20th May 2022 Trade & Financial Services Round Up

May 20, 2022 - 5 minutes read
KENYA

Kenya’s debt repayments to China shoot to Sh73.5 billion

Kenya’s debt repayments towards China-funded infrastructure projects have more than doubled to a record Sh73.48 billion this financial year on the back of increased clearance of principal sums after the grace period lapsed.

Expenditure data published this week by the Treasury shows the amount repaid to Chinese lenders has surged 135.15 percent compared with Sh31.25 billion in the year ended June 2021 when a moratorium due to Covid-19 shocks was in place.

The cash was wired to the lenders — Exim Bank of China and China Development Bank — in two batches of Sh43.62 billion in the third quarter of the current fiscal year (around January) and Sh29.86 billion in July 2021.

The repayments to Chinese lenders accounted for 81.4 percent of the Sh90.26 billion that the Treasury spent on servicing bilateral debt in the nine-month period through March, according to the provisional data.

Kenya had sought to save the bulk of the cash that was due to China in the first half of the current financial year, but Beijing rejected its application for deferment of the debt obligations for six months to last December.

Chinese lenders, especially Exim Bank, were uncomfortable with Kenya’s application for extension of the Covid-induced debt service suspension programme by the rich nations, prompting delays in disbursements to active projects funded by Chinese financiers largely in the power transmission sub-sector.

(Source: Business Daily)

TANZANIA

How TSh474 billion road has cut cereal prices

Residents in the western zone regions will now be able to access cereals at affordable prices, thanks to the completion of a 343-kilometre tarmac road project linking the area to a key producer, Katavi.

President Samia Suluhu Hassan graced the inauguration of the TSh473.879 billion road in Sikonge – Tabora yesterday, describing the road as a respite for opening up economic activities in Tanzania.

Speaking during the event, chairperson of the infrastructure parliamentary committee Selemani Kakoso revealed that the prices of cereal products will go down after the completion of the road.

“Before the construction of this road, a sack of maize was sold around TSh50,000 to TSh60,000 depending on location, but after the completion of the road, the prices will range from TSh15,000 to TSh18,000 per 100 kilogramme sack. This is a milestone,” he said.

Stressing, the minister for Works and Transport, Prof Makame Mbarawa, said the completion of the road will encourage citizens to pursue both national and international trade

“This road will boost business between Katavi, Tabora, Kigoma and the neighbouring countries through transporting agricultural products,” he said.

President Suluhu, who inaugurated the road during a live-broadcast ceremony, insisted on the good use of the infrastructure for scaling up the wellbeing and economy of the residents.

(Source: The Citizen)

UGANDA

Ugandan shilling loses against dollar for first time in over two years

The shilling has between April 2022 to date, depreciated against the dollar by 3 percent, according to Bank of Uganda.

This is the first time in over two years that the shilling is losing ground against the dollar.

Speaking in an interview early this week, Dr Adam Mugume, the Bank of Uganda director of research, said, a combination of both internal and external factors fueling the depreciation of the shilling against the dollar, among which include increase in corporate demand for dollars and strengthening of the dollar.

“The increase in global commodity prices means that payment for oil and other essential commodities requires more dollars. Put differently, the demand for dollars to pay for essential raw materials, most of which are quoted in dollars, has gone up,” he said, noting that the Bank of Uganda will continue to monitor the market to ensure stability.  Ms Catherine Kijjagulwe, the Absa head of trading, said the shilling had continued to exhibit volatility, opening Wednesday at UgShs3,660 per dollar, before closing at UgShs3,650.

This, she said, was driven by continued demand, prompting two Central Bank interventions on Wednesday, which relaxed the southward movement yesterday. By yesterday, according to Bank of Uganda, the shilling had marginally gained closing at UgShs3,643.13 against the dollar.

 In the Regional Economic Outlook for sub-Saharan African published in April, the International Monetary Fund said the central banks should manage exchange rate adjustment on the back of monetary tightening in the US, which could raise risk premiums exacerbated by the conflict between Russia and Ukraine.

(Source: The Monitor) 

RWANDA

Rwanda plans to spend Rwf4,650 billion by 2022/2023

Next year’s draft budget shows that Rwanda expects to spend more than Rwf4,650 billion.  

The Minister of Finance and Planning, Dr  Uzziel Ndagijimana, speaking to Parliament pointed out that the Rwandan economy could continue to be affected by the COVID-19 pandemic in parts of the world, the Ukraine war and climate change. The budget approved by the Cabinet consists of Rwf4,658.4 billion, an increase of Rwf217.8 billion or 4.7% compared to Rwf4,440.6 billion in the revised budget of 2021/22. Domestic revenue will reach Rwf2,654.9 billion, equivalent to 57% of the total budget for the year 2022/23.

Foreign aid is projected to reach Rwf906.9 billion or 19.5% of the total budget; and foreign loans will reach Rwf651.5 billion or 23.5% of the total budget.

Dr Ndagijimana says the reduced COVID-19 epidemic has led to a reduction in the budget used to fight it. More than Rs 156 crore has been earmarked for the agriculture sector, which is a reduction of Rs 9.5 billion, which he acknowledges, with the government finding that some projects will no longer be funded but agriculture will be allocated a sufficient budget.

Overall, the country’s inflation and foreign debt repayment accounted for about 80.5% of the country’s 2022/2023 budget.

The issue of rising market prices and low wages is one of the issues raised by Senators and MPs.

Dr Ndagijimana says a law is expected to exempt workers from being paid more than Rwf60,000.

Of this budget, more than Rs 2,834 billion is projected to accelerate economic development, or 60.9%, while social welfare is projected to be over Rs 1,175 billion or 25.2% while good governance is estimated at Rs 1,379 billion.

(Source: Rwandan Broadcasting Agency) 

ETHIOPIA

Public-Private Partners Sign Agreement to Launch Company that Develops Capital Markets

A cooperation agreement for the establishment of Ethiopian Securities Exchange (ESX) was signed by Ethiopian Investment Holdings (EHI), Ministry of Finance, and Financial Sector Deepening Africa (FSD Africa) today.

The Ethiopian Securities Exchange is designed to provide a fundraising platform for small and medium-size enterprises and offer a platform for the privatisation of Ethiopia’s state-owned enterprises.

On the occasion, Finance Minister Ahmed Shide said the Government of Ethiopia has embarked on developing capital markets as part of the Homegrown Economic Reform program.

According to him, the ESX will be established as a share company by the government in partnership with the private sector, including foreign investors.

“The establishment of a security exchange through such a public-private partnership will usher a new era for the Ethiopian financial industry and the economy as a whole. Today’s cooperation agreement between the Ministry of Finance, EIH, and FSD Africa is the first concrete step towards realizing our vision,” the minister stated.

Ethiopian Investment Holdings CEO, Mamo Mihretu, said the National Bank of Ethiopia has made strides towards realizing capital market, though a lot remains to be done.

EHI is a strategic investment arm of the Government of Ethiopia and the objective is to contribute key development goals through professional management of public assets and best international practices and good corporate governance principles, he added.

(Source: Ethiopia News Agency)

SUDAN

Sudan’s Consumer Protection Association calls attention to electricity and oil issues

The Consumer Protection Association joined a group of organisations and individuals who filed an official complaint in Khartoum against the doubling of the electricity tariffs for household consumption since April and called on “all those affected to join the complaint”. The association further reported on the smuggling of large quantities of oil that does not meet the country’s quality standards.

Yasir Mirghani, head of the Consumer Protection Association, said in an interview with Radio Dabanga’s Sudan Today programme, that the association denounces the doubling of electricity tariffs for household consumption “without any justifications”.

Mirghani also criticised the “suspicious silence” of electrical engineers and technicians surrounding the price increase.

The association also told Radio Dabanga about the reported smuggling of large quantities of petrol to the Sudanese markets after a ship entered the country with petrol of which the quality was not in accordance with the prevailing standards in the country.

Mirghani said that the Ministry of Oil formed a committee to investigate how the non-conforming petrol ship was allowed to enter the country and called on the ministry to include the Consumer Protection Association in the committee.

He said that there was another vessel importing oil from the same company that also carried non-conforming petrol. Mirghani explained that the Khartoum Refinery had proven that the petrol did not conform to the official standards.

He further explained that the company itself analysed the petrol in another laboratory to prove the quality standards, but that the authorities in Port Sudan refused to approve those results.

Sudan has witnessed protests against the soaring costs of living, including oil and energy prices, and against environmental pollution caused by oil extraction activities. 

(Source: Radio Dabanga) 

SOMALIA

Roble Transfers $9.6 million To UAE

The Prime Minister of the Federal Government of Somalia Mohamed Hussein Roble and a delegation led by him recently departed from Aden Adde International Airport in the capital Mogadishu.

Prime Minister Roble has left for the United Arab Emirates (UAE) to pay his last respects to the late Sheikh Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates.

The Prime Minister will also convey his congratulations to the new President of the United Arab Emirates, Sheikh Mohammed bin Zayed Al Nahyan, and to the President of the Federal Republic of Somalia, Hassan Sheikh Mohamud.

Meanwhile, the Federal Government of Somalia today officially handed over to the United Arab Emirates $ 9.6 million previously frozen, which in 2018 was seized by security forces at Mogadishu Airport and held by the Central Bank for four years.

The Prime Minister of the Federal Government of Somalia Mohamed Hussein Roble in January this year ordered the release of the money which was suspended from the UAE government in 2018.

(Source: Radio Dalsan)

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