China’s Tencent Holdings Ltd saw its shares down 4.51 percent at the midday trading break on Friday after the internet firm’s largest shareholder, Naspers Ltd, said it would lower its stake for the first time in 17 years.
<div id="attachment_41574" style="width: 1375px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-41574" class="wp-image-41574 size-full" src="http://cnbc.africa/wp-content/uploads/2017/02/tencent_hq_-_wikimedia.jpg" alt="Naspers - game on" width="1365" height="1024" />Tencent Headquarters.</div>
The Hong Kong-listed stock opened 7.8 percent lower at HK$405, its lowest opening price since Feb. 9, before regaining ground to HK$419.6 by noon. The benchmark Hang Seng Index was down 2.81 percent.
A day earlier, the stock fell 5 percent following Tencent’s late Wednesday report showing quarterly revenue missed estimates as well as expectations of margin pressure, although profit beat forecasts.
Friday’s decline wiped $24 billion off Tencent’s market value, though at $508 billion, it is still Asia’s most valuable listed company and fifth globally behind Apple Inc, Alphabet Inc, Amazon.com Inc and Microsoft Corp.
South African media and e-commerce group Naspers said on Thursday it planned to sell up to 190 million Tencent shares, or 2 percent of its holding, in a sale that could earn Naspers up to $11 billion. It also said it had no plans to further reduce its holding for the next three years.
“The funds will reinforce Naspers’ balance sheet and be invested in classifieds, online food delivery and fintech globally,” said CICC analyst Natalie Wu. “We think it is a good opportunity to buy into dips given Tencent’s solid fundamentals.”
Jefferies analyst Karen Chan said, “Given Naspers’ largest single shareholding and board representation in Tencent, we believe its stake sale is unlikely to be a reaction to Tencent’s quarterly results. Instead of a timed profit-taking move, we believe this is more to improve Naspers’ own free cash flow and allow it higher flexibility in pursuing investment opportunities.”
A Tencent spokeswoman said it was informed and supportive of Naspers’ decision, and that Naspers’ intention to keep its remaining stake for the next three years demonstrated its confidence in Tencent.
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Reporting by Sijia Jiang and Donny Kwok; Editing by Paul Tait and Christopher Cushing
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Tencent loses $24 bln in market cap after Naspers’ selldown

What is the TPP 11? | CNBC Explains

African leaders agreed on Wednesday to form a $3 trillion continental free-trade zone encompassing 1.2 billion people, but its two biggest economies, Nigeria and South Africa, did not sign up, diminishing its impact.
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The African Union started talks in 2015 to establish a 55-nation bloc that would be the biggest in the world by member states, in a bid to increase intra-regional trade, which sits at a measly 15 percent of Africa’s total commerce.
Rwandan president Paul Kagame, host of an AU summit called to conclude the initial negotiations, declared the meeting a success after 44 African nations signed up to establish the free trade bloc within 18 months.
It was not immediately clear why South Africa and Nigeria stayed on the sidelines. Others staying out of the bloc were Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau.
“It would have been great if the two biggest economies on the continent, Nigeria and South Africa, had signed, but the most important is that the rest of the continent is sending a right message to these two biggest economies that we are moving ahead without you,” said Michael Kottoh, an analyst at Confidential Strategies in Ghana.
The project needed a minimum of 22 countries signing up to get off the ground and Kagame hailed the effort so far.
“What is at stake is the dignity and well-being of Africa’s farmers, workers and entrepreneurs,” he said.
AU trade commissioner Albert Muchanga also put a positive spin on the absence of the top two African economies, telling Reuters they would soon join in.
“They are still doing national level consultations and so when they finish they will be able to come on board,” he said.
<h3>TRADE ZONES</h3>
Economists point to Africa’s low level of intra-regional trade as one of the reasons for the continent’s enduring poverty and lack of a strong manufacturing base.
It is blamed on a host of factors, from colonialism, to high internal tariffs to poor road and rail links to excessive border bureaucracy and petty corruption at frontier checkpoints.
The relatively small size of many African markets &#8211; only Nigeria and Ethiopia have populations estimated at 100 million people or more &#8211; also inhibit private sector investment.
Africa already has an alphabet soup of competing and overlapping trade zones &#8211; ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south &#8211; although only the EAC, driven mainly by Kenya, has made significant progress towards a common market in goods and services.
Analysts said governments needed to do more to ensure goods and people flowed freely across borders.
“If they just sign the agreement without opening the borders, without getting rid of non-tariff barriers and if they don’t work on free movement of people, it is not going to work,” analyst Kottoh said.
Even the six-nation EAC has its sticking points &#8211; Tanzania has been known to kick out Kenyan executives and impound Kenyan imports at the border, in violation of EAC rules.
Businessmen said the current set-up forced them to look outside the continent, particularly Asia for manufactured goods.
“It is easy and cheaper to buy in Asia than to buy in the sub-region because of less-flexible rules of origin and non-tariff barriers that are not clear,” said Meriem Bensalah-Chaqroun, head of the Moroccan Confederation of Businesses.
Sudden changes in rules and impromptu checks on goods also held up supply chains.
“Some countries all of a sudden decide they are going to do a quality check on goods but they don’t really know what they want to check. That slows the trade,” said Thomas Schafer, CEO of Volkswagen Africa.
“We are not able to bring a vehicle from South Africa into Zimbabwe in a cost-efficient and fast way. That needs to change.”
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Writing by Duncan Miriri; Editing by Ed Cropley and Alison Williams
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Africa agrees to giant trade bloc, but Nigeria, South Africa sit it out

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Professor Landry Signé | Stanford University
Since 2000, at least half of the world’s fastest-growing economies have been in Africa. And by 2030, Africa will be home to 1.7 billion people, whose combined consumer and business spending will total $6.7 trillion.
<div id="attachment_106420" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-106420" class="wp-image-106420 size-full" src="http://cnbc.africa/wp-content/uploads/2017/03/Africashutterstock_110973782.jpg" alt="" width="800" height="600" />Photo: Shutterstock</div>
Seven years ago, the <a class="js-external-link" href="https://hbr.org/2011/05/the-globe-cracking-the-next-growth-market-africa" target="_blank" rel="noopener">Harvard Business Review pointed out</a> that Africa is also home to many of the world’s biggest opportunities. And yet, despite its tremendous business potential, Africa has not risen to the top of Western business leaders’ agendas.
In fact, between 2014 and 2016, U.S. exports to Africa fell by almost half, from $38 billion to $22 billion. And while the United Kingdom’s investments on the continent more than doubled between 2005 and 2014, reaching £42.5 billion ($57.6 billion), only 2.5 percent of its total exports are to Africa.
Western countries are quickly losing ground to China, which increased its exports to Africa more than sevenfold—to $103 billion—from 2005 to 2015. If Western businesses hope to keep up, they will need to tap into the African countries and sectors with the highest potential for growth.
By 2030, more than half of Africa’s population will reside in seven countries: Nigeria, Ethiopia, the Democratic Republic of Congo, Egypt, Tanzania, Kenya, and South Africa. But, more important, 43 percent of Africans will belong to the middle or upper classes, up from 39.6 percent in 2013, implying considerably higher demand for goods and services. By 2030, household consumption is expected to reach $2.5 trillion, up from $1.1 trillion in 2015.
Nearly half of that $2.5 trillion will be spent in three countries: Nigeria (20 percent), Egypt (17 percent), and South Africa (11 percent). But there will also be lucrative opportunities in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, and Tunisia. Any one of these countries would be a good bet for companies seeking to enter new markets.
By 2030, the sectors generating the most value in Africa will be food and beverages ($740 billion), education and transportation ($397 billion), and housing ($390 billion). But there will also be strong growth in consumer goods ($370 billion), hospitality and recreation ($260 billion), health care ($175 billion), financial services ($85 billion), and telecommunications ($65 billion).
Of course, much of this growth will depend on the African Union properly implementing its new Continental Free Trade Area, which would create a single market for goods and services, offering corporations many points of entry. Moreover, the CFTA will increase the need for connectivity, so there will be new opportunities to invest in infrastructure and sectors ranging from transportation and energy to information and communications technology (ICT) and water supplies. For its part, the African Development Bank can help investors find promising projects through its Program for Infrastructure Development in Africa.
Another major growth area between now and 2030 will be in African business-to-business spending, which will reach $4.2 trillion, up from $1.6 trillion in 2015. Here, the largest sectors will be agriculture and agricultural processing ($915 billion), manufacturing ($666 billion), and construction, utilities, and transportation ($784 billion), followed by wholesale and retail ($665 billion), resources ($357 billion), banking and insurance ($249 billion), and telecommunications and ICT ($79.5 billion).
The expected growth in agriculture and agricultural processing reflects the fact that food and beverages will constitute the largest share of total household spending. Moreover, 60 percent of the world’s unused arable land is in Africa, which still contributes a meager share of worldwide agricultural exports. That means there is a lot of room for growth. And, because severe hunger still affects many African countries, investors can even contribute to the public good by investing in fertilizers, machinery, water and irrigation systems, and other areas of the agriculture sector.
As of 2012, the African countries with the highest agricultural value-added in terms of annual growth included Burkina Faso, Ethiopia, Nigeria, Mali, Mozambique, Rwanda, and Tanzania. In addition, Angola, Morocco, and South Africa now all have sizable markets, and have committed to expanding their agricultural sectors.
According to the <a class="js-external-link" href="https://hbr.org/2017/05/the-worlds-next-great-manufacturing-center" target="_blank" rel="noopener">Harvard Business Review</a>, Africa also has the potential to become “the world’s next great manufacturing center.” China is expected to lose from 85-100 million low-cost, labor-intensive manufacturing jobs by 2030, and Africa stands to capture many of them.
This helps to explain why manufacturing will be the second-largest sector in terms of business-to-business spending. Another reason is that many of the manufacturing opportunities in Africa happen to be in globally competitive sectors such as automobiles and transport equipment, refined petroleum, computers, and office and industrial machinery. South Africa, Egypt, and Nigeria are already becoming promising places to invest in these areas. And investors will also be able to find high returns and favorable business environments in Ethiopia, Morocco, and Rwanda.
Africa is the world’s last frontier market, and Western businesses need to start taking advantage of its tremendous potential, as Chinese firms already are. Doing business in Africa will also create sustainable jobs and advance the United Nations Sustainable Development Goals to eliminate poverty and hunger. And that, too, will be good for the bottom line. As the <a class="js-external-link" href="http://report.businesscommission.org/" target="_blank" rel="noopener">Business and Sustainable Development Commission has shown</a>, pursuing the SDGs “could raise trillions in new market opportunities in ways that extend prosperity to all.”
This article was originally published by Project Syndicate.

Op-Ed: Capturing Africa’s high returns

Democratic Republic of Congo will declare cobalt and coltan, used in electric vehicle and renewable energy technology, as “strategic” minerals which will earn the country higher royalties, an advisor to the prime minister said on Wednesday.
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A new mining code was signed into law on Friday by President Joseph Kabila despite vigorous opposition by global mining companies with operations in Congo such as Glencore, Randgold and China Molybdenum.
Royalties paid to the government from cobalt and coltan mining will jump to 10 percent from 2 percent previously. Miners of the two metals used in batteries, would have paid a royalty of 3.5 percent under the new code if they had not been designated as strategic.
The government considers minerals with the “strategic” designation important for the economic, social and industrial future of the country.
“We need to make enough money before we run out of these minerals so that is why they are strategic to the country,” said Jean Nkunza.
“We have to make sure for the next 20 years we make money from these minerals because demand is going to be so high. It’s going to continue to grow and we are not going to stop raising the royalties on these minerals.”
Other “strategic” minerals on the list include lithium and germanium, Nkunza said.
Congo is the world’s biggest source of cobalt, the price of which more than doubled last year. The central African country is also Africa’s top copper producer.
International mining companies have said the new mining code will deter foreign investment but have agreed to start negotiations with the government over measures to implement the code.
The announcement by the prime minister’s office, however, appears to pre-empt those negotiations, which were due to determine, among other things, how metals would be classified.
The code also removes a clause that protected miners from changes to the fiscal and customs regime for 10 years and raises royalties and taxes across the board.
Low commodity prices in recent years hit Congo’s resource-dependent economy hard, causing inflation to swell to nearly 50 percent in 2017, and the government is desperate to increase its revenues.
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Reporting by Zandi Shabalala; Editing by Elaine Hardcastle
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Cobalt to be declared a strategic mineral in Congo

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There can’t be many people who can say a rough day at work was worrying about a crazed gunman jumping from behind a bush and shooting you off your horse. That was how I felt on the trail of a crack-shot and would be assassin who wanted to shoot, stone dead, the Head of the Commonwealth Queen Elizabeth.
That white-knuckle ride through the wild, dense, bush of New Zealand’s West Coast , fording rivers and struggling up rocky hills, proved the genesis of a story that I bashed out on a rickety old typewriter. It won me an award and made world headlines for weeks.
We were looking for a 22-year-old armed robber called Christopher John Lewis who was on the run after knocking over a bank and post office. He claimed to be a Ninja warrior as well as a right-wing extremist and gun fanatic. In his first slip through police fingers he dived into a river to escape – apparently a Ninja-style way of evading capture.
My editors on the Dominion newspaper, in the capital Wellington, despatched me to the West Coast to report on the hunt. The photographer and I asked around and tracked down the four-man police sniper squad to a hotel bar and persuaded them to let us go with them on the manhunt the next morning.
So I came to grips with a horse – that I had no idea how to ride – from dawn, until dusk for a couple of days. Every half an hour, the police raised their telescopic sights, we dismounted and lay flat on the ground waiting for a bullet that, luckily, never came.  I was 24-years-old and living every minute as if it were my last.
In the end, Lewis got away by hanging onto the floor of a passing train, before jumping on the ferry to Wellington and getting another train to Auckland at the other end of the country. Police arrested him &#8211; believe it or not – when he gave a credit reference to buy a car. A woman vouched for him and then tipped off police and Lewis, strangely enough, for a man of violence, went like a lamb.
Back in the bush my journalist antenna was working overtime. We had been led to believe Lewis was a mere felon; yet the police sniper squad talked of him as if he were Rambo and the Terminator rolled into one. I spoke to each of the snipers in their off guard moments in the bush to glean what I could – surprising how people will tell you stories face-to-face that they won’t do over email.
It led me, with the help of the news desk back, to retired Detective Tom Lewis (no relation) who spat out the whole story from his new home in Australia. He had arrested Lewis, back in 1981, and drawn him out by flattering his ego, telling him how he had given the police the run around, which led to the confession about attempting to blow the Queen’s head off as she walked the streets of Dunedin on the royal visit a few months before. Lewis had used the helpful map of the Queen’s route, published in the Otago Daily Times, to draw his field of fire and how many seconds he had to get in a head shot. His first shot was clear as day, the detective told me, from a roof overlooking the street. It was only a couple of policeman who climbed onto that roof, to get a better view of the Head of the Commonwealth, who messed up Lewis’s clear shot.
“There is no doubt he could have plugged her from there,” he told me. To this day, I wonder whether those policeman know their vantage point could have saved the Queen and averted a change in the course of history.
Detective Lewis recommended that the gunman be charged for treason that would have brought the whole story out. Police chiefs in Wellington were horrified – the revelation would have made them look like idiots and could have ended royal tours to New Zealand – and opted to sweep it under the carpet.
That is, until I came along six years later with my, dogged reporting, poor horse riding and rickety typewriting. It is immensely satisfying to see, 31 years later, in this age of fake news and sloppy reporting, that every word I wrote was verified by newly released intelligence documents; even more so, because the police at the time tried hard to pour cold water on my story.
If it had been possible to Google Christopher John Lewis in 1987 it would have been a lot easier and undoubtedly I would have got more information – but I probably wouldn’t have got the story.

Guns and fear on the trail of the man who wanted to kill the Queen

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By Dhuha Fadhel, Senior Economist, Thematic Research, Regional Research- Standard Chartered UAE
For years the Gulf Cooperation Council (GCC) successfully turned their natural resources – oil and gas – into material economic dividends, but how sustainable is this in the face of lower-for-longer oil prices?
GCC countries are now among the world’s 30 richest countries in terms of GDP per capita and fared well compared with emerging markets, developed markets and the world economy throughout 2008-14.
However, the latest episode of falling oil prices that started in mid-2014 saw average growth rates plummet throughout 2015-16, reaching only 0.3 per cent in 2017, based on our estimates.
The lower-for-longer oil prices [USD67 by the end of 2017 compared with an average of USD100 during 2008-14] and subsequent lower growth are creating three big challenges for the GCC.
First, global oil prices have always played a major role in determining growth rates, and consequently income levels, of these economies. For instance, lower oil prices turned current account surpluses into significant deficits in most cases, putting pressure on foreign exchange reserves. Furthermore, fiscal balances turned into deficits, prompting GCC countries to tap international capital markets, leading to increases in government debt.
Second, the dominance of oil and gas has resulted in a phenomenon familiar to commodity-exporting countries. Non-tradable sectors, such as property, tend to flourish (these attract a large share of oil and gas revenue), while tradable sectors, especially manufactured exports, do less well.
There are two key issues with this. First, higher oil prices can fuel asset price bubbles that could pose risk to the overall macroeconomic stability of GCC economies. For example, the high oil prices that prevailed before mid-2014 led to rapidly rising house prices in Abu Dhabi and Dubai, followed by a significant correction as oil prices started to fall from the second half of 2014.
Second, GCC economies are often characterised by stubbornly low productivity, with labour-intensive sectors such as construction and light manufacturing (less dependent on technology and high-skilled labour) taking the lead over more high-value-added sectors, such as finance and high-tech manufacturing. Given the importance of productivity for long-term growth, the GCC’s current low productivity levels may translate into lower growth rates in the medium to longer term.
Outside the distortions caused by overreliance on oil and gas, policy makers face a third pressing issue in the near future: demographics.  An increasing number of young people will enter the labour market in the coming years. Traditionally, GCC nationals seeking employment have favoured the public sector, given it offers higher wages, better job security, shorter working hours and longer holidays than the private sector. However, the public sector has reached saturation point, which means the GCC must find new ways to attract people to other sectors, or develop new sectors to absorb excess labour.
How can GCC countries tackle these challenges? In short, via reform. The question is, what type of reform?
To address their short-term imbalances, the GCC will need to continue with fiscal consolidation while structural reforms are needed to address longer-term issues.
The UAE and Saudi Arabia have led regional fiscal consolidation efforts to increase government revenue with the introduction of consumption taxes (value added tax – VAT) at 5 per cent at the turn of the year.
Other GCC countries appear to be lagging in this area. We believe that the potential revenue from 5 per cent VAT in GCC countries would be below the level needed to close the large fiscal deficits in many cases. Hence, introducing VAT will need to be accompanied by drastic cuts in current expenditure (especially subsidies and social benefits). Energy subsidy reforms introduced in 2015-16 were viewed as a positive step in this direction. However, further reform is likely in the future given that subsidies and social benefits are estimated to be equivalent to 8 per cent of total GCC GDP.
Also, GCC countries will need to implement measures to address deeper structural issues currently preventing them from reaching their long-term growth potential. Such reforms should aim to: improve the efficiency and conduct of fiscal policy; improve the business environment and reduce red tape; upgrade the regulatory system; address labour-market issues; introduce more ambitious industrial policies that aim to integrate GCC economies into the global supply chain; and continue to deepen the financial sector.
On the latter, a key development is the local debt market. This would provide these economies with new sources of financing, reduce pressure on local banks and the need to borrow from abroad at the same time as providing monetary authorities with effective tools to manage liquidity while preserving their currency pegs.
GCC countries, to some extent, provide a good example of how successful a country endowed with natural resources can be. However, the continued reliance on oil and gas both on the fiscal and external fronts has exposed these countries to macroeconomic instability related to the fluctuations in oil markets and, going forward, will continue to bring challenges especially in a lower-for-longer oil price environment.
GCC countries should prioritise reforms to help bring their fiscal and external balances back to more sustainable levels. Efforts targeting fiscal consolidation in the short term should continue alongside long-term structural reforms, to help sustain high growth in the future.

Gulf Cooperation Council: The oil-rich bloc that’s facing a new era

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