25th February 2022 Trade & Financial Services Round Up

  • 25 Feb 2022
  • 12 Mins Read
  • 〜 by Amrit Labhuram

State pushes to raise debt ceiling to Sh13 trillion in chaotic session

Parliament has asked the Treasury to increase the debt ceiling to allow it to borrow Sh846 billion to plug the budget deficit in the next financial year.

Majority Leader Amos Kimunya successfully pushed an amendment to the 2022/23 Budget Policy Statement (PBS) directing the Treasury to amend the law to accommodate the huge budget deficit.

Mr Kimunya, however, failed to disclose the amount that the government wants the Treasury to cap the new ceiling from the current Sh9 trillion, but sources in Parliament say the government has asked for Sh13 trillion.

The Treasury will now propose changes to the public finance management law and table the amendments for adoption by the House.

The Treasury had in the Medium-Term Debt Management Strategy 2021 said it will be tabling changes to the Public Finance Management law for approval by legislators to raise the cap on debt, without disclosing the fresh limit it is looking at. Lawmakers raised the ceiling from Sh6 trillion in October 2019.

In a chaotic session, Mr Kimunya marshalled his troops to overturn the Budget and Appropriations Committee (BAC) report which had imposed a Sh400 billion cap on new debt to avoid breaching the Sh9 trillion loan ceiling.

The MPs deleted the Sh400 billion cap and reinstated the Sh846 billion as contained in the BPS.

But Mr Kimunya’s proposals mean that the government will spend Sh2 trillion on the Executive, Sh38.4 billion on Parliament, Sh18.8 billion on the Judiciary and Sh370 billion in counties.

The Treasury wants to spend Sh3.2 trillion with a budget deficit of Sh846 billion which would automatically breach the debt limits since Kenyan loans will hit Sh8.6 trillion in June.

(Source: Business Daily) 

CBK seeks linking Lipa na M-Pesa with Airtel

The Central Bank of Kenya (CBK) will launch a national payment system that will force Safaricom  to accept cash from rival firms such as Airtel on its Lipa na M-Pesa, enabling a seamless transfer of money through merchants.

The new system, to be introduced by 2024, will remove the hurdle where Airtel subscribers, for example, cannot pay for goods and services through Safaricom’s till and pay-bill numbers.

The move is aimed at curbing the dominance of Safaricom’s mobile money service and Lipa na M-Pesa, which handled payments worth Sh970.2 billion in the year to last month.

Airtel’s version of merchant payments services is dubbed Lipa na Airtel Money, but it is used much less compared to Safaricom’s, a market position that is in line with its stake in the mobile money transfer service.

The CBK said the increased use of mobile money at agents and merchants through platforms like Lipa na M-Pesa had been constrained by lack of interconnection among the telecommunications operators.

The interoperability — the ability of different IT systems to communicate and exchange data — will offer Airtel a larger share of the mobile money payments made through merchants and deepen financial inclusion.

Through interoperability, the CBK is seeking to replicate the linkage between Airtel Money and M-Pesa that was introduced four years ago.

Safaricom has been uncomfortable with the push to open its mobile money outlets to rival firms, arguing it would expose its lucrative M-Pesa mobile money platform to stiff competition.

“The emergence of a fully integrated ecosystem that is seamlessly interoperable is critical. A strong foundation has already been laid with the rollout of P2P [peer-to-peer] interoperability in 2018 and the industry engagement that culminated in the proposal for a single integrated solution with multiple functionalities (national switch),” the CBK said.

(Source: Business Daily) 


ATCL to enter into partnership with KLM and Emirates

Air Tanzania Company Limited (ATCL) is in the final stages of signing partnership agreements with Emirates and the Royal Dutch Airline- KLM that will help connect its passengers to destinations in the United States and Europe.

The national carrier also said it was in the final stages of talks with China’s Aviation authorities over a similar arrangement.

“These companies are the largest in the world as an effort to expand the network will start partnerships with them while we prepare to go to the United States and Europe,” said the ATCL managing director Ladislaus Matindi.

He was speaking during the tour by deputy Permanent Secretary in the Ministry of Works and Transport Dr Ally Possi adding that the carrier is currently  working with Rwandair, Ethiopian airlines, Qatar Airways and Air India. 

He said that Air Tanzania tickets are now available worldwide despite the ticketing system facing hitches.

“We are continuing to expand our business but also to increase the number of staff so that we are competitive in the market,” he said, adding that currently, Air Tanzania has 15 centres in the country and eight outside the country.

On his part, Dr Possi said the impact of Covid-19 was the source of the company’s Sh60.24 billion loss, adding that efforts to overcome the challenge are still ongoing.

(Source: The Citizen)

Tanzania Exports Up by +15% in 2021, Tourism Arrivals Up by +48%

Tanzania’s exports of goods and services increased to USD 9,818.6 million in the year ending December 2021, from USD 8,555.5 million in the corresponding period in 2020, showing a year-on-year increase of 14.76%. 

This was revealed by the Bank of Tanzania (BoT) in its latest Monthly Economic Review of January 2022. The expansion was on account of a rise in exports of manufactured goods particularly sisal and sisal products, manufactured tobacco and other manufactured products as well as horticulture, fish products, and travel receipts. 

Exports of goods increased by +6.0% to USD 6,755.6 million, with non-traditional goods rising by 9.7% to USD 5,763.0 million.

Gold exports fell by 7.2% to USD 2,743.1 million and accounted for 40.6% of total goods exports, driven by the recent decline in world market prices. 

Exports of manufactured goods rose to USD 1,213.2 million in the year ending December 2021, from USD 908.6 million in 2020, driven by sisal and sisal products, manufactured tobacco and other manufactured products, particularly iron and steel, cosmetics, plastic, paper, and paper products.

On a monthly basis, exports of non-traditional goods were USD 465.2 million, slightly higher than USD 452.9 million in December 2020. 

Exports of traditional goods declined to USD 627.9 million from USD 808.1 million in the same period in 2020. Much decline was recorded in exports of cashew nuts, tobacco, and cotton. 

On a monthly basis, traditional exports were largely unchanged at around USD 135.0 million.

Services receipts increased to USD 3,229.2 million, from USD 2,183.8 million in the year ending December 2020, largely boosted by travel (tourism) and transport receipts.

Travel receipts rose to USD 1,396.34 million, consistent with a rise in the number of international tourist arrivals by 48% to 918,603, as the recovery in tourism activities is underway. 

On a monthly basis, services receipts were USD 362.9 million, compared to USD 218.9 million in December 2020, with travel receipts accounting for the larger increase.

(Source: Tanzania Invest)


Pharmacists seek govt support to manufacture drugs locally

Pharmacists, under the Pharmaceutical Society of Uganda, have asked the government to support them so that they can manufacture drugs locally. 

Speaking during an interview in Kampala on Tuesday, pharmacists led by Dr Musa Ssemanda, the Pharmaceutical Society of Uganda treasurer, said that whereas they have the capacity in terms of knowledge to manufacture a number of pharmaceuticals, they lack incentives from government such as land, equipment, affordable electricity and financial support for clinical trials on medicines, many of which are capital intensive.

Currently, he noted, nine out of every 10 medicines used in Uganda are imported yet Pharmaceutical Society of Uganda, which has a membership of about 1,500 pharmacists, has knowledge to manufacture different medicines locally.

According to a Ministry of Finance report that reviews and classifies close to 1,500 imports, Uganda imports pharmaceuticals worth UgSh1 trillion annually.

Mr Emmanuel Ainebyona, the Ministry of Health spokesperson, said that whereas the government would be ready to support any pharmacist who intends to manufacture medicines locally, they would have to follow set procedures and due processes.

“Already, there are companies manufacturing medicines and they were given incentives by the government,” he said, without giving specifics. 

Dr Ahmed Hammed Sale, the Wide Spectrum Enterprises managing director, a pharmaceutical importation firm, said local manufacturing of medicines would reduce prices as well as ensure their availability in the country.

(Source: The Monitor) 

Airtel announces doubling its data bundles for the same old prices

Telecom company Airtel Uganda has announced doubling of its daily data bundles for the same old price.

According to the company, this will be done on all daily bundles that the company offers to their customers, for example, at UgSh250, a customer can now get 30 MBs instead of 15 MBs previously given out.

At the same time, the telecom company has also unveiled what it termed as the cheapest 4G smartphone in a bid to grow universal access to affordable internet.

The phone, a Benco Y40 boasts of a 5 inch display, long battery life of 2500mAh, and big storage of 32 GB and a good processor of 1.4Ghz quad core.

According to Airtel officials, with these capabilities, the 4G smartphone is well adapted for rural areas where the country needs to grow internet access for the transformation of the lives of  people.

The 4G smartphone  goes for UgShs163,500, but  the customer will pay UgSh250,000 at the outlets and  the offer comes with a total UgSh86,500  worth of 13 GBs data redeemed as 2GB for the first month and 1GB every month for the next 11 months.

“Growing equitable access to the benefits of the internet requires Investment in 4G network, which Airtel has done. It requires affordable data, which Airtel is known for, and lastly, it requires affordable 4G smart devices. Today we are here to support the government in the private sector-led digital transformation of Uganda by presenting the cheapest 4G smartphone on the market,” said Airtel Uganda Managing Director, Manoj Murali.

(Source: Nile Post)


Rwandan Banks write off Rwf75bn ($71.8 Million) bad debt

Non-performing loans in Rwanda have dropped to 4.6 per cent compared to 5.4 per cent recorded in the last three quarters of 2021, the latest statistics from the Central Bank show.

The drop was attributed to a higher growth of outstanding loans relative to the growth of outstanding Non Performing Loans as well as the write off of long overdue Non Performing Loans.

In 2021 banks wrote off Rwf75bn compared to Rwf22bn in 2020. The banking sector increased lending by 15.4 per cent to close the year at Rwf1230bn compared to a contraction of 8.2 per cent.

A loan write-off is an action taken by the lender when the chances of loan recovery are almost zero and its assets are non-performing. This enables the bank to maintain a clear record of the unrecovered loan amount in their balance sheets.

However, this does not mean the trials for recovery will cease. The sectors that had the highest written off loans include trade, public works contractors as well as commerce.  

The statistics further show that loans in watch category (loans where repayment is late by 30 to 90 days) increased by 77 per cent to Rwf489 in December 2021 14.2 percent from Rwf277 billion.

In response to the perceived credit risk outlook, banks have increased their provisions by Rwf48bn to Rwf189bn in December 2021 leading to the provisions coverage ratio of 119.8 per cent.

The loan quality drop is however not a surprise given the Covid-19 related challenges with the central bank noting that the banking sector is well capitalized to make provisions for loans that could struggle to resume making payments.

(Source: The New Times)

Rwanda’s agriculture exports rose by 39% to Rwf543bn in 2021

Rwanda earned over $543 million (about Rwf543 billion) in agricultural export revenues from January to December 2021 against over $390 million during the same period in 2020, representing an increase of 39 percent.

These export statistics are contained in the National Agricultural Export Development Board (NAEB)’s December 2021 and Quarter Two Report 2021-2022, which was published early February this year.

The report comprises statistical data for agricultural exports and re-exports for December 2021. It also provides combined data for the calendar year of January-December 2021, fiscal year July-December 2021 and quarter two (October-December 2021) in comparison with the same period of 2020.

According to the report, both export and re-export increments were related to the economic recovery from the Covid-19 pandemic, where most of the economic activities resumed with more movement of people and goods in the region and abroad.

Transport of people to Europe and other destinations became regular which allowed trade with Europe and the rest of the world.

The report indicated that tea, coffee, flowers, fruits and vegetable unit prices were also showing positive trends, thus contributing to the realized good export performance compared to the same period in 2020.

(Source: The New Times)


FDI Flow in Ethiopia Increased by 23 Percent in Six Months

Foreign Direct Investment (FDI) flow in Ethiopia has increased by 23 percent over the last six months of the budget year, Prime Minister Abiy Ahmed said.

Addressing queries from members of the House of Peoples’ Representatives today, the premier said despite several challenges, the nation attracted additional 1.63 billion USD in FDI over the past six months.

The country’s FDI has surpassed 23 percent on average over the last six months compared to the same period last year, according to Abiy.

However, the FDI flow is not enough, he said, adding that Ethiopia has a huge capacity to attract more FDI in various sectors.

“Ethiopia has the opportunity to invest billions of USD in energy alone. We have immense opportunity to invest in geothermal, solar as well as hydropower,” he elaborated.

Speaking on the number of business licenses in the country, the Prime Minister said more than 200,000 people received new business licenses. This has increased by 10 percent, with 8 percent of renewing already existing business licenses.

The systems, however, need to be upgraded and modernized, he underlined.

(Source: ENA)

Grand Ethiopian Renaissance Dam Begins Power Generation at 375MW

The Grand Ethiopian Renaissance Dam (GERD), Ethiopia’s mega project on the Blue Nile, has started generating power at 375MW with its first turbine.

Prime Minister Abiy Ahmed, officially launching GERD’s power generation, said this marks “the birth of a new era.” He went on to say this is “good news for [Africa], as well as the downstream countries with whom we aspire to work together.”

When it goes fully operational with a power generation capacity of 6,450 megawatts per year via its 13 turbines, the Grand Ethiopian Renaissance Dam will be the largest hydroelectric power plant in Africa, providing electricity to some 65 million Ethiopians who thus far do not have access to power. Moreover, it is expected to transform Ethiopia into a powerhouse of investment, as well as provide affordable electricity to neighboring countries.

(Source: 2merkato) 


Effort to produce youth equipped with knowledge and skill

At an activity assessment meeting conducted on February 19, the Sawa Vocational Training Center reported that it is exerting strong effort to produce youth equipped with the necessary knowledge and skill that could make an impact in the nation building process.

According to the reports presented by the directors of the various fields of study, necessary preparation has been made to start the academic year as scheduled through the coordinated participation of the Vocational Center and the National Service Training Center.

The director of the Vocational Training Center, Mr. Tesfay Tewolde said that the center is providing two years practical and theoretical training in 12 fields of study including Design, Survey, Electricity, Electronics, Water Pipes Installation, Computer Maintenance, Cooling System, Machinery Operation and Maintenance as well as Metal and Wood Work.

Mr. Tesfay also called on the concerned institutions and stakeholders to reinforce participation with a view to further develop the center.

The participants of the meeting conducted extensive discussion on the reports presented and adopted various recommendations including for strengthening the relationship between students, teachers and staff of the center as well as for creating a conducive atmosphere for students to have access to develop their skills practically at institutions in their areas.

Speaking at the occasion, Col. Debesai Ghide, Commander of Sawa National Service Training Center, said that the teachers and staff members of the center have the responsibility to produce competent and well equipped students with knowledge and skill and expressed readiness to stand alongside them in all their endeavors.

Sawa Vocational Training Center is currently providing vocational training in 12 fields of study to 23,137 students including 10,741 females.


GERD electric start-up a breach of legal obligations by Ethiopia

In a statement on Monday, Omer El Farouk Sayed Kamil, spokesperson for Sudan’s GERD Negotiations Team, says that “Sudan affirms its firm position in the dossier of GERD, which is the need to reach a legally binding agreement on the filling and operation of the dam. Sudan believes that its position is based on the reference of the international law and the Declaration of Principles signed in March 2015 by the three countries”.

In reaction to comments by the Ethiopian PM on social media that Ethiopia believes that the GERD is a good example of the principle of cooperation for the benefit of all the peoples of the riparian countries without causing harm to any of them, Kamil says that Sudan believes that “it is necessary and important for Ethiopia to take real steps that correspond to this statement on the ground”.

Sudan confirms its stance rejecting all unilateral measures in everything related to the filling and operating of the dam, and Sudan believes that the measures that have been taken, especially the first and second filling and the latest measure related to starting the operation of electricity generation turbines, are incompatible with the spirit of cooperation and constitute a fundamental breach of legal obligations, the statement says.

The dam, Ethiopia’s intention to fill it, and the ramifications to Sudan and Egypt downstream have been the subject of sharp and often fruitless negotiations, which are now progressing due to international efforts at mediation.

The three countries signed a Declaration of Principles in Khartoum in 2015 as a basis for negotiations, but no agreement on the use of the Nile waters has been reached so far. More than once, negotiations under the auspices of the Africa Union ended in a deadlock. Recently, the EU and the USA have both expressed their willingness to mediate between the three countries.

(Source: Radio Dabanga)

Bank of Khartoum dismisses 40 more critical employees

The Bank of Khartoum dismissed 40 employees in various branches of the bank on Tuesday. This brings the total number of employees who have been dismissed after expressing their opinion or participating in a workers’ protest to 62.

Dismissed employee Abdelrahman Mohamed Nour described the procedures for their dismissal as ‘arbitrary’. He explained that the employees’ protest was aimed at improving the work environment and reforming salaries and said that the bank’s management had not fulfilled its promises to implement the demands raised last year. 

Since the October 25 military coup, the situation at the Bank of Khartoum has been uneasy.

Nour explained that the October 25 military coup and the dissolution of the steering committees led to a governance vacuum that the employees tried to fill by nominating representatives of the branches and establishing the bank’s employees’ initiative that presented proposals and demands to the management. 

The management, however, dismissed 22 critical employees last year. This led to escalating steps from the employees’ initiative, including strike action to demand the return of the dismissed at the end of December. These demands were ignored.

(Source: Radio Dabanga)


Somalia’s President Cans US Oil Deal Hours After It Was Signed

Somalia’s leadership has made a swift reversal on an oil exploration deal signed with a US company. On Saturday, the Minister of Petroleum and Mineral Resources, Abdirashid Mohamed Ahmed announced that production sharing agreements had been signed with US-based firm, Coastline Exploration Ltd.

Ahmed said in a statement that the deal was “a huge moment” for the people of Somalia.

“Recently completed seismic programs indicate that Somalia has the potential to become a significant oil and gas producing country,” he said in a statement. The deal would “accelerate our roadmap of hydrocarbon exploration offshore.”

“We are pleased to announce that we have signed 7 Production Sharing Agreements with COASTLINE EXPLORATION LTD. It is a victory for the Somali people,” the minister said in a tweet.

But with the ink barely dry, both Somalia’s president and prime minister announced the deal was off.

In a statement, the office of President Mohamed Abdullahi Mohamed said the deal was nullified. The presidential palace Villa Somalia tweeted that “it contravenes Presidential Decree 7/8/2021 which bans the inking of deals during elections so as to protect public resources from exploitation during elections.”

The office of the presidency and the prime minister have a strained relationship but, in this instance, both leaders appear to have been on the same page.

(Source: allAfrica)