25th March 2022 Trade & Financial Services Round Up

March 25, 2022 - Reading Time: 9 minutes - By Amrit Labhuram

Fertiliser crisis looms on Sh5.7bn subsidy row

MPs want President Uhuru Kenyatta to order the reinstatement of a Sh5.7 billion fertiliser subsidy that the Treasury has removed from the supplementary budget.

The legislators have threatened to paralyse the passage of the Sh138 billion mini-budget if the fertiliser subsidy is not reinstated by Tuesday.

The National Assembly’s Agriculture Committee said the Treasury had removed the entire amount that was meant to cushion farmers from the skyrocketing prices of fertiliser.

The committee said despite reallocating the budgetary requests for the Ministry of Agriculture to secure the Sh5.734 billion subsidy, the Treasury had gone ahead and transferred the money to the security docket.

“The committee had allocated Sh5.7 billion for fertiliser subsidy. But we are shocked that there is no single shilling allocated in the Supplementary Budget I,” Silas Tiren, who chairs the committee, said.

Fertiliser prices have hit an all-time high on fears that Russia’s invasion of Ukraine will curtail global supplies.

Russia was the world’s largest exporter of nitrogen products or planting fertliser in 2021.

The risk of disruption to shipments comes as fertiliser costs have already been soaring because of the high prices of natural gas in Europe, which forced some plants to halt or curtail production.

(Source: Business Daily)

Kenya risks blackout on power lines repair hitch

The Energy ministry has no money to procure a contractor to fix five towers on a high-voltage power line that collapsed in December and plunged the country into darkness.

The ministry declined to disclose the amount of money required from the Treasury to procure a contractor and equipment for the high-voltage transmission line, saying it might influence the tender for the works.

This raises the risk of a nationwide outage or power rationing should a temporary tower collapse, triggering financial losses from disruption of businesses.

Blackouts occur regularly in Kenya, partly because of an ageing energy network, forcing many businesses in Nairobi and other big towns to operate back-up generators or install solar systems.

Gordon Kihalangwa, the Energy Principal Secretary, told Parliament that the ministry had put a request to the Treasury and expects funding to be made available in the second supplementary budget.

He told the Public Investments Committee (PIC) that the Kenya Electricity Transmission Company (Ketraco) would issue tenders for restoration of the five main towers once the Treasury provides funding.

(Source: Business Daily)


Mtwara Port and Dangote Cement ink transport deal

Tanzania Ports Authority (TPA) entered into a business agreement with Dangote Cement Tanzania Limited that would see the southern waterway exporting 40,000 tonnes of cement monthly.

The amount is 27,000 tonnes more as compared to 13,000 tonnes passing the part, therefore increasing revenue four times.

TPA acting marketing manager Lydia Malya said that the agreement will enable the cement production industry to transport cement and clinker used as raw materials for cement production within and outside the country.

“Through the agreement, cement will now be transported to other parts of the country via the Mtwara, Tanga, Dar es Salaam and Zanzibar ports. Likewise, the product can be shipped further afield outside the country,” she said.

Ms Malya, who was speaking on behalf of TPA director general Erick Hamissi said the main objective of the agreement was to attract the company’s use of the port that would not only attract other users, but also increase government’s revenues.

Mtwara port manager Kalembwe said since most of the company’s customers are centered at the business capital of Dar es Salaam to other parts of the country including Kigoma the distribution through the ocean would be reliable for availability of cargo, hinting that the move will reduce the products prices.

Furthermore, he said before the agreement the plant transported cargo to Zanzibar, Comoro and Northern part of Mozambique at an average of 13,000 to 15,000 tonnes through the port.

“The volume of cement that was passing the port remained relatively low compared to the plant production volume. Therefore, following this beginning, we expect more from the company and other stakeholders,” he said.

Dangote Cement Company Limited, produces 1.5 million tonnes of the product annually, however the factory’s installation capacity is 3 million tonnes per year.

(Source: The Citizen)

TotalEnergies launches first solarised station in Tanzania

TotalEnergies Marketing Tanzania launched its new global identity in Dar es Salaam as part of its ongoing transformation plan.

The company also launched its first solarised service station at the TotalEnergies Samora service station in the city in an effort to give users an opportunity to enjoy products and services powered by solar energy.

The company introduced its TotalEnergies image in Tanzania in May 2021 in its ambitious plan to become a world–class player in the energy transition.

The new name and new visual identity of TotalEnergies embodies the company as a broad energy player that is committed to producing and providing more affordable, reliable and clean energies to as many people as possible. Speaking during the event, the TotalEnergies Marketing Tanzania Ltd managing director, Jean-Francois Schoepp said the ongoing transformation plan was in line with the firm’s wider goal of cutting carbon emission.  “It is with great honor and pride that we are here today to reveal our milestone and ambition as the first Oil Marketing Company in Tanzania to have solarized service stations which is in line with our climate ambition to have net zero carbon emission and a reflection of our transition from Total Tanzania Ltd to TotalEnergies Marketing Tanzania Ltd,” he said.

(Source: The Citizen)


USh1.2 trillion: Record performance for Equity Group

Equity Group has recorded superior performance for the year ended 31st December 2021, putting it at the top as the regional financial sector market leader, despite the challenging operating environment characterized by a global COVID-19 pandemic.

Profit After Tax increased by 99% to Kshs 40.1 billion ($349.7 million – Ush1.2 trillion) from Kshs 20.1 billion ($175 million – Ush631 billion).

The Group has recommended a record dividend payout of Kshs 3 per share totalling Kshs 11.3 billion (Ush335 billion) which is a 50% jump from previous dividend pay-out after earnings per share grew by 98% to Kshs 10.40 up from Kshs 5.20 the previous year. (1 Kenya shilling = 31.44 Ugandan shillings)

A look at Equity’s balance sheet, asset size, profitability, customer base and market capitalisation at the Nairobi Securities Exchange shows that the group has emerged as the regional financial sector market leader despite 2 years of operating in a COVID-19 environment.

Equity’s Profit Before Tax recorded a growth of 134% to Kshs 51.9 billion up from Kshs 22.2 billion the previous year.

(Source: The Independent)

Low alcohol consumption forces drop in tax revenue 

Administrative challenges in effective implementation of the digital tax tracking system coupled with lower than anticipated consumption of alcoholic drinks such as beer, spirits, wines and non-beer beverages affected tax collection during February, according to the Ministry of Finance Performance of the Economy report. 

In details contained in the February report, the Ministry of Finance noted that tax collections were lower than targets due to shortfalls in Excise Duty and Value Added Tax (VAT) resulting from challenges in proper implementation of some digital tracking systems and  difficulties encountered in the roll out of the Electronic Fiscal Receipting and Invoicing System. 

“Indirect domestic tax collections were affected by underperformance by Excise Duty and VAT. Excise Duty collections were affected by administrative challenges in effective implementation of the digital tracking system coupled with lower than anticipated consumption of items such as beer, spirits, wines and near beer beverages. Similarly, collections for VAT were affected by roll out difficulties of the Electronic Fiscal Receipting and Invoicing System,” the report said, noting that during February tax collection shortfalls stood at Shs86.06b. 

During the period, both tax revenue and grants were lower than targeted, realising Shs1.672 trillion against the planned Shs1.836 trillion. 

(Source: The Monitor) 


DP World Kigali inaugurates its expansion phase with a commodity distribution centre

Kigali Logistics Platform, which is operated by the United Arab Emirates’ logistics firm, DP World, located in Masaka sector in Kicukiro district, has inaugurated its expansion phase including three spacious warehouses and other facilities on an additional 7.5 hectares.

The facilities were built within a period of six months and are now operational.

Speaking during the launch that was graced by the Minister of Trade and Industry Beata Habyarimana, Capt. Sumeet Bhardwaj, the CEO of DP World Kigali, said that the three warehouses and one small one in the new section covers a total of about 10,500m² storage capacity.

The three warehouses are to be operated by various traders including East Africa Exchange (EAX) – a regional commodity exchange offering trading services in Rwanda and the East African Community common markets in key staple food crops.

In addition to the current operational phases, the company has a provision of additional 25 hectares for further expansion.

DP World is a dry port which was launched by President Paul Kagame in 2019 as the country’s biggest inland cargo handling facility.

(Source: The New Times)


Study Agreement Signed with US Firm to Explore Ethiopia’s Natural Gas Potential

The Ethiopian government signed an agreement with US firm Netherland, Sewell & Associates, Inc. (NSAI) to explore Ethiopia’s natural gas deposits and its economic potential.

Inking the deal were Takele Uma, Ethiopia’s Minister of Mines and Petroleum, and Joseph M. Wolfe, VP of NSAI. Tracey Jacobson, the US ambassador to Ethiopia, was also present during the signing of the agreement.

Consequently, NSAI will conduct surveys and feasibility studies in the Ogaden area of Ethiopia’s Somali region. The study will be based on explorations done so far on a 3,500km² area in Ogaden.

The study will help develop Ethiopia’s investment opportunities in energy, as well as help utilise natural gas reserves, Mr. Takele said in a tweet. It will also provide affirmation of the nation’s natural gas opportunities for international investment firms, he noted.

(Source: 2Merkato)

Ethiopia Urged To Take Decisive Actions to Reduce Economic Effects of Russia-Ukraine Conflict

Ethiopia has to take decisive measures to reduce the looming economic effects of the conflict between Russia and Ukraine particularly on its import-export trade, Tshwane University of Technology (TUT) Department of Economics Senior Lecturer, Prof Mulatu Fekadu said.

The economist told ENA that the conflict between Russia and Ukraine is causing economic pressure in many countries, including Ethiopia, which has also been tested by cascading challenges.

He stated that the price of products being imported both from Russia and Ukraine to Ethiopia, including fuel and food items have been soaring, demanding swift measures to contain the challenges.   

He advised conserving available resources, enhancing import substitution and diversification of trade destinations to help ease the looming challenges.

The economist has also suggested budget adjustments considering the global price increment, and seize the opportunities of the rainy season to grow fast-growing agricultural products.

Ethiopia needs to have a diverse supply chain to withstand the economic pressures caused by various global crises as the existing supply chain can wreak havoc on the economy in the event of conflict, he stressed, stating that the US and European sanctions on Russia could lead to a sharp rise in fuel and food prices.

Diversifying the supply chain would be expanded to create more business partners and would require a lot of effort, Mulatu pointed out.  

Various mechanisms should also be designed with a view to reduce the fuel consumption of the nation by limiting its supply, the economist advised, stressing the need to conserve food products.

Wise measures and use of available resources, prioritising on important national projects, reducing expenses and undertaking swift supply of goods to the people can reduce the economic burden of the conflict between Russia and Ukraine, Mulatu underlined.  

(Source: Ethiopian News Agency


Economist: ‘US Dollar could soon cost more than 1,000 Sudanese Pounds’

As the value of the Sudanese Pound (SDG) continues its unprecedented downward spiral against the US Dollar and other major international currencies, a prominent economic analyst has predicted that the price for a greenback could rise above SDG1,000.

In an interview with Radio Dabanga, economic analyst Kamal Karrar predicts that the price of the US dollar will rise to exceed more than SDG1,000 in the coming period, which might lead to a comprehensive stagnation and depression. This will mean that the public will be unable to afford the existing goods.

He said that there is now a continuous rise in the price of the dollar and other currencies resulting from the race between banks and the parallel market to determine the price of the pound. “It is a race between a tortoise and a hare, because there are greater possibilities for the parallel market.”

Karrar predicts that simple industries, even local ones, might have to stop if the depreciation of the Sudanese Pound makes it impossible to purchase raw materials from abroad.

He asserts that the reason for the collapse is the lack of state control over resources and export commodities that could return in hard currency to the Bank of Sudan to finance the basics such as food, medicine, and fuel.

“What is happening now is an economic collapse as a result of the IMF and World Bank policies to expel the state from the foreign trade market and the currency market, as well as the decision to float the Sudanese Pound and leave determining its value to street market traders.”

Karrar concludes: “There is no possibility of reforming the economy and there is no hope for reform through normal means, without an agreed-upon political programme. Ousting the coup junta is the way to address the economic situation.”

(Source: Radio Dabanga) 


Fisheries minister and US Ambassador Larry André discuss advancement of the fishing sector

Minister of Fisheries Abdullahi Bidhan held a meeting on Tuesday, March 22 with US Ambassador to Somalia André in the capital Mogadishu. 

They discussed the ministry’s efforts to advance the fishing sector in Somalia, US-Somali cooperation to combat illegal, unreported, & unregulated fishing. 

In a statement the US Embassy in Mogadishu said the Ambassador and the Minister also discussed the repercussions of the delayed elections in the country. 

“Ambassador André had a productive meeting with @mrbidhaan today. They discussed @fisheriesSOM’s efforts to advance the fishing sector in Somalia, US-Somali cooperation to combat illegal, unreported, and unregulated fishing, and the negative impact of delayed elections,” said the Embassy. 

Somalia is still grappling with the completion of the House of People elections which had started last year but has along the way been marred by widespread claims of malpractices and leadership wrangles pitting between President Mohamed Abdullahi Farmajo and his Prime Minister Mohamed Hussein Roble. 

The US announced recently that it had extended the list of Somali leaders who have been placed under Visa restrictions and sanctions after the Horn of Africa Nation failed to meet the deadline of the completion of the ongoing Lower House elections for the fourth time. 

Jubbaland and Hirshabelle State are yet to conclude elections with two States facing revolt both in Garbaharey and Beledweyne towns which are the second voting sites for the two regional States.

(Source: Radio Dalsan)

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