November 19, 2021 - 5 minutes read

19th November 2021 Trade and Financial Services Round Up

By Amrit Labhuram

KENYA

CBK Takes Baby Steps Towards Launch of Digital Currency (Source: Business today)

Kenya is exploring the possibility of developing and launching a central bank digital currency (CBDC) to settle cross-border payments, as it seeks to advance the shift to a cashless economy and secure transactions.

The Central Bank of Kenya Governor, Dr Patrick Njoroge, says CBDCs can slash the time needed for cross-border payments in addition to cutting costs significantly. A CBDC is money that exists in electronic form, issued and regulated by the nation’s monetary authority and backed by the government.

Speaking on the sidelines of the Afro-Asia Fintech festival, which was held virtually, Dr Njoroge said that CBDCs can enhance the efficiency of cross-border payments, as long as countries work together. “We see the benefits would be more cross border,” said the CBK governor. “The issue is not to be first, the issue is to do it right.”

Towards this end, Dr Njoroge said that the CBK is in discussions with other global central banks. Many central banks across the world are considering issuing digital currencies to cater to businesses and households seeking faster, safer, easier, and cheaper means of payments.

Uhuru’s budget for new president signals higher taxes (Source: Business Daily)

President Uhuru Kenyatta’s last budget will put his successor under pressure to raise Sh342.20 billion additional revenue to implement his preferred projects, setting up Kenyans for higher taxation.

President Kenyatta’s administration has proposed a budget of Sh3.31 trillion for the financial year starting July 2022, a month before he leaves office at the end of the constitutional two-year term.

The Treasury plans to spend Sh278.81 billion or 9.2 percent more than the budget for the current year in a bid to enhance investments in Mr Kenyatta’s legacy projects under the Post-Covid-19 Economic Recovery Strategy and the floundering “Big Four” Agenda.

Kenya will continue to splurge on infrastructure projects and a stimulus plan to maintain economic growth in the face of the coronavirus crisis, which delivered layoffs and business closures.

The new president, who will take over from Mr Kenyatta, will need to increase ordinary revenue to nearly Sh2.41 trillion next Financial Year against the Sh2.06 trillion estimate for the current year

TANZANIA

Malaysian firm to invest in locomotive assembly plant (Source: The Citizen)

Tanzania will start producing locomotives and wagons within a year if a foot plan by Malaysia’s railway engineering service provider to invest between $40 million (about TSh92 billion) and $100 million (about TSh230 billion) comes to fruition.

SMH Rail has already secured 50 acres of land at Kwala in Kibaha, Coast Region for building of a rolling stock manufacturing plant to manufacture locomotives, wagons and a diesel–electric multiple unit (Demu).

This is according to the company’s representative, Mr Mussa Mansour, who was speaking here yesterday on the sideline interview of an event to handover to the Tanzania Railway Corporation (TRC) of the TSh22 billion worth three modern locomotives (H10 series) for the metre gauge railway (MGR).

Mr Mansour said they were expecting to soon start the construction of the factory that is set to create 1,000 direct jobs to Tanzanians.

Tanesco to announce rationing as power generation drops (Source: The Citizen)

Tanzanians should brace for more pains as power rationing looms after Tanzania Electric Supply Company Limited (Tanesco) revealed that water levels in many of their dams have reduced.

According to a statement issued by Tanesco on Thursday, November 18, 2021 the utility company said that that situation has affected power generation at some of their stations.

The power supply company stated that the declining water levels have affected stations such as Kihansi, Kidatu and Pangani leading to a deficit on the national grid.

 “The total production deficit is approximately 345 megawatts which is equivalent to 21 percent of total production,” reads part of the statement. “Because there will be shortages in some regions, information will be provided in a timely manner so that clients can plan their activities.” Tanesco says in a statement.

RWANDA

BNR said Covid-19 had given commercial banks the right to renew loans (Source: Rwanda Broadcasting Agency) 

The Central Bank of Rwanda has stated that in the current era of Covid-19, it has given commercial banks the right to reform loans to facilitate the borrowers, as their activities are being disrupted by the epidemic. As a result, the debt is valued at $776 billion, or about 28%.

Private sector lending in 2020-2021 increased by 28.7%, while in the previous year it was at an average rate of 26.4%. Economic analysts point out that this increase in private lending has played a role in bringing together the overall economy of the country, which has been hit hard by the covid 19.

On the other hand, non-performing loans have risen from 5.5% in 2019-2020 to 5.7% in 2020-202 in the banking sector, while in small and medium-sized enterprises the rate has decreased to an average of 6.7%, however in the previous year these unsecured loans were at a rate of 12.8%.

The Governor of the Central Bank of Rwanda, Mr John Rwangombwa, explained to both members of Parliament that it was agreed that the debts of bank customers should be renewed for at least 4 years. Banking profits have continued to rise over the past two years as they rose from Rs 33 billion to Rs 56 billion in the fiscal year ended June 2021.

Rwanda’s export revenues grow by 16 per cent (Source: The New Times) 

Rwanda earned over $1.487 billion (over Rwf1.4 trillion) from exports during the 2020-2021 fiscal year, up from over $1.277 billion during the previous year, representing a 16.4 per cent increase in the country’s export receipts, according to the Central Bank report set to be presented in Parliament this afternoon.

The National Bank of Rwanda (BNR)’s annual report for the financial year 2020/2021 which ended on June 30, indicated that the country’s total export volume increased by 30.2 percent. Overall, the growth of the revenues and the export quantities imply a drop in prices on the international markets.

According to the report, the growth in export revenues reflects primarily a continued recovery of merchandise exports from the Covid-19-induced collapse that reached the lowest point in recent times, during the second quarter of last year.

Specifically, traditional exports (including minerals, tea, coffee, and pyrethrum), non-traditional exports (such as grains, cereals, and horticulture) and re-exports categories increased by 10 percent, 44.4 percent, and 21.9 percent respectively.

UGANDA

Kenya delays trade mission to Uganda to resolve sugar, milk row (Source: The Monitor)  

Kenya has postponed a trade mission to Uganda in which the two countries had sought to resolve the sugar and milk import standoff until December. 

This is the third time Kenya is postponing the matter that has raised questions on whether the two countries are ready to find a lasting solution to the impasse.

Kenya’s Principal Secretary State Department of Livestock, Harry Kimtai, said the November meeting will not take place as planned because the Kenya Dairy Board was not ready.

The delay to resolve the impasse comes at a time when Uganda has been allowed to access the Zambian market, offering an alternative to the country’s commodity.

Pearl Dairy, makers of Lato milk, secured annual supplies of milk to Zambia after the company suffered major losses when Kenya stopped exports of its products in 2019.

The firm is the largest processor of milk in Uganda with a daily capacity of 800,000 litres. 

Banks want taxes on mobile money, Internet scrapped (Source: The Monitor)

Commercial banks have asked Uganda Bankers’ Association (UBA) to lobby the government, particularly Bank of Uganda and Ministry of Finance, to consider removing or reviewing digital taxes. 

The taxes, among them mobile money tax, banks claim, impact digital inclusion thus reducing uptake of digital financial services.

“Lobby for removal of user taxes on mobile money and internet access, to attract more users thus increase both digital and financial inclusion,” banks say in details contained in the proposed regulatory reforms in the banking sector. 

The removal of such taxes, they claim, will lower the cost of popular digital financial services, many of which the government plans to use in the transformation of Uganda’s financial services from cash-based to a cashless economy.

ETHIOPIA

Addis Preparing to Export 60+ Agricultural and Industrial Products (Source: 2Merkato)

Ethiopian Investment Commission (EIC) announced that Ethiopia is preparing to export over sixty types of agricultural and industrial products to improve its forex earning.

Samuel Assefa, Director of Export Projects Facilitation at EIC, pointed out Ethiopia is already exporting agricultural and industrial products to American, European, Asian, and other African markets. Furthermore, efforts are in full swing to increase such exports and their market reach, undergirded by related market research, he said.

The market research, Mr. Samuel remarked, will help Ethiopia earn more forex while resisting undue economic pressure from certain countries. He also called on the concerted efforts of all stakeholders to do what is expected of them for success to be achieved.

Efforts are underway to maintain quality standards of agricultural and products, Mr. Samuel said, adding that the mining sector has a significant role to play to ensure sustained forex earnings.

Pointing out that Ethiopia has abundant resources but an unmatched low amount of exports, the Director said “a lot needs to be done in the future.”

Ethiopia Collects Over 53.9bn Birr ($1.13 billion) in Revenue in October (Source: 2Merkato)

Ethiopia’s Ministry of Revenues announced that it has collected over 53.9 billion birr in the month of October alone. The amount stands at 95.26 percent of the 56.59 billion birr target set for the period, Lake Ayalew, Minister of Revenues noted.

Compared to the previous fiscal year, the collected amount has shown an increase of 21.82 percent, over 9.657 billion birr. Local tax accounted for nearly 42.8 billion birr of the collection, while customs duties amounted to 11.84 billion birr.

Mr. Lake emphasized this has been achieved despite four of its branches not being functional due to the security situation in some parts of the country, in addition to movement restriction in other areas. He also extended thanks to the staff of his Ministry who he said worked “relentlessly” for the achievement to be realized.

ERITREA

Gerset Farm Project making a difference (Source: Ministry of Information Eritrea)

The construction of Gerset dam, which triggered the transformation of traditional farm practices to advanced irrigation systems, is a stepping stone toward the expansion of mechanized farm projects and change in the living standards of local communities. Farm activities that have been flourishing in Gerset and its surrounding areas are the result of the construction of major dams in Goluj sub-zone.

Gerset farm has been a training centre for young graduates who are now armed with practical experiences that are instrumental in moving the farm project forward. Over 500 professionals, who have over five years of experience in Plant Protection, Horticulture, Agronomy and Agricultural Engineering and other disciplines have been running and making a difference in all major farm activities of Gerset farm. Mr. Amine Tesfamichael, Manager of Gerset Farm, said besides the contribution they have been making to the development of the farm, the graduates are making use of the opportunity provided for them to hone their skills.

SUDAN

Finance minister calls for international aid (Source: Africanews)

Last month, Sudan’s top military leader General Abdel-Fattah Burhan dissolved the government and transitional council, arresting many political leaders and activists, including Prime Minister Abdalla Hamdok, who is currently under house arrest. 

The Oct. 25 military takeover has halted all aid. The United States suspended $700 million (618.6 million Euros) in direct financial assistance and the World Bank suspended aid of up to $2 billion (1.8 billion Euros). Mediation efforts are ongoing with top US diplomat Molly Phee visiting Khartoum.

The Finance Minister Gibril Ibrahim called for continued international support for Sudan’s transition to democracy.

SOMALIA

Milk, meat and might: Camel is king in Somalia’s economy (Source: Daily Sabah)

For many Somalis, the camel is a gift from the gods: a source of milk and meat, a beast of burden in the desert and – as climate change spurs extreme weather in the Horn of Africa – insurance in times of crisis. In this overwhelmingly rural society of 15 million, the rearing of camels and other livestock underpins an economy devastated by war and natural disaster that ranks among the world’s very poorest.

The livestock industry is the main contributor to economic growth in Somalia and in normal years accounts for 80% of exports, according to the Food and Agriculture Organization (FAO).

Camels are far outnumbered by sheep and goats, which wander Hargeisa in northern Somalia with their owner’s phone numbers scrawled on their sides, should they get lost and need returning.

But at seven million beasts, there are more camels in Somalia than almost anywhere else, and they don’t just confer respect on their owners – they fetch much higher prices. An impressive specimen can carry a $1,000 (860 euros) price tag. 

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