July 31, 2021 - 5 minutes read

31st July 2021 Trade & Financial Services Round Up

By Acha Ouma
KENYA 

THE FISCAL BUDGET FOR THE FINANCIAL YEAR 2022/2023

In pursuit of openness and accountability in financial matters as spelt out in Article 201 of the Constitution, the National Treasury has invited Government Departments and Agencies, the private sector, non-governmental organizations and individuals to submit proposals on economic policy measures. The proposals will be considered by the Cabinet Secretary National Treasury and Planning in preparation of the National Fiscal Budget for the Financial Year 2022/23. The proposals should resonate with the Economic Recovery Strategy which aims at supporting sustainable economic recovery and inclusive growth during this period of COVID-19. In addition, the proposals may include measures on regulatory reforms, revenue administration reforms, and any other measures that may enhance macroeconomic stability and implementation of programs and projects under the Government’s Economic Recovery Strategy that aims to reposition the economy on an inclusive and sustainable growth trajectory. Further, the proposals should resonate with the “Building Back Better” theme. The submissions should be specific on the proposed amendment to the law, supported by a statement on the issue to be addressed and a clear justification for the proposed amendment.

Cognizant that the year 2022 is an election year, there is a need to fast-track the National Fiscal Budget process to ensure smooth government operations. It is therefore imperative that the process of preparing the Finance Bill, 2022 begins early enough to ensure that the Finance Act, 2022 is enacted before Parliament breaks in preparation for the General Elections. In this regard, the preparation of the Finance Bill, 2022 will commence in August, 2021. Completion and submission of the Bill to the National Assembly will be in January 2022. In order to facilitate timely consultations and adequate consideration, your proposals may be forwarded in writing to the undersigned or through the email budgetproposals@treasury.go.ke not later than 30th August, 2021.

Property owners in Kenya in dilemma as demand tumbles

Kenya is likely to reform its land valuation following a decline in real investment caused by over-valuation and the Covid-induced financial crisis.

Speaking at the East Africa Property (EAPI) Summit 2021 recently (July 5-9), land economists and real estate professionals agreed that real estate in the region is unlikely to see a rise in demand. The post-covid-19 period may see a need to re-evaluate the real estate sector with a view of reviewing its valuation. While accurate real estate valuations can help investors make better decisions when it comes to buying and selling properties, the current market variations in Kenya are unpredictable. An eighth in one area can retail for Ksh1.7 million ($15,455), and Ksh 70 million (636,364) in another.

US firms freeze Kenya expansion in Biden trade review

US firms have frozen investment plans in Kenya due to uncertainty about a new free trade deal between the two countries.

Many American firms had already begun investing in Kenya, spurred by the prospects of a fresh bilateral trade and investment pact between Washington and Nairobi.

Talks on the free trade deal were, however, jolted by the exit of President Donald Trump’s administration late last year.

State-backed mortgage firm triples home loans to Sh7bn

The State-backed mortgage refinancing firm will triple affordable home loans to Sh 7 billion in the year starting July, offering a boost to workers’ push for house ownership.

The funds will be offered to banks and savings and credit cooperative societies (saccos) this fiscal year, representing a 154.73 percent jump from the Sh2.748 billion a year earlier, the Kenya Mortgage Refinancing Company (KMRC) said.

The mortgage refinance firm, which got permission to formally start operations in September 2020, offers funds to banks and saccos for onward lending to homeowners at an annual interest of five percent. The recipient lenders are, in turn, expected to lend out the cash at single-digit interest rate — lower than average market rate of 12.06 percent as of May 2021. It offers loans to workers earning less than Sh150,000 and whom banks had locked out from the mortgage market.

Foreigners’ turnover at NSE dips to 3-year low

The share of traded turnover attributed to foreign investors at the Nairobi Securities Exchange (NSE) fell to a three-year low in June, reflecting growing confidence in the market among local investors.

Data from the Capital markets Authority (CMA) shows that foreign investors accounted for 54.74 percent of all traded turnover last month.

Foreign investors have tended to trade almost exclusively on the large blue chips such as Safaricom, EABL, Equity Bank, and KCB.

Sources: East African, Business Daily 

ETHIOPIA 

Scholars Believe Second Round Filling of GERD Will Shift Trilateral Negotiations

The completion of the second round filling of the Grand Ethiopian Renaissance Dam (GERD) will definitely lead to a shift in the trilateral negotiations between Ethiopia, Egypt and Sudan, scholars said. Morgan State University Political Science and International Relations Professor, Getachew Metaferia told ENA said Egypt has for a long time counted itself as the hegemonic power of the Nile valley region.  

The completion of the second round filling of GERD will definitely lead to a shift in the trilateral negotiations. According to the professor, the African continent is not given much attention in Egypt’s foreign policy strategy calculation as its primary focus remains the Middle East and the Arab world.

Currently, Egypt is frantically trying to cultivate friendship in Africa, especially with neighbors of Ethiopia, in an attempt to strangle Ethiopia, he noted.  

Finance State Minister Confers with Safaricom CEO

Finance state Minister Eyob Tekalign held discussion with Safaricom Ethiopia PLC CEO, Anwar Soussa on the progress of the project by Global Partnership for Ethiopia and the next steps in the implementation.

Eyob and Soussa spoke about the importance of digitization and an open and competitive telecommunications sector for the future of the country, according to the Ministry of Finance.

In the discussion, Eyob said the Government of Ethiopia as part of its homegrown agenda has opened its market to private-sector competition, and foreign investment, which is expected to bring a higher quality of service and more choice for consumers.

He also stated that these reforms will lay the foundations for Ethiopia’s future digital transformation. Safaricom Ethiopia PLC’s entrance as the second mobile phone operator in Ethiopia is expected to spur massive investment in the telecommunications sector as well as to bring increased competition to the market, leading to improvements in service quality, coverage, and innovation.

The Company is also expected to lead to thousands of direct and indirect jobs being created as companies are formed to offer services to the industry and a new technology ecosystem emerges. It is expected that the award would bring to Ethiopia a total of eight billion USD investments over the next ten years and is expected to provide 1.5 million jobs to citizens.

Source: ENA

UGANDA

SafeBoda seeks electronic money license  

SafeBoda, a ride-hailing App for boda-boda rides, is set to get a payments license that will enable it to play in the electronic money (e-money) space as it moves to expand its service provision. Mr Tim Jamieson, the SafeBoda vice president-payments and finance services, said they are currently waiting for the Bank of Uganda, which regulates electronic money services under its National Payments System Act. 

Mr Jamieson also noted that they were in the process of building a range of new products, including building a payments ecosystem, open-loop products, savings products and working capital loans, to enable more people access financial services, easily and affordably.

The company, he added, will soon pilot its working capital loans product, to extend credit to the merchant partners with priority given to female-run enterprises to boost inclusion. 

SafeBoda, which is based in Nigeria but headquartered in Uganda, started off providing ride-hailing services six years ago, before expanding its service offerings to food and shop, buying airtime and payments, among others. Mr Jamieson, who was speaking during the on-going 40-Days 40-Fintechs initiative, said they seek to provide a cheap ecosystem that allows customers to send money across networks for free as well as drastically reducing the cost of withdrawing these funds.

While cash is still a predominant method of payment in Uganda and across Africa, Covid-19 is steadily drawing people towards cashless transactions, which presents a great opportunity for Financial Technology Companies (Fintechs).

Petroleum authority sued over failure to prioritise local firms

The Petroleum Authority of Uganda, together with Total E&P and CNOOC have been sued for allegedly violating laws on provision of national content in regard to ongoing procurements for the East African Crude Oil Pipeline (EACOP) project.

The EACOP is a 1,443 kilometre crude oil export pipeline that will transport Uganda’s crude oil from Kabale – Hoima to a maritime port on the Chongoleani Peninsula near Tanga in Tanzania.

Acting through Muwema and Co. Advocates, Mr Andrew Oluka, a Kampala-based lawyer specialising in oil and gas, wants court to direct Petroleum Authority of Uganda to conduct a legal audit of all petroleum procurement activities to ensure compliance with the national content provisions.

Source: Daily Monitor

TANZANIA 

CRDB, the business community sign post import financing deal

CRDB Bank Plc yesterday inked a deal with the Tanzania Business Community Association that seeks to hasten the pace at which goods are cleared from the port.

The post import financing solution was signed between CRDB Bank Plc’ chief commercial officer, Dr Joseph Witts and chairman of Tanzania Business Community Association, Mr Silva Kiondo. “With this deal, we seek to end the challenge of delays in clearance of goods from the port,” said Dr Witts.  He said the bank decided to come up with the service as part of its efforts in supporting President Samia Suluhu Hassan’s resolve to improve Tanzania’s business climate.

The bank has also reduced its interest whereby clients for its Post Import Financing Solution will be charged a lending interest rate of 16 percent compared to 18 percent that is applied to normal loans on trading activities.

Reviving Tourism Sector

The World Bank (WB) yesterday mentioned five priorities that could support sustainable recovery of Tanzania’s tourism sector which was also hard hit by the Covid-19 pandemic. It proposes formation of a special task force which will suggest the reforms related to taxes and fees, licenses requirements, labor regulations, and investment incentives.

The second priority relates to improving the tourism information management system where the government establishes a system that consolidates data from tourists and firms, enabling policymakers to improve sectoral planning and create viable investment opportunities.

Tourism was Tanzania’s leading foreign exchange earner by 2019. But the earnings dropped to $1 billion in 2020, down from $2.6 billion in 2019 following the outbreak of the viral Covid-19 which disrupted economic activities around the world.

Accordingly to the Bank of Tanzania (BoT), foreign tourist arrivals in 2020 declined to 616,491, from 1.5 million in 2019. Tourism earnings decelerated further, reaching $795.8 million in the year to May 31, 2021, BoT says.

Source: The Citizen

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