12th August 2022 Trade & Financial Services Round Up

August 12, 2022 - Reading Time: 5 minutes - By Naisiae Simiren

EABL’s Kisumu and Nairobi biomass plants almost ready

East African Breweries Plc (EABL) is set to complete the setting up of its biomass-fired energy plants as it accelerates its shift to renewable energy. Diageo Plc, a majority shareholder of EABL, says the Kenya biomass plants in Nairobi and Kisumu are in the final stages.

“Tusker and Kisumu breweries in Kenya are in the final stages of commissioning new biomass facilities, using sustainable local by-products to produce renewable energy,” said Diageo in its latest annual report. “Our biomass investment in East Africa, and other projects like it, are critical enablers in reducing GHG [greenhouse gas] emissions and using 100 percent renewable energy across all our direct operations by 2030,” Diageo added.

Biomass power is generated from burning organic waste that would otherwise be taken to landfills or disposed of by other means. The beer manufacturer, which uses raw materials such as sorghum and barley, is expected to use the waste of its production processes to fuel the biomass plants. For EABL, the biomass plants are part of its plans to cut costs and reduce reliance on Kenya Power which distributes electricity through the national grid.

(Source: Business Daily)

Digital lenders stall loans by microfinance banks

Lending by microfinance banks (MFBs) has stalled due to competition from robust digital lenders, a new report by the Central Bank of Kenya (CBK) said, pointing to shifts in the low market segment. A CBK report shows annual growth in gross loans by MFBs shrank further by 7.3 per cent in December 2021 from negative growth of 1.2 per cent in December 2020—indicating low uptake of loans or disbursements.

“The sector faces competition from other credit providers, especially digital credit providers as well as funding challenges that limit their capacity to lend,” the regulator said. The impact of suppressed loan disbursement by MFBs reflects in their financial performance with their total assets declining by 1.2 per cent, from Sh74.9 billion in December 2020 to Sh74 billion in December 2021, mainly on account of a 9.2 per cent decline in net loans and advances.

Only four out of 14 MFBs reported profits last year, although the overall pre-tax loss in the sector improved to Sh877 million in December 2021 from Sh2.2 billion in December 2020.

(Source: Nation Africa)


Bank of Tanzania tasked to review loan policies

Bank of Tanzania (BoT) has been urged to review policies governing loan issuance from the financial institutions.The reviewed policies should be more friendly and supportive to the small scale business people, including farmers. “This will enable those advanced with loans to service them without much difficulty,” said Monduli District Commissioner Frank Mwaisumbe.

He made the appeal here during his visit to the central bank’s pavilion at the Themi Nane Nane grounds, the venue of Farmers’ Day.

He said, currently some small business people getting loans had to repay them only after one month after being advanced with the cash.“This is a burden to them because this is too short a period for their businesses to start making profit,” Mr Mwaisumbe pointed out.

The DC insisted that small and medium entrepreneurs have to benefit from their income generation activities and this has to start with access to soft loans.“It is high time for BoT to consult with the banks and other financial institutions on the matter,” he pointed out during a media briefing. He proposed long term repayment periods for the loans in order to enable the beneficiaries to make profit from their businesses.

(Source: The Citizen)


Djibouti-based bank acquires Top Finance 

In a notice on Monday, Bank of Uganda noted that Salaam African Bank with headquarters in Djibouti had acquired Top Finance Bank, following conclusion of negotiations as provided under the Financial Institutions Act, 2004. 

Top Finance Bank, a tier two credit institution, was founded in 2012 and later licensed by Bank of Uganda in 2014. The bank will be the second major sector movement in less than three months following Afriland First Bank’s voluntarily exit in May, less than three years after it was licenced in 2019. 

Salaam African Bank, which was established in 2007 also has a presence in Ethiopia, through a representative office and in Kenya through Salaam Microfinance Bank and Salaam Investment Bank. 

The acquisition comes amid a number of challenges and regulatory requirements in banking, among which include a volatile and competitive market and an increase in licensing fees.

(Source: Monitor) 

MTN Uganda H1 net profit up 48% to Shs193.6bn

MTN Uganda has reported a 48.1% growth in profit after tax to Shs193.6bn for the first six months of 2022 amidst a tough economic environment.

Wim Vanhelleputte, the company’s outgoing CEO said “MTN Uganda delivered a resilience half year amidst a difficult macroeconomic environment characterised by increased inflationary and currency pressures. This has largely been influenced by higher fuel prices, rising domestic food crop prices due to dry weather across the country as well as persistent global and supply chain challenges. The combination of these factors have had a significant impact on the spending power of our customers in the period under review.”

Listed on the Uganda Securities Exchange last year, the company sustained investment in its business with capital expenditure of UgShs201.7 billion in the first half which underpinned the resilience and quality of the network serving its customers.

Vanhelleputte said the company’s investment and commercial strategy enabled it to increase its subscriber base by 8.9% to 16.3million, thus sustaining its market leadership.

The company’s active data subscriber base grew by 28.1% to 5.7 million enabled by improved quality of network and data services for its customers. The growth in data users and traffic was also boosted by increased 4G coverage, which reached 67.7% (up 15.4% year-on-year) population coverage as of June 30, 2022.

(Source: The Independent)


Central bank raises lending rate to tame inflation

The National Bank of Rwanda (BNR) has increased the key repo rate from 5% to 6% in a bid to tame soaring inflationary pressures, while preserving the purchasing power of consumers. The key repo rate is the fee at which the central bank lends to commercial banks. The higher the rate, the more it is likely to reduce liquidity in the banking system.

Speaking during the Central Bank’s quarterly monetary policy and financial stability statement, Governor John Rwangombwa, said that the trajectory of the next three months demonstrated relatively high inflationary pressures mainly due to global supply challenges as well as lower domestic agriculture output.

(Source: The New Times)


Chinese WODA Steel Company Signs MOU with EIC to Upgrade Itself to Industrial Park Level

Chinese WODA Steels Company and Ethiopian Investment Commission have signed a memorandum of understanding (MOU) to upgrade the company to an industrial park level. The company has been producing steel products on a large scale in Ethiopia since 2016 contributing a lot in reducing imported products. And at this time, the company has signed a MoU with the Ethiopian Investment Commission (EIC) to transform itself into an industrial park.

Accordingly, the company would establish an Industrial Park in Sebeta town of Oromia region  in collaboration with other two companies. Expanding from an existing 18.9 hectares of operational factory, the park will have 100 hectares of land in Sebeta. During the signing ceremony, Deputy Commissioner of EIC, Daniel Teressa, said the commission will provide support to both foreign and local investors to expand their investment activities in Ethiopia, indicating the MoU signed today as part of this support. He further said the efforts being carried out by WODA Steel  Company to engage in industrial parks is commendable and could be a model for other similar companies.

The company’s participation in industrial parks development will contribute a lot in job creation, import substitution and knowledge transfer, the deputy commissioner underlined.

(Source: ena)

Operating loans target manufacturing enterprises

Ethiopian Enterprise Development (EED) reported that it would facilitate the provision of operating loans and machine lease to manufacturing enterprises in the current fiscal year by strengthening engagements with regional bureaus and financial institutions.

Accordingly, it revealed that operating loans totaling ETB 1.66 billion would be distributed to 1,591 manufacturing enterprises through banks and microfinance institutions. EED also stated that production equipment worth ETB 1.6 billion would be provided to 1,430 enterprises.

It is reported that the loan and equipment which will be provided to the enterprises will enable the enterprises to be competitive and engage in the production of import substituting goods.

During the 2021/2022 fiscal year, ETB 1.47 billion loan was distributed to 1,420 while 1,523 manufacturing enterprises collectively received equipment worth ETB 1.5 billion.(Source: 2merkato)

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