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issue 384 | 24 Jan 2021

World

PCT’s new toolkit helps countries implement effective transfer pricing documentation requirements

The Platform for Collaboration on Tax (PCT), a joint initiative of the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank, released the final version of the ‘Practical Toolkit to Support the Successful Implementation by Developing Countries of Effective Transfer Pricing Documentation Requirements’. The PCT’s new toolkit serves as a sourcebook of guidance on implementing transfer pricing documentation requirements for developing countries. The toolkit compiles essential information on transfer pricing documentation and analyses policy choices and legislative options. Readers can find sample legislation as well as examples and practices from over 30 countries and additional approaches to transfer pricing documentation in the toolkit. The toolkit aims to help countries implement effective transfer pricing documentation requirements so that they can protect their tax bases, reduce profit shifting and raise much-needed revenues for the recovery phase. This is the fourth toolkit published by the PCT. French and Spanish versions of the toolkit will be available in the coming days, as well as virtual learning opportunities based on the toolkit.

Source: IMF

Africa

AfDB, EIB sign joint partnership action plan to accelerate development in Africa

The African Development Bank (AfDB) and the European Investment Bank (EIB) on Wednesday, 20 January signed a joint partnership action plan to strengthen their cooperation and mutual priorities in development, with a strong and shared focus on boosting public and private investment in Africa. The action plan allows the two institutions to develop a common pool of bankable projects focused on complementary areas to which each partner can leverage its comparative advantages. These include combating the effects of climate change and environmental sustainability, large-scale innovative investments in quality infrastructure, infrastructure and services for information and communication technologies, financial inclusion that takes gender equality into account and empowers girls and women, education, training and health. Over the past five years, the joint portfolio of the two institutions has grown to EUR3.4-billion and has generated a total investment of EUR10.2-billion for 26 projects across the continent. The EIB and the AfDB have recognised the unique role that public development banks play in supporting innovative and high-impact investments and in mobilising private sector financing.

Source: AfDB

Africa

AU member states adopt digital COVID-19 certificates

African Union (AU) member states will from this month start using digital Coronavirus (COVID-19) certificates as one way of eliminating travel restrictions that were occasioned by the outbreak of COVID-19. The new digital application from Econet Wireless and PanaBios which was certified by the AU and the Africa Centres for Disease Control and Prevention (Africa CDC) will assist travellers to comply with COVID-19 travel protocols and share vital information to end double testing across the continent. The application will also share information about the latest travel restrictions and entry requirements applicable to the entire stretch of passengers' journey across Africa. This happens as the AU works closely with the African Continental Free Trade Area (AfCFTA) secretariat to reduce a number of non-trade barriers in the wake of implementation of African free trade. The mobile-based global health information applications are powered by secure blockchain technology and also carry information about the Africa CDC mutual recognition protocol for COVID-19 testing, pre-entry and exit requirements and, most importantly, a traveller’s test results.

Source: The EastAfrican

Africa

CDC Group targets USD1-billion of African investments in 2021

CDC Group is planning about USD1-billion in African investments this year in sectors including infrastructure and finance, and is part of a consortium considering a bid for a new telecommunications licence in Ethiopia. The United Kingdom development finance institution is matching a similar outlay made on the continent in 2020, chief executive officer Nick O’Donohoe said in an interview. CDC Group will target markets such as Egypt, Ethiopia, Kenya and Nigeria, while also considering putting money into more remote, frontier locations. “The two areas we will be particularly focused on this year are accelerating our climate-related” and technology-based investments, the CEO said. “In addition to that, we are a big investor in infrastructure and will continue to be.” The USD1-billion pledge comes as a boost to a continent expected to have suffered a 25% to 40% decline in foreign direct investment last year, according to a report by the United Nations Conference on Trade and Development, as the COVID-19 pandemic and lower oil and commodities prices curtailed spending. CDC Group’s commitment also follows comments by the Southern African Venture Capital and Private Equity Association that regional investors are starting to open the taps on about USD2-billion of unallocated funds.

Source: Bloomberg

Africa

Platform to give SMEs a boost in intra-Africa trade

Small and medium-sized enterprises (SMEs) eyeing a slice of intra-Africa trade will now have a platform to ease transactions. The Africa Continental Free Trade Area (AfCFTA) application (app) will enable the SMEs to sell and buy goods via a cashless and contactless platform under the low duty regime that satisfies the “know-your-customer” requirements at banks and financial institutions. AfCFTA trade promotion and programmes director, Francis Mangeni said SMEs admitted onto the app will be issued with a mark of identity. Aside from the AfCFTA app, other technological advances made by individual players in a bid to promote Africa trade include EcoBank’s Emerald Ecobank Business Club online platform that offers SMEs direct linkages to 33 markets. The German government has partnered with global logistics firm, Deutsche Post DHL Group to moot an e-commerce platform that facilitates cross-border trade in Africa.

Source: Business Daily

East / Southern Africa

COMESA floats EUR800-million to support regional digital payments

The Common Market for Eastern and Southern Africa (COMESA) Business Council has proposed a new digital financial inclusion program that will have to be adopted by member countries to kick-start affordable, accessible and timely digital payment systems in micro, small and medium enterprises (MSMEs) in the region. The proposed ‘COMESA Digital Integrated Common Payment Policy and Framework for SMEs’ was tabled for validation at a virtual consultative meeting held in Kigali, Rwanda on 20 January 2021 to kick-start the region’s validation of its policy and framework that will be submitted to respective member states. The move will be piloted in nine countries including: Rwanda, Zambia, Malawi, Tanzania, Uganda, Kenya, Egypt Ethiopia and Mauritius. Sandra Uwera, the CEO of COMESA Business Council (CBC) noted three foundational elements that are critical to unlocking the potential of digital financial innovation for MSMEs across the COMESA region, namely, available and affordable internet digital platforms, digital skills and entrepreneurship. The role of stakeholders and the private sector will be highly needed in integrating their business operations within the regional direction so as to ease doing business at a time when the COVID-19 pandemic has deemed technology as the next step of doing trade.

Source: KT Press

The Gambia

IMF Executive Board completes first review under the ECF arrangement for The Gambia, and approves USD28.8-million disbursement

The Executive Board of the International Monetary Fund (IMF) completed the first review of The Gambia’s performance under a program supported by a 39-month Extended Credit Facility (ECF) arrangement. The ECF, with a total access of SDR35-million (about USD47.1-million at the time of approval, or 56.3% of quota), was approved by the IMF Executive Board on 23 March 2020. Completion of the first review enables an immediate disbursement of SDR20-million, about USD28.8-million, to help meet the country’s balance-of-payments and fiscal financing needs and support the post-pandemic recovery. This brings total disbursements under the arrangement to SDR25-million, about USD36-million. In completing the review, the Executive Board also approved an augmentation of access under the ECF arrangement from SDR35-million to SDR55-million (or 88.4% of The Gambia’s quota in the Fund). The Board also completed a financing assurances review and granted a waiver of nonobservance of a continuous quantitative performance criterion relating to a zero ceiling on the accumulation of external payment arrears.

Source: IMF

Ghana

Relief for importers as GSA backtracks on fee increment

The Ghana Standards Authority (GSA) has rescinded its decision to start the implementation of its revised registration fees for freight forwarders and general importers – originally scheduled for the start of this month – to allow for more stakeholder consultations and buy-in. “No changes to the charges; the [old] charges have been maintained,” director-general of the Authority Prof. Alex Dodoo told a gathering of importers in Accra. This was the outcome of a stakeholder meeting convened by the Ghana Shippers’ Authority in Accra to dialogue on the revised rates. The Standards Authority, in December last year, announced that it would start the implementation of its new fees and charges effective 1 January 2021. The increases ranged from GHS1,000 to GHS5,000 annually for importers of goods such as gaming items, industrial machinery and cement, to GHS20,000 for shopping malls, who are considered big importers.

Source: GhanaWeb

Ghana

USD50-million released towards operationalising development bank

The president’s representative at the Finance Ministry, Ken Ofori-Atta, has disclosed that USD50-million has been released towards the operationalisation of the national development bank. The bank is expected to be capitalised with USD1-billion, of which the government has committed USD250-million. The bank will source funding from the domestic market, as well as regional and international markets, through the periodic issuance of domestic bonds, diaspora instruments and direct borrowings from international financial institutions and capital markets. Mr Ofori-Atta said the bank has generated a high level of interest from international bodies such as the World Bank, the European Investment Bank, KfW and the Department for International Development (DFID). “It is expected that the combined resources of these international institutions will amount to USD558-million to support the bank by December 2021,” he said. The bank will focus on supporting the transformation of industrialisation, agriculture, agro-processing, and housing over the medium to long term. It will also serve as a promotional bank for the country, with a focus on mobilising medium- to long-term funds and channelling them into the economy through the financial system. The Development Bank Ghana will be regulated by the Bank of Ghana, with a competitively selected independent board and management.

Source: GhanaWeb

Kenya

Kenya taps KES1.29-billion US fund for workers’ rights ahead of new trade deal

Kenya is set to benefit from a KES1.29-billion United States (US) government fund meant to improve compliance with international labour standards in key export sectors ahead of a new trade deal with Washington. The US Department’s Bureau of International Labor Affairs (ILAB) said Kenya is among three African countries picked for the grant alongside Democratic Republic of the Congo and one other unnamed nation. “Made available through the Department’s Bureau of ILAB, the grant of USD11.7-million (KES1.29-billion) will support efforts to improve compliance with relevant international labour standards and acceptable conditions of work, with an emphasis on promoting occupational safety and health in one or more export-oriented economic sectors, such as the mining and quarrying sector,” the Department said in an update. The move comes as Kenya stepped up talks for a new trade deal with Washington before the expiry of the African Growth Opportunity Act (AGOA), which allows sub-Saharan African countries to export thousands of products to the US without tariffs or quotas until 2025.

Source: Business Daily

Kenya

Kenya now eyes KES69-billion debt service suspension

Kenya has widened its debt service relief request to all its bilateral lenders, hoping to save KES69-billion, the National Treasury has said. The move comes days after a decision by the Paris Club of international decision to give Kenya a KES32.9-billion loan repayment break to help ease the financial distresses linked to COVID-19. The Treasury said Nairobi had expanded the bid for reprieve from servicing its looming debt payment obligations under the landmark debt relief initiative, known as the Debt Service Suspension Initiative (DSSI), which came from the G20 grouping of the world’s largest economies – spurred on by the International Monetary Fund (IMF) and World Bank – last April. The G20 nations agreed to freeze bilateral government loan repayments for 76 low-income countries until the end of the year and called on private sector creditors to participate on a voluntary basis. "We have engaged all bilateral creditors. The projected DSSI relief is KES69-billion," Treasury principal secretary, Julius Muia told the Business Daily in an interview.

Source: Business Daily

Kenya

Kenya joins Tanzania and Uganda in taxing digital transactions

Kenya has joined Tanzania and Uganda in taxing digital transactions to support its depleted public coffers in an economy weighed down by slowing private sector activities, shrinking revenue collections, growing public debt and increasing expenditure pressures. The Digital Service Tax (DST) which took effect on 1 January, was introduced by the cabinet secretary for the National Treasury, Ukur Yatani through the Finance Act 2020. A 1.5% tax on gross income derived from all services offered through the digital marketplace including downloadable digital content was imposed. In Uganda, digital service tax was introduced in May 2018 by the Ugandan government to prevent gossip and broaden the country’s tax base from July 2018, internet users in the country seeking to access social media sites were required to pay the daily duty tax of UGX200 (USD0.05). In Tanzania, to curb hate speech and fake news, the government introduced the Electronic and Postal Communications (Online Content) Regulations, 2018, for bloggers and online radio and television services requiring them to pay an annual fee of up to USD900. Under these rules, online content publishers are required to apply for a licence at a fee of TZS100,000 (USD43), pay an initial licence fee of TZS1-million (USD429) and an annual licence fee of TZS1-million (USD429).

Source: The EastAfrican

Malawi

Firms dominate cannabis licence applications

The Cannabis Regulatory Authority (CRA) says it is receiving more applications for medicinal cannabis production from companies compared to groups of farmers who are applying for industrial hemp production. So far, since licence fees were announced in November last year, CRA said it has formally received 35 applications, with over 20 applications coming from individual companies and the rest from farmer groups. However, experts in the field feel this is an indication that licensing conditions are not favouring the majority of growers. In an interview, CRA acting registrar, Ketulo Salipira said having more companies on board should be good news for the country as they will be producing and adding value for export markets, earning the country foreign exchange. The recently gazetted regulations show that applications for licences attract a non-refundable fee of USD1,000 (about MWK740,000) for medicinal cannabis while a licence for industrial hemp is pegged at USD500 (about MWK370,000). A licence fee to cultivate and sell, as well as a licence to process is pegged at USD10,000 (about MWK7.4-million) for medicinal cannabis. A licence fee to cultivate and sell industrial hemp is USD2,000 (about MWK1.4-million) while a licence to process industrial hemp is pegged at USD5,000 (about MWK3.7-million).

Source: The Nation

Malawi

Malawi ratifies AfCFTA after submitting instrument of ratification

Malawi has submitted its instrument of ratification of the African Continental Free Trade Area (AfCFTA) Agreement, becoming the 35th member state to ratify the agreement, said the African Union Commission (AUC). Ambassador Albert Muchanga, the AUC Trade and Industry commissioner who made the announcement, said more member states were on track to submit their own documents soon. Trading started officially on 1 January, signaling the commencement of Africa’s journey to market integration, AfCFTA’s secretary general Mr Wamkele Mene said on 12 January. It was postponed by six months last year following the outbreak of the COVID-19 pandemic. Following Malawi’s ratification, only 19 member states are left to ratify. They are Benin, Botswana, Burundi, Cape Verde, Comoros, Democratic Republic of the Congo, Guinea-Bissau, Liberia, Libya, Madagascar, Morocco, Mozambique, Seychelles, Somalia, South Sudan, Sudan, Tanzania and Zambia. Only Eritrea out of the African Union’s 55 countries is yet to sign the agreement.

Source: United Nations Economic Commission for Africa

Mauritius / Morocco

Mauritius and Morocco join AfDB/AFMISM Bloomberg® leap index

The African Development Bank (AfDB) has announced the addition of two new countries – Mauritius and Morocco – to its Bloomberg African Bond Indices (ABABI), marking a steady progress in the Bank's efforts to deepen the continent's local currency bond market. The AfDB administers the ABABI, a family of African bond indices launched in February 2015 and calculated by the independent, global index provider Bloomberg. At the launch, the indices included Egypt, Kenya, Nigeria and South Africa. Botswana and Namibia joined in October 2015, and Ghana and Zambia in April 2017. Effective 1 January 2021, Mauritius and Morocco have become members of the ABABI, the Bank said. By providing transparent and credible benchmark indices, the Bank and Bloomberg provide investors with a tool to better measure and track the performance of Africa's bond markets. The Bank has also structured and invested in an exchange traded fund, the African Domestic Bond Fund (ADBF), replicating the index and providing investors with an innovative tool to gain exposure to African local currency fixed income. ADBF is listed in United States Dollars on the Stock Exchange of Mauritius and managed by the Mauritius Commercial Bank Investment Management.

Source: AfDB

Nigeria

IMF gives reasons for underwriters’ poor financials

The International Monetary Fund (IMF) has explained the reasons many insurance firms fall short of quality financial statements. The IMF highlighted this in a report, entitled ‘Publication of Financial Industry Assessment Program Documentation – Detailed Assessment of Observance of Insurance Core Principles’, stating that the challenge does not only hinder effective supervision but also timely disclosure of information to policyholders and the market. The organisation urged the National Insurance Commission (NAICOM) to collaborate with the Financial Regulator Council (FRC) to improve the reliability of audited financial statements to enable regulators to focus on both quantitative analysis and qualitative aspects of supervision. Determined to address the identified issue and other associated challenges, NAICOM in its response said it is building a robust tool, a platform for interconnecting all industry stakeholders to support real-time aggregation of data. The insurance policy platform, it said, is a digital platform to capture all insurance policies issued in Nigeria with a unique identifier. The portal will generate a unique identifier for every policy issued by insurance companies to enable insurance customers and third-party entities such as law enforcement agencies to query and validate their insurance policies.

Source: The Guardian

Nigeria

Nigeria seeks sustainable oil, gas sector with NOGEC

A new infrastructure, the National Oil and Gas Excellence Centre (NOGEC), built by the Department of Petroleum Resources (DPR), aims to address critical challenges and create a more stable and sustainable business environment. The project, billed to be inaugurated by President Muhammadu Buhari later this month, will, according to the director of the DPR, Sarki Auwalu, drive safety, value and cost efficiency, which are critical for oil and gas industry stability, growth and sustainability. Auwalu said the infrastructure will afford the Nigerian petroleum industry the elements for competitive advantage in a changing global energy landscape. The NOGEC is expected to house the various flagship centres to comprehensively cover key areas of the industry. The centres included the Search, Rescue and Surveillance (SeRAS), Command and Control Centre, National Improved Oil Recovery Centre (NIORC), Oil and Gas Dispute Resolution Centre (DRC), Oil and Gas Competence Development Centre (CDC), and Integrated Data Mining and Analytics Centre (IDMAC).

Source: The Guardian

South Sudan / Sudan

South Sudan, Sudan reach oil production agreement

South Sudan and Sudan have signed an agreement to increase oil production in South Sudan’s northern fields from 170,000 barrels per day (bpd) to 300,000 bpd within the next three years. Commencing from 2021, the agreement provides for enhanced bilateral relations by focusing on investment and production as a way to mitigate economic challenges being experienced by both countries. The agreement was signed during a three-day joint meeting of a technical committee forged between the countries’ respective oil ministries and establishes a joint company for seismic surveys, analysis and the sharing of information. The agreement also provides for the introduction of a coordination office to facilitate engagement. Sudan aims to leverage its capacity to help South Sudan resolve logistical challenges and increase oil output, so as to utilise additional crude from its neighbour to operate the El Obeid refinery.

Source: Africa Oil & Power

Tanzania

TBS now to inspect vehicles upon arrival at Dar es Salaam port

Imported vehicles will, from 1 March 2021, be inspected at Dar es Salaam port upon arrival in the country, the Tanzania Bureau of Standards (TBS) has said. In that regard, the USD150 inspection fee that was paid in the country of export on imported vehicles will now be paid in Tanzania. Currently, TBS inspects vehicles intended to be imported into the country using four contracted agents, one of whom is stationed in Dubai while the other three are stationed in Japan. In view of the foregoing, TBS head of communications, Roida Andusamile said any vehicle inspection certificates issued by the agents on cars that will be imported into Tanzania beginning on 1 March will not be valid. “Any vehicles that will be inspected at the port and are found not to comply with the requirements will have to undergo upgrading and further inspection at the UDA yard adjacent to Dar es Salaam port before they are cleared and allowed on public roads,” Ms Andusamile said. Explaining, the charges, she said the inspection costs that were incurred by vehicle importers will now be paid locally as part of public revenue.

Source: The Citizen

Zambia

Zambia ratifies and deposits instruments of the TFTA Agreement

Zambia has become the latest country to deposit its instruments of ratification for the Tripartite Free Trade Area (TFTA) Agreement with the Common Market for Eastern and Southern Africa (COMESA) Secretariat. This brings the number of countries that have ratified and deposited the TFTA instruments to nine. The Agreement needs a total of 14 ratifications by member states to enter into force. Once operational, the TFTA will enable the free movement of goods, services and businesspersons, all of which stimulate economic activity in the region. The TFTA brings together 28 countries with a population of over 700 million people, and a combined gross domestic product (GDP) of USD1.4-trillion. Additionally, the region accounts for almost half of the membership of the African Union and 60% sixty of the GDP of the African continent. Other countries that have so far ratified and deposited the instruments of ratification with the COMESA Secretariat include Namibia, Egypt, Uganda, Kenya, South Africa, Rwanda, Burundi and Botswana. Eswatini has also ratified but is yet to deposit the instrument. In addition, five countries are currently in advanced stages of the ratification, namely Comoros, Malawi, Sudan, Tanzania and Zimbabwe.

Source: COMESA