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issue 363 | 02 Aug 2020

Africa Business in Brief


Coronavirus (COVID-19)

Africa: A higher level of preparedness is urgently needed to prevent and mitigate the COVID-19 pandemic in Southern Africa, including additional resources for testing and to reduce the impact on households and the economy, the African Development Bank said in its new Southern Africa Regional Economic Outlook. In the worst-case scenario, growth in Southern Africa would fall to -6.6% in 2020 before recovering to 2.2% in 2021. Economic diversification, characterised by commodity-driven industrialisation, will help boost the region’s resilience during downturns, the report noted. Improving business environment competitiveness in the region is critical. The African Continental Free Trade Area (AfCFTA) is projected to provide medium- and long-term opportunities for markets to spur economic growth. The intra-African market is expected to mitigate some of the negative effects of COVID-19.

Source: African Development Bank Group

Africa: CDC Group, the United Kingdom’s development finance institution and impact investor, has announced an additional USD75-million commitment to its existing trade finance facility with Absa Bank. The investment will provide systemic liquidity across CDC’s African markets and enable local banks to sustain the availability of trade finance, supporting supply chains during the COVID-19 crisis. CDC’s partnership with Absa includes an innovative mechanism to boost trade finance funding to some of Africa’s most vulnerable countries. Trade finance transactions in sectors that are critical to serving people’s basic needs during the crisis – food and agriculture and health – will also benefit from preferential terms. The commitment will help maintain consumer access to a wide range of goods and services and allow businesses to continue operating by enabling them to import vital equipment and goods.


Africa: The 20th edition of African Utility Week and POWERGEN Africa may be postponed in person, but is still scheduled to take place from 24-26 November this year as the organisers have promised attendees and partners an inspired and inspiring online platform with world-class speakers, live discussions and virtual networking and product showcases. The postponed live, in person edition of this leading conference and exhibition at the Cape Town International Convention Centre will take place from 11-13 May 2021.

Source: Pumps Africa

Djibouti: The African Development Bank approved grants worth about USD41.16-million to Djibouti to bolster the national budget in support of government efforts to mitigate national and regional impacts of the COVID-19 pandemic. The funding will take the form of an African Development Fund grant for USD4.12-million and a USD37.04-million grant from the Bank’s Regional Operations Envelope. The Bank is providing the funding under its COVID-19 Response Facility. The financing will enable the Government of Djibouti to support three interlinked COVID-19 response programs to enhance health systems; safeguard livelihoods and provide social protection; and defend labour force productivity and economic activity.

Source: International Monetary Fund

Eswatini: The International Monetary Fund (IMF) approved USD110.4-million in emergency financial assistance under the Rapid Financing Instrument to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 pandemic. The immediate priority is to support public health, vulnerable groups and businesses.

Source: International Monetary Fund

Ghana: The Monetary Policy Committee of the Bank of Ghana has maintained the policy rate at 14.5%, citing the need for macroeconomic stability amid the disruption caused by the COVID-19 pandemic.

Source: GhanaWeb

Kenya: Banks changed the terms of loans worth KES844.4-billion by end of June, an equivalent of 29% of their total loan book, highlighting the depth of economic hardship the COVID-19 pandemic has brought on borrowers. The Central Bank of Kenya (CBK) said businesses reviewed loans worth KES604.4-billion in the period to June, led by firms in trade followed by real estate, transport, communication and manufacturing industries – sectors that have been hit hard by the effects of the COVID-19 pandemic. Under the CBK’s initiative to offer relief to borrowers, struggling individuals and companies can take a three-month repayment holiday, lengthen the tenure of their loans, or opt to just pay the interest for a period of time. The relief also applies to credit card debt and mortgages. In addition to allowing lenders to offer relief to distressed borrowers, the CBK has cut lending rates and lowered the ratio of cash that commercial banks are required to hold. The government also reduced value-added tax by two percentage points to 14% and imposed cuts on corporate and income tax.

Source: Business Daily

Kenya: Major international passenger airlines have set dates for resuming flights through Jomo Kenyatta International Airport (JKIA) in Nairobi after Kenya eased restrictions on air travel. The global carriers including British Airways, KLM, Qatar Airways and Air France have announced the resumption of passenger services in August, setting the stage for passenger fights amid a slump in air travel.

Source: Business Daily

Kenya: Nairobi has joined other global cities in the launch of a green post-COVID-19 recovery plan, which will guide in delivering an equitable and sustainable revival from the global pandemic and end fossil fuel subsidies. The outcome of the plan – named C40 Mayors Agenda for a Green and Just Recovery – released by the C40 Cities seeks to prepare cities for future pandemics while addressing systemic injustices. Other African cities in the plan include Freetown, Johannesburg, Cape Town, Durban, Addis Ababa, Lagos and Accra.

Source: Business Daily

Lesotho: The International Monetary Fund (IMF) approved USD49.1-million emergency support under the Rapid Credit Facility and the Rapid Financing Instrument to help Lesotho meet urgent balance of payments needs stemming from the COVID-19 pandemic. While the authorities’ immediate priority is to respond to the pandemic through emergency health and economic mitigation measures, fiscal consolidation and structural reforms will be required to restore external balance, preserve debt sustainability, and stimulate inclusive growth over the medium-term.

Source: International Monetary Fund

Malawi: Germany has given the Malawi Government EUR28.1-million (about MWK24-billion) to support the reform agenda and fight against the COVID-19 pandemic. The agreement affirms a EUR28.1-million commitment made during bilateral negotiations on development cooperation between the two governments in Lilongwe on 29 October 2019. “Reaffirming our financial commitments, Germany underpins its determination to support the new Malawian Government in implementing its envisaged reform agenda,” Germany Ambassador Jürgen Borsch is quoted as having said in a statement.

Source: The Nation

Malawi: Malawi will receive USD45.07-million to finance the government’s response to the health, social and economic impacts of the COVID-19 pandemic, following a decision by the Board of Directors of the African Development Fund (ADF). The package comprises a loan of USD24.48-million, and a grant of USD20.59-million as direct budget support, and complements an earlier sum of USD8.9-million to six countries in the region, including Malawi, under the Bank’s COVID-19 Response grants to the Southern African Development Community (SADC) countries. The budget support intervention will help boost the Malawi National COVID-19 Preparedness and Response Plan that has been developed with multi-stakeholders including government, development partners and non-government organisations.

Source: African Development Bank Group

Mozambique: Mozambican micro, small and medium companies can only access the lines of credit made available by the government through the National Investment Bank (BNI) to combat the effects of the COVID-19 pandemic, if they commit to maintaining existing jobs, and creating new ones. The Chairperson of the BNI Executive Council, Tomas Matola, interviewed by AIM, said this is a crucial condition intended to stop the economy from haemorrhaging jobs. The credit available via the BNI, which is 100% owned by the Mozambican state, amounts to MZN1.6-billion (about USD22.8-million).

Source: Club of Mozambique

Rwanda: The African Development Bank approved a concessional loan of USD97.675-million to Rwanda to strengthen its national budget as it works to mitigate impacts of the COVID-19 pandemic. The funding will take the form of an African Development Fund loan, which the Bank is providing under its COVID-19 Response Facility. Under the Crisis Response Budget Support Program, the Rwandan government will use the funding to strengthen the health system to contain the spread of COVID-19; safeguard economic resilience; and mitigate the pandemic’s impact on vulnerable sectors of the population.

Source: African Development Bank Group


COMESA, EAC and SADC adopt harmonised Guidelines on Trade and Transport Facilitation

The Common Market for East and Southern Africa (COMESA), East African Community (EAC) and the Southern African Development Community (SADC) on 29 July 2020 adopted harmonised Tripartite Guidelines on Trade and Transport Facilitation Guidelines for Safe, Efficient and Cost-Effective Movement of Goods and Services during the COVID-19 Pandemic. The Guidelines are aimed at containing the spread of COVID-19 whilst facilitating trade and transport of goods and services across the tripartite area during the COVID-19 pandemic. In his remarks at the opening of the Tripartite Council of Ministers meeting, Honourable Mr Tarek Shalaby, Assistant Minister for Foreign Trade, Agreements and International Relations of the Arab Republic of Egypt, representing the Chairperson of the COMESA-EAC-SADC Tripartite Council of Ministers said the harmonisation of guidelines on Trade and Transport Facilitation presents an opportunity towards the realisation of the Tripartite Free Trade Area (TFTA) which was signed by the Tripartite Heads of State and Government in June 2015. The Minister called for collective action to guarantee movement of goods and services to promote intra-regional trade, while reducing the cost of goods and services within the tripartite area.

Source: Southern African Development Community

West Africa

Electricity trade to unlock affordable and reliable electricity in West Africa

On 28 July 2020, the World Bank Board of Directors approved a total of USD300-million in International Development Association (IDA) credits and grants to support reforms that will help promote electricity trade in West Africa. The West Africa Regional Energy Trade Development Policy Financing Program (West Africa Energy DPF) seeks to remove barriers to electricity trade, which will lower electricity costs for consumers, support the competitiveness of firms and improve resilience and reliability of supply. Over the past decade, member countries of the Economic Commission of West African States (ECOWAS) have been working – through the West Africa Power Pool (WAPP) – towards a fully integrated power market. Within a few years, they will have completed the primary interconnectors that will link them together. The West Africa Energy DPF supports a policy reform program being implemented by Burkina Faso, Côte d’Ivoire, Guinea, Liberia, Mali and Sierra Leone, to facilitate trade in cleaner low cost electricity generated from gas, hydropower and renewable energy across borders. This will replace the more expensive electricity generated from inefficient small-scale oil-fired and diesel generation and improve the reliability of electricity services.

Source: The World Bank Group

West Africa

ECOWAS launches “Improved Business and Investment Climate in West Africa Project” website

The Economic Community of West African States (ECOWAS) Commission has announced the “go-live” of the web portal of its regional Investment Facilitation Programme; “Improved Business and Investment Climate in West Africa Project”. The website hosts project relevant information, as well as the ECOWAS Investment Climate Monitoring Scorecard and Report of pilot member states’ reform outcomes. The Scorecard implements the key provisions of the ECOWAS Investment Policy and Code – which were adopted in December 2018 by the ECOWAS Authority of Heads of State and Government, as the policy, legal and regulatory drivers of the ECOWAS Common Investment Market (ECIM) – through measurable indicators for benchmarking compliance by member states; and for reform advocacy and monitoring in the ECIM.

Source: Economic Community of West African States

Côte d'Ivoire

New taxes on waste management come into force

Solid waste management could soon be improved in Côte d’Ivoire. The Economic and Financial Affairs Commission (CAEF) of the Senate unanimously adopted on 23 July 2020, the draft law ratifying Ordinance No. 2019-1087 of 18 December 2019, which amends the procedures for determining the distribution key for the proceeds of the property tax (IPF) between the bodies responsible for waste management and local authorities. In concrete terms, the new law on solid waste management provides for the levying of a tax on property assets and property income; a tax on roads, hygiene and sanitation; a tax on health and environmental protection; a special tax on certain plastic products and a remunerative tax for the removal of household waste. This decision follows the commitment made by Côte d’Ivoire under the Paris Climate Agreement. “This change will make it possible to increase the share of the property tax allocated to financing sanitation from 25% to 50%, in view of the expected change in the tax on land assets, and to maintain the nominal level of resources allocated to communities at about FCFA50-billion (over EUR7.6-million),” explains Moussa Sanogo, the minister to the Ivorian prime minister in charge of the Budget and the State Portfolio.

Source: AFRIK 21


Ghana positions to become auto hub in AfCFTA era

Finance Minister Ken Ofori-Atta has announced the planned establishment of an Automobile Industry Development Centre to coordinate licensing of vehicle assemblers and manufacturers, and monitor their compliance with industry regulations. With the expected implementation of the African Continental Free Trade Area (AfCFTA) once the COVID-19 pandemic is brought under control, Mr. Ofori-Atta said the establishment of the centre, together with other policy decisions to facilitate the assembly of automobiles in the country, will lead to the export of vehicles from Ghana to the rest of the continent. Presenting the mid-year budget review to Parliament, Mr. Ofori-Atta said the automobile development centre “will also coordinate the implementation of a Vehicle Financing Scheme which will link financial institutions to individuals and groups interested in purchasing newly assembled vehicles in Ghana. Furthermore, it will manage an Automotive Skills and Technology Upgrading Programme to provide requisite skills for the industry.” He added: “It is envisaged that the development of the automobile industry in Ghana, which is one of the new Strategic Anchor Initiatives being promoted under the Ministry of Trade and Industry’s Industrial Transformation Agenda, will constitute a significant step towards import substitution and enhancing exports, particularly within the context of the AfCFTA.”

Source: GhanaWeb


CST reduction to take effect in September – Akufo-Addo

President Nana Addo Dankwa Akufo-Addo has said the implementation of the new Communication Service Tax (CST) for all mobile service subscribers is expected to take effect from September 2020. This follows an earlier announcement in the increment of the CST in 2019 by the finance minister pegging the rate at 9% for all telecommunications companies to charge mobile services subscribers for talk time. Subsequently, the rate has since been reduced to some 5% as the finance minister, Ken Ofori-Atta made a presentation to Parliament in the mid-year budget review. “In the short term, we will reduce the CST from 9% to 5% to reduce the cost of communication services to the consumer as more and more people work remotely and utilise online services. We will count on the Telcos to match this reduction in the CST by reducing their tariffs. This is important for our youth, entrepreneurs, and the burgeoning FINTEC industry,” the finance minister earlier said. Providing clarity on the implementation in an address to the nation on Sunday, 26 July, President Akufo-Addo disclosed; "the Communication Service Tax has also been reduced from 9% to 5%, effective September 2020."

Source: GhanaWeb


Malawi ready to ratify African Continental Free Trade Area

Malawi has said it is ready to ratify the African Continental Free Trade Area (AfCFTA), a pact aimed at increasing trade among African countries. The government has said it has concluded consultations with stakeholders on the matter. In an interview, minister of Trade, Sosten Gwengwe, said the country is expected to deposit its ratification instruments to the African Union (AU) within a month. “Malawi [government], after consultations with private sector, has signed the approval of the AfCFTA. The instruments are with the Ministry of Justice as we finalise the ratification processes. “After proof reading the agreement, it will be deposited to the AU, but approval protocols are done. We should deposit the instruments within a space of one month,” Gwengwe said.

Source: BusinessMalawi™


World Bank warns over debt distress

The World Bank has warned that Malawi remains at a high overall risk of debt distress, which could further undermine fiscal sustainability and frustrate strides towards economic recovery. In its latest Malawi Economic Monitor titled ‘From Crisis Response to a Strong Recovery’ launched in Lilongwe, the Britton Woods institution attributes this to the increased incurrence of high-cost domestic debt. However, it says the risk associated with external debt is moderate, with some space to absorb shocks. Domestic borrowing has continued to expand, increasingly through Treasury notes. The government has been implementing a deliberate strategy to lengthen the maturity profile of domestic debt. The World Bank says given significantly higher and increasing interest rates on T-notes – which currently range from 16% to 22%, compared to T-bills ranging from 8% to 13% - this will contribute to higher interest expenditure. It says with the government having stopped borrowing from the Reserve Bank of Malawi since early 2018, domestic debt is shifting toward commercial banks and the non-bank sector. The situation, according to industry captains, could crowd out private sector investment due to increased cost of borrowing, a situation that would stifle economic growth strides.

Source: The Times Group


Bank of Mauritius joins Network of Central Banks and Supervisors for Greening the Financial System

The Bank of Mauritius has become a member of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), with request for membership being unanimously approved by all NGFS members. The NGFS is a platform that promotes the sharing of experience and best practices among central banks and supervisors to address climate risk management. The Network also enables its members to work together for a green and sustainable financial system. For the Bank of Mauritius, this membership translates its focus on sustainable development and on embedding the concept of a greener banking sector in Mauritius. Reflecting on this new membership, governor Harvesh Seegolam stated: ''In line with the United Nations Sustainable Development Goals and the Paris Agreement, the Bank of Mauritius is committed to further integrating the climate agenda into its banking sector transformation strategy.''

Source: Africa Business Communities


Tenders for Mozambique-Malawi powerline

The Mozambican government has launched an international public tender to select the contractor who will build the 400 kV electricity transmission line linking Mozambique and Malawi. The line will run for 220 kilometres – 145 kilometres inside Mozambique and 75 kilometres inside Malawi. A source in the Ministry of Mineral Resources and Energy, cited in Noticias, said the line has guarantees of funding of USD127-million from the World Bank, the Norwegian government, and German Cooperation (through the German Development Bank, KfW). For his part, Joao Catine, the official of the Mozambican publicly owned electricity company, EDM, responsible for the transmission line project, said that another international public tender will be launched “within days” to choose a contractor to build a brand new electricity sub-station to raise the voltage in the centre-north power system to 400 kV, and with a capacity of 500 MVA (megavolt-amperes). Work on the power line should begin in March 2021, and the conclusion is scheduled for March 2023. The inter-connection project will link Malawi to the Southern African Power Pool (SAPP), which coordinates the planning and operation of electrical power systems among its member utilities. 

Source: Club of Mozambique


Africa’s largest oil refinery to be operational in 2021

Africa’s largest oil refinery and the world’s biggest single-train facility is set to be operational in early 2021 despite the disruption caused by the COVID-19 pandemic – Dangote Group executive director Devakumar Edwin has confirmed. Work is still ongoing at the Dangote Refinery, which is expected to be commissioned in January next year. The completion of the project was scheduled for 2020 but progress was interrupted by the global outbreak of COVID-19. Dangote Group is undertaking an ambitious and a visionary project to build Africa’s largest oil refinery complex able to process 650 000 barrels of crude oil per day. The pipeline infrastructure at the Dangote Petroleum Refinery is the largest anywhere in the world, with 1,100 kilometers to handle three billion standard cubic foot of gas per day. The Refinery alone has a 400 MW power plant that is able to meet the total power requirement of Ibadan DisCo. The plant will not only help Nigeria meet its own fuel demand and become self-sufficient, but will also add Nigeria to the list of top global exporters of gasoline, diesel, aviation jet fuel as well as other petrochemicals and petroleum-based products, such as polypropylene.

Source: Pumps Africa


BRD, World Bank commence fundraising for Ignite Power

The Development Bank of Rwanda (BRD), the World Bank, and the Swedish International Development Agency (SIDA) have announced a strategic fund-raising and collaboration to raise capital for Ignite Power. Ignite Power is a Rwandan renewable energy firm with investment in solar energy. The firm also has presence in other African countries. The new agreement is aimed at raising funds to boost the firm’s capacity to provide solar solutions at the most affordable price possible to rural customers. Seth Merrin, Ignite Power’s lead investor said that the deal is the sort of transaction that could bring the distributed solar energy sector to scale. Christina Wedekull, head of Development Cooperation at the Swedish Embassy in Kigali said that the partnership is a model of how the public and private sector can work together.

Source: The New Times


Rwanda stock market gets 10th listed company

Rwanda’s leading cement manufacturer, CIMERWA has received approval from the Capital Markets Authority and the Rwanda Stock Exchange to list its shares on the local bourse on 3 August 2020. Out of the listed shares constituting 703,219,520 shares (100%), a free float of 344,575,560 shares (49%) will be available for trading to the investor community at RWF120 per share on the Rwanda Stock Exchange. The 49% shares are owned by Agaciro Development Fund (AGDF) Corporate Trust on behalf of the Government of Rwanda, Rwanda Social Security Board (RSSB), Rwanda Investment Group (RIG) and Sonarwa Holdings Ltd. Cimerwa CEO, Albert Sigei, stated that the company has been part and parcel of Rwanda’s growth story and this listing by introduction will be an opportunity for investors to gain exposure into the attractive cement industry with solid growth potential. With Cimerwa PLC Listing by Introduction, it will become the second company to list through this approach and the 10th limited company to be listed on the Rwanda Stock Exchange main investment market segment.

Source: KT Press


Who can join the board of a Rwandan financial institution?

The National Bank of Rwanda recently issued directives on the eligibility of persons to serve as independent directors of a financial institution. According to the recently issued guidelines, signed by the governor of the National Bank of Rwanda, John Rwangombwa, the independent directors ought not to have any management relationship with the said financial institution by employment or close family members. The same directive further notes that independent directors ought not to have current business relations with the financial institution or its related parties including holding shares. That way, the only compensation they should be receiving from the financial institution is from sitting allowance or board member allowances. In instances where the independent director has previously been employed by the financial institution, it should not be within the last three years.

Source: The New Times


Court declares tax appeal deposits unconstitutional

Taxpayers disputing assessments by the Uganda Revenue Authority (URA) will no longer be required to deposit 30% of the amount in dispute before launching a challenge at the Tax Appeals Tribunal (TAT). Section 15 of the TAT Act requires a company or any taxpayer who disputes a tax bill to deposit 30% of the money in dispute to URA before launching a challenge. But the Constitutional Court judges led by Alfonse Owiny-Dollo ruled that the requirement was unconstitutional and went against a constitutional provision that guarantees everyone a fair hearing. In a majority ruling, Justices Alfonse Owiny-Dollo, Kenneth Kakuru, Egonda Ntende and Ezekiel Muhanguzi said that the requirement for payment of 30% before challenging URA assessments contravenes article 44(c) of the Constitution. The cited article guarantees everyone to a fair hearing. The ruling is a huge boost to business owners that have for long argued that their money is unnecessarily held up at URA as cases drag on for years at the TAT. It is, however, a blow to URA that has been collecting this money before one could challenge its decisions.

Source: The Independent


Uganda opens MTN share sale to East African investors

Uganda has opened a window for East Africans to buy shares in MTN Uganda when the telecommunications operator sells its 20% equity stake on the local bourse. The government is forcing all its telecommunications operators, including MTN Uganda and the local unit of India’s Bharti Airtel, to list a fifth of their shares on the Uganda Securities Exchange to allow locals to benefit from the sector’s profits. “The shares are restricted to Ugandans, and also citizens from the East African Community (EAC),” Ibrahim Bbosa, spokesman for the Uganda Communications Commission, the regulator, told Reuters.

Source: The EastAfrican


ZINWA to finance rehabilitation of Wenimbe Dam

The Zimbabwe National Water Authority (ZINWA) has recently proposed to the state of Zimbabwe an estimated budget for the implementation of the Wenimbe Hydroelectric Dam Rehabilitation Project at Marondera in Mashonaland Province. ZINWA will finance the project to the tune of over USD946,000. Currently, Wenimbe has two water pumping stations and a 16 kilometres pipeline from the dam to the drinking water plant. Normally, the pumping capacity of the installations is 540 m³ per hour. Currently, the actual production is only 270 m³ per hour. The reason for this low efficiency is that the Wenimbe dam has been operating for several years with only one set of pumps. ZINWA’s specifications call for the installation of new multi-stage pumps with motors at the main station and at the secondary intake. This operation is expected to cost USD312,000. ZINWA also plans to upgrade the polyvinyl chloride (PVC) pipeline linking the dam to the drinking water plant. This will increase the amount of water treated from 30% to 60%. This second component of the rehabilitation project is expected to require an investment of USD634,000.

Source: AFRIK 21