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issue 390 | 07 Mar 2021

Africa

Afreximbank re-affirms to support factoring as alternative source of trade financing

The African Export-Import Bank (AfreximBank) has reaffirmed its readiness to support factoring as a viable alternative source of trade financing for small and medium enterprises (SMEs) in Africa. It said, “given that access to finance remains a key constraint to operations of SMEs in Africa, availability of sustainable trade finance is essential to propel the African Continental Free Trade Area (AfCFTA).” The Model Law on Factoring developed and promoted since 2016 by the AfreximBank, a Development Partner of the African Capacity Building Foundation (ACBF), has become more relevant than ever with the launch of the AfCFTA, according to its release copied to the Ghana News Agency. Ms Kanayo Awani, the Banks’ Managing Director of the Intra-African Trade Initiative and Chairperson of FCI’s Africa Chapter, recently told participants at a virtual workshop focused on ‘opportunities for factoring in Africa,’ that “the Bank had to date provided financing to emerging factoring companies in Cameroon, Senegal, Congo, Zimbabwe, Botswana and Nigeria, while factoring volumes in Africa grew by 10% to EUR24-billion in 2019.”

Source: GhanaWeb

Africa

Experts discuss African capital market space, joint African Exchanges Linkage Project

The Making Finance Work for Africa (MFW4A) partnership, hosted by the African Development Bank (AfDB), and the African Securities Exchanges Association (ASEA) have provided a recent progress update on the African Exchanges Linkage Project (AELP), which aims to connect Africa’s leading securities exchanges and boost cross-border investment flows. The updates were given during a virtual webinar held on 26 February. Among the AELP milestones discussed during the event were the establishment of six criteria to use in assessing the candidacy of exchanges wishing to join, establishment of a project management office and rollout of a communications program about the initiative. The seven AELP exchanges are: Bourse Régionale des Valeurs Mobilières (integrating the exchanges of Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo), Morocco’s Casablanca Stock Exchange, the Egyptian Exchange, the Johannesburg Stock Exchange, the Nairobi Securities Exchange, the Nigerian Stock Exchange and the Stock Exchange of Mauritius. Collectively, AELP covers 14 countries, 1,055 African companies and a market capitalization of USD1.2-trillion, or 95% of the market capitalization of all African exchanges.

Source: AfDB

East Africa

Trade within East Africa drops by 30%

The export of goods among East African countries has dropped by more than 30% in the last 10 years as individual countries embark on sustaining their needs. The most affected are consumer products and farm equipment, according to the Ministry of Trade and Industrialisation. This emerged during a validation workshop for the African Continental Free Trade Area (AfCFTA) in Naivasha. Trade and Industrialisation chief administrative secretary David Osiany said many countries had reduced reliance on each other for some products and services owing to the growth of local industries. He said they had instead focused on local production owing to steady demand, instead of relying on imports. Mr Osiany said Africa, with more than 1.2 billion people, has huge market potential in terms of goods and demand from individual countries, noting that the AfCFTA strategy would address the issue. A report by the East African Community (EAC) Secretariat shows Uganda, Tanzania, Rwanda, South Sudan and Kenya’s combined exports to the EAC amounted to USD3.1-billion in 2018. This however shows that the growth in intra-EAC trade slowed down to 9.4% in 2018 compared with 24.8% in 2017.

Source: The Standard

West Africa

AfDB provides grant to mainstream gender in ECOWAS’ digital financial operations

The African Development Bank (AfDB) has awarded a grant of USD320,535 to the West African Monetary Agency (WAMA) to mainstream gender in the Economic Community of West African States’ (ECOWAS) core digital financial services (DFS) regulatory frameworks. The funds will support a gender gap analysis of several WAMA strategies including those for financial inclusion, gender disaggregation data analytics, digital payment services and infrastructure, and digital identity. The project, to be executed over a three-year period, will potentially affect 350 million people in all 15 ECOWAS member countries. The grant will be disbursed through the Africa Digital Financial Inclusion Facility, a blended finance vehicle, supported by the Bank. The project has the potential to raise women’s participation in digital financial market operations in the region by 35%. The region has a higher gender disparity than other parts of the continent as reflected in its Gender Development Index of 0.825 versus the African average of 0.871.

Source: AfDB

West Africa

IMF Executive Board concludes regional consultation with WAEMU

After almost a decade of strong growth, the West African Economic and Monetary Union (WAEMU) region is facing severe challenges from a triple crisis impacting health, the economy and security. In part, because of drastic measures taken early on, the Coronavirus (COVID-19) seems to have spread at a slower pace and with a lower fatality rate in WAEMU countries than on average in sub-Saharan Africa. Economic activity decelerated sharply between March and June 2020, particularly in the commerce, construction, transportation and hospitality sectors. But a rebound was observed in the third quarter. Both fiscal and monetary policies were relaxed significantly in 2020 to contain the pandemic and support the economy. For 2021, growth is projected at 5.4%, mostly driven by a rebound in private consumption and private investment, reflecting the relaxation of lockdown constraints and the return of foreign direct investment. A gradual fiscal consolidation is expected to start this year and bring the aggregate fiscal deficit to 3% of GDP by 2023. There are, however, significant downside risks to the outlook, and new virus outbreaks or security shocks could derail the recovery and create additional fiscal pressures.

Source: IMF

Ethiopia

Integrated agro-industrial park to be constructed in Oromia Region

An agreement was recently signed between the Oromia Industrial Parks Development Corporation and Walabu Construction Share Company to construct an agro-industrial park at the cost of ETB7.8-billion in Nekemte town, East Welega zone of Oromia Regional State. During the occasion, Oromia Industrial Parks Development Corporation Bureau head, Sisay Gemechu, said the construction of the park will be completed in three years. The entire budget required for the construction of the park will fully be covered by the regional government, he said. The Park will cover 250 hectares of land and is expected to create more than 3,000 job opportunities in the course of the construction process, Sisay added. The park will accommodate plants to process coffee, tea, oilseeds, grains, fruits and vegetables, meat, poultry products, eggs, honey and dairy products. The park is expected to attract foreign and domestic investors engaged in agro-processing products to be exported for international markets.

Source: ENA

Ghana

Ghanaian banks well-positioned for higher asset quality risk

Ghanaian banks are well-positioned to absorb the increased asset quality risk from borrowers pressured by the economic effects of the COVID-19 pandemic, Fitch Ratings says. The sector entered the crisis strengthened by recent initiatives led by the government and the Bank of Ghana (BoG) that addressed energy sector asset quality issues, raised minimum capital requirements and resulted in consolidation. Pandemic-induced defaults will add to legacy asset quality issues but strong pre-impairment operating profitability and improved capitalisation mean that banks are on a sound footing to absorb the risks. The banking sector's regulatory capital adequacy ratio was 19.8% at end-2020, comfortably above the minimum regulatory requirement of 11.5%, which was reduced from 13% at the onset of the pandemic in an effort by the BoG to stimulate lending. Strong capitalisation, combined with strong pre-impairment operating profit and current BoG guidance against dividend payments, gives banks significant headroom to absorb pressure on asset quality, as well as space to expand credit to support the economic recovery. Nevertheless, Ghanaian banks' credit profiles remain highly constrained by Ghana's volatile operating environment and by their high exposure to the sovereign (B/Stable) relative to capital.

Source: Fitch Ratings

Ghana

GSE extends deadline for submission of 2020 financial reports of listed banks

The Ghana Stock Exchange (GSE) has extended the date for the submission of 2020 audited financial statements of listed banks. The Exchange said in a release that this is due to a request made by the listed banks through the Ghana Association of Bankers for an extension by one month to 30 April 2021, to enable them to work effectively with their external auditors to achieve the audit objectives. The Association has indicated that the advent of COVID-19 has resulted in a significant impact on human resource allocation in most banks. “This has been exacerbated by the recent spike in the infection rate in the country. Results from initial assessment in the banking industry point to signals that some banks are unable to keep sufficient staff members at post to assist with the audit of the 2020 financial statements, resulting in significant delays in some instances,” the Association informed the GSE. The banks that are able to conclude their audit in time, in spite of the negative impact of the pandemic, have been encouraged to submit within the existing statutory timeline.

Source: GhanaWeb

Ghana / United Kingdom

Boost for Ghanaian exporters as Ghana, UK seal trade agreement

The United Kingdom (UK) on Tuesday, 2 March signed a trade partnership agreement with Ghana that secures tariff-free trade and provides a platform for greater economic and cultural cooperation. The deal supports a trading relationship worth GBP1.2-billion and reinstates the terms of the economic partnership agreement between the two sides when the UK was part of the European Union (EU). It means Ghanaian products including bananas, tinned tuna and cocoa will benefit from tariff-free access to the UK. UK exports are also in line to benefit from tariff liberalisation from 2023, including machinery, electronics and chemical products. Ghana’s largest exports to the UK include mineral fuels and oil, preparations of fish, fruit, cocoa and cocoa preparations. Its top imports include clothing / textiles, machinery and mechanical appliances, and chemical products from the UK. The deal means the UK has now secured trade agreements with 65 non-EU countries, representing trade worth GBP217-billion in 2019.

Source: Ghanaian Times

Kenya

NSE plugs derivatives market into global data platform

The Nairobi Securities Exchange (NSE) has integrated its data for its derivatives market with global data platform Refinitiv, giving investors across the globe a real-time view of the market. London Stock Exchange-listed Refinitiv runs the Elektron Real Time platform that will carry the updates on the NSE’s single stock futures and index futures products. The integration went live on Monday, 1 March. The NSE trades Safaricom, KCB, KenGen, Equity Bank, BAT Kenya, EABL, Bamburi and the NSE 25 index on the derivatives market, dubbed Next. NSE chief executive officer Geoffrey Odundo said partnering with Refinitiv will help meet international investors’ demand for real time data of the NSE’s derivatives market. He added that the derivatives market has seen a spike in trading as stockholders look for alternative options in the market and will gain further with the live data feed.

Source: Business Daily

Kenya / United Kingdom

UK MPs endorse Kenya trade deal

United Kingdom (UK) legislators have endorsed the trade deal with Kenya after completing scrutiny of the document, paving the way for its enforcement once the Kenyan counterparts approve it. The House of Lords completed the legislative scrutiny of the treaty following a debate on Tuesday, 2 March. “The UK looks forward to agreeing the date of entry into force once Kenya has completed its domestic processes for ratification,” a spokesperson for the British High Commission in Nairobi said. Kenyan lawmakers initially delayed debate on the trade deal and sought more details, while the Kenya Small-Scale Farmer Forum and Econews Africa have moved to court to stop ratification of the agreement, citing failure to widely consult stakeholders. A section of members of Parliament on Wednesday, 3 March further protested a clause that bars them from amending or expressing reservations on the pact, although protocols for such deals do not give parliaments powers to introduce changes to trade deals at the ratification stage.

Source: Business Daily

Kenya / United States

Biden team resumes Kenya, US trade talks

Kenya and the United States (US) will resume talks on a bilateral trade agreement after a four-month pause in the wake of American presidential elections last November. Mr Johnson Weru, the principal secretary for Trade and Enterprise Development, said the imminent confirmation of President Joe Biden’s trade representative nominee will unlock talks. The US Senate Finance Committee has held confirmation hearing for Ms Katherine Tai, the nominee for the trade representative post in President Biden’s administration, awaiting a vote. “As soon as that confirmation is formally announced by Congress, we will be ready as we have always been in getting business done,” said Mr Weru. Successful trade talks between Nairobi and Washington will form the basis for other deals between the US and sub-Saharan African countries ahead of the expiry of the African Growth and Opportunity Act (AGOA) in 2025. The AGOA pact allows sub-Saharan African countries to export more than 6,000 product lines to the US without tariffs or quotas.

Source: Business Daily

Malawi

UN tips Malawi on tech development

The United Nations (UN) Technology Bank has urged the Malawi Government to engage the financial sector to provide funding for start-ups in the information and communications technology industry by establishing a credit-guarantee facility. This, the UN says, will help the sector grow substantially. In an interview, UN Technology Bank managing director, Joshua Setipa, said the government should set up a facility where it could be covering 50% of credit risk when banks lend out to start-ups in the industry. He said the government should also have competitive incentives that would facilitate foreign direct investment (FDI) inflow. “Other Least Developed Countries (LDCs) have very competitive incentive packages that are aimed at attracting FDI in a number of sectors,” Setipa said. He added that Malawi would be among countries that would benefit from a project where the bank is establishing science academies in LDCs. According to Setipa, the project is expected to commence in the second half of this year.

Source: The Times

Mauritania

IMF Executive Board completes sixth review under the ECF arrangement with Mauritania

The Executive Board of the International Monetary Fund (IMF) completed the sixth and final review of the arrangement with Mauritania under the Extended Credit Facility (ECF) covering 2017-2021, allowing the disbursement of SDR16.56-million (12.9% of quota, about USD23.8-million). The arrangement was approved on 6 December 2017 with total access of SDR115.92-million (about USD167-million at current exchange rates), or 90% of Mauritania’s quota, to help the authorities meet social and infrastructure needs while maintaining macroeconomic stability and increasing resilience to shocks. It was augmented by SDR20.24-million (15.7% of quota) on 2 September 2020 to address higher-than-anticipated financing needs due to the COVID-19 pandemic and was extended by three months on 1 December 2020. In completing the review, the Executive Board also approved the authorities’ request for a waiver for the non-observance of the June 2020 performance criterion on net domestic assets of the central bank.

Source: IMF

Namibia

Economic recovery hinges on external factors – BoN

The Bank of Namibia (BoN) has painted a hopeful picture for the Namibian economy. This, however, largely hinges on the opening of the global economy, mass vaccinations domestically and trading partners. In its recent economic outlook update for February 2021, the central bank projected an economic recovery of 2.7% set to be driven by the primary sector as usual. The BoN warned that risks to domestic growth are lingering in the corridors and that growth is still dominated by uncertainty around the impact of the COVID-19 pandemic. If all goes as projected this year, the country's production of goods and services would expand by 2.7%, which would continue into next year, with a projected growth of 3.3% in the following year. This will be quite significant given that the economy has lost 7.3% in production last year. Growth of 5% is projected for industries in the primary sector for this year, from an estimated contraction of 7.5% in 2020. An astounding 11.1% increase is expected in the diamond mining sector by 2021. The agriculture, forestry and fisheries sectors are expected to grow by 4.4% this year.

Source: The Namibian

Namibia

MPs talk value addition before ratifying SADC protocol

After the tabling of the ratification of the Southern African Development Community (SADC) protocol, some parliamentarians feel Namibia still has much more to do before considering the protocol. The motion to ratify the protocol was tabled by the minister of Industrialisation and Trade, Lucia Iipumbu. Debating the motion in the National Assembly, Popular Democratic Movement (PDM) president, McHenry Venaani, said the question of value addition is central to broaden the debate of industrialisation. Also weighing in on the debate, Landless People’s Movement (LPM) parliamentarian, Henny Seibeb, cautioned that Namibia needs to be mindful and take realistic steps in the proposed protocol of industrialisation as it continues to meet future challenges of regional integration. He further stated that to achieve all objectives outlined in the protocol, Namibia needs a lot of finance which is hard for it to secure given the current economic situation, saying the little allocation of funds allocated to the trade ministry makes it so much more difficult. Meanwhile, for the protocol to come into force, minister Iipumbu explained that at least two-thirds or 11 SADC member states have to ratify it.

Source: New Era

Nigeria

NAICOM tasks insurers on tech-drive investment

The National Insurance Commission (NAICOM) has urged insurance operators to invest significantly in technology to drive efficient business operations in the industry. This was the submission of the Commissioner for Insurance, Sunday Thomas, at a conference in Lagos. He said insurers should make investments in technology as a matter of priority to deepen market penetration. Thomas lamented that the declining participation of local insurers in big-ticket businesses due to lack of appropriate technology has been a major setback. Worried by this development, he said, insurance companies are losing underwriting businesses in the oil / gas and aviation sectors. He said “the industry has to invest handsomely in technology, which is one of the key drivers for developing the market. Institutions should prepare to digitalise their processes, procedures and systems to make their operation seamless and real-time.” He stated that the commission was investing heavily in automating its processes and expects nothing less from insurance operators.

Source: The Guardian

Nigeria

NPA offers to partner with NLNG to increase gas production capacity

Managing director, Nigerian Ports Authority (NPA), Hadiza Bala Usman, said the agency was ready to partner with the Nigeria Liquefied Natural Gas (NLNG) in increasing natural gas production capacity by 36%. Represented by the executive director, Marine and Operations, NPA, at the virtual Multilogues-2 organised by the Nigerian Gas Association (NGA), Usman said the agency would support NLNG in increasing natural gas production from 22 million tonnes to 30 million tonnes yearly. “The NPA is poised to offer necessary collaborative support to the NLNG in achieving the goals of its Train 7 projects, which we are informed will increase Nigeria’s liquified natural gas production capacity by 36% from the current 22 million tonnes per annum to 30 million tonnes per annum,” she said. Usman reiterated the need for the deep seaports to accommodate larger vessels and improve port services. “We are also conscious of the current limitation of our seaports in relation to the growing appeal of larger vessels which should be deployed for the purpose of economies of scale.”

Source: The Guardian

Nigeria / Morocco

Nigeria, Morocco endorse protocols for fertilizer plant

The Nigerian government signed a pact with OCP Morocco, a leading global provider of phosphate and its derivatives, to aid the second phase of the Nigerian Presidential Fertilizer Initiative (PFI) in Morocco. The pact signed by the Nigerian delegation led by the minister of State for Petroleum, Timipre Sylva, and officials of the Nigeria Sovereign Investment Authority (NSIA), is geared towards boosting local fertilizer production. This development was disclosed by the managing director of the NNPC in a tweet posted on his official Twitter handle on Tuesday, 2 March. “We joined HMSPR Timipre Sylva, OCP Morocco, PFI and the NSIA in Marrakech to endorse protocols that progress the ammonia plant establishment in Akwa Ibom. We gave gas supply assurances and NNPC will take equity in the venture. Local fertilizer production will get [a] boost!” his tweet reads. According to the NSIA, the new Memorandum of Understanding is expected to utilise Nigeria’s gas and Morocco’s phosphate to produce 750,000 tonnes of ammonia and one million tons of phosphate fertilizers annually by 2025.

Source: Premium Times

Rwanda

Lawmakers to push for reforms in public procurement

The lower chamber of Parliament has requested the prime minister to amend the law governing public procurement in a bid to address challenges in the execution of public tenders. The Chamber of Deputies made the resolution on 2 March as it adopted a report of the Public Accounts Committee (PAC) on the current procurement law, which was enacted in 2018. PAC chairperson, Valens Muhakwa, said poor planning, delays in executing contracts and paying contractors as well as loopholes in some provisions of the law are some of the challenges undermining the efficiency in public procurement. In order to better analyse the issues in the current law, Muhakwa said that the committee held talks with Nyarutarama Property Developers, the Private Sector Federation (PSF), the Rwanda Public Procurement Authority (RPPA), the Ministry of Justice, the Ministry of Trade and Industry and the Ministry of Finance and Economic Planning. According to MPs, the current law provides that all invoices should be paid within 45 days, but does not provide for what happens when that period is not observed. This situation, MPs said, can be a loophole for injustice and corruption.

Source: The New Times

Tanzania

Why BoT wants names of sacked bank workers

In a move aimed at ensuring that banks and other financial institutions in Tanzania are manned by staff of high integrity, the Bank of Tanzania (BoT) has decided to establish a database of employees with a proven record of involvement in gross misconduct or fraud. BoT banking supervision manager Sadati Musa said the move was part of the central bank’s regulatory and supervisory mandate. Hence, banks and financial institutions in the country are required to submit to the regulator in a prescribed format information pertaining to staff who were or will be terminated because of gross misconduct or fraud. “Information covering the period from January 1, 2011 to date, to be submitted within ten days after receiving these instructions,” he said in a statement seen by The Citizen. He said going forward information shall be submitted within seven days from the date of conclusion of the staff termination process including completion of the internal appeal process or from the date when staff resign from employment during the disciplinary hearing process.

Source: The Citizen

Zambia

Beeline Telecoms to increase competition

The Consumer Unity Trust Society (CUTS) is confident that the introduction of Beeline Telecoms, a fourth mobile telecommunications service provider in Zambia, will bring about competition and improved service delivery among existing mobile phone network service providers. CUTS programmes coordinator Ishmael Zulu noted that Zambia, like many other countries, has seen an increased demand for mobile telecommunications owing to the COVID-19 pandemic. “We are hopeful that this will enhance service delivery because people work from home and students have online lessons. There is need for a stable internet network,” he said. The Zambia Information and Communications Technology Authority (ZICTA) recently announced that a licence has been granted to Beeline Telecom to commence mobile phone operations in the country. Beeline Telecom will be required to commence operations within the next six months. Failure to do so, unless determined otherwise by the Authority, will result in revocation of the licence.

Source: Lusakatimes

Zambia

IMF staff complete virtual mission to Zambia

An International Monetary Fund (IMF) staff team led by David Robinson held virtual meetings from 11 February to 3 March to discuss the Government of Zambia’s request for support under the IMF’s Extended Credit Facility. The discussions covered recent economic developments, the near-term macroeconomic challenges, and policy options to return Zambia to a sustainable macroeconomic position over the medium-term. Broad agreement was reached on the nature and cause of the underlying macroeconomic imbalances. Key challenges remain, including implementing fiscal reforms to correct current large fiscal imbalances; increasing fiscal revenues to provide the needed fiscal space to achieve development objectives; bolstering governance and the efficiency of the use of public resources, including through debt and expenditure transparency; halting the incurrence of domestic arrears; and ensuring that the social protection scheme is fully funded with timely payments. Significant progress has been made and discussions are expected to continue in the next few weeks, following additional technical work on the appropriate policy package.

Source: IMF