5th August 2022 Trade & Financial Service Round Up

August 5, 2022 - Reading Time: 6 minutes - By Naisiae Simiren

Deloitte fined for Sh2.1bn hidden hole in Chase Bank

The capital markets regulator on Wednesday fined Deloitte after the audit firm failed to detect a non-existent Sh2.1 billion Chase Bank account at the Central Bank that enticed bond investors to offer the collapsed lender billions.

In addition to being fined Sh10 million, Deloitte faces further scrutiny after the Capital Markets Authority (CMA) asked the accountants regulator to probe the consultancy for failures that saw bond investors lose Sh4.8 billion after Chase Bank’s collapse.

Deloitte failed to verify a false claim from Chase Bank that it had Sh2.1 billion in a Central Bank of Kenya (CBK) account, according to a CMA investigative report seen by the Business Daily.

The non-existent account is believed to have inflated the cash position of the bank, encouraging investors to offer it Sh4.8 billion in 2015 through a corporate bond, which closed 10 months before the collapse.

Chase Bank went into receivership in April 2016 after failing to meet its financial obligations. Its ex-chairman Mohamed Zafrullah Khan was charged with conspiring to defraud depositors of Sh1.7 billion, in a case that undermined confidence in the country’s banking sector.

(Source: Business Daily)

Facebook owner rolls out NFT features on Instagram in 100 countries

Facebook owner Meta has rolled out non-fungible tokens (NFT) in 100 countries as the social media giant seeks to join the digital collectible frenzy. 

Meta on Thursday announced that it is expanding NFT features to Africa, Middle East, Asia-Pacific and the Americas following a successful test in May. 

This comes after Meta integrated with Coinbase Wallet and Dapper besides Trust Wallet, MetaMask and Rainbow. The platform has also added support for Flow Blockchain on top of Polygon and Ethereum.

Meta has said that the new feature will give users artistic connections on the platform and grow earnings for content creators.

It was not immediately clear whether the rollout would include Kenya, which ranks top on the continent in digital technologies adoption. 

The new feature will allow Instagram users to create and sell non-fungible tokens as Meta tries to cash on the hype-fuelled $40 billion digital collectible market. 

(Source: Business Daily)


Abu Dhabi, India firms set to invest in Tanzania ports

The government’s pro-business policies are increasingly attracting investors to Tanzania with the latest entrants being Abu Dhabi Ports PSJC (AD Ports Group) and India’s largest integrated ports and logistics company, Adani Ports and SEZ Ltd.

AD Ports Group, which markets itself to be the leading facilitator of global trade, logistics, and industry, has signed a Memorandum of Understanding (MoU) with Adani Ports and SEZ Ltd for strategic joint investments in end-to-end logistics infrastructure and solutions.

Under the MoU, the two firms will specifically invest in rail, maritime services, port operations, digital services, an industrial zone and the establishment of maritime academies in Tanzania, the companies said in a statement that was widely quoted by various media outlets yesterday.

The two companies signed the key agreement setting in motion a series of potential country-level investments to grow, improve, and promote an end-to-end maritime and logistics ecosystem which will make Tanzania a hub for the African region.

(Source: The Citizen)


Government seeks changes in borrowing terms to curb rising debt  

Government is considering changes to future borrowing in the face of mounting pressure to manage debt and repayment, according to the Ministry of Finance. The changes, according to Ms Maris Wanyera, the Ministry of Finance director for cash and debt policy, will include re-examining ratios of interest payments to tax revenues, interest payments against export earnings and debt-to-economic growth balances. Debt has been mounting with the government last month conceding that it was no longer sustainable. 

However, Finance Minister Matia Kasaija last month said the government would continue to borrow unless Ugandans paid more taxes to fund a rise in priority demands. Uganda’s debt-to-gross domestic product (GDP) ratio, measured as the level of indebtedness, rose to 54 percent in June from 49.1 percent based on cumulative debt data captured between July 2021 and June 2022. 

Public debt, according to government data, currently stands at Shs73.5 trillion ($19.2b), with external debt valued in excess of Shs40 trillion ($10.5b).  State Minister for Planning Amos Lugoloobi last month said Covid-19 related borrowing resulted in higher debt levels pushing debt ratio to GDP beyond the threshold of 50 percent.

Therefore, Mr Lugoloobi said, there was a need for the government to rethink the financing architecture of the National Budget with the view of increasing tax ratio to GDP through focused increase in production and infrastructure, creating markets and promoting trade. 

(Source: The Monitor)

Tight monetary policies to impact markets, says IMF

Uganda is currently experiencing high commodity prices and increase in inflation, which has prompted the Bank of Uganda to raise the central bank rate twice as it moves to control inflation. 

In its updated World Economic outlook, the IMF said tighter financial conditions trigger debt distress in emerging markets and developing economies. 

“As advanced economy central banks raise interest rates to fight inflation, financial conditions worldwide will continue to tighten. The resulting increase in borrowing costs will, without correspondingly tighter domestic monetary policies, put pressure on international reserves and cause depreciation versus the dollar,” the IMF said, noting that such challenges will come at a time when government financial positions in many countries are already stretched, implying less room for fiscal policy support, with 60 percent of low-income countries in or at high risk of government debt distress. 

Thus, the IMF noted, whereas an increase in interest rates raises net incomes, financial institutions are likely to suffer losses as loan origination declines and default rates rise.

(Source: The Monitor)


Regional business to rise by 11% in 2023

On Business outlook during 2022 into 2023, most businesses in Rwanda, South Sudan and Tanzania are optimistic about: improvements in the business climate, business performance, government interventions for business recovery, recovery from losses suffered during the pandemic and expansion of businesses to other markets within the EAC after the pandemic.

It is notable that businesses in Tanzania stood out with an optimistic view of the outlook across all dimensions.

The EABC barometer on business and investment revealed that curfews had the most negative effect, followed by border closures, banning of in-person meetings, inter-country movement restrictions, and banning of public gatherings, respectively.

The Barometer seeks to highlight the relevant policy issues, regulatory gaps, and recommendations. It also laid the foundation for the regional advocacy and the much-needed reforms in the East Africa Community region by the EABC.

Among the study’s immediate recommendations is: the quick resolution of non-tariff barriers; improved investment climate and favourable government policies; provision of corporate tax cuts and tax breaks; provision of low interest business loans and restructuring of current business loans; and ensuring rapid delivery of SME and entrepreneurship policy support by simplifying access to support and ensuring effective digital delivery systems, while safeguarding accountability and effectiveness.

(Source: The New Times)


Banking Sector Registers Better Performance in Various Variables: National Bank Governor

The banking sector has registered better performance on various healthy variables during the concluded Ethiopian fiscal year, National Bank Governor Yinager Dessie said.

The Macroeconomic Committee met on Wednesday in the presence of Prime Minister Abiy Ahmed to evaluate the performance for the stated fiscal year and the banking sector was mentioned among the sectors that attained better performance.

The banking sector registered better performance in asset, loan repayment, and other healthy parameters. The governor stated that the total assets of banks reached 1.7 trillion. He added that the sector has registered 26.7 percent growth as the capacity of banks in repayment of loans increased to 48.7 percent during the concluded fiscal year.

The introduction of Tele-Birr has enhanced the digital system as it is crucial to control money laundering and contraband and stabilising inflation. Despite all the encouraging achievements, the Governor noted that the amount of foreign currency provided for the private sector is not sufficient. Therefore, activities will be undertaken to increase foreign currency, including export trade.

(Source: ENA)

Ethiopian Airlines orders Africa’s first Airbus A350-1000

Ethiopian Airlines has converted its existing orders of A350-900 for larger planes, making it the first African carrier, yet again, to own the largest variant of the Airbus A350 models.

Africa’s most profitable airline has swapped four of its remaining six A350-900 orders for the larger aeroplanes.

The aircraft will give the state-owned carrier a competitive edge over its African peers like Kenya Airways (KQ) and South African Airlines (SAA) in attracting passengers seeking new experiences while saving on fuel costs.

“The A350-1000 is the best fit for our dense routes, and we believe that the upsizing will be instrumental in satisfying the increasing demand of customers in our vast global network across five continents,” said Mesfin Tasew, the Ethiopian Airlines Group chief executive on Thursday.

The larger planes can carry about 369 passengers with a maximum limit of 480, while the A350-900 caters to the 300-350 passenger market segment.

Ethiopian had ordered 22 Airbus planes as part of its expansion plan, 16 of which it had already received, making it the first in Africa to use the A350 planes. The delivery timeline for the remaining four A350-1000 and two A350-900 has not been disclosed.

(Source : ENA)

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