16th October 2020 Trade & Financial Services Round Up

October 16, 2020 - Reading Time: 9 minutes - By The Vellum Team

Cabinet Despatch 16th October 2020

Today the President chaired an extraordinary session of Cabinet where the Head of State received the Report on the State of National Security, Nationhood and Territorial Integrity. The Report covers a wide range of issues, including national cyber projects, geospatial surveys and airborne geophysical projects, the National Integrated Information Management System (NIIMS) Programme – Huduma Namba initiative, and the National Security Industrialization Project. The Report also addressed a number of other areas of national security concern and strategic national


Employment of Foreigner tied to issuance of work permit 

Justice Radidio of the Employment & Labor Relations Court today determined Petition 108 of 2020 Rishi Prakash Aggarwal v Scanad Group Kenya Ltd that the employment contract of a foreigner in Kenya is tied to issuance of work permit to the foreigner. In the case, the Judge held that Scan Group was not at fault for terminating Rishi’s contract as Executive Creative Head after expiry of his work permit issued in 2014. Per Kenya’s immigartion laws, a work permit cannot be renewed for more than 5 years. The Petitioner had received his first work permit in 2014, with the 5 year period lapsing in 2019.

The National Budget for the Financial Year 2021/2022

The National Treasury and Planning has embarked on the process of preparing the Financial Year 2021/22 National Budget as required by the provisions of the Public Finance Management Act, 2012, and the Constitution. 

The National Treasury and Planning hereby invites institutions, the private sector,  non-governmental  organizations  and the  general  public to submit taxation proposals that the Cabinet Secretary for the National Treasury and Planning could  consider while preparing  the  National  Budget  for  the  Financial  Year 2021/2022. The proposals  should  be  submitted  in  writing  to  the  undersigned  or  through  the  email [budgetproposals@treasury.go.ke] not later than 15th November, 2020. 

The proposals should be aimed at supporting economic recovery from the effect of the Covid-19  pandemic, strengthening the revenues in the fiscal framework especially in support of the “Big Four” Agenda currently under implementation by the  Government. The  proposals  may also  include  measures  on regulatory reforms, revenue administration reforms, and measures to strengthen macroeconomic stability. The  review  of  the  proposals, consultations  and  their consideration  will  commence on 16th November 2020, immediately  after  the deadline of submissions

Kenya drops to No.7 in investment attraction ranking

The Absa Africa Financial Markets Index 2020 has ranked Kenya number 7, a drop from number 3 with a score of 65. Countries that have overtaken Kenya are Nigeria (3), Botwana (4) Namibia (5) and Ghana (6).

The Absa Africa Financial Markets Index evaluates financial market development in 23 countries, and highlights economies with the most supportive environment for effective markets. Its aim is to show present positions, as well as how economies can improve market frameworks to bolster investor access and sustainable growth. The index assesses countries according to six pillars namely: 

  1. Market depth; 
  2. Access to foreign exchange; 
  3. Market transparency, tax and regulatory environment; 
  4. Capacity of local investors; 
  5. Macroeconomic opportunity; and 
  6. Legality and enforceability of standard financial markets master agreements: enforceability of financial contracts, collateral positions and insolvency frameworks.

Kenya’s score according to the report is: 

Pillar Score
market depth;52 
access to foreign exchange;57 
market transparency, tax and regulatory environment;74 
capacity of local investors41
macroeconomic opportunity67 
Legality and enforceability of standard financial markets master agreements57

Kenya climbed two places on Pillar 3 after scoring better in corporate governance structure. The Kenyan Capital Markets Authority issued guidance allowing listed firms to purchase their own shares. These share buybacks, which can help encourage stock market activity, boost the country’s score in this indicator.

Other key findings from the 2020 edition reveal:

  • Average overall score dips to 51 out of 100 in 2020 from 53 in 2019, partly due to slower market activity in the first half of 2020 and stricter scoring in some indicators.
  • Countries perform best in ‘market transparency, tax and regulatory environment’, scoring 67 on average.
  • South Africa and Mauritius maintain their lead in the index, scoring 89 and 79, respectively.
  • Namibia tops ‘capacity of local investors’, while Mauritius retains its lead in ‘legality and enforceability of standard financial markets master agreements’.
  • Green finance is gaining momentum, with Nigeria, Kenya and Egypt among countries that have issued sovereign green bonds in the past year.

Airtel selects Ericsson to modernise its 4G network in Kenya

Airtel Africa has expanded its strategic partnership with Ericsson to enable 4G coverage in Kenya. With Ericsson’s Radio Access Network (RAN) and packet core products for 4G, Airtel subscribers will experience enhanced quality of voice and data. The network modernisation deal, signed in August 2020, is in line with the ‘Kenyan Digital Economy Blueprint Vision 2030’ which aims to provide robust connectivity in rural areas and facilitate e-commerce platforms. The modernisation deal will simplify and upgrade the existing network while future-proofing it for the anticipated and rapid expansion of mobile connectivity in the country. With Ericsson Radio System and Packet Core solutions, Airtel Kenya’s network will have 4G coverage, while driving enhanced use cases in both the consumer and the enterprise segments. Ericsson technology will also get the network in Kenya ready for 5G deployment.

Source: Africa Business Communities

The Banker’s Top 100 African Banks 2020 by The Banker

The Banker’s Top 100 African Banks ranking for 2020 shows stabilisation in the finances of the majority of African major lenders. The following are the categosries and Kenyan Banks that ranked top 10:

Top 10 Overall Category

7. Equity Bank

Top 10 Growth Category

3. KCB Group

9. Equity Bank

Top 10 Profitability

6. Equity Bank

9. KCB Group

Top 10 Operation Efficiency

8. KCB Group 

Top 10 Asset Quality

No Kenyan Bank

Top 10 Return on Risk

8. Equity Bank 

Top 10 Liquidity

10. KCB Group

Top 10 Soundness

5. Equity Bank

10. KCB Group

Top 10 Leverage

6. Equity Bank


Bank of Uganda statement on financial institutions business in Uganda.

The Bank of Uganda (BoU) released a statement on the financial institutions business in Uganda. The Statement which seemed to be a reaction to last week’s High Court of Uganda ruling where the court held the Diamond Trust Bank Kenya could not lend to a borrower in Uganda, clarified the scope of financial services and licensing in Uganda.

The Bank specified that it does not regulate  extension  of  loans/credit  or  the financing of commercial transactions that are funded using  funds  owned  privately  by  individuals,  corporates,  private  equity funds local or foreign. 

On agent banking, the Bank of Uganda stated that International and Regional Development  Organizations,  Foreign  Banks, and  other  Lenders both  local  and  foreign are allowed to choose to appoint any entity or person to act as their agent in Uganda under general contract law. This does not require any approval from BoU since such agencies do not fall within regulated agency under the Financial Institutions Act, 2004 of Uganda and thus do not require a BoU license.

The Bank finished its statement by stating that foreign banks lending deposits held in jurisdictions other than Uganda are regulated and supervised by their home financial regulators. It is not mandatory for foreign  banks  to  establish  a  representative  office  in  Uganda  in  order  to conduct lending or non-deposit-taking activity. The Bank of Uganda’s regulatory and  supervisory powers only apply to financial  institution  business  conducted  by  BoU  licensed  entities  in  or outside  Uganda  or  activity  which  should  be  licensed  as  such  in  Uganda. 

Uganda now open

President Yoweri Museveni has confirmed Uganda is now open to the world – urging tourists to visit the country following the easing of COVID-19 restrictions. The President said on social media that tourists are free to visit Uganda following the reopening of the country’s Entebbe International Airport and national borders after seven months of government closure in the wake of the COVID-19 pandemic. “Uganda is now open to the world, provided the SOPs (Standard Operating Procedures) are strictly adhered to,” said President Museveni. He added: “Tourists / travellers should have tested negative 72 hours before arrival in Uganda”. Uganda on 1 October 2020 resumed scheduled commercial passenger flights after the government suspended the operations when the pandemic broke out in the country in March.

Source: PML Daily

TradeMark East Africa will, under the Safe Trade Programme, provide up to USD2-million (UGX7.4-billion) in health assistance as it seeks to safeguard one-stop border points as well as promote trade at a time when there have been slowed business activities. The money, which will mainly go towards the purchase of personal protective equipment (PPE), will seek to protect frontline workers deployed at different border points such as Mutukula one-stop border point. Speaking during the handover, Ms Damali Ssali, the TradeMark East Africa acting country director, said the UGX7.4-billion seeks to support an emergency response to ensure that regional and international trade continues to thrive amid COVID-19.

Source: Daily Monitor

Cotton export revenue set to increase

Uganda’s export revenue from cotton is set to increase following the launch of the Cotton Development Organisation (CDO) module under the Uganda Electronic Single Window (UESW) system. This will see stakeholders enjoy reduced paper-based procedures and delays in getting the required regulatory documents for export, such as the ginnery certificate, lint export certificate and lint quality certificate. This, according to the TradeMark East Africa acting country director for Uganda, Damali Ssali, will enable the country to export more cotton and increase export revenue from the cash crop. The UESW is a system that leverages technology, to allow traders to submit all the required regulatory documents, such as permits and customs declarations, to approving agencies electronically, using a single access point.

Source: New Vision

Government establishes first free zone at Entebbe airport

Arrangements have been finalised for government to establish the first public free zone at Entebbe International Airport to boost export-oriented investment in the country. The development of the public free zone is expected to cost UGX48-billion. It will house seven production units and trade houses such as offices of the Uganda Free Zones Authority, Uganda Revenue Authority, and other government offices to facilitate the smooth flow of business. Under the arrangement, the project targets sectors which include food processing, mineral processing, warehousing, storage and simple assembly, where all operators in the public free zone will process their products for onward export through Entebbe International Airport. Mr Hez Kimoomi Alinda, the Uganda Free Zones Authority’s executive director, said the project is testimony of government’s commitment towards the creation of an economic environment, which is conducive to private sector investment and growth.

Source: Daily Monitor

Private sector asks government to extend tax payment holiday

The private sector has asked government to conduct a survey before it can ask businesses to resume paying taxes. Government had in April offered tax deferral in which businesses had been provided a window to carry forward tax payment for at least three months. However, the window expired last month and businesses are expected to start filing returns on or before 15 October 2020. Speaking in an interview, Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director told Daily Monitor that government must ascertain the performance of the private sector since June before assuming that the private sector was now ready to resume tax payment. Government had in the 2020/21 Budget Speech indicated that in order to address short term emergency liquidity requirements, it had been forced to put in place tax relief measures, which included deferment of payment of corporate income tax or presumptive tax until September 2020.

Source: Daily Monitor


South Sudanese government looking to build four oil refineries

James Yugusuk, general manager of Downstream at the South Sudanese state-owned petroleum company (Nilepet), announced that the government intends to build four oil refineries. While no information was given regarding the date of construction of the units, the towns of Bentiu, Paloch, Thiangrial and Pagak were chosen to house the facilities. In addition, the authorities plan to provide the country with strategic fuel reserves. Thus, depots will be built in the main cities. The announcement comes a few weeks after the government’s decision to make Nilepet the operator of several key production areas, from 2027. A training program for local engineers will soon be launched and will allow the execution of these projects by mainly local labour. “We want to expand our points of sale to all major cities in the country. We want to have a very strong and very effective joint venture with the companies and the people who are willing to do it. We also want to have a strong presence in petroleum research and development programs,” added Yugusuk.

Source: Energy Mix Report

South Sudan oil firm bids to set up a USD500-million regional refinery

South Sudanese oil marketing giant Trinity Energy Ltd is set to inject USD10-million worth of new investments in its Kenyan operations and also plans to build a USD500-million crude oil refinery in South Sudan to serve the region with refined petroleum products. The firm, which controls close to 40% of the South Sudanese oil market, is planning a 40,000 barrels per day (bpd) modular refinery at Paloch in the oil-rich Upper Nile State, with the potential of expanding capacity to 200,000 bpd, as well as petroleum storage facilities at Nesitu, in the south of the country. The refinery, to be built by American firm Chemex, is expected to be operational in two to three years, with plans to start distribution of refined petroleum products to Kenya, Uganda, Tanzania and the Democratic Republic of Congo by road, owing to the absence of railway and pipeline connectivity between these countries. The EastAfrican has learnt that the feasibility study and the designs for the proposed refinery have already been concluded with Afreximbank together with big regional banks operating in Juba expected to provide financing.

Source: The EastAfrican


Vodacom targets 5G technology, as it marks 20 years in Tanzania

Vodacom Tanzania is in initial discussions with the Tanzania Communications Regulatory Authority (TCRA) on the possibility of investing in 5G technology. This comes as the telecommunications firm was soldiering on with its TZS75-billion investment this year alone in broadband expansion for 3G and 4G technologies across the country. Managing director Hisham Hendi told The Citizen that the company was only awaiting regulatory approvals before it can start investing in 5G. Speaking on the sideline of celebrations to mark two decades of Vodacom’s presence in Tanzania, Hendi said as soon as the regulator gets 5G spectrum, the firm will not hesitate to start investing in the system. Vodacom’s Corporate Affairs director Rosalynn Mworia said the company was making huge investments in 2G, 3G and 4G coverage, with a specific view on ensuring that such services are accessed by 90% of the population come 2025.

Source: The Citizen

Tanzania’s economy continued to perform satisfactorily despite spillover effects from the global economy due to the COVID-19 pandemic, the central bank said on Tuesday, 6 October. The Bank of Tanzania said in a statement that the Bank’s Monetary Policy Committee assessment of the performance and outlook of the economy showed that it will grow at the projected rate of 5.5% in 2020. “The macro-economic indicators have continued to remain stable and within agreed regional ranges,” said the statement. The statement added that private sector credit growth is strong notwithstanding challenges on global supply chains attributable to the COVID-19 pandemic.

Source: Xinhua

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