20th November 2020 Trade & Financial Services Round Up

KENYA

The Public Sector Hearings for FY 2021/22 and Medium -Term period

The National Treasury and Planning has organized the Public Sector Hearings for FY 2021/22 and Medium-Term period on 25th – 27th November, 2020 at KICC Amphitheatre hall starting at 8:30 am.

TIME SECTOR/PRESENTATION
DAY ONE : Wednesday November 25, 2020
08.30 – 09.00 a.m. – Arrival and registration
9.00 – 10.30 a.m. – Key note address/Official Launch Hon. (Amb.) Ukur Yatani, EGH, Cabinet Secretary/The National Treasury& Planning

11.00 –12.30 p.m. – Presentation: Health Sector
02.00 – 03.30 p.m. – Presentation: General Economic, and Commercial Affairs Sector
03.45 – 05.15 p.m. – Presentation: Education Sector

DAY TWO: Thursday , November 26, 2020
09.00 –10.30 a.m. – Presentation: Energy, Infrastructure &ICT Sector
11.00 -12.30 p.m. – Presentation: Agriculture, Rural and Urban Development & ICT Sector

02.00 –03.30 p.m. – Presentation: Social Protection, Culture and Recreation Sector

DAY THREE: Friday , November 27, 2020
09.00 –10.30 a.m. Presentation: Environmental Protection, Water and Natural Resources Sector

11.00 -12.30 p.m. Presentation: Public Administration & International Relations Sector

2.00 –3.30 p.m. Presentation: Governance, Justice, Law & Order Sector(GJLOS)
Source: Ministry of National Treasury & Planning

Comprehensive insurance cover for civil servants and employees of the National Youth Service (NYS)
The National Treasury & Planning Cabinet Secretary Hon. Amb. Ukur Yatani, on the 18th of November, 2020 unveiled the first ever comprehensive insurance cover for civil servants and employees of the National Youth Service (NYS). The comprehensive Group Life cover, for civil servants and employees of the National Youth Service, will cater for all causes of death including death arising from critical illnesses such as COVID-19. The existing Group Personal
Accident Cover (GPA) cover and Work Injury Benefits Act (WIBA) have further been enhanced.
Source: Ministry of National Treasury & Planning

Resumption of Learning in Basic Education Learning Institutions in January 2021

The Ministry of Education met with all stakeholders to deliberate on the current preparedness for full resumption of learning of all learners in all basic education learning institutions on January 4 th , 2021.
The key milestone dates:

  1. All schools will reopen fully on January 4th 2021. This will apply to all continuing PP1 & 2; Grade 1, 2 and 3; Class 5, 6 and 7; and Form 1, 2 and 3 learners.
  2. All 4 year-olds will join PP1 in July 2021
  3. Pre Primary 1 & 2; Grade 1, 2 & 3; Class 5, 6 & 7; and Form 1, 2 & 3 learners will start their Term 2 on 4th January, 2021 and end on 19th March 2021 together with the Grade 4 and candidate classes (Class 8 and Form 4).
  4. All learners, except Class 8 and Form 4 candidates, will proceed for a 7-week holiday to allow for KCPE and KCSE examinations administration and marking.
  5. Grade 4 and incoming Form 1 (Class 8 graduates) learners will stay at home as other learners complete their Term 3
  6. Grade 4 CBC learners will transition to Grade 5 in July 2021.
  7. International schools will reopen from January 4th 2021 for all learners still at home.

Absa Bank Kenya PLC reports Q3 2020 Normalised Profit after Tax of KES 3.0 billion
Absa Bank Kenya PLC has on Wednesday reported 3 rd Quarter Normalised profit after tax of
KES 3.0 billion, a 51% decline compared to a similar period last year. Normalised performance
excludes an exceptional cost item of KES 1.9billion relating to separation and brand transition to
Absa which is largely concluded.
Performance was significantly impacted by a 147% growth in impairment as customers
struggled to keep up with loan repayments due to the economic effects of the COVID-19
pandemic, and a decisive action by the management to increase provisions in order to best
position for future potential credit losses.

Performance highlights:

  • Net Customer assets up 8% to KES 209 billion
  • Customer deposits grew by 5% to KES 247 billion
  • Total revenue growth at 3% to KES 25.4 billion
  • Pre-provision profit growth at 6% to KES 12.9 billion
  • Normalised Profit after tax declined by 51% to KES 3.0 billion
  • Provisions increased by 147% to KES 7.6 billion to best position for the uncertain future
  • KES 1.9 billion exceptional item related to spend towards the transition to Absa.


Source: Absa Bank


The Independent Electoral and Boundaries Commission (IEBC) Open Letter to People of Kenya

The Electoral Commission wrote an open letter where they provided a chronology of electoral reform in Kenya to demonstrate the evolution of the electoral management body from the control of the political class into an independent agency, and conclude by highlighting the reform agenda that IEBC has prepared and proposed.


The Commission made several recommendations in order enhance electoral democracy;

  • Maintain the current Independent expert model in appointment of the Chairperson and commissioners of IEBC to guarantee impartiality. Stagger recruitment of Commissioners to facilitate transfer of knowledge, institutional memory and growth. Retain the current practice of hiring core professional and permanent secretariat staff for efficient, transparent and credible elections.
  • Address the root causes of negative ethnicity and mistrust amongst political players in order to reduce high costs associated with mitigating these challenges through electoral processes.
  • Conclude electoral legal reforms at least two years to elections, in line with international best practices, to provide for adequate time for implementation by the EMB. However, in the current circumstances the electoral legal reforms should be concluded not later than one year to the 2022 general elections.
  • Entrench the Independent Electoral and Boundaries Commission fund in the Constitution to give the Commission autonomy to manage its funds. However, at the very least funding for the Commission activities should be in tandem with its 5-year electoral cycle, as opposed to providing funds in the year of elections.
  • Electoral laws should be reviewed with a view to making them less prescriptive and to enable the commission flexibility in administrative processes and reduction in cost of elections.
  • Enhance engagement between the IEBC and political parties through the Political Parties Liaison Committee with a view to enhancing electoral democracy in Kenya.

Key Highlights on Central Bank of Kenya Governor, Dr. Patrick Njoroge keynote address at the Institute of Chartered Accountants of Barbados (ICAB) Annual Conference 2020
The pillars that have anchored Kenya’s financial transformation journey as mentioned include:

  1. It is not about the technology but the problem at hand: It is easy to get caught up in the fanciness of technology and exotic labels—blockchain, artificial intelligence (AI), internet of things (IoT). Unfortunately, oftentimes Fintechs and other startups may focus on the features of the technology, and not how it solves a problem.
  2. It takes collaboration to build an ecosystem: Regulators, Fintechs or Governments on their own cannot build a financial ecosystem. Regulators can certainly create an enabling environment but they need the agility and innovation of the private sector in order to succeed.
  3. Kenya’s regulatory philosophy towards innovation: In Kenya, we seek to maximize the opportunities arising from innovation while minimising the risks. This entails understanding business models, resultant risks and the mitigants put in place by innovators.

How then does digitization act as the bridge to post COVID-19 recovery?

  1. We must put people at the centre of the global financial system. For both the public and private sector, the key question must be what are the needs of the people particularly in the context of the SDGs, and how will digitalization work for them?
  2. We must connect our citizens to the digital ecosystem. While digitalization has been a lifeline in the pandemic, we risk alienating a large swathe of the global population.
  3. Empowering and protecting our citizens in the digital realm. Notwithstanding the significant benefits that digitalization presents, it also poses serious risks related to cybersecurity and data privacy.

Highlights of KPLC’s brief to Senate Standing Committee on Energy Business Performance

Reasons for Declined performance

  1. Heavy investments in distribution network infrastructure
  2. Delays in review of the retail tariff
  3. Increased Finance costs as a result of continued usage of commercial facilities
  4. Increasing outstanding bills from RES
  5. Expanded lifeline tariff threshold from 10 kWh to 100 kWh per month
  6. Operational and Maintenance challenges
  7. High system losses with low allowable losses in the tariff
  8. Negative impact of the revised IFRS accounting on the financial position

Future Outlook

  1. Growing electricity sales
  2. Growing revenue
  3. Managing costs
  4. System efficiency improvements

IDs to become invalid as Kenya switches to Huduma cards
Kenyans will start receiving Huduma Namba cards from next month in a gradual rollout that will see current national identity cards invalidated in December next year.

ICT Cabinet Secretary Joe Mucheru said countrywide issuance of the Huduma Cards would commence in the next two weeks. The rollout targets three million Kenyans by January and another five million in February. Kenyans, he said, would receive text messages from the State directing them where they would collect their Huduma Namba Cards within a month.
Source: Business Daily Africa

CBK seen retaining benchmark loans rate
The Central Bank of Kenya (CBK) is likely to retain its benchmark lending rate at seven percent
when its Monetary Policy Committee meets next Thursday, analysts said.
The analysts agree that the CBK rate-setting team is likely to remain neutral as they take a wait-
and-see approach over fears of a second corona wave.
Source: Business Daily Africa

KCB gets approval to apply for Sh27bn UN climate fund
KCB Kenya has received approval to apply up to Sh27.3 billion ($250 million) UN Green Climate Fund (GCF) for lending to projects with positive impact on the environment such as reduced carbon emissions. The lender becomes the first financial institution in East Africa to receive the accreditation, paving the way for it to fund climate resilient investment projects in Kenya and the region.

The bank has been accredited under the medium to large private sector category, allowing it to front projects of between Sh5.4 billion ($50 million) and $250 million. The announcement was made during the 27th GCF board meeting in South Korea after nearly three years of due diligence on KCB’s ability to manage climate change programmes.
Source: Business Daily Africa

Investors offer Sh56 billion in November Treasury bond sale
Investors offered Sh55.98 billion for two bonds the Treasury re-opened for sale this month, way
above the target, despite jitters about declining liquidity in the market.

The high subscription on the reopened 15-year and 20-year bonds represented a performance rate of 139.95 per cent and indicates the sustained investor preference for the long-term debt due to higher yields. The two bonds, whose sale closed on Tuesday, had a coupon rate of 12 per cent and 13.2 per cent respectively. The Central Bank of Kenya (CBK) had targeted Sh40 billion on the two bonds for budgetary support. The results show the government took Sh53.72 billion.
Source: Business Daily Africa

Safaricom saves Sh5.7bn from Covid-19 tax relief
Safaricom saved Sh5.67 billion from the lower corporate tax rate offered by the State in April to
support businesses in the disruptive Covid-19 environment.

Vodacom Group, which has a 35 percent stake in Safaricom, disclosed that the reduction of Kenya’s corporate tax from 30 percent to 25 percent helped to prop up operating income in half year period ended September.
Kenya in April lowered the corporate tax for resident companies to support business weather Covid-19 disruptions that have hurt revenue triggering layoffs and salary cuts.
Source: Business Daily Africa

Safaricom eyes debt for 51pc stake in Ethiopian firm
Safaricom will borrow billions of shillings to fund its expansion into Ethiopia if a consortium it is leading wins one of two telecommunications licences being auctioned in that market. The company will have a controlling 51 percent stake in the consortium, meaning that it will shoulder most of the financial investment that is expected to top the $1 billion (Sh109 billion) mark. The Nairobi Securities Exchange-listed firm sees Ethiopia, a market with more than 100 million people and relatively lower uptake of mobile and broadband services, as presenting significant growth opportunities.
Source: Business Daily Africa

Tender invitation for natural gas feasibility studies
The Government of Kenya intends to create a domestic natural gas market for power generation and industrial use. The gas will be imported as government progresses with development of domestic gas resources. Introduction of gas for power generation is aimed at further diversification of the country’s energy mix, increased security of supply, reduction of the cost of electricity and reduction of greenhouse gas emissions in line with the 2015 Paris Global Climate Change Agreement that Kenya is a signatory.

The Kenya Electricity Generating Company PLC (KenGen) invites expressions of interest from eligible consultancy firms to conduct a feasibility study for the following: Development and operation of infrastructure for importation, storage, and regasification of liquefied natural gas (LNG) for power generation in Kenya; conversion of the existing Heavy Fuel Oil (HFO) to operate on natural gas; development of a new natural gas power plant; and operations and maintenance (O&M) of the natural gas infrastructure for a period of 20 years. The deadline for receipt of expressions of interest is Monday, 30 November 2020 at 10:00 East African Time.
Source: ESI Africa

EAST AFRICA
UGANDA


Tightening of lending rates by banks in Uganda is healthy
“The tightening of lending rates by banks in Uganda is healthy because it will slow down a rise in non-performing loans (NPLs) and enable the banks to manage defaulted loans,” Moody’s Investors Service said on Thursday, 12 th November. Peter Mushangwe, a bank analyst at Moody’s, said the move taken by the banks amid an economic slowdown is positive because it will enable them to better manage NPLs, which are set to increase in the coming quarters.

According to a survey by the Bank of Uganda, on a net basis, banks expect the default rate on loans to both enterprises and households to increase before December 2020. The projected increase is mainly attributed to the negative impact of the COVID-19 pandemic on business activities, employment and incomes of firms and households. At the continental level, Moody’s said that rising pressure on African governments caused by the COVID-19 pandemic is weighing on domestic banks because the creditworthiness of the banks is inextricably linked to the financial strength of the government of the relevant country where they are based.
Source: Xinhua


AfDB grants USD500,000 for capacity development of MSMEs in the petroleum sector
The African Development Bank and the Government of Uganda have signed a USD500,000 grant agreement for financing of micro, small and medium enterprises (MSMEs) to boost business linkages on the East African Crude Oil Pipeline Technical Assistance project. The project’s overall objective is to help develop capacity of local Uganda MSMEs along the East African crude oil pipeline, by enabling them to access new market opportunities, and building linkages with larger, national, regional and international companies. The project aims to support inclusive private sector growth and the creation of an estimated 500 jobs along the pipeline. Through the Fund for African Private Sector Assistance (FAPA), the Bank will contribute USD500,000 to the project. The Government of Uganda through the Petroleum Authority will provide counterpart funding. A similar project is being finalised on the Tanzanian side of the border. The grant was provided in response to a request from Uganda and Tanzania for assistance in preparing local business communities to be able to retain a portion of the USD3.5- billion investment in the construction of a crude oil pipeline from Hoima in western Uganda to Tanga, on the coast of Tanzania, agreed in 2016. This has recently been followed by the signing, in September 2020 between the two governments, of an agreement for the project to be undertaken by Total E&P as the lead private sector developer.
Source: Africa Business Communities

Court orders URA to refund billions to 13,946 importers
The Court of Appeal has ordered the Uganda Revenue Authority (URA) to refund billions of shillings, which was illegally levied from 13,946 traders who imported goods for 11 years. In an unanimous decision delivered on Monday, 9 November the three judges of the Court of Appeal including Frederick Egonda Ntende, Cheborion Barishaki and Muzamiru Kibeedi ruled that there is no law, which authorised URA to collect domestic value-added taxes (VAT) at the rate 15%. Therefore, court ruled, the collection was done without any authority of law, contrary to the Constitution. “A reading of the provisions of law shows that VAT can only be collected at a rate of 18%. It does not provide for collection of domestic VAT at a rate of 15%. There appears to be no statutory instrument issued by the Minister and approved by Parliament specifying the rate of domestic VAT,” Justice Barishaki held in a lead judgment. The court held there was no basis upon which URA could estimate a mark-up, which applied generally to all importers. The decision resulted from an appeal in which traders, led by Ms Margaret Akiiki Rweheru, challenged a High Court decision that had held that the imposition of domestic VAT of 15% on the value of goods, which is not provided for in the VAT Act in addition to the 18% on importation, was legal.
Source: Daily Monitor


Uganda tops African countries with well-developed electricity regulatory frameworks – ERI 2020 report
Uganda has for the third time in a row emerged as the top performer in this year’s Electricity Regulatory Index (ERI) report published by the African Development Bank (AfDB). The East African country, along with Namibia, Tanzania, Zambia and Kenya, the other top performers, have regulators with the authority to exert the necessary oversight on the sector. However, the overall electricity regulatory frameworks of African countries is poorly developed, and most countries experience major regulatory weaknesses. The ERI, a flagship report of the AfDB, is a composite index which measures the level of development of electricity sector regulatory frameworks in African countries against international standards and best practice. The third edition of the ERI report was launched during the Digital Energy Festival of the Africa Energy Forum, on 5 November 2020. The event brought together more than 70 stakeholders in the energy sector, regulators, international organisations, and development finance institutions like Africa50 and the World Bank.
Source: AfDB

A third of districts in Uganda have no compliant taxpayer
More than one-third of the districts in Uganda did not have a compliant taxpayer last year, according to the latest list of compliant taxpayers issued by the Uganda Revenue Authority. The list has 86 districts chosen from the 125 districts which were in existence five years ago during the mapping exercise. The ranking is part of the activities under the URA’s annual Taxpayer Appreciation Season aimed at enhancing compliance and boosting domestic revenue collections.
This year, the appreciation season is running from October to December 2020, under the theme ‘Celebrating the Taxpayers of Uganda’, which will see the tax body award the most compliant taxpayers. There are also summits planned featuring experts who offer customized business solutions for business survival beyond COVID-19, to support the long-term goal of becoming self-sustaining.
Source: The Independent

Equity Group offers 30% more loans, Uganda deposits up 50%
Equity Group has reported giving out 30% more loans than the previous year, as it supports companies seeking new opportunities as they recover from the COVID-19 lockdown. This has been possible as customer deposits grew from Kshs478 billion ($4 billion) to Kshs 691 billion ($6.3billion), driven by 51% growth in Uganda. There was a 21% growth in Kenya and an additional Kshs130 billion from the acquisition of BCDC in DRC.
Source: The Independent

TANZANIA

Tanzania inches up governance index
Tanzania’s governance progress moved up last year even as most African countries slowed for the first time in a decade last year. According to the Mo Ibrahim Index of African Governance report, Tanzania slightly improved in both ranking and score while the continent’s average score slowed from 49 to 48.8 percent. Tanzania’s ranking increased two places to 19th last year compared with 21st position in 2018 while the score increased from 52.6 to 53.0 percent, according to the report published every two years. However, Tanzania has not reached its level of 2015 when the country scored the highest in the last ten years at 54.2 percent. In the East African Community, Tanzania is ranked third after Rwanda and Kenya which scored 60.5 percent and 58.5 percent respectively.
Source: The Citizen

Analysts predict ten-year bond yields drop
The ten-year government bond is expected to post a positive performance in today’s auction since banks need the instrument for liquidity purposes. The government wants to raise 110bn/- at a coupon rate of 11.44 per cent per year, but debt analysts projects an oversubscription accompanied by slight yields decline. Zan Securities Chief Executive Officer, Raphael Masumbuko said the bond will receive a good response form investors pushed by banks, unlike the last week Treasury bill.
Source: Tanzania Standard Newspapers Ltd

Cashew inflows bolster shilling
The shilling has continued to retain its steadiness, thanks to demand and supply stabilized by cashew nuts inflows. The shilling, which lost a pip started a week at 2,306/2,338 against the US dollar, has been stable for almost the entire year. NMB Bank said in its e-Market report that the local currency was steady against the dollar as moderate demand from importers, mostly oil marketing companies and the manufacturing sector was buoyed by agricultural inflows.
Source: Tanzania Standard Newspapers Ltd

RWANDA


Kenya’s Banking Tycoon Dr. James Mwangi to build Kigali Financial Towers
Rwanda’s plans to fully develop the Kigali International Financial Centre (KIFC) could be edging closer to realization following a development which will see Kenyan businessman James Mwangi set up financial towers in Rwanda. The project, Kigali Financial Towers, was approved by the cabinet last week, and will be developed by Equity Holding (EH) Venture Capital, an investment arm of Equity Group.
Source: New Times

Rwandan Importers Switch to Kenyan Cement

Reports from neighbouring Tanzania indicate that Cement manufacturers are currently involved in maintenance activities, meaning there is zero production going on. Rwanda cement importers have been cited swammed at various depots trying to secure deals for the remaining cement stocks as they last. Trade and Industry Ministry in Tanzania also is concerned about the high cement prices saying that 50kg bag of cement which retailed for Tsh15,000 ($6) in October has risen by 30 percent to Tsh22,000 ($9) in parts of the country.
Source: Taarifa


ATAF list Rwanda as top country with effective COVID-19 tax relief measures
The African Tax Administration Forum (ATAF) has placed Rwanda at the forefront among countries that put in place effective COVID-19 tax relief measures in Africa, followed by Lesotho, Uganda, Burkina Faso, Niger, Madagascar, South Africa, Togo, Cameroon, the Gambia, Sierra Leone, Zambia, Mauritius, Seychelles, Tanzania, Zimbabwe, Eswatini, Ghana, Angola, Burundi and Namibia. Rwanda is one of the 39 members of ATAF, an organisation that was established by African revenue authorities in 2009, in order to improve the performance of tax administration in Africa.
Source: Taarifa


Government to provide incentives to mining exploration companies
Rwanda says it has put in place an incentive package that seeks to attract investors in mining exploration activities, part of the drive to strategically reposition the country’s mining sector in the region. The new incentive package was announced on Tuesday, 10 November ahead of the Africa Mining Forum, by Francis Gatare, the chief executive officer at the Rwanda Mines, Gas and Petroleum Board (RMB). “We are excited about a new incentive [package] for exploration companies that gives incentives for a 10 year-loss carry over,” he said during a press briefing. “This means that companies that invest in initial exploration can carry forward losses or expenses incurred during that period.” According to Gatare, the incentive is a new provision in a revised Investment Code that targets to attract junior mining companies, whose business model focuses on mineral exploration, and then sell their assets after making mineral discoveries.
Source: The New Times


SOUTH SUDAN

The Executive Board of the International Monetary Fund (IMF) approved a disbursement of SDR36.9-million (about USD52.3-million or 15% of its SDR quota) to South Sudan under the Rapid Credit Facility (RCF). This is the first Fund-supported financial assistance provided to South Sudan since it joined the Fund in 2012. The disbursement will help finance South Sudan’s urgent balance of payments needs, contain the fiscal impact of the shock and will provide critical fiscal space to maintain poverty-reducing and growth-enhancing spending. Prior to the COVID-19 pandemic, South Sudan had achieved significant progress due to improved political stability and an uptick in global oil prices. Economic growth rebounded, inflation declined, and the exchange rate stabilised. However, the pandemic and oil price shock created severe economic disruption, leading to deterioration in the fiscal and external balances, and a sharp decline in growth, reversing some early gains from political stability. South Sudan’s economy is projected to contract 3.6% in FY20/21, about 10 percentage points below the pre-pandemic baseline.
Source: IMF


IMF approve disbursement of USD52.3-million to South Sudan under the Rapid Credit Facility


ETHIOPIA


Revenues Ministry Collects Over 107 Billion Birr
Ministry of Revenues has secured over 107.6 billion Birr income, exceeding its plan for the first four-month of the Ethiopian budget year. Briefing journalists on Wednesday, Revenues Minister Laqe Ayalew said the performance exceeded the plan by 102 percent and an increase of 17.3 billion Birr compared to same periodlast fiscal year. S ource: ENA


AFRICA


Orange launches Djoliba fibre backbone in West Africa
Orange and its subsidiaries announced the commissioning and commercial launch of Djoliba, the first pan-African backbone based on a terrestrial fibre optic network, coupled with undersea cables, offering secure connectivity abroad from West Africa. This investment aims to support the digital ecosystem and meets the growing needs for connectivity in the region. The new backbone covers eight countries: Burkina Faso, Côte d’Ivoire, Ghana, Guinea, Liberia, Mali, Nigeria and Senegal. Natively interconnected with the domestic networks within the countries, this broad coverage will generalise access to connectivity for operators and companies. Until now, telecommunications networks in West Africa were built inside each country, up to its borders; there was no cross-border network. To provide a service between two capitals, operators had to integrate the offers of several providers and join several different networks which were interconnected at the borders. This new network is a true innovation that simplifies the interconnection processes between countries.
Source: Africa Business Communities