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23rd October 2020 Trade & Financial Services Round Up

COMESA UPDATES

A report from the Fifth Trade and Trade Facilitation Sub-Committee meeting of the Common Market for Eastern and Southern Africa (COMESA) which was held virtually has indicated that the region’s average growth slowed down in 2019 to 5.2% from 6% in 2018 and is projected to decrease to 0.6% in 2020. The slowdown in growth was experienced in most COMESA member countries except Egypt, Ethiopia, Malawi, Rwanda and Seychelles that registered improved economic growth in 2019 compared to 2018. The impressive growth of above 5% in both years in these countries, reflected among others, improving growth fundamentals, with a gradual shift from private consumption toward investment and exports. The COMESA region experienced a slowdown in growth in 2019 as compared to 2018. This is largely attributed to lower commodity prices over the period. The region is currently going through an unprecedented economic and health crisis following the spread of COVID-19 pandemic to the region since the beginning of 2020. The contraction is attributed to among others: the impact of containment measures that includes quarantine, lockdowns, travel restrictions and border closures, among others.

Source: COMESA

There has been a notable increase in the number of non-tariff barriers during the COVID-19 pandemic period as countries increasingly took discretionary measures to contain the spread of the virus. Common Market for Eastern and Southern Africa (COMESA) director of trade, Dr Chris Onyango told delegates attending the fifth Meeting of the COMESA Trade and Trade Facilitation Sub-Committee, 6-8 October 2020, that during the COVID-19 era, measures put in place by member states have disrupted global value chains, radically reduced dependency on imports and rallied states towards the path of protectionism. He implored countries to continue reviewing and improving existing regulations and mechanisms taking into account changing ecosystems, understanding key causes, analysing regulatory regimes, production techniques and technological advancements.

Source: COMESA

KENYA

President Uhuru to deliver State of the Nation Address on November 5

Senate Speaker Kenneth Lusaka disclosed to the Star Newspaper on Monday that the date was firmed up during the President’s meeting with Parliament’s leadership at State House, Nairobi, 17th October 2020.

During that meeting, the President met speakers of the bicameral Parliament where he asked them to back the BBI and fast-track passage of laws to accelerate the realisation of the Big Four agenda.

Article 132 of the Constitution and House Standing Orders obligate the President to address a joint sitting of the Houses on matters that touch on national values.

The President has in the past delivered the address between March and May. Last year, he gave the address on April 4. This year’s address was delayed by Covid-19 as the first case of the virus was reported in the country in March.

The Star reported that this year’s address will most likely take stock of the Big Four agenda. They also foresee the President rooting for the Building Bridges Initiative vehicle, which he believes will deliver equity and national unity.

President Kenyatta will also report to Parliament the measures taken to achieve national values, progress in fulfilment of international obligations, and state of security.

In his last address, Uhuru briefed the nation on the progress his administration had made towards realising his legacy-defining projects. He also dwelt on the war on graft, as well as the Building Bridges Initiative.

Central Bank of Kenya establishes the new Kisii Centre

President Uhuru Kenyatta, C.G.H opened the CBK Kisii Centre on October 21, 2020. The Centre will serve seven counties in the region (Kisii, Nyamira, Migori, Bomet, Homa Bay, and parts of Narok and Kericho), a population of over 7 million people contributing about 12 percent of Kenya’s GDP.

The Central Bank of Kenya has over the years sought to improve access to its services across the country, which has led to the establishment of the current network of Branches (Mombasa, Kisumu and Eldoret) and Centres (Nyeri, Nakuru, Meru, and now Kisii). 

The Kisii Centre is established under partnership with the Kenya Bankers Association (KBA) and is located at the Absa Bank facilities opposite the Kisii County Government offices. It is the first of the 21st Century Generation, and is world-class in every way. It will offer a wide range of services, including currency services to the public and bank branches in the region, opportunities for investment in Government securities (Treasury bills and bonds), and general banking services to County Governments. The opening of the Kisii Centre is a milestone in the provision of CBK services to Kenyans and is expected to catalyze successful devolution and the development of the Nation. 

Source: Central Bank of Kenya

Tax Appeals Tribunal rules that tax invoice not enough to claim input VAT

The Tax Appeals Tribunal has ruled that it is not enough for a taxpayer to provide a tax invoice in order to claim input VAT.

In the ruling that upheld the Kenya Revenue Authority (KRA’s) position in a case filed by Osho Drappers Limited, the Tribunal stated that the documentation must be supported by an underlying transaction and the taxpayer must furnish proof that there was an actual purchase of goods or services.

Facts

In April 2018,KRA had issued a tax assessment notice of Kshs. 1.8 million VAT demand and Kshs. 3.367 million in Corporation Tax against Osho Drappers Limited. Upon receiving the notice, the company objected and appealed against it at the Tax Appeals Tribunal.

KRA had disallowed the input VAT claimed by Osho Drappers Limited which was in respect to its transactions with 4 companies that had been investigated by the KRA. The companies were found to be involved in a tax fraud scheme of printing and selling the invoices without actual supply of goods. KRA in its decision to disallow the input tax maintained that Osho Drappers Limited was unable to prove to the satisfaction of KRA that indeed it had received the supplies on which the input tax claims were made.

On its part, Osho Drappers Limited argued that all it needed to produce was an original tax invoice and that on production of the documents, a legitimate expectation was created that it could claim input VAT.

The Tribunal dismissed Osho Drappers Limited’s case and upheld the tax assessment. It affirmed that once KRA had raised questions as to the legitimacy and credibility of documents produced by the taxpayer, the onus shifted to the taxpayer to prove that it indeed purchased the supplies disallowed for input tax claim.

In this case, the Tribunal held that Osho Drappers Limited did not discharge the onus of proof and that KRA was right to disallow input VAT and charge Ccorporation Tax on the transaction.

Source: Commissioner of Legal Services & Board Coordination

Kenya approves move to set up EAC seamless airspace

Kenya has moved the region closer to achieving an open airspace following the decision by the cabinet to approve establishment, implementation and management of the East African Community (EAC) Seamless Upper Airspace. The development, which has been elusive for many years, comes at a time the call for creation of a common airspace has been getting louder from different stakeholders who have argued that the move will lower high cost of air transport in the region. If implemented, the move will enable interoperability and foster seamlessness for the Air Navigation Services (ANS) and enhancement of collaborative activities in the provision of ANS in member states. This will also lead to implementation of national aeronautical information databases development and operationalisation of the centralised regional aeronautical information database. The cabinet, led by President Kenyatta, approved the memorandum of understanding on the establishment of the seamless upper space.

Source: Business Daily

MasterCard Foundation begins disbursing Sh600m youth, women business loans

The Kenya National Chamber of Commerce and Industry (KNCCI) and the Mastercard Foundation have started disbursing Sh600 million in interest-free loans earmarked for youth and women-led small businesses.

The loans are part of the Covid-19 Recovery and Resilience Programme. They are targeting small businesses that have borne the brunt of the negative effects of the Covid-19 pandemic, which caused the Kenyan economy to contract by 5.7 percent in the second quarter of the year.

The one-year programme will be implemented by KNCCI through its chapters across the 47 counties with focus on agriculture, retail, healthcare and manufacturing sectors.

Source: Business Daily

AfDB to guarantee Kenya’s mortgage refinancer bond

Kenya Mortgage Refinance Company has reached a deal that will see the African Development Bank (AfDB) guarantee its debut bond issue, planned for the third quarter of next year.

Kenya Mortgage Refinance Company (KMRC), the mortgage refinance firm formed through a partnership between the Treasury and private lenders, already has a credit line of more than Sh35 billion and plans to continually raise additional funds towards affordable home loans.

Chief executive Johnson Oltetia said the state-backed lender will piggy-back on AfDB’s top credit rating (AAA) with a stable outlook in the debut cash call, and thereafter build its own reputation among investors.

Source: Business Daily

Co-op hires McKinsey to cut loan default risk

Co-operative Bank has hired management consulting firm McKinsey & Company to review its lending processes with an aim of reducing the risk of defaults.

This is McKinsey’s second assignment at the lender that first hired it in 2014 to cut costs and transform the Nairobi Securities Exchange-listed firm into a digital bank.

Source: Business Daily

AFRICA

Digital Energy Festival to exhibit wireless transmission project

The world’s first-ever long-range wireless power transmission project will be showcased at the Digital Energy Festival on 21 October 2020. The Africa Energy Forum will host a special presentation by Emrod CEO and founder Greg Kushnir, demonstrating the wireless transmission project, currently operating in New Zealand. Emrod has developed the world’s first commercially viable long-range, high-power, wireless power transmission as an alternative to existing copper line technology. Emrod’s technology works by utilising electromagnetic waves to safely and efficiently transmit energy wirelessly over vast distances. “Being able to transmit high-power electricity without any cables is game-changing for the continent. It means barriers to energy-access are smashed and Africa could be fully electrified within ten years. This is the technology millions of people have been waiting for,” said Simon Gosling, EnergyNet’s managing director. By significantly reducing infrastructure costs, Emrod says the wireless power transmission has the capacity to support remote communities such as in Africa and the Pacific Islands by providing access to cheap, sustainable energy to power schools, hospitals and economies.

Source: ESI Africa

Unlocking Africa’s ESG potential

The adoption of Environmental, Social and Governance (ESG) criteria is on the rise, unlocking capital for ESG compliant projects and investment in companies that have integrated ESG into their business. Despite Africa’s diverse natural resources, renewable energy potential, human capital and significant development opportunities, connecting investors (many situated offshore) with investees on the continent is not straight forward. This gives rise to missed opportunities and stifles the ability of ESG investment to flow into projects in Africa that would otherwise support ESG investment mandates. The European Union has taken many steps in recent years to promote ESG in regulatory environments and markets. In contrast, when looking at the country-by-country analysis of voluntary or mandatory measures to incorporate a consideration of ESG factors (as set out on the Principles for Responsible Investment’s website), Africa is far behind. To benefit from ESG and impact investing, African companies need to position themselves to take advantage of new funding opportunities as the world seeks to build back better.

RWANDA

Rwanda approves cannabis production for export

Rwanda has approved the cultivation and export of cannabis even as the use of the stimulant for medical or recreational purposes remains illegal in the country. The government is targeting to grow its export earnings from the global cannabis market valued at the USD345-billion according to analysts New Frontier Data. The decision has caused confusion with some warning it could be detrimental to the youth if tough controls are not enforced. Rwanda’s minister of Health, Dr Daniel Ngamije said that despite the government’s intention to profit from the production and export of marijuana, its use in the country is prohibited. A cabinet meeting, chaired by President Paul Kagame, approved regulatory guidelines on cultivation, processing, and export of “high-value therapeutic crops”. Analysts say that the government’s latest stance causes confusion and will require an amendment of the Penal Code as well as public sensitisation.

Source: The EastAfrican

SOUTH SUDAN

South Sudan abandons plans to introduce new currency

South Sudan said it has reversed its plans to introduce a new currency as the Pound continues to depreciate against the US Dollar and other major currencies due to the economic crisis. Michael Makuei Lueth, minister of Information and Broadcasting, said the move to change the local currency was only a mere proposal by the economic crisis management committee as a means to salvage the economy from further collapse but was not agreed and passed by the cabinet. “The change of the national currency (South Sudanese Pound) was brought in the discussion of previous cabinet meetings as one of the long-term economic measures, but it was not agreed and passed by the council that time,” Makuei told the reporters in Juba. In September, President Salva Kiir established an economic cluster committee to investigate mismanagement of non-oil revenue and also to come up with recommendations to revive the falling economy. Makuei also said the government is in the final process of acquiring a loan that would be injected into the market to stabilise the deteriorating economy.

Source: Xinhua

TANZANIA

Barrick deal, smuggling crackdown revive Tanzania gold industry

Tanzania’s gold mining industry is showing signs of a renaissance following a crackdown on smuggling and the settlement of a long-running dispute with Barrick Gold Corp. Gold has overtaken tourism as the East African nation’s biggest foreign exchange earner, while Barrick’s joint venture with the Tanzanian government paid its first cash dividend of USD250-million. Earnings from gold exports surged 43% in the year through August as bullion rallied. Now Tanzania wants to double the contribution of mining to 10% of the economy over the next five years, Mining minister, Doto Biteko said in an interview. Barrick chief executive officer, Mark Bristow has said the Tanzanian operations could eventually rank as a so-called tier-1 asset, producing more than 500,000 ounces a year. At the same time, Tanzania plans to use Barrick as a model to structure other ownership deals with miners, including with AngloGold Ashanti Ltd.

Source: Bloomberg

CRDB revives KCBL with 7bn/- capital

CRDB Bank has injected 7.0bn/- into Kilimanjaro Cooperative Bank (KCBL), which was on a verge of collapsing. CRDB Bank’s boost to KCBL gives a new ray of hope after being asked to turn around the institution by the Bank of Tanzania (BoT).   

Deputy Minister for Finance and Planning, Dr Ashatu Kijaji, said CRDB Bank’s initiative to revive KCBL gave new hope to cooperatives in the country, which were major stakeholders of the bank.

Source: Tanzania Standard Newspapers Ltd

Tanzania investors study Malawi’s investment, trade potentials

Members of the business community in Tanzania are working on a special strategy that would enable the country to best utilise the trade and investment opportunities that are available in neighbouring Malawi. Grouped under the auspices of Tanzania Private Sector Foundation (TPSF), the business community believes Malawi has numerous untapped potentials in the areas of commercial agriculture, manufacturing and mining that could be utilised for the benefit of the peoples of both countries. The strategy, according to the acting TPSF chairperson, Ms Angelina Ngalula, would take into account the business environment in Malawi and come up with a database of potential business and investment areas. “The strategy will make it easy for Tanzanians to understand the business environment there. It will entail potential areas of doing business, including costs of establishing a business or factory, taxes and other matters,” she said. In a joint press conference, President John Magufuli and President Lazarus Chakwera said they had agreed to strengthen bilateral cooperation in a number of areas, including trade, transport, communications, energy and democracy.

Source: The Citizen

TRA set for third phase of digital stamps

The Tanzania Revenue Authority (TRA) is set to roll out the third phase of an electronic tax stamps management system (ETSMS) for additional products which are subjected to excise duty from November 1, this year.

According to a statement issued by TRA Commissioner General on October 21, 2020, Dr Edwin Mhede, the third phase will cover locally-produced and imported fruit and vegetable juices, bottled water in addition to CDs, VCDs, DVDs and recorded cassettes.

Source: Tanzania Standard Newspapers Ltd

NMB Bank wins coveted award

NMB Bank Plc has won the ‘Safest Bank in Tanzania Award’ for the year 2020. This is thanks to its concerted efforts at maintaining stability and profitability amid the global Covid-19 pandemic battle.

Listed with the Dar es Salaam Stock Exchange (DSE), the lender was so-ranked on Monday, October 20, 2020, by Global Finance, a financial markets magazine based in New York, US.

Annual rankings of the World’s Safest Banks by country are selected after an evaluation of long-term foreign currency ratings from Moody’s, Standard & Poor’s and the Fitch Investor Services – in addition to the total assets of 500 largest banks worldwide, of which NMB received a significant ranking over other banks.

By The Citizen Reporter

UGANDA

URA’s Shs1tn first quarter surplus

The Uganda Revenue Authority has recorded a surplus in revenue collection for the first quarter of the Financial Year 2020/21 amidst the coronavirus pandemic but economic experts warn it is too early to celebrate.

The taxman collected Shs4trillion for the months of July to September against a target of Shs 2.9trillion.

Source: The Independent

MPs ask government to Reduce domestic borrowing

Members of Parliament have asked the government to reduce domestic borrowing as a means to finance the budget saying it will crowd out the private sector.

The MPs were meeting the Ministry of Finance and the Uganda Revenue Authority (URA) to consider two loan applications worth 6.5 trillion Shillings, to finance a budget deficit for the financial year 2020/2021.

Source: The Independent

Bank of Uganda keeps key policy rate at 7pc

Uganda’s central bank has kept the key policy rate unchanged at seven percent, a stance described by analysts as “cautious and guarded” amid a looming rise in inflation following the easing of lockdown restrictions.

The Bank of Uganda (BoU) noted a slight improvement in both foreign and domestic demand which, along with the easing of the lockdown and a stable exchange rate, are supporting economic growth recovery.

But, the regulator warned that the “economic outlook is extremely uncertain”, largely due to the Covid-19 pandemic.

The announcement of the central bank rate (CBR) on Thursday was delayed by nearly a week with banking industry insiders claiming the central bank’s Monetary Policy Committee meeting scheduled for last week had been postponed.

Following the easing of restrictions for schools, churches, airlines, and border points, business activity has slightly picked up, raising hopes for traders hard hit by the containment measures of increased household spending.

Source: The East African

ETHIOPIA

Ethiopian Banks Provide 85 Percent of 55 Billion Birr Loan for Private Sector

The National Bank of Ethiopia (NB) announced that it has distributed 55 billion Birr loan in the first quarter of this Ethiopian budget year.

Briefing journalists on the performance of the bank today, NB Governor Yinager Dessie revealed that 85 percent of the 55-billion-Birr loan was given to the private sector.

The loan has contributed a lot to support and make the private sector more competitive as set out in the Homegrown Economic Reform Program, he added.

According to him, the National Bank of Ethiopia has been taking the necessary steps to prevent the negative impacts on domestic debt and foreign exchange shortage.

Source: ENA

NIGERIA

NITDA to tighten nose on data protection through new Bill

The National Information Technology Development Agency (NITDA), is to send a new Bill on data protection to the National Assembly, and if passed into law, would ensure stringent protection of personal data and regulation of the processing of personal information. This comes as the Federal Government said it earned NGN12.650-million from the Data Protection Compliance Organisation’s (DPCO) Licensing and Audit report filing, while over 2,686 new jobs have been created. Director-General of NITDA, Kashifu Inuwa Abdullahi, who disclosed this at the presentation of the Nigeria Data Protection Regulation Performance Report 2019-2020, in Abuja, noted that on 25 May 2018, the General Data Protection Regulation (GDPR) of the European Union came into force. The GDPR impacted small and medium-sized enterprises, who hitherto supplied goods and services to European-affiliated businesses and/or individuals, which shut out thousands of Nigerians. He said NITDA felt the need to use its mandate as provided in the NITDA Act, 2007 to issue a national regulation that meets the basic tenets of data protection law while also providing a framework to catalyse compliance.

Source: The Guardian

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