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issue 361 | 19 Jul 2020

Africa Business in Brief

 


Coronavirus (COVID-19)

Africa: On 15 July 2020, the European Investment Bank (EIB) announced that it approved EUR16.6-billion of new financing for projects across Europe and around the world. This includes more than EUR10-billion of COVID-19-related investment to improve public health, strengthen public services and back investment by companies in sectors hit by the pandemic. Outside Europe the EIB will also enable companies in North and sub-Saharan Africa, the Eastern Neighbourhood and southern Caucasus to access financing under a dedicated regional COVID-19 financing programme. The EIB also approved financing to two new electricity interconnectors in Mali and Madagascar to reduce dependency on fossil fuels, increase energy access and increase the use of cheaper energy sources. In Mali the capital Bamako will be connected to the West Africa power pool and new sources of renewable energy from across the region.

Source: European Investment Bank

Côte d’Ivoire: The International Finance Corporation (IFC), a member of the World Bank Group, announced a EUR25-million, one-year senior loan to NSIA Banque Côte d’Ivoire (NSIA), allowing the bank to extend new trade-related or working capital loans to companies whose cash flows have been disrupted by the COVID-19 pandemic. The loan is IFC’s first investment in Côte d’Ivoire as part of its global COVID-19 fast-track financing support package, designed to help client financial institutions – and the thousands of smaller businesses they support – weather COVID-19-related disruptions.

Source: International Finance Corporation

The Gambia: President Adama Barrow has further declared a State of Public Emergency in the whole country. The declaration shall last for a period of seven days with effect from 15 July 2020. The COVID-19 Emergency Regulations issued under the Emergency Powers Act will continue to apply during the period of the State of Public Emergency.

Source: Freedom Newspaper

Ghana: The Ghana National Petroleum Corporation (GNPC) has suspended new oil exploration activities which had been planned for this year, to add onto the national reserves. The Corporation said the COVID-19 pandemic has impacted negatively on the oil and gas industry in Ghana, a situation which has necessitated international oil companies to take business decisions to safeguard their investments even if they are not actually in Ghana’s interest.

Source: GhanaWeb

Kenya: Kenya Airways resumed domestic flights with lower fares of KES4,815 for a one-way ticket to Mombasa and Kisumu from Nairobi after being grounded since April due to COVID-19 travel restrictions. Travellers took advantage of the reduced fares, nearly half its earlier charges, with the flights recording a 65% cabin load or seat capacity. President Uhuru Kenya announced the easing of the restrictions, paving the way for the resumption of domestic flights. International flights will resume from 1 August 2020, offering a further boost to Kenya Airways, which had lost an estimated KES10.6-billion in revenues in the six months to June.

Source: Business Daily

Mauritius: The Competition Commission of Mauritius (CCM) has announced that it will, on an exceptional and temporary basis, run a Guidance Programme in relation to proposed COVID-19-related collaborations between enterprises until 11 December 2020. Enterprises that may benefit from the Guidance Programme are those whose proposed collaboration is in response to and directly related to the COVID-19 situation. The guidance provided will assist enterprises in determining the lawfulness of their proposed collaborations having regard to the prohibitions under the Competition Act 2007, and, in particular, those relating to price fixing, market sharing, restriction of supply, bid rigging and resale price maintenance.

Source: ENSafrica 

Namibia: The German Federal Government has mobilised additional resources of EUR13-million (approximately NAD250-million) to support the Namibian Government, through the Ministry of Environment, Forestry and Tourism, in mitigating the challenges of the COVID-19 pandemic in the conservation and tourism sector.

Source: Africa Business Communities

Nigeria: Airline operators have been directed to contact the Federal Airports Authority of Nigeria and the Nigerian Civil Aviation Authority on the status of any airport before selling tickets to passengers. The Director-General of the NCAA, Captain Musa Nuhu gave the directive during a webinar. Nuhu said a few operators had gone ahead to advertise flights to airports that were yet to be approved for operations.

Source: Radarr Africa

Rwanda: National carrier, RwandAir will resume flights on 1 August 2020, after almost five months since the airline suspended operations due to the COVID-19 pandemic, which has taken a heavy toll on industry. This follows the government decision to reopen airport operations for commercial flights.

Source: The New Times

Rwanda: Two cells of Nyamgabe district and four cells of Nyamasheke district in the Southern Province and Western Province respectively have been put into total lockdown to contain the spread of COVID-19. The zones add to five sectors of Rusizi district in Western Province and some cells of Kicukiro and Nyarugenge districts in the City of Kigali which have been under lockdown.

Source: KT Press

Uganda: Uganda’s real gross domestic product (GDP) growth in 2020 is projected to be between 0.4% and 1.7% compared to 5.6% in 2019, according to the latest edition of the Uganda Economic Update released by the World Bank on 8 July 2020. The report, “Digital Solutions In A Time of Crisis” shows the economy has suffered from the triple shocks of the COVID-19-related economic and social disruption, a locust invasion and floods. The increased use of digital technologies during the COVID-19 lockdown such as mobile money, on-line shopping, on-line education, digital disease surveillance and monitoring, and dissemination of public health messages shows the great potential to support faster economic recovery and strengthen resilience against similar shocks. While Uganda has made reasonable technological strides, the analysis notes that it still lags with a phone penetration rate of 69.2% of the population, far below the average of 84% for Africa.

Source: World Bank Group

Zimbabwe: President Mnangagwa is ready to put in place any needed measures to contain the spread of COVID-19 infections after the recent spike in local transmissions. Until recently, almost all Zimbabweans found to be infected were returning citizens and residents infected outside the country with the infection discovered while they were in quarantine. But the recent daily double figure rise in confirmed cases has sent alarm bells tolling, prompting President Mnangagwa to make it clear that he will take measures to control infection rates.

Source: The Herald

World

New task force to drive global floating offshore wind growth

The Global Wind Energy Council (GWEC) has announced the formation of a Floating Offshore Wind Task Force with the participation of key global industry players and associations to drive the global growth of floating offshore wind. Members of the task force consisting of leading stakeholders in the floating offshore wind sector, including: Equinor, GE Renewable Energy, Iberdrola, Ideol, the Japanese Wind Power Association, MHI Vestas, Ørsted, Principle Power, RenewableUK, Siemens Gamesa Renewable Energy, Shell, Stiesdal, wpd, and The World Bank Group. Floating offshore wind is a significant market opportunity, and can increase offshore wind resource by tenfold by opening new markets where fixed-bottom offshore wind would not be possible. According to GWEC Market Intelligence forecasts, 6.2 GW of floating offshore wind is likely to be built by 2030 given the current project pipeline. However, this forecast could be increased to up to 19 GW if cost reduction is accelerated.

World

How to develop a national green taxonomy for emerging markets – a New World Bank Guide

On 13 July 2020, the World Bank published a guide outlining the processes that financial regulators can use to develop a green taxonomy. The publication ‘Developing a National Green Taxonomy: A World Bank Guide’ will help regulators in emerging economies who seek to “green” their countries’ financial systems. The lack of clarity about which activities and assets can be defined as green has long posed a barrier to scaling up green finance. A green taxonomy identifies the activities or investments that deliver on environmental objectives, helping drive capital more efficiently toward priority environmentally sustainable projects. The guide can help banks and other financial institutions originate and structure green banking products (e.g. loans, credits, and guarantees). It can also help investors identify opportunities that comply with sustainability criteria for impact investments. Given the diverse needs and contexts of emerging economies, this guide avoids one-size-fits-all definitions and standards. Instead, it presents ways to develop a taxonomy based on the environmental objectives relevant to a country’s sustainable development priorities and agenda. A key recommendation is for regulators to provide a technically sound justification for the activities and investments considered green.

Source: World Bank Group

Africa

Overcoming technical hurdles of infrastructure PPPs

The drive for high-impact initiatives has led a few sub-Saharan countries including South Africa, Nigeria, Kenya and Uganda to partner with the private sector on some infrastructure projects. Despite the ample opportunities for public-private partnerships (PPPs) – and their obvious benefits – governments have been slow to drive this agenda. According to SRK Consulting partner and principal environmental consultant Darryll Killian, this may be the result of prior bad experiences with ill-prepared PPPs or even with less-than-competent PPP project sponsors. However, there are well-proven strategies and lessons that can pave the way for efficient, cost-effective and manageable infrastructure-building. Africa needs infrastructure improvements to open doors to trade and create opportunities for economic investment. As the implementing arm for the African Union’s 2063 development strategy, the New Partnership for Africa’s Development (NEPAD) focuses on incubating high-impact projects that demonstrate proof-of-concept. These are intended to translate the African Union’s (AU) strategic development frameworks into national priorities.

Source: ESI Africa

Africa

US-Africa Energy Advisory Committee to push energy dialogue and investment

The African Energy Chamber has appointed a US-Africa Committee to serve on its Advisory Board and support the development of stronger energy cooperation and investment between the United States (US) and Africa. Serving in their personal capacities, the members of the US-Africa Committee gather several decades of experience in government and the private sector from both sides of the Atlantic, and share a passion for Africa and its development. The US-Africa Committee is the first committee on the African Energy Chamber’s Advisory Board to be announced. The Chamber has put together leading industry experts, executives and public representatives to support several initiatives over the course of 2020 and 2021, such as local content development, natural gas and energy transitions, the promotion of an enabling environment and the expansion of exploration activities.

Source: African Energy Chamber

Africa

Why refined products standard is critical to Africa

A move by the African Refiners and Distributors Association (ARA), and the African Union (AU), to ensure common standards for the importation and refining of petroleum products on the continent remains critical to trade, the environment and the economy of the region, stakeholders said. Under the plan, Africa is expected to adopt harmonised AFRI Clean Fuel Specifications. The Cleaner Fuel specification recommends the adoption of AFRI 5 specifications (50 ppm sulphur for gasoline and diesel) by 2025, and AFRI 6 specifications (10 ppm for same products) by 2030. ARA Executive Secretary, Anibor Kragha, had told The Guardian that the objective is to stop the importation of fuels not meeting these AFRI specifications into Africa by 2021, and give existing refineries until 2025 to upgrade their facilities. Kragha disclosed that the Economic Community of West African States (ECOWAS) Council of Ministers of Hydrocarbons in February 2020 already recommended product imports to meet AFRI 5 specifications by 2021, and regional refineries to meet AFRI 5 specifications by 2025. He revealed that the stakeholders’ input would be submitted to the AU Technical Meeting of African Energy Ministers in October, adding that two more consultative sessions are planned for 13 July and 30 July 2020, ahead of the report submission in August / September.

Source: The Guardian

Central Africa

African Energy Chamber salutes the BEAC’s authorisation to open foreign currency-labelled escrow accounts

The Board of Directors of the Bank of Central African States (BEAC) has allowed the opening of foreign currency escrow accounts by petroleum and mining operators. The authorisation was given within the implementation framework of key dispositions of Regulation No. 02/18/CEMAC/UMAC pertaining to foreign currency exchanges within the CEMAC region. Earlier this year, the Chamber had joined several industry stakeholders in calling on the BEAC to relax its currency controls rules adopted in June 2019. In its latest Commonsense Energy Agenda, the African Energy Chamber notably called on financial institutions and central banks to set up stronger dialogue mechanisms with the private sector and industry stakeholders to address current industry challenges. The Chamber notes the leadership of the BEAC in taking initiatives that will preserve jobs, encourage local content and help the oil and gas sector recover.

Source: African Energy Chamber

Botswana

Botswana central bank seeks law to preserve shrinking sovereign wealth fund

The Bank of Botswana will seek legislation to limit access to its sovereign wealth fund, a central bank official said, as it seeks to stem a steady fall in the fund’s reserves often tapped to meet budget deficits. “At the moment the fund doesn’t work strictly like a sovereign wealth fund as it does not have rules that guide withdrawals and replenishments,” Caster Moseki, acting director of financial markets at the bank, said of the Pula Fund. He did not disclose details on when the bank would approach the government for the requested legislation. Plans to limit a regular dip into the Pula Fund, which has reserves equivalent to 7% of GDP, comes at a time when Botswana’s diamond revenues - the main source of the fund - are likely to fall sharply due to the impact of COVID-19. The sovereign wealth fund, most of it invested overseas, has declined from 20% of GDP in 2011 to around 7% of GDP in May 2020, or around BWP15-billion.

Source: Reuters

Ethiopia

Ethiopian government restores partial internet access as normalcy returns in unrest-hit areas

The Ethiopian government on Wednesday, 15 July, restored partial access to the internet after a total shutdown since 29 June following deadly unrest that erupted in the capital Addis Ababa and other parts of the country killing at least 166 people. The Ethiopian government restored WIFI and broadband internet access in the early hours of Wednesday as normalcy returned across almost all the unrest-hit parts of the country, according to police.

Source: Xinhua

Ethiopia

Ministries set to foster import substitution of industrial inputs

The Ministry of Trade and Industry and the Ministry of Mines and Petroleum launched an integrated plan to steadily substitute the extensive importation of industrial inputs with home-produced ones. In a presser held by the ministries, Trade and Industry minister, Melaku Alebel said the integrated plan enables the gradual substitution of the importation of industrial inputs, which has been costing the country millions of dollars every year on top of the chronic forex crunch. Ethiopia imports over 70% of construction inputs, the minister pointed out, adding that it spends USD850-million on iron and steel, and USD950-million on chemicals and constructional inputs per annum respectively. The ministry has planned to fully substitute marble and granite imports with domestic products in the next Ethiopian fiscal year, according to Melaku.

Source: ENA

Kenya

Kenya’s rating cut signals expensive foreign loans

Global ratings agency, Standard and Poor’s (S&P) has lowered its outlook on Kenya’s economy to “negative” from “stable”, dimming the country’s chances of tapping cheap credit in the international financial market. The agency pegged its decision on a projected significant slowdown on Kenya’s GDP growth this year due to the ravages of the COVID-19 pandemic. "The negative outlook reflects Kenya's deteriorating fiscal and external position," said S&P in a statement. "The negative outlook also reflects the risk of wider external financing gaps if funding from official lenders is not as forthcoming as we forecast." It, however, affirmed the country's long-term foreign and local currency debt ratings at ‘B+/B’. The ratings downgrade by S&P is the third on Kenya’s economy by three different international agencies since 7 May, underscoring the country’s diminishing odds of landing affordable credit from international lenders. Two other agencies, Moody’s and Fitch Ratings, downgraded Kenya’s credit outlook to negative from stable, on 7 May and 19 June respectively, citing the shock caused by COVID-19 pandemic to key sectors of the economy. Tourism and horticulture, foreign exchange earners and major employers are some of the sectors most affected by the outbreak-induced slowdown.

Source: Business Daily

Kenya

Kenya set for trade talks with Britain

Kenya will soon start negotiations on a second bilateral trade pact with the United Kingdom (UK) following its exit from the European Union (EU). The two countries have previously been trading through the EU. However, Kenya lost market access after Britain left the union. Under the EU, Kenya benefited from duty-free and quota-free market access to all member states for industrial and agricultural products, including beef, fish, dairy, cereals, fresh and processed fruits and vegetables. The talks mean Kenya and the UK will have to renegotiate the terms for a trade pact. The announcement comes after the government kicked off negotiations for Kenya-US bilateral agreement on 8 July. Kenyan exports to the UK were recorded at KES40.08-billion in the 12 months to December 2019, representing 30% of KES133.39-billion total exports to the EU in the period. Kenya National Bureau of Statistics data shows the volume of trade between Kenya and EU in the first three months, which excluded the UK after exiting the union in February 2020, was valued at KES94.35-billion compared to KES106.13-billion recorded in a similar period in 2019.

Source: Business Daily

Mauritius

Mauritius reinforces its anti-money laundering and terrorism financing laws

On 9 July 2020, the Government of Mauritius strengthened its framework against money laundering and the financing of terrorism by passing the Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous Provisions) Act (the AML-CFT Act), which amends 19 existing pieces of legislation. The Act aims to align Mauritius with the recommendations of the Financial Action Task Force (FATF) and the European Commission. The enactment of the AML-CFT Act shows the adoption of a firm approach against money laundering and terrorism financing and addresses the deficiencies observed by the FATF in the AML-CFT system of Mauritius. Coupled with measures already taken by various institutions regarding their internal policies, Mauritius is well on the way to achieve a strong legal and regulatory framework on AML-CFT by August 2020, as set forth in the Prime Minister Office’s Communique dated 2 June 2020. This ENSafrica ENSight highlights a few considerations that companies and individuals should be aware of.

Source: ENSafrica  

Namibia

Timber exports, transportation resume

The Ministry of Environment, Forestry and Tourism has resumed issuing of permits for timber transportation in Namibia after halting this in March 2020. However, the export and transportation of timber is subject to conditions such as local supply and processing getting priority. The ministry will however not issue permits for unprocessed timber in accordance with set regulations. Environment commissioner, Timoteus Mufeti said permits will have conditions aimed at promoting sustainable utilisation of Namibian timber and forest resources as well as stimulating economic growth and employment creation in the country. The commissioner further noted that timber at Walvis Bay will only be allowed for exportation if all documentation is in order and when the information on the permits is consistent.

Source: The Namibian

Nigeria

NASS, NERC to partner on legal framework to protect investment in power sector

The National Assembly (NASS) says it is working with the Nigerian Electricity Regulatory Commission (NERC) to put in place a legal framework that will protect investment in the power sector. Sen. Gabriel Suswan, chairman, Senate Committee on Power, said that what was in place was a Reform Sector Act which was put together by NASS in 2005 to enable government to privatise the electricity entity. “We have gone beyond privatisation, there has to be an Electricity Act for the country that will touch on the issue of energy theft, how people will be sanctioned and those that bypass meters. “And it will also create that environment that gives potential investors assurance that their investments are protected. “Beyond the Reform Act, issues have cropped up that needed to be addressed, so we need a legal framework that will put in place enabling environment for potential investors.”

Source: Vanguard

Nigeria

NCC creates new department to accelerate FG’s digital economy agenda

In continuation of its renewed strategy and vigour for effective delivery of its regulatory mandate, the Nigerian Communications Commission (NCC) has created a Digital Economy Department, principally responsible for implementing programmes and policies aimed at fully supporting and promoting the national digital economy agenda of the Federal Government. The Governing Board of the Commission approved the creation of the new department at its last meeting. The department is strategically and structurally placed under the Office of the Executive Vice Chairman/CEO of NCC. The executive vice chairman of NCC, Prof. Umar Danbatta, said the creation of the new department is in line with the Commission’s strategy to create a dedicated team, with the sole responsibility of giving necessary push to the promotion of digital economy vision of the Federal Government being driven by the minister of Communications and Digital Economy, Dr. Isa Ali Ibrahim Pantami.

Source: Nigerian Communications Commission

Nigeria

Shell’s 20 kilometre gas pipeline connects industrial zones in Abia state

Shell Nigeria Gas (SNG) has completed the final phase of its 20km domestic gas pipeline expansion project in Abia State, connecting Agbor Hill, Osisioma and Ariaria industrial zones. The project has also enabled the supply of pipeline gas to Ariaria Market Energy Solutions Limited, the Independent Power Project (IPP) consortium that provides electricity to the popular Ariaria market in Abia State. Ariaria International Market is one of the largest leather shoe-making and open stall markets in West Africa, with over 37,000 shops and an estimated one million traders. According to the president of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed, the gas supply to the Ariaria Market IPP would strengthen micro, small and medium enterprises in the Abia State and enhance the operating environment for manufacturing to thrive. SNG together with its partners and local stakeholders has agreements to build infrastructure and deliver natural gas to over 150 industrial and commercial customers, mostly in Ogun, Abia, Rivers, Bayelsa and Lagos States.

Source: Africa Business Communities

Uganda

When interim injunction orders against Uganda Revenue Authority are not in the public interest

In a stunning decision, the High Court held that a temporary injunction will not be issued to restrain the Uganda Revenue Authority (URA) from its statutory function of collecting taxes, save in limited circumstances. The decision Capital Shoppers v URA Miscellaneous has been received with what can truly be called mixed feelings. On one hand, the tax collector feels strengthened in its efforts at tax collection and on the other, taxpayers may feel they have little recourse when the tax collector knocks at the door. A close examination of the ruling, however, suggests that the facts of this case are unique and the ruling will be of limited relevance.

Source: ENSafrica

Uganda

TAT ruling: Commissioner General’s discretion must be exercised judiciously

The recent ruling of the Tax Appeals Tribunal (TAT) in the case of Century Bottling Company v Uganda Revenue Authority (URA), has brought the discretion of the Commissioner General of the URA sharply in focus. It is absolutely necessary and indeed important that in the exercise of their functions, public authorities exercise discretion. It is equally important that such discretion is properly exercised taking into account only the relevant considerations and for the proper reasons. The citizen has recourse to court to check the excesses of executive discretion. A public official is therefore not like the cultural leader ‘kamala byona’ (he who finishes all matters). The former’s discretion is very much controlled by law and by the courts.

Source: ENSafrica

Uganda

Interest rate cap could hit commercial banks

The Bank of Uganda (BoU) has threatened to cap interest that commercial banks can charge borrowers following the industry’s failure to lower interest rates in response to the cuts in the central bank rate (CBR), according to its governor, Emmanuel Tumusiime-Mutebile. Mutebile in a letter dated 7 July sent to all commercial banks said he was disheartened that banks have not lowered their interest rates to match the reduction in CBR cuts. “BoU had been pursuing an accommodative monetary policy stance since April 2016. It is however, disheartening to see that commercial banks have not reduced lending rates in tandem with the reduction in CBR despite several discussions with Uganda Bankers Association,” he said. BoU has cut its CBR by 200 basis point to the lowest ever of 7% between April and June this year to resuscitate the economy that is now battered with the impact of the COVID-19 pandemic. Mutebile said BoU is considering invoking a law that allows it to determine maximum and minimum rates that financial institutions may impose on credit extended in any form.

Source: The Independent

Uganda

Uganda now importing more from within Africa

Uganda is gradually changing its import source markets, according to data from Bank of Uganda. The country, which continues to be a net importer, currently, according to Bank of Uganda, sources much of its imports from within East Africa, the Common Market for Eastern and Southern Africa (COMESA) and the Rest of Africa. This is reflected in the Bank of Uganda report on the status of import trade for the period ended May. Uganda had until the start of 2020 relied on China, some Middle East countries such as United Arab Emirates and partly Europe for imports. However, according to the report the course is changing with the country importing goods worth USD124.4-million (UGX466-billion) from within COMESA in May. This, the report indicates, is a 66% increase from USD41.4-million (UGX155-billion) that the country spent on imports in April within COMESA. Within COMESA, Uganda imported more from Kenya, South Sudan and Namibia.

Source: Daily Monitor