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2nd October 2020 Trade & Financial Services Round Up

KENYA

Suspension of the listing of negative credit information for borrowers expires

The Central Bank of Kenya (CBK) on April 14, 2020, announced a six-month suspension of the listing of negative credit information with credit reference bureaus (CRBs) for borrowers whose loans were performing previously and had become non-performing after April 1, 2020.

Yesterday in a press release they stated that the six-month suspension ended on September 30, 2020, following which the existing procedures for risk classification of loans with respect to their performance and subsequent listing with CRBs would apply.

The release stated that from October 1, 2020, financial institutions will assess the performance of all loans that were performing before April 1. For those loans that went into arrears after that date, the period for determining their performance begins on October 1, 2020. If a loan is in arrears after 60 days from October 1, a financial institution will,in accordance with the existing procedures, give the borrowers notice of the intention to list them with the CRBs. If the loan has not been regularized after the 30-day notice period, the financial institution will then list the non-performing loan with the CRBs. Consequently, borrowers whose loans were performing before April 1 and subsequently went into arrears, will have three months (up to end December 2020) in accordance with existing procedures to regularize their loans before they are listed with CRBs.

CBK MPC Media Briefing, September 30, 2020

CBK Governor Dr. Patrick Njoroge held a press briefing on September 30 2020, after the MPC meeting on September 29, 2020. In the media briefing he made updates on what had been discussed in the Monetary Policy Committee meeting. In the meeting, the MPC assessed the outcomes of its policy measures deployed since March to mitigate the adverse economic effects and financial disruptions from the pandemic.

The Committee noted that the package of policy measures implemented since March were having the intended effect on the economy, and will be augmented by implementation of the fiscal measures in the FY 2020/21 Budget. The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent.

COVID-19 slows down Stawi SME loan uptake

The COVID-19 pandemic has slowed down the uptake of mobile loans by small businesses. Stawi, a product offered through NCBA, Co-op Bank , DTB and KCB launched by the Central Bank of Kenyan and some banks last year is designed to give quick credit ranging from Sh30,000 to Sh250,000 for one year at a nine percent interest rate. The product targets businesses with a turnover of between Sh50,000 and Sh250,000 and assesses borrowers on the strength of past records and available assets.

NCBA’s chief executive John Gachora told Business Daily that demand had declined significantly.

“We saw the uptake of Stawi slow down during the Covid-19 season,” Mr Gachora said without giving figures. He added that small businesses have been among the hardest affected by the coronavirus disruption.

Stawi was meant to replicate the success of individual mobile loans at a business level, leveraging credit scoring based on data from mobile money platforms M-Pesa, M-Shwari and credit reference bureaus to enable banks make instant lending decisions.

Expansion of the Rironi – Nakuru – Mau Summit Highway through a Public Private Partnership Arrangement

On 30th September, President Uhuru Kenyatta witnessed the signing of the Commercial Agreement for the expansion of the Rironi–Nakuru –Mau Summit Highway, which will be largest road PPP project in Africa. The Government of Kenya is expanding the 2-lane  highway  into a 4-lane  dual  carriageway, that  will  be  expanded further into a 6-lane dual carriageway at its busy sections.  This 233km  project  also  includes strengthening and widening of  the existing Rironi -Mai  Mahiu –Naivasha road  to become a 7m carriage way  with  2m shoulders  on both  sides, construction of a 4Km viaduct (elevated  highway) through Nakuru town, and  construction  and  improvement  of  interchanges along  the  highway. The Rironi -Mai  Mahiu –Naivasha road serves the Naivasha Inland Container Depot (ICD) and the proposed Industrial  Park in Naivasha. It  also  serves  traffic destined to Narok, SouthWestern  Kenya  and Northern Tanzania. 

The  parties  to  the  Commercial  Agreement  are  the  Ministry  ofTransport, Infrastructure,  Housing,  Urban  Development  &  Public  Works,  through  the Kenya   National   Highways   Authority(KeNHA),   and   the   French   VINCI Consortium  comprising  of VINCIHighways  SAS,  Meridian  Infrastructure Africa Fund (MIAF),and VINCI Concessions SAS.  VINCI Highways SAS is the largest construction company outside China whilst VINCI Concessions SAS is the largest provider of infrastructure concessions services in the world.

Coronavirus (COVID-19)

WORLD

The European Investment Bank (EIB) has approved EUR12.6-billion of new financing for projects across Europe and around the world. New financing includes more than EUR3.1-billion of COVID-19-related investment to improve public health, strengthen public services and back investment by companies in sectors hit by the pandemic. The EIB Board also backed investment in agriculture, water, housing, telecommunications and urban development across Europe, as well as in Africa, Asia and Latin America.

AFRICA

There is an urgent need for financing to reenergize Africa’s trade in the wake of the COVID-19 pandemic, according to the latest trade finance report released jointly by the African Development Bank (AfDB) and the African Export-Import Bank. According to the report, titled ‘Trade Finance in Africa: Trends Over the Past Decade and Opportunities Ahead’, only 40% of Africa’s trade is bank-intermediated – a far lower share than the global average of 80%. The trade finance gap also remains unacceptably high at USD81-billion in 2019. The report found that these are some of the structural challenges that hinder banks’ ability to effectively intermediate Africa’s trade with the world. It also highlighted the critical role of development finance institutions in supporting the industry. The study also found that unintended regulatory bottlenecks were one of the key constraints driving these patterns.

Source: AfDB

Africa trade pact negotiators to fast-track e-commerce talks

Negotiations for e-commerce and digital trade under an Africa-wide free trade pact will be fast-tracked as the COVID-19 pandemic heightens the need for a legal and governance framework, according to the zone’s most senior official. The talks that were to have been part of phase 3 of what could be the world’s biggest free trade area will now take place alongside phase 2 negotiations on competition policy, intellectual property rights and investment protocols, said Wamkele Mene, the secretary general of the African Continental Free Trade Area. Discussions are expected to begin early next year. Talks on digital trade will include measures to harmonise and speed up customs-clearance procedures between countries, Mene said. Delays at borders and regulations that differ from country to country slow regional commerce.

Source: Bloomberg

RWANDA

RwandAir will resume flights to and from London and Brussels to Kigali from 3 October, as it reinstates its passenger network. The resumption of European services will see the carrier switch its United Kingdom (UK) operations from London Gatwick, with commercial flights to the Rwandan capital now departing from London Heathrow for the first time. The inaugural RwandAir service from Kigali to Brussels and London Heathrow will depart on 3 October. Flights will initially resume on a bi-weekly basis, before increasing to three flights weekly from 25 October, reconnecting the UK with Rwanda for passenger and critical cargo operations.

Source: RwandAir

UGANDA

The Government has clarified that Entebbe airport and borders will reopen on 1 October for both tourists and other travellers. The minister for Information and Communication Technology (ICT), Mr Peter Ogwang, told Daily Monitor that emphasis will be put on the travellers presenting certificates of negative test results for COVID-19, which must be done 72 hours before arriving in Uganda. Ms Judith Nabakooba, the ICT and National Guidance minister, further clarified that the airport will be open to all travellers entering or leaving Uganda. With regard to “travelling out, it is now mandatory to have negative test results for COVID-19 done within 72 hours before the flight. The same applies to all those travelling to Uganda from other countries,” she said.

Source: Daily Monitor

Tanzania, Rwanda and Uganda race ahead to forge a single stock market

Three East African countries have joined forces to implement a World Bank-funded financial project that aims to connect regional stock markets electronically. This means they can operate as a single market with a view of reducing the cost and time of trading in shares of companies listed on markets across the borders. Rwanda, Tanzania, Uganda are set to start trading as a single market before the end of this year after interconnecting their trading systems and hooking to the East African Community (EAC) Capital Markets Infrastructure (CMI) Information Technology platform. Investors in the three countries will buy and sell shares of companies listed in any of the countries without going through different stockbrokers. The East Africa Securities Exchange Association (EASEA) said the project that has dragged for more than five years largely due to payment dispute with the software provider and lack of integration between CMI software and the trading systems of the three participating states will remove obstacles on stock trading in regional markets, spur activities and boost liquidity in underperforming markets once operational.

Source: The EastAfrican

TANZANIA

Government reviews investment policy

The government has embarked on a review of the investment policy to improve domestic direct investment (DDI) and foreign direct investment (FDI). The move is also aimed at improving a business and investment climate for the country to continue building the economy by exploring available opportunities. Under review, is the National Investment Promotion Policy of 1996 that paved the way for the enactment of the Investment Act of 1997 for which the Tanzania Investment Centre (TIC) was established. Director of planning in the Prime Minister’s Office, Packshard Mkongwa mentioned three areas that needed more attention to improve the sector. “A lot has been done so far on improving the sector, but there are still challenges in investment coordination, investment promotion and investment facilitation,” he said.

Source: Daily News

Tanzania’s petroleum products market sees sizeable annual expansion

The liquefied petroleum gas (LPG) market registered double-digit growth last year as companies and the sector’s regulator foster public awareness campaigns on the benefits for using the environmentally friendly energy source. A new report by the Energy and Water Utilities Regulatory Authority (EWURA) shows that the LPG business segment grew by 16% last year, fuelled partly by increased imports and investments in storage and refilling plants. In 2019, a total of 166,436 MT of LPG were imported, compared to 142,939 MT of the same imported in 2018. The partly-released report notes that about 65% of the imports was for the domestic market, while the remaining 35% was transited to neighboring countries, 70% of which went to Kenya. The increase in LPG imports is due to government efforts and LPG marketing companies to create public awareness on the importance of using LPG against traditional fuels such as charcoal and firewood. EWURA’s director of the petroleum division, Mr Gerald Maganga, said despite the increased LPG consumption in the country, there was still limited distribution of the product in rural areas. According to Maganga, the regulator has continued to encourage construction of petrol stations in rural areas so as to ensure that petroleum products are distributed in a reliable and safe manner.

Source: The Citizen

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