during the registration process may result in the bank reversing its initial decision to grant you a home loan. This is due to the fact that your credit profile will be in a poorer state, as you will now be required to repay both your home loan and additional loan instalments monthly,” says Mhlongo.
Furthermore, you also need to take into account that you will be required to pay bond and transfer attorney fees before the house can be registered. For a house valued at R500 000, you are likely to pay around R30 000.
Mhlongo says applying for a pre-approval from your bank can give you a good indication of how much you qualify for. This gives you an opportunity to start saving in advance for the deposit and attorney fees.
Moreover, being able to pay a deposit, when you qualify for a 100% bond improves your credit score, resulting in the bank offering you an even better interest rate.
First time buyers who earn a household income between R3 501 and R15 000 per month can also use the Finance Linked Individual Subsidy Programme (FLISP) from the government to pay the deposit.
FLISP offers qualifying consumers subsidies ranging between R20 000 to R87 000 once off, provided that they haven’t benefitted from a government subsidy before and approval of the home loan from the bank.
“Keeping your credit record clean and saving in advance for a deposit and attorney fees before applying for a bond can give you peace of mind knowing that you stand a greater chance of qualifying and there are no surprise costs that will catch you off-guard,” concludes Mhlongo.
&nbsp;

Why taking out debt for a bond deposit is risky

South African retailer Shoprite has been fined 1 million rand ($77,500) for failing to assess properly whether consumers could afford its loans, the National Consumer Tribunal said on Wednesday.
The company, which had turnover in its last financial year of 141 billion rand ($11 billion), was also ordered to appoint a debt counselor at its own costs following what the regulator called “reckless lending”.
Shoprite was not immediately available for comment.
Unsustainable levels of household debt, especially in lower-income brackets, is a pressing social and economic problem in South Africa, which has just emerged from a recession but remains saddled with high levels of unemployment and poverty.
“This judgment comes after an investigation by the National Credit Regulator (NCR) revealed Shoprite entered into credit agreements with consumers without conducting a reasonable and objective assessment of the consumers’ ability to afford the loans,” NCR Chief Executive Nomsa Motshegare said.
“Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act (NCA) was that Shoprite, when assessing whether a consumer could afford a loan or not, took into account unverified income of another person, such as a spouse or a life partner,” she said in a statement.
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Reporting by Ed Stoddard; editing by David Clarke
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South Africa’s Shoprite fined for “reckless lending” – regulator

TJ Strydom | JOHANNESBURG
South African life insurer MMI Holdings said it will start offering loans and take deposits as part of a deal with lender African Bank, as it looks to revive declining profits.
MMI, the No. 3 long-term insurer in South Africa, has seen profits drop for the past two years as weak growth and poor investment returns weighed on revenues.
The insurer plans to use African Bank to build up a loan book in excess of 10 billion rand ($780 million) over the next five years and to share the profits equally with the bank.
<blockquote>&#8220;African Bank will be the exclusive provider of consumer credit products to MMI, for solutions falling within its product range,&#8221; MMI said, adding that the lender will use the insurer&#8217;s existing sales channels.</blockquote>
African Bank, a lender that grants loans not backed by assets, was rescued and recapitalised by South Africa&#8217;s central bank after its parent African Bank Investments Limited collapsed in 2014.
In April last year, the bank was split into a &#8220;good&#8221; business aimed at attracting new clients, and a new company to mop up old debts.
&#8220;African Bank will act as sponsoring bank to facilitate deposit-taking and extend transactional banking capabilities that MMI wishes to offer to its clients,&#8221; the insurer said in a statement.
MMI also plans to sell to African Bank&#8217;s clients, making its full range of insurance products available to African Bank account holders, with the goal of generating more than 1 billion rand in premiums within five years.
($1 = 12.8432 rand)
(Reporting by TJ Strydom; Editing by Susan Fenton)

South African insurer MMI in lending, sales deal with African Bank

The New Development Bank recently held its <a href="http://pib.nic.in/newsite/PrintRelease.aspx?relid=160274">second annual meeting</a> in the Indian capital of New Delhi to discuss the sustainability of financing development projects in its member states.
The multilateral bank was established by the BRICS states of Brazil, Russia, India, China and South Africa. With headquarters in Shanghai, China, it was created to support emerging economies and provide an <a href="http://uk.businessinsider.com/the-brics-countries-just-launched-a-rival-to-the-imf-and-world-bank-2015-7">alternative to the domination</a> of the World Bank and the International Monetary Fund.
But the new bank is already proving to be a replication of the Bretton Woods institutions. This can be seen through the <a href="http://www.business-standard.com/article/economy-policy/european-development-bank-strikes-pact-with-new-development-bank-117040300784_1.html">partnerships</a> the new bank is forming as well as its operating posture.
It’s also showing bias towards the development of Asian countries. This is evident from its funding patterns and the recent proposed <a href="https://sputniknews.com/politics/201703221051849196-brics-enlargement-plan/">enlargement of the BRICS bloc</a>. The list of proposed additions includes Pakistan, Bangladesh, Iran, Nigeria, South Korea, Mexico, Turkey, Indonesia, the Philippines and Vietnam. All except three are Asian.
The proposed expansion of the BRICS countries has been justified as a move to <a href="http://www.iol.co.za/business-report/economy/brics-plus-can-be-new-model-of-integration-8700388">strengthen the bloc</a> and fill the void created by rising protectionism in the US. But it has been met with mixed reactions even among member countries. India, for example has expressed its disapproval that BRICS “plus” is China’s ploy to <a href="https://timesofislamabad.com/china-to-include-pakistan-in-brics-plus-ignoring-indian-concerns/2017/03/13/">cut New Delhi’s influence</a> in the group by roping in more pro-China countries.
The New Development Bank’s business as usual and its bias towards Asia suggests that it will not become an alternative source of finance. It will not address the key areas of needs for emerging economies like human capital development, poverty alleviation and basic healthcare.
<h2>More of the same</h2>
The New Development Bank was set up as an <a href="http://www.paragkhanna.com/home/new-brics-bank-building-block-alternative-world-order">alternative</a> to the World Bank and IMF which are viewed to be <a href="http://thoughtleader.co.za/sentletsediakanyo/2008/07/09/can-we-trust-the-west-imf-world-bank-etc/">pushing western agendas</a>. It was to provide a development model that would be sensitive and beneficial to emerging economies. But it’s quickly abandoning this mandate and falling into the trap of operating like the institutions it was created to replace.
In September 2016 the New Development Bank <a href="https://www.businesslive.co.za/bd/companies/2016-09-09-world-bank-and-new-development-bank-sign-mou-to-boost-partnership/">signed partnership deals</a> with the World Bank to co-finance projects. The agreement also aims to facilitate knowledge and staff exchanges. This puts the bank in bed with the institutions it was established to counter.
The bank has also signed memorandums of understanding with the <a href="http://www.ebrd.com/news/2017/new-development-bank-ebrd-affirm-mutual-goals-agree-cooperation.html">European Investment Bank</a>, <a href="http://www.ndb.int/borrowings/memorandum-understanding-new-development-bank-european-bank-reconstruction-development/">European Bank for Reconstruction and Development</a>, <a href="https://www.aiib.org/en/news-events/news/2017/20170401_001.html">the Asian Infrastructure Investment Bank</a> and <a href="http://www.ndb.int/press_release/new-development-bank-international-investment-bank-sign-memorandum-understanding-develop-cooperation/">the Eurasian Development Bank and the International Investment Bank (IIB)</a>. The agreements cover co-financing of infrastructure projects, the bulk of which are in Asia.
Perhaps the foundations of the bank were faulty from the start. Its <a href="https://mg.co.za/article/2017-03-31-00-brics-joins-the-reigning-world-order">original designers</a> were two former World Bank chief economists, Joe Stiglitz and Nick Stern. Given this history, it’s possibly never going to challenge the world financial order.
Today, the New Development Bank is pushing the <a href="http://www.business-standard.com/article/news-ians/brics-bank-should-focus-on-small-scale-investments-117033001495_1.html">corporate-led development model</a> just like the World Bank, the IMF and other Bretton Woods institutions. Their investments are profit-oriented which tends to undermine social justice. Thus similar to the World Bank and IMF, the New Development Bank seems more focused on protecting its investments at the expense of saving the interests of the BRICS citizens.
Over the past decade, the corporate led model has impoverished many people in emerging economies, particularly in Asia. It has led to <a href="http://www.globalresearch.ca/the-seeds-of-suicide-how-monsanto-destroys-farming/5329947">farmer suicides</a>, <a href="http://www.herinst.org/BusinessManagedDemocracy/government/privatisation/banks.html">large-scale privatization</a>, <a href="https://www.globalpolicy.org/social-and-economic-policy/the-three-sisters-and-other-institutions/the-world-bank/49476-dodging-world-bank-schizophrenia-the-looting-on-africa-continues.html">natural resource looting</a> and <a href="http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-destruction-peru">environmental degradation</a>.
<h2>Funding so far</h2>
The New Development Bank has so far made loans of <a href="http://www.ndb.int/projects/list-of-all-projects/">$811 million to entities</a> in four BRICS countries towards energy infrastructure. Of this $300 million went to Brazil, $81 million to China, $250 million to India, and <a href="http://thebricspost.com/brics-bank-announces-first-set-of-loans/#.WQN5ePmGPIU">$180 million to South Africa</a>.
For South Africa, the bank has so far not provided any meaningful opportunity to obtain additional finance. The loan of $180 million (R2.6 billion) was given to South Africa’s power utility Eskom to develop 670 MW of power generation and 500 MW worth of renewable energy projects involving <a href="http://www.sabc.co.za/news/a/a239fb804c72c32d96d9df3b0fa74342/EskomundefinedgetsundefinedR2.6blnundefinedNDBundefinedloanundefinedforundefinedrenewableundefinedenergy-20161804">independent power producers</a>. This <a href="https://www.businesslive.co.za/bd/companies/energy/2017-01-16-eskom-distorts-facts-about-renewable-energy-group-claims/">unnecessary loan</a> to an inefficient state owned entity has only contributed to BRICS’s power over South Africa by adding onto the current contingents <a href="https://www.businesslive.co.za/bd/opinion/2017-03-31-the-brics-bank-green-energy-gordhan-and-the-guptas/">liabilities</a> dollar-based loans that the government has guaranteed for the next 12 to 20 years.
<h2>Weaknesses</h2>
There are weaknesses in the way in which the New Development Bank works that also raises questions about its intent.
First, the bank’s activities are often shrouded in secrecy. There are no clear official records available to the public about the bank’s activities, decisions and operational guidelines. Analysts have to rely on secondary and tertiary information sources.
Second, the bank is yet to present any socio-economic redress and environmental operational guidelines for communities. This would ensure that its funding does not lead to displacement, evictions, ecological destruction, loss of livelihoods and threats to the basic right to life. These issues have recurred for decades due to <a href="http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-destruction-peru">projects funded</a> by other multilateral development banks.
Lastly, as a co-financier with development institutions like the World Bank, the bank’s seriousness about promoting transparency, accountability and probity remains questionable.
To strengthen its relevance to emerging economies, the New Development Bank must review the much criticised, inequitable representation of developing countries, especially from Africa. It must also focus more on small-scale investments rather than large-scale infrastructure projects. These often lead to exclusion of people and communities, and aggravate existing vulnerabilities rather than bringing about development.

BRICS bank is offering more of the same rather than breaking the mould

Nigeria&#8217;s efforts to secure funds from international lenders to help haul it out of recession have stalled because it has not submitted the required economic reform plans, according to one of the banks and sources close to the matter.
The government has been in loan talks with the World Bank for a year. It had told the lender it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December, according to Western diplomats and a Nigerian official who declined to be named as they are not authorised to speak publicly.
But this has not happened and as a result of the delay, which the government has not explained, the Washington-based bank has not been able to consider a loan yet, the sources said.
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Nigerian finance minister Kemi Adeosun and the World Bank declined to comment.
The African Development Bank (AfDB), meanwhile, is holding back the second tranche of a $1 billion loan for Nigeria, AfDB president Akinwumi Adesina told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.
&#8220;We are waiting for the economic policy recovery programme and the policy framework for that,&#8221; said Adesina, without specifying when the AfDB had expected to receive the reform plans.
Nigeria has said it is seeking to borrow $4 billion in total from the World Bank and other foreign institutions and $1 billion through Eurobonds to plug a yawning budget deficit and fund badly needed infrastructure projects.
The country, which relies on oil revenue for most of its income, has been hit hard by the sharp fall in crude prices since 2014 and is struggling to drag itself out of its first recession in 25 years.
It is unclear why the government has not submitted reform plans to the international lenders. The funding deadlock could throw into doubt badly needed infrastructure projects planned for this year, including new roads and improvements to power infrastructure.
The failure to secure the funds, and to present a reform programme, could also deter some investors from Nigeria&#8217;s planned $1 billion Eurobonds sale in March.
A Nigerian financial source said the government was working with a consultancy on putting together a package of proposed reforms. The source, who declined to be named as the matter is confidential, did not elaborate.
 
RECORD BUDGET
Nigeria needs money to help plug a budget deficit of 2.2 trillion naira ($7 billion) for 2016 and to help fund a record budget of 7.3 trillion naira for 2017 which is aimed at stimulating the economy.
It has been holding talks with various institutions and China over the last year to borrow funds but apart from a $1 billion loan from the African Development Bank, at a rate of 1.2 percent, nothing has been made public.
The Abidjan-based AfDB has paid out an initial $600 million in November but is awaiting the economic reform proposals before it disburses the rest of the money.
It is unclear how much money Nigeria is seeking from the World Bank, or whether the lender was pushing for any specific economic reforms from the government.
The diplomatic sources, however, said the bank wanted to see how Nigeria planned to lower its dependence on oil revenues and boost investment, which has been hit by a high official exchange rate for the naira currency.
Nigeria&#8217;s central bank, backed by President Muhammadu Buhari, has kept the naira rate to the dollar at 40 percent above the unofficial &#8211; or parallel &#8211; market rate, which has dried up dollar supplies on official channels.
The policy has also made investors reluctant to commit new projects as they expect the central bank will have to devalue the naira eventually as oil production has been hit by an insurgency in the Niger Delta oil hub.
The central bank has also imposed hard currency curbs making impossible the import of almost 700 goods, which has forced dozens of plants to close running out of spare parts.
Adesina told Reuters on Tuesday that the currency rate problem needed to be addressed by the government in its reform programme, which he said the AfDB was coordinating with the World Bank.
&#8220;We are being clear that the quantitative restriction in terms of access to FX is what&#8217;s creating huge gap between parallel market rates and official rates,&#8221; he added.
($1 = 314.5000 naira)﻿

Nigeria's efforts to secure international loans hit deadlock

South Africa&#8217;s borrowing costs would likely &#8220;double or triple&#8221; if ratings agencies downgraded the country&#8217;s debt to subinvestment grade in the coming months, Deputy Finance Minister Mcebisi Jonas said on Tuesday.
Jonas said debt servicing costs were the highest growing item in October&#8217;s medium-term budget and along with low growth would force government to cut welfare spending.
Standard &amp; Poor&#8217;s and Fitch both rate South Africa&#8217;s debt on the lowest investment grade level and are due to give their next reviews in December.﻿

Downgrade could triple South Africa's borrowing costs

LAGOS (Reuters) &#8211; The maximum amount that Nigeria can borrow in 2017 from both local and foreign sources is $22.08 billion without it violating its debt threshold, the Debt Management Office (DMO) said.
Nigeria has a borrowing space of 5.89 percent of its GDP of $374.95 billion which will take its debt limit to a country-specific threshold of 19.39 percent of its total public debt-to-GDP ratio, it said in a report.
Total public debt-to-GDP ratio for 2016 is projected at 13.5 percent, it said in a debt sustainability report seen by Reuters on Wednesday. It said total public debt-to-revenue stood at 28.10 percent as of 2015, slightly higher than 28 percent threshold.
President Muhammadu Buhari has asked parliament to approve $30 billion of foreign borrowing to fund planned infrastructure projects until 2018, according to a letter read out to lawmakers on Tuesday.
Nigeria&#8217;s public debt stood at 16.29 trillion naira as of June 2016, up from 12.60 trillion naira by end December.
&#8220;Although the level of debt stock is still appreciably low relative to the country&#8217;s aggregate output (GDP), the debt portfolio remains mostly vulnerable to the various shocks associated with revenue, exports and substantial currency devaluation,&#8221; the DMO said in the debt sustainability analysis report.
The DMO said the debt sustainability analysis showed that Nigeria&#8217;s debt position deteriorated in 2016 and slipped from a low-risk of debt distress to a Medium-risk of debt distress.
 
(Reporting by Chijioke Ohuocha; Editing by Angus MacSwan)﻿

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South Africa extends COVID-19 loans for struggling businesses

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Downgrade could triple South Africa's borrowing costs

Nigeria can borrow a maximum of $22.08 bn in 2017 – DMO

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