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Africa Business in Brief

 

issue 352 | 17 May 2020

Coronavirus (COVID-19)

A non-exhaustive list of recent measures aimed at curbing the spread of coronavirus (COVID-19)

Africa: The director of regional integration and trade at the Economic Commission for Africa (ECA), Stephen Karingi, told an online group of journalists on 11 May 2020 that the African Continental Free Trade Area (AfCFTA) could help African economies recover from the impact of COVID-19. “Boosting intra-African trade can serve as an alternative stimulus package for job creation, foreign exchange, industrial development and economic growth,” said Mr. Karingi.

Source: United Nations Economic Commission for Africa

Africa: Although government restrictions on mining activity across sub-Saharan Africa will ease over the coming months, the rebound in mining output will be constrained by logistical factors. Mining operations will now be subject to increased health and safety regulations, which will both reduce capacity and increase operating costs.

Source: Fitch Solutions

Africa: At least 42 African countries applied partial or full lockdowns in their quest to curtail the pandemic. The ECA estimates that a one-month full lockdown across Africa would cost the continent about 2.5% of its annual GDP, equivalent to about USD65.7-billion per month. This is separate from and in addition to the wider external impact of COVID-19 on Africa of lower commodity prices and investment flows. In the new report titled COVID-19: Lockdown exit strategies for Africa, the ECA proposes seven exit strategies that provide sustainable, albeit reduced, economic activity. The report sets out some of the exit strategies being proposed and tried around the world and outlines the risks involved for African countries.

Source: tralac

Africa: The COVID-19 pandemic is not a reason to delay the start of trade under the African Continental Free Trade Area (AfCFTA), on 1 July 2020 as earlier envisaged, according to African trade experts and business leaders. Business leaders on the continent have signed an Open Letter stressing that the AfCTFA can and must remain on course. There are innovative ways to keep AfCFTA on track, they stressed, "and we should be willing to explore them."

Source: The New Times

East Africa: The East African Community Heads of State noted that the region’s key economic sectors are experiencing a slowdown as a result of the COVID-19 pandemic, such as agriculture, trade, manufacturing and industry, tourism, hospitality and entertainment and directed partner states to prioritise regional value/supply chains to support local production of essential medical products and supplies including masks, sanitizers, soaps, coveralls, face shields, processed food, ventilators as part of efforts to combat COVID-19 in the region.

Source: East African Community

East / Southern Africa: The Common Market for Eastern and Southern Africa (COMESA) member states have asked the Secretariat to conduct a socioeconomic study on the effects of COVID-19 to inform ongoing containment measures and recovery strategies.

Source: Common Market for Eastern and Southern Africa

Ethiopia: Amhara Regional State Revenue Bureau has announced a cancellation of income tax debt amounting ETB1-billion. The tax debt cancellation is aimed to back the business community hit by the COVID-19 pandemic fallout there by ensure quick economic recovery in the region.

Source: Fana Broadcasting Corporate

Ethiopia: Ethiopian Cargo & Logistics Services, a multiple award-winning and largest cargo network operator in Africa, is adapting its operations to the evolving global demand for air cargo services following the COVID-19 pandemic. In response to the current situation, Ethiopian Cargo has extended its reach to 74 destinations globally, and caters to charter flight needs anywhere in the world boundlessly, carrying much needed medical supplies in the ongoing fight against COVID-19.

Source: Fana Broadcasting Corporate

Ethiopia: France has announced that it will disburse a EUR40-million budgetary support to Ethiopia to help the country in its fight against COVID-19. The money will be disbursed through the French Development Agency (AFD). The support is part of a EUR85-million agreement signed in June last year to assist Ethiopia in the implementation of its ambitious economic reforms.

Source: Fana Broadcasting Corporate

Ethiopia / Kenya: Moody's downgraded Ethiopia's long-term issuer and senior unsecured ratings to B2 from B1, and revised Kenya's outlook to negative from stable on macroeconomic risks posed by the COVID-19 pandemic.

Source: S&P Global

Guinea-Bissau: President Umaro Sissoco Embaló renewed the state of emergency for an additional 15 days, until 26 May, as confirmed COVID-19 cases continued rising. The Government also decreed a nationwide mandatory curfew between 8pm and 6am, as well as the mandatory use of masks in public areas.

Source: IHS Markit

Kenya: Income tax, value-added tax and sales levy cuts announced by President Uhuru Kenyatta in the wake of the COVID-19 pandemic will be reversed if Kenya agrees with the International Monetary Fund (IMF) to reinstate the higher taxes. The IMF says the cuts will cost the Kenya Revenue Authority (KRA) and compromise the state’s ability to deal with emergencies and spending on development projects like roads, power plants and water infrastructure.

Source: Business Daily

Kenya: The aviation regulator has extended the payment period for expired licences to cushion carriers facing reduced bookings in the wake of the COVID-19 pandemic. The Kenya Civil Aviation Authority director-general Gilbert Kibe told the Business Daily that the deferment takes effect immediately.

Source: Business Daily

Lesotho: Lesotho recorded its first COVID-19 case on Wednesday, 13 May, the Health Ministry said, after conducting 81 tests on travellers from South Africa and Saudi Arabia. There is a likelihood that more cases could be recorded before the end of the week after the ministry said it was awaiting results for 301 cases.

Source: IOL

Liberia: The United States Government has committed USD1-million in health funds to mitigate the spread of COVID-19 in Liberia. The United States, via the United States Agency for International Development (USAID), is providing life-saving support by coordinating with the Government of Liberia, international humanitarian partners, and other stakeholders to identify priority areas for investment.

Source: FrontPageAfrica

Mauritius: Government has elaborated strict guidelines and regulations that both commuters and public transport operators will have to adhere to. These guidelines and regulations are in line with Government's strategy to ensure that there is no risk of the propagation of COVID-19 as the country gradually prepares itself to allow certain economic activities to resume as from 15 May 2020.

Source: Government of Mauritius

Mozambique: The index measuring business activity (PMI) in Mozambique fell to 37.1 points, “an unprecedented drop” that shows “a sharp fall in production” in April due to the COVID-19 pandemic and restrictions on movement. This is compared with a reading of 49.9 in March, just a tenth of a point below the threshold above which business conditions are considered positive.

Source: Club of Mozambique

Rwanda: Rwanda will start using robots in the fight against COVID-19 where the programmable machines will be used to do some of the tasks in the handling of COVID-19 cases in a bid to minimise human-to-human contact. This was revealed by the Ministry of Health on Friday, 8 May, with the Director of Rwanda Biomedical Centre (RBC), Dr Sabin Nsanzimana confirming the development.  “Robots will screen temperature, monitor status, keep medical records of Patients,” Dr. Nsanzimana said.

Source: KT Press

Rwanda: The National Carrier Rwandair is looking to shift focus to cargo freight in the short term as passenger flights remain suspended in a bid to avert the spread of COVID-19.

Source: KT Press

Seychelles: Fitch Ratings downgraded Seychelles' long-term foreign-currency issuer default rating to B+ from BB, with a stable outlook. The rating agency said the downgrade is driven by its expectation of a 14% contraction in the archipelago's economy in 2020, mainly due to the impact of the COVID-19 pandemic on tourism, which directly accounts for an estimated 25% of Seychelles' GDP.

Source: S&P Global

Tanzania: Tanzania’s central bank lowered the statutory minimum reserves requirements for commercial banks to 6% from 7% and cut its discount rate for banks, to cushion the economy from the effects of the COVID-19 crisis. The reduction of the reserves will come into effect on 8 June to provide additional liquidity to banks, governor Florens Luoga said in a statement.

Source: Reuters

Tanzania: Zambia’s closure of the Tunduma-Nakonde border with Tanzania in the fight against COVID-19 will deal a heavy blow to the economies of four countries, stakeholders say. The border closure will affect Tanzania, Zambia, the Democratic Republic of Congo and - partly - Zimbabwe, and stakeholders have called for a swift resolution to ensure these countries are not adversely affected.

Source: The EastAfrican

Uganda: East Technology applications have registered an increase in number of businesses going digital. The emergence of COVID-19, which has restricted movement of people since March, has increased appetite and emphasised the need for businesses to move online. Data gathered from different technology applications that digitise businesses indicates that more than 614 businesses have moved online.

Source: Daily Monitor

Zambia: Zambian President Edgar Lungu on Friday, 8 May, announced the re-opening of some businesses after they were closed in light of the COVID-19 outbreak. In his national address, Lungu said there was a need to balance the economy and the health of the people, adding that the pandemic has had a devastating effect on social and economic sectors.

Source: Zambia News.Net

East / Southern Africa

COMESA Agency strikes-off 12 anti-competition trade agreements

More than twelve trade agreements which have been operational in the Common Market for several years have been banned for being anti-competition. The action was taken by the Common Market for Eastern and Southern Africa (COMESA) Competition Commission (CCC) after assessing the agreements in place up to 2019. The banned Agreements were found to have the potential to bar potential competition in the Common Market by safeguarding dominance by monopoly undertakings. According to the Commission, anti-competitive agreements have the highest potential for partitioning the Common Market hence the renewed vigilance on such agreements. Meanwhile, the CCC has cautioned consumers in the region to be alert lest they fall victim to fraud during this time when most business are operating online due to the COVID-19 pandemic. In a statement issued in Lilongwe, Malawi, the CCC noted that most consumers have resorted to online purchases to avoid close physical contact in the conventional markets and also in compliance with directives from their respective governments.

Source: Common Market for Eastern and Southern Africa

Djibouti

Geothermal project to boost green energy production capacity

The board of directors of the African Development Bank approved, additional funding of USD3.22-million for the geothermal exploitation project in the Lake Assal region of Djibouti. This financing is in addition to the earlier USD6.83-million and previous USD14.68-million approved by the Bank’s board of directors in June 2013 and May 2018 respectively, bringing its total contribution to USD24.73-million. The project for which this additional funding is intended aims to improve the quality of life of the Djiboutian population through the increase of green energy production capacity, the reduction of oil imports, and the reduction of greenhouse gas emissions. Its objective is to explore the geothermal steam field of Lake Assal, located in the centre of the country, and to confirm the characteristics of the geothermal resource.

Source: ESI Africa

Ethiopia

Agreement signed to build satellite manufacturing, testing center

The Ethiopian Space Science and Technology Institute and the Addis Ababa Science and Technology University have signed an agreement to build a satellite manufacturing and testing centre in Ethiopia. Dr Abrham Belay, minister of Innovation and Technology, said the centre is a flagship project that would help to manufacture, assemble and test satellite. Recalling the first satellite that Ethiopia had launched with the help of China last year, he said, the centre will create an opportunity for the country to run all operation by its own. Professor Hirut Woldemariam, minister of Science and Higher Education for her part said the project will be implemented jointly by the two ministerial offices. The EUR50-million needed for the construction of the centre will be secured from the European Union (EU), French and Ethiopian Governments. The centre will be built on the premises of the Addis Ababa Science and Technology University. Construction will commence next Ethiopian fiscal year, it was noted.

Source: Fana Broadcasting Corporate

Ethiopia

First geothermal independent power producer in Ethiopia

The African Development Bank has welcomed a decision by the Trust Fund Committee of the Clean Technology Fund (CTF), one of two funds within the Climate Investment Funds (CIF), to extend a USD10-million concessional senior loan for the development of the 50 MW Tulu Moyo Geothermal Power Plant project in Ethiopia. The project is seen as a critical step to the East African country’s drive to harness sustainable and resilient energy resources to support its economy and livelihoods. With this investment, CTF becomes the first geothermal independent power producer (IPP) in Ethiopia. The project entails the design, construction, commissioning and operation of a 50 MW geothermal power plant under a Build, Own, Operate and Transfer (BOOT) scheme, and marks the first phase of the Ethiopian government’s plan to build a cumulative generation capacity of 150 MW by 2024. The project will include a sub-station and an 11km transmission line.

Source: ESI Africa

Kenya

EU beans exports to cost more on tighter measures

The European Union (EU) will impose stricter measures on Kenyan beans starting 26 May as it tightens checks on residue levels, raising the price and threatening access if the country fails to comply. The new directive the bloc issued on 6 May, will see all beans from Kenya subjected to a 10% mandatory sampling, with excessive levels of pesticide residues likely to lead to total ban. The EU, which is Kenya's main market for horticulture produce, had initially capped the sampling at 5%, with the doubling of the sample size expected to hit farmers and make the produce more expensive in the world market. In its official journal, the EU says some food and feed from certain Third World countries, including Kenya are subjected to special conditions for the entry into the union due to contamination risk that among others include aflatoxin and pesticide residue. Mr Ojepat Okesegere, chief executive at Fresh Produce Consortium of Kenya, said the new requirement would reduce the shelf life of Kenya's produce as it will take at least two days for the tests to be concluded.

Source: Business Daily

Kenya

Kenya continues its pipeline plan as oil prices drop

Kenya is forging ahead with its plan to build a KES121.45-billion pipeline from Lokichar to Lamu to boost its crude oil exports despite the concern over falling prices of the commodity in the global market. Budget estimates show that the State Department for Petroleum plans to spend KES648.5-million in the financial year starting 1 July on the oil pipeline, commonly known as Project S. The allocation is in addition to the KES777.5-million allocated in the current financial year to undertake research, feasibility studies, project preparation and design for the project. According to the official timelines, the pipeline construction will be completed in the second half of 2023 and not June 2022. The pipeline project is under a joint partnership between the Government of Kenya and the oil companies’ consortium of Tullow Oil Kenya B.V., Africa Oil Turkana Ltd and Total Oil (formally Maersk Oil). On paper, the 824-kilometre pipeline comes along as a key component of the KES2.5-trillion Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project whose construction is underway in Kililana, Lamu West. The Treasury has also allocated KES370-million for the “early monetisation of first oil project” for the year starting 1 July. The project had received another KES500-million in the current financial year.

Source: Business Daily

Kenya

Review of IP laws to spur innovation

Kenya is set to review her intellectual property laws, through the Intellectual Property Bill 2020. The country has been highly ranked as the second most innovative country in Africa. It is home to many global innovations. Intellectual property may include innovations and also go further to include trademarks and copyrights. Currently, intellectual property law in Kenya is governed through many piecemeal laws like the Industrial Property Act which regulates patents, utility models and technovations; trademarks which regulate trademarks and copyrights which regulate the same and related rights. There are also several institutions whose mandate it is to oversee the administration of the various classes of rights. The first major proposed change is to harmonise all these pieces of legislation into one known as the Intellectual Property Act (IP Act). The IP Act will include all classes of legislations under one law and will also lead to the creation of one statutory body to administer intellectual property in Kenya, that is, the Intellectual Property Office. Harmonisation of the law has its strong advantages and is currently the practice in countries like Rwanda whose intellectual property law was drafted with aid from the World Intellectual Property Organization (WIPO).

Source: Business Daily  

Kenya

Bill targets loss-making firms with tax

Loss-making firms will from next financial year starting July 2020 be required to pay tax on their gross earnings in proposed changes to the income tax law geared at addressing low compliance levels. Treasury secretary Ukur Yatani has in the Finance Bill 2020, presently before the National Assembly for approval, proposed to introduce a new section that will see all persons whose income have not been taxed elsewhere pay tax at a rate of one 1% of gross earnings. The proposed levy to be known as minimum tax is seen as targeted at the corporates, which do not pay tax on their income when they report losses. If the legislators approve the Bill, the affected persons, largely companies, will start paying quarterly taxes on their income on 20th day of the fourth (April 2021), sixth, ninth and 12th months – reflecting the tax payment schedule for corporation tax. The proposed provision spares those whose income has been subjected to Section 5 (employment), 6A (residential income tax), 12C (turnover) as well as eighth and ninth schedules of the Income Tax Act, which cover earnings such as capital gains and proceeds from mining or oil exploration. The provision means that all firms earning more than KES1-million will pay taxes to the Kenya Revenue Authority (KRA), with only small traders with an annual income of KES1-million and below spared the monthly turnover tax at the rate of 1% of gross sales.

Source: Business Daily

Kenya

Treasury in bid to scrap tax incentives for industrial parks

Investors setting up premises on more than 100 acres of industrial park land outside Nairobi and Mombasa will have to dig deeper into their pockets if Parliament approves a Bill seeking to scrap waiver on payment of import declaration fees on raw materials. Through the Finance Bill, 2020, the Government has also sought to strike out Treasury Cabinet Secretary’s power to exempt raw materials used in the construction of premises at the industrial parks. The Bill seeks to delete section XXII of Part A of the Second Schedule to the Miscellaneous Fees and Levies Act, 2016 that empowers the Treasury to exempt any other goods as the Cabinet Secretary may determine are in public interest, or to promote investments valued at not less than KES200 million. Also to be deleted is a section that allows the Cabinet Secretary to approve waivers on payment of import declaration fees by industrial park investors. The Government in July last year, designated 9,000 acres of land in Naivasha, Mombasa and Machakos as Special Economic Zones (SEZs), as it stepped up efforts to boost manufacturing. The Finance Bill, 2020, which is currently before Parliament, comes at a time that the taxman has thrown its weight behind the Treasury’s bid to scrap tax subsidies that denies the State up to KES60.3-billion each year. Kenya Revenue Authority said allowing investors to deduct taxes when they set up plants and machinery, buy land or export costs the country more than the benefits accrued.

Source: Business Daily

Mauritius

Mauritius committed to exit the High Risk Third Countries list, states Minister Seeruttun

Government is determined to complete the implementation of the Financial Action Task Force (FATF) action plan so as to be removed from the FATF list and from the European Union (EU) list of High Risk Third Countries at the earliest, in order to protect the economy. The minister of Financial Services and Good Governance, Mr Mahen Seeruttun, highlighted that the EU listing is a direct consequence of the listing of Mauritius by the FATF on its list of “Jurisdictions under Increased Monitoring”. However, the FATF did not call for application of enhanced due diligence to be applied to jurisdictions on the list and the EU’s decision to go beyond the FATF decision is therefore unclear, he pointed out. This matter, underlined the minister, has been given highest level of priority by Government and a dialogue is to be initiated with the EU Commission, through a teleconference with a technical team from Mauritius on 13 May 2020. In addition, he mentioned that under the FATF action plan, Mauritius has to demonstrate an increased level of effectiveness of its anti-money laundering and combatting the financing of terrorism (AML/CFT) systems. Moreover, stated the Minister, Mauritius has obtained technical assistance from the EU-funded AML/CFT Global Facility and the German Government, through the German Development Agency, to support the implementation of the FATF action plan.

Source: Government of Mauritius

Mozambique

Kibo Energy secures land for energy storage projects in Mozambique

Power solutions company Kibo Energy announced that it has successfully acquired additional land adjoining to the Benga Power Plant Project in the Tete province, increasing the total project area with an additional 345 hectares. Alongside hosting a 150-300 MW thermal power plant, which is being developed as part of a joint-venture agreement with local energy company Termoeléctrica de Benga. The expanded land holding provides room for the intended renewable and long-duration storage energy projects in line with Kibo’s commitment to creating reliable, sustainable and affordable electricity. In support of this commitment, the company has also finalised and signed a new Memorandum of Understanding (MoU) with Mozambican state-owned electric utility Electricidade de Mocambique (EDM), to guide and facilitate further development of Benga, as part of EDM’s mandate to develop electricity infrastructure and implement electricity projects in Mozambique.

Source: ESI Africa

Rwanda

Bank of Kigali to buy life insurance business or start its own

Bank of Kigali aims to expand its range of financial services in the medium term to include life insurance, CEO Diane Karusisi tells The Africa Report. The bank, which already operates in general insurance, is in talks with some local life insurance businesses and could also decide to start its own operation, says Karusisi. A decision may be made later this year or in 2021. Rwanda’s young population offers prospects for rapid growth in financial services. The Bank of Kigali’s figures show that 60% of the population is under 24 years, with 93% under 54 years. The country’s life insurance industry grew at a compound annual rate of 17% between 2014 and 2017, outstripping non‐life insurance on 9%, according to the World Bank. The insurance sector is still far from capitalising on the opportunities, says the World Bank.

Source: The Africa Report

Tanzania

Tanzania Government to buy locomotives for SGR Project

The government is finalising procurement of two locomotives, eight compartments and wagons that will ply the Dar es Salaam-Morogoro section of the Standard Gauge Railway line (SGR). The Permanent Secretary in the Ministry of Works, Transport and Communications, Dr Leonard Chamuriho, said that the actual construction of the first phase of the SGR which covers Dar es Salaam and Morogoro has reached 77% and will be completed this year. The construction work from Morogoro to Makutupora has been completed by 30%. "We expect the construction work from Dar es Salaam to Morogoro to be completed anytime from June, but we project the work will be fully completed by the end of this year" he said. The first phase of the SGR project from Dar es Salaam to Morogoro covers 300km. It was initially scheduled to be ready last November but heavy rains disrupted the works. The first phase will have six main stations at Dar es Salaam, Pugu, Soga, Ruvu, Ngerengere and Morogoro, with the Dar es Salaam and Morogoro stations being the largest.

Source: The Citizen

Tanzania

Tanzania's avocados go from zero to TZS28-billion-a-year crop

Avocados have become Tanzania's latest green gold, bringing in at least USD12-million (TZS27.6-billion) annually, up from zero five years ago, a new report reveals. Less than 10 years ago, avocado exports never existed. But, data from Tanzania's private sector horticultural apex body, the Tanzania Horticultural Association (TAHA), as well as the Avocado Catalogue 2020 report, show that avocado exports jumped from 1,877 tonnes in 2014 to 9,000 tonnes in 2019, fetching the country USD12-million last year. It is understood that the government and TAHA jointly worked to establish a state-of-the-art facility in Njombe where farmers can store their fresh produce and is also a hub to connect with buyers. TAHA data shows that over 10,000 farmers in the country are involved in avocado production, triggering its export surge by 380% in a span of five years. The majority are exported to Europe as its consumption of avocados reached one million tonnes a year - with the World Avocado Organization (WAO) predicting a growth rate of 50%: between 500,000 and 700,000 tonnes for Europe in the next ten years. The European Union market represented 85% of Tanzanian avocado exports in 2018, whereby France imported 3,133MT; the Netherlands: 2,304MT, and the United Kingdom: 1,193MT.

Source: The Citizen

Zambia

Zambia, in diversification push, starts processing artisanal gold

Zambia has built 10 milling plants to process gold in a drive to formalise artisanal and small-scale miners and diversify from copper mining, state mining investment company ZCCM-IH said on Wednesday, 13 May. The project is being undertaken by Consolidated Gold Company Ltd (CGCZ), a gold processing and trading joint venture between Karma Mining Services and Rural Development and ZCCM-IH. Zambia’s efforts are part of a continent-wide push to tackle informal mining of gold, which is driven by poverty and unemployment, poses health and environmental risks and deprives states of revenue when the metal is smuggled across borders. Africa’s second-largest copper producer, Zambia aims to produce 40,000 kg of gold in 2020 from primary and secondary sources including gold bought from artisanal and small-scale miners at government-controlled buying centres. The project aims to reach gold production of 25 kg per month from the milling and leaching plants by the end of 2020, ZCCM-IH said. As the state seeks to benefit more from large-scale mining too, Zambia in December said it plans to make copper mining companies account for the gold they produce as a by-product of the copper mining process.

Source: Reuters