Nigeria Content Online

South Africa will
start a much-delayed plan to buy electricity from green energy plants
next year under a new subsidies programme to help boost private
investment in renewable power, a senior official said on Monday.

Africa’s biggest
economy is struggling to meet fast rising demand for power, and
state-owned utility, Eskom, said supply would remain tight until 2015,
and especially over the next two years, until its two new power plants
come on stream.

Private producers
and industry have long said they could supply thousands of much-needed
megawatts – either through greenfield projects or via cogeneration at
their plants – but have been blocked by a lack of power purchase deals.

Renewable energy
feed-in-tariffs have long been anticipated to stimulate large-scale
investments, but the country has yet to sign a deal with one of the
independent producers already putting money into renewable projects
after the first phase of subsidies was announced in March last year.

“We are targeting
the first quarter of 2011 for the release of the procurement
documentation,” Ompi Aphane, acting deputy director general at the
energy ministry, told a media briefing.

The tariffs set out
the price per unit of electricity to be paid for energy from renewable
sources. They cover the cost of power generation and allow for a
reasonable profit to tempt private developers to invest in renewable
energy.

South Africa is
increasingly looking towards renewable energy sources to help plug a
chronic power shortage and decrease its dependence on the coal-fired
power stations that provide most of its electricity.

The country expects
to have 7,200 MW of electricity supplied by renewable projects over the
next two decades under a new energy resource plan currently under
development.

South Africa’s power demand is expected to more than double from levels of around 37,000 MW by 2030.

Financial
Derivative Company, a finance and research firm, in its bi-monthly
economic and business update, says the upward adjustment in interest
rates have helped to reduce pressure on the nation’s reserves.

“The
nation’s external reserves declined for the 12 consecutive months in
November to $33.1billion from $43billion a year ago, representing 23
percent depletion. Year to date, reserves have dwindled by 21 percent
from $42.1bn. However, the rate of depletion has slowed, thanks to
upward adjustments in interest rates that indirectly helped to reduce
the pressure on the reserves”.

The
report stated that the rate of decline started to slow down in
September when the Central Bank of Nigeria increased the benchmark
interest rate from 6 percent to 6.25 percent.

“On
a month-on-month basis, reserves declined by 1.3 percent in November,
compared to 3 percent and 5 percent decline in October and September
respectively.”

This is in spite of high oil price prices (averaging $87pb) and high oil production (above 2.1mbpd) in November.

“Also, forex demand and CBN intervention in the forex market dropped significantly during the period,” the report stated.

According
to the firm, the Central Bank, which had earlier stated that, “the
continued dependence of the country on imported food and energy is one
of the main sources of erosion of our foreign re-serves”, should move
fast to rescue what is left of the reserves.

Way out

According
to the report, high interest rates will encourage capital inflow which
will further reduce forex and reserve pressures.

“If
an increase in interest rate can have the effect of slowing the pace of
depletion, it could also be supportive of accretion and increase the
propensity to save, as most economic agents would prefer to delay
consumption and earn interest on their income, as long as the interest
rate is higher than the rate of inflation”.

Nigeria’s
foreign exchange reserves fell by almost a quarter to just under $33
billion by December 2 from $43 billion a year ago, the Central Bank
said on Monday. The figure was also around 4 percent down on the $34.3
billion recorded in mid-November. Increased government spending in the
nation’s economy has put pressure on reserves.

Dollar
demand at the bi-weekly forex auction has also forced the Central Bank
to dip into the reserves to defend the local currency for months.
According to the report, compared to last month’s trading values, the
naira has depreciated marginally against the US dollar by 30K to
N148.6/$ at the official market. At the inter-bank market, it
depreciated by 43k to trade at N150.71/$. The naira, however,
appreciated marginally in the parallel market by 50k to sell at N153/$.

Samir
Gadio, emerging markets strategist, Standard Bank, said the growth
money supply continued to decline to 13.2 percent year-on-year in
October, from 18.7 percent year-on-year in September and 21.6 percent
year on year in August, reflecting a sharp contraction in net foreign
assets and sizeable deceleration in Net Domestic Credit growth in
annual terms. “Broad money was broadly flat in October, at
N11.2trillion ($74.7billon), down from N11.5trillion ($76.7billion) in
August.

Net foreign assets shrank 13.9 percent year-on-year in October, from
negative figures of 7.5 percent year-on-year in September and 13.1
percent year-on-year in August. This probably primarily mirrors the
downward trend in the Central Bank’s foreign reserves,” he said.

The sum of $500m
(about N75m) has been provided to the Bank of Industry to boost access
to funds by small and medium-scale enterprises(SMEs) as well as small
growing businesses (SGBs).

The minister of
finance, Olusegun Aganga, who spoke in Abuja during the formal launch
of the initiative last week at the unveiling of Federal Government
support plan for SMEs and small growing business, said the National
Economic Management Team has identified the two groups as the best
institutions for job creation and economic growth in most economies
around the world.

“These sectors have
the potential to become a major contributor to our gross domestic
product and productive capacity. We must leverage the entrepreneurial
strengths of our people to help them to become successful,” he said.

Though government
has been investing in the promotion of the SMEs and SGBs, the minister
identified lack of business training and capacity, which constituted a
major constraint to access to business credits, as the bottlenecks to
the growth of the sectors.

Holistic development

To reduce the high
cost of business, increase the quality of training and capacity
building for businesses, and the access to credit and other finance for
SMEs and SGBs, he said the launch of the three-pronged programme would
act as catalysts for their holistic development.

Mr. Aganga said the
Enterprises Development Services of the Pan-African University, an
affiliate of the Lagos Business School, would coordinate the capacity
development programme in liaison with other centres nationwide to
provide business-practicals, classroom-based trainings, and business
advisory support services to improve the managerial capability and
bankability of businesses.

He warned that
government will have zero tolerance for non-performance of loans by
businesses, stressing the importance of paying back on time monies
borrowed from banks to enable others benefit from the scheme.

Besides, the Bank
of Industry (BoI) would collaborate with international development
partners, like the United Nations Development Programme and the United
Nations Industrial Development Organization to fix some of the market
infrastructure failures in industrial parks, including shared amenities
and services, such as access roads, electricity, water, sewage,
telecoms, and security.

Nationwide support

The national
coordinator of the programme, Peter Bankole, said a website that will
call for applications from businesses from all the geo-political zones
in the country is to be launched in two weeks, while the applications
are to be processed within four to six weeks for the commencement of
management training for the small and growing businesses.

“We will continue
to support them on an ongoing basis for about a year. Alliances with
various centres nationwide have already started. We hope to work with
the IDCs around the country as the focal point of the programme. We
will leverage upon the comparative advantage of each geo-political
zone, which has already been identified by the World Bank,” Mr. Bankole
said.

Managing director,
BoI, Evelyn Oputu, who identified the existing capacity gap as one of
the most difficult aspects of doing small business in Nigeria, said the
bank would strive to make access to fund for business possible at
single digit rates to help realise government objectives.

“BOI has in the
last five years tried to dedicate more than 85 percent of its resources
to support the small and medium-scale business sector.

“Government’s
decision to provide support through the programme will go a long way to
change the landscape of business in the country. There is no point the
country growing in double digits if the people continue to be poor,”
she said.

Mauritius’ annual
average inflation rate rose for the fifth straight month in November to
2.5 percent from 2.3 percent a month earlier, official data showed on
Monday.

The rate was up
mainly on account of a 5.9 percent jump in the prices of alcoholic
beverages and tobacco, the Central Statistics Office said in a
statement.

“The headline
inflation rate for the 12 months ending November 2010 works out to 2.5
percent, compared to 2.9 percent for the 12 months ending November
2009,” the statement said.

According to the statistics office, the consumer price index rose to
121.9 from 121.0 in October and 117.3 in November 2009, pushing the
year-on-year rate to 3.9 percent.

World oil prices are at a good level, Algerian energy minister, Youcef Yousfi, said on Monday.

Oil ministers from
members of the Organization of the Petroleum Exporting Countries are to
meet on December 11 in Ecuador. Several member states, including
Algeria, have said there is unlikely to be a change in production
quotas at the meeting.

“They are good.
They will stay at their current level, God willing,” Mr. Yousfi told
reporters when asked about oil prices. Algeria is the world’s eighth
biggest exporter of crude oil.

Tanzania’s coffee
prices fell at the latest weekly auction in line with global trends,
but traders said on Monday that prices were likely to rise in the
coming weeks.

“The decline in
coffee prices … followed the international markets. But coffee prices
in Tanzania remain very high,” said a trader at a leading coffee
exporting company.

“The outlook is
that there is not a lot of coffee left to sell, so the volumes are
going down. The prices in the auction should maintain their current
high levels,” he added.