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Moody’s downgrades Zambia credit rating to negative

External and liquidity pressures impairing government’s ability to service debt over medium-term cited as reasons

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Moody’s downgrades Zambia credit rating to negative

Credit rating agency, Moody’s has downgraded Zambia’s credit rating with a negative outlook from stable.

Moody’s cited external and liquidity pressures impairing government’s ability to service debt over medium-term as reasons for changing the long-term issuer ratings outlook which was stable at Caa1 to Caa2.

The downgrade follows three downgrades in 2018.

The rising probability of default also reflects increasingly stark credit challenges stemming from rising debt levels, which further reduce the likelihood that the external and liquidity stress will be resolved rapidly.

Moody’s says the Caa2 rating balances those pressures against the possibility that Zambia could refinance forthcoming maturities and continue to service its debt while preventing a depletion of foreign exchange reserves.

It now projects Zambia’s government debt burden (including arrears) to exceed 76% of GDP in 2019, significantly higher than earlier expected, and to increase further approaching 80% early in the next decade.

The negative outlook reflects the risk of material losses to investors in the event of a default by Zambia, beyond what would be consistent with a Caa2 rating.

Despite mineral royalty receipts being remitted in US dollars, the country’s foreign exchange reserves have continued to decline gradually in recent months.

As of the end of April, foreign exchange reserves had fallen to about US$1.1 billion, or 1.3 months of imports, well below the three-month of imports threshold commonly considered a minimum level of reserve adequacy.

Current reserve holdings have reached a record-low level in almost a decade and are very low compared to the external debt payments due in the remainder of 2019 and in 2020.

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Nigeria to sign military cooperation deal with Russia

Nigerian President, Muhammadu Buhari is due to meet Putin on the sidelines of a Russia-Africa summit in Sochi

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Nigeria to sign military cooperation deal with Russia

Nigerian President, Muhammadu Buhari hopes to sign a military-technical cooperation deal with Russia at talks with President Vladimir Putin this month that will help it fight Boko Haram militants.

The Nigerian leader is due to meet Putin on the sidelines of a Russia-Africa summit in the Black Sea city of Sochi amid a push by Moscow to expand its influence in Africa.

“We’re sure that with Russian help we’ll manage to crush Boko Haram, given Russia’s experience combating Islamic State in Syria,” Nigerian envoy, Steve Ugbah said in an interview with Russia’s RIA news agency, adding that Nigeria was interested in purchasing Russian helicopters, planes, tanks and other military equipment.

Ugbah says a military-technical cooperation deal between Russia and Nigeria had already been drafted and that it is awaiting finalisation. 

“We hope President Buhari can take the talks to their logical end. The agreement will open new possibilities in such areas as the supply of military equipment and training for specialists,” he adds.

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Nigeria, Cameroon to plan Cocoa price cartel

The plan suggested by Nigeria is part of a trend by cocoa growers in West Africa and Latin America

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Nigeria, Cameroon to plan Cocoa price cartel

Nigeria aims to team up with Cameroon to agree on a premium for its cocoa with buyers, after the world’s top growers, Ivory Coast and Ghana set a price floor for the crop.

The plan suggested by Nigeria, the world’s fourth-largest cocoa producer, is part of a trend which has seen growers in West Africa and Latin America seek to influence prices in the global market.

The move follows Ghana and Ivory Coast’s union in July, which set the price for a ton of cocoa from their countries at $2,600 plus a $400 premium described as “living income differential”.

READ: Cocoa industry stakeholders accept Ghana, Ivory Coast price

Both countries produced 60 per cent of the world’s cocoa in 2018.

Vice President of the World Cocoa Producers Organisation, Sayina Riman says discussions will be held with the private sector and the Nigerian Government before formal talks are held with Cameroon.  

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Exxon to invest $500 million in Mozambique LNG project

Construction of onshore facilities has been awarded to a consortium led by Japan’s JGC, U.K firm TechnipFMC and U.S. company, Fluor Corp

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Exxon to invest $500 million in Mozambique LNG project

Exxon Mobil plans to invest more than $500 million in the initial construction phase of its liquefied natural gas (LNG) project in Mozambique.

The U.S. oil company’s $30 billion Rovuma LNG project, jointly operated with Italy’s Eni, has a capacity of more than 15 million tonnes a year (mtpa) and is set to pump much-needed cash into the country’s ailing economy. 

“The Area 4 partners will advance midstream and upstream area project activities of more than $500 million as initial investments,” Exxon head of power and gas marketing, Peter Clarke told a ceremony in Mozambique’s capital Maputo on Tuesday.

Construction of onshore facilities has been awarded to a consortium led by Japan’s JGC, U.K firm TechnipFMC and U.S. company, Fluor Corp.

“These EPC (engineering, procurement and construction) contracts cover the construction of two natural gas production trains with a total capacity of 15.2 million tons per annum, as well as associated onshore facilities,” Clarke adds.

Final investment decisions, a term used by the oil industry to mean the commercial and regulatory aspects of a project are finalised, will be made in 2020.

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