Author: Antonio Guerrero

SA-SWAZILAND RAILWAY LINK (FINALLY) GETS THE GREEN LIGHT

By Antonio Guerrero

Transnet, South Africa's state-owned transit and logistics company, and Swaziland Railway have joined forces to complete a $2.2 billion railway linking their two countries, a plan under consideration since the late-19th century.


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New rail link will facilitate trade and reduce costs

Construction of the 146-kilometer line will begin next year and end by 2016. It will link Lothair in South Africa with Sidvokodvo in Swaziland, a landlocked country, to facilitate trade and reduce transportation costs. Swaziland imports more than 80% of goods from neighboring South Africa, to which it also sells some 70% of its exports. The coal industry is expected to be among the rail line's principal clients.

Kenyan lawmakers are studying legislation that would cap interest rates on commercial bank loans at four percentage points above the central bank benchmark rate. Local business leaders and investors have been pressuring the government to push for lower interest rates, as the base lending rate is currently as high as 25%. The benchmark rate was a record-high 18% in February, after the central bank, which had been steadily hiking the rate, kept it unchanged for two consecutive months. The government is reluctant to cut rates due to inflation concerns amid a drought that is boosting food prices. Inflation in January was 18.3% year-on-year, compared with a 10% official target. However, there is also mounting concern that high interest rates may dampen this year's GDP growth forecast, as investors remain cautious. The government has already cut its 2012 growth outlook to 5.3%, from a previous 5.7%.

Despite ongoing protests from religious groups and some media pundits, Nigeria's Jaiz Bank has begun offering Islamic banking services after long delays, becoming the country's first Islamic financial institution. The Christian Association of Nigeria, a religious umbrella group, continues to threaten litigation against the nation's central bank unless it withdraws Jaiz Bank's license.

Muslims account for 55% of Nigeria's population. Islamic financial institutions have been established in several African countries, including in South Africa, which is currently eyeing the launch of an Islamic sovereign bond issue.