25th Trade and Financial Services Round Up

  • 25 Nov 2022
  • 4 Mins Read
  • 〜 by The Vellum Team
Court stops law allowing workers to withdraw pension for home purchase

A High Court has stopped the implementation of the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 which allows workers to withdraw part of their pension to buy a home. 

Justice Anthony Ndung’u said that the amendment to the law was done through an irregular and flawed process because Parliament did not allow for public participation. 

The law change, signed in 2020 by former Treasury CS Ukur Yatani, allows workers to access up to Sh7 million or a maximum of 40 percent of their retirement savings to buy their first residential house.

“Article 10 provides the national values and principles of governance which bind Parliament when it legislates and Article 118 provides that Parliament shall conduct its business in an open manner and facilitate public participation and involvement in the legislative process while Article 93(2) provides that the National Assembly and the Senate shall perform their respective functions in accordance with the Constitution,” Justice Ndung’u said in his judgment.

Pension schemes had until September 14, 2021, to amend their rules to allow their members early to access their savings for house purchases.

The law was meant to boost home ownership in a market where most people employed in the formal sector are unable to raise the deposit or afford the typical monthly mortgage payments. 

(Source: Business Daily)

Samia: Burning of live chicks from Kenya was wrong

President Samia Suluhu Hassan said yesterday that the order to burn 6,400 live chicks imported from Kenya five years ago was wrong. The chicks, which were impounded at the Namanga border town, were set on fire in November 2017 on grounds that they were smuggled in. Five years after the torching, the President said the action nearly soiled the historical relations between the two trading partners.

“It was not a good way to handle such imports. Even chickens have the right to live,” she said when she addressed lawyers from the region. The move was criticised by members of the business community from the two neighboring countries as well as animal rights groups.

The 6,400 day-old chicks were impounded at the famous border town between the two states on allegations of being illegal imports. The matter nearly degenerated into a diplomatic tiff as Kenya formally protested on what it termed “ a policy shift that condones hostile actions against Kenyan citizens.”

The then Tanzania High Commissioner to Kenya Dr. Pindi Chana was summoned by the Kenya Foreign Ministry to explain “the unilateral action”. At that time the Ministry of Livestock Development and Fisheries said that burning of live chicks was made to prevent the spread of bird flu.

(The Citizen)

Expensive loans, reducing reserves weakening Uganda’s growth outlook, says Moody’s

A combination of expensive loans, rising debt repayment and decline in foreign reserves, among other risks have influenced Moody’s to downgrade Uganda’s outlook from stable to negative. The negative outlook, Moody’s said, was due to increasing external debt-service repayments, tightening of global financial conditions and erosion of the foreign exchange reserves, noting that the debt trajectory was vulnerable while currency depreciation continues to put pressure on the economy.   

“The structure of Uganda’s debt is becoming less favourable. Shorter-term and more expensive domestic borrowing has been key in financing the fiscal deficit in recent years. Domestic debt accounted for 38 percent of public debt as of December 2021, but 83 percent of interest payments,” Moody’s said.   Bank of Uganda recently indicated that as of June, the stock of public debt had increased to Shs78.8 trillion, a growth of 2.3 percent largely driven by expansion in domestic debt to finance underperformance of tax revenue and growing expenditure pressures. 

Therefore, Moody’s said, Uganda’s debt burden has increased, reaching 48.6 percent as of June, from an estimated 35.1 percent of gross domestic product in June 2019. 

(Source: The Monitor)

Regulator explains ban on steel bars

Substandard steel bars which are said to have a grade of ‘upper yield strength below 500MPa (500N/mm2)’ will no longer be accepted on the Rwandan market according to Rwanda Inspectorate, Competition, and Consumer Protection Authority (RICA).

The said grade means a lack of tensional force resistance per square millimetres. Operators and users have been granted six months to deplete their current stock and no new order is allowed except those done before with proof, RICA announced.

The warned operators and users include the public, importers, wholesalers and retailers, manufacturers, and users of steel bars for reinforcement of concrete. Officials said that except for already made and paid-for orders with proven bank payments as evidence, no new orders of the mentioned grade of steel bars shall be allowed.

Deo Munyaneza, the Information, Education, and Communication Specialist at RICA told the New Times that the ban on steel bars of a grade below 500MPa was based on regional integration agenda, to implement the harmonized standard.

He said that at the regional level, the harmonized standard on steel for the reinforcement of concrete does not accommodate steel bars of the grade below 500MPa. “The effect of using steel bars of the grade below 500MPa was basically on Rwanda because of not implementing a regional harmonized standard. “We gave six months for depleting the stocks because we thought that was enough time for all lower-grade steel bars to be finished on the market,” he said.

(Source: The New Times)

Gov’t working to attract FDI by establishing Special Economic Zones

The government of Ethiopia is working to strengthen international trade connectivity and attract Foreign Direct Investment (FDI) by establishing Special Economic Zones, according to Ethiopian Investment Commission.

In a bid to realizing this the government is set to modify the Special Economic Zones (SEZs) Proclamation. The commission held a discussion forum today with various government organizations to collect feedback on the draft proclamation.

The draft law is designed based on comparative advantage and priorities and thereby strengthens the country’s drive to attract foreign direct investment, create jobs, enhance trade and productive sectors, integrate into global value chains, and generate sustainable growth.

Speaking at the discussion, Ethiopian Investment Commissioner, Engineer Lelise Neme, said in its aim to make the country an industrial corridor, the government has been actively engaged in improving the business Eco system. Hence, the development of industrial parks has continued to play a critical role in the countries’ strategy to transform the manufacturing sector, she said.

According to her, the 13 industrial parks constructed by the government have been making a significant contribution in supporting the country’s economy. The purpose of the draft SEZ law is to promote regional and international trade ties by improving the ecosystem of free trade zones and industrial parks.

Speaking on his part, EIC Consultant, Dr, Habtamu Simachew, said the existing working environment of the industrial parks regime has restrictively focused on manufacturing industries-hence impending economic diversification and impact.

(Source: ENA)