issue 394 | 04 Apr 2021
AfricaAfCFTA and UNDP announce new partnership to support largest trade area towards inclusive growth in Africa
The African Continental Free Trade Area (AfCFTA) Secretariat and the United Nations Development Programme (UNDP) have signed a strategic partnership to promote trade as a stimulus for Africa’s socio-economic recovery from the Coronavirus (COVID-19) crisis, and as a driver of sustainable development particularly for women and youth in Africa, in line with the Sustainable Development Goals (SDGs) and Agenda 2063 common vison for the continent. The agreement was sealed by the AfCFTA Secretary General, H.E. Mr Wamkele Mene, accompanied by Ambassador Fatima Mohammed Kyari, Permanent Observer of the African Union to the United Nations, and by the UN Assistant Secretary-General and Director of the UNDP Regional Bureau for Africa, Ms Ahunna Eziakonwa. The partnership will leverage UNDP’s presence in all African countries, working in close collaboration with other UN entities, and includes direct support to the AfCFTA Secretariat through a financial grant of US$3 million. This will enhance AfCFTA Secretariat advocacy among policy makers, business, civil society, academia, youth and other stakeholders.
AfricaAfrica signs historic agreement with Johnson & Johnson for 400 million doses of COVID-19 vaccines
In a historic COVID-19 vaccine procurement agreement signed on 28 March 2021, all African Union member states, through the African Vaccine Acquisition Trust (AVAT) set up in November 2020 under the African Union chairmanship of H.E President Cyril Ramaphosa will have access to 220 million doses of the Johnson & Johnson single-shot COVID-19 vaccine, with the potential to order an additional 180 million doses. Most of the supplies will be produced at the giant pharmaceutical manufacturing plant in South Africa operated by Aspen Pharma. The vaccines will be made available to African countries through the African Medical Supplies Platform (AMSP), over a period of 18 months. The transaction was made possible through the USD2-billion facility approved by the African Export-Import Bank (Afreximbank), who also acted as financial and transaction advisers, guarantors, installment payment advisers and payment agents.
AfricaAfDB and BOAD sign MoU to co-finance preparation of regional infrastructure projects in PPP in Africa
The African Development Bank (AfDB) and the West African Development Bank (BOAD) signed a Memorandum of Understanding (MoU) setting out a strategic partnership framework for co-financing the preparation of regional infrastructure projects in a public-private partnership (PPP) in Africa. The two institutions were represented respectively by Solomon Quaynor, Vice-President for Private Sector, Infrastructure and Industrialisation at the AfDB and Serge Ekue, President of the BOAD. As part of this strategic partnership, the AfDB will build on the New Partnership for Africa's Development Infrastructure Project Preparation Facility (NEPAD-IPPF). For its part, BOAD will build on its Regional Public-Private Partnership Project Development Unit (URDPPP). The two institutions intend to cooperate in order to increase the availability of viable regional infrastructure projects in transport, energy, water and information and communication technology. The MoU, concluded over a five-year period, covers the identification, selection and prioritisation of potential P3 regional infrastructure projects, feasibility studies, and structuring and support for the transaction.
GhanaEncouraging competition in AfCFTA: Government waives import duties
The government has waived import duties on imported equipment, machines and raw materials for local manufacturing companies to enable them to become competitive in the global marketplace. Since 2017, the government has also reduced some taxes, and in some cases completely removed them, provided some critical infrastructure and simplified some trade procedures to boost local production. The measures are part of a fiscal incentive framework under the Industrial Transformation Programme to empower the private sector to fully harness market opportunities such as the AfCFTA. The Minister of Trade and Industry, Mr Alan Kyerematen, disclosed this in a keynote address delivered on his behalf at the Graphic Business / Stanbic Bank Breakfast Meeting in Accra on Tuesday, 30 March 2021. Mr Kyerematen said although the AfCFTA created a market area of 1.3 billion people, with a combined productivity value of USD3.4-trillion, the benefits would not drop automatically. In order to harness the benefits of AfCFTA, he said, the Ghanaian private sector required fiscal incentives in the areas of taxation to boost their competitiveness.
Source: Graphic Online
KenyaBusiness lobby calls for fresh stimulus, tax cuts
Kenya’s top business lobby has called on the state to unveil an emergency stimulus package and tax cuts to cushion the economy from the new lockdown following a spike in COVID-19 cases. The Kenya National Chamber of Commerce and Industry (KNCCI) petitioned for emergency relief measures for the worst-hit industries, such as the entertainment, hospitality, and transportation sectors. The business lobby is pushing for a reduction of fuel taxes, lowering the value-added tax (VAT) rate to 14% from 16% and eliminating the minimum tax, which demands loss-making firms to pay a duty equivalent to 1% of their sales. The KNCCI wants the Central Bank of Kenya to allow lenders once again to restructure loans for borrowers in the wake of the latest COVID-19 restrictions. “The prevailing high taxes should be revised, and the minimum tax should be abolished,” KNCCI president Richard Ngatia said after a meeting of the chamber’s top organ. “The businesses require intervention to progress.” Mr Ngatia said there is a need for the extension of emergency loan restructuring measures by financial institutions to further cushion small businesses.
Source: Business Daily
KenyaIMF Executive Board approves USD2.34-billion ECF and EFF arrangements for Kenya
On 2 April 2021, the Executive Board of the International Monetary Fund (IMF) has approved 38-month arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya in an amount equivalent to SDR1.655-billion (305% of quota or about USD2.34-billion) to support the next phase of the authorities’ COVID-19 response and address the urgent need to reduce debt vulnerabilities. Approval of the ECF/EFF enables immediate disbursement of about USD307.5-million, usable for budget support. This follows Fund emergency support to Kenya in May 2020 (100% of quota, equivalent to USD739-million at the time of approval). Kenya was hit hard at the onset by the COVID-19 pandemic. With a forceful policy response, the economy has been picking up heading into 2021 after likely posting a slight contraction of 0.1% in 2020. Even with this recovery, challenges remain in the return to durable and inclusive growth, and past gains in poverty reduction have been reversed.
KenyaKQ exempted from 1% minimum tax
Kenya Airways is now exempted from paying the minimum tax set at 1% of gross turnover, saving the cash-strapped airline hundreds of millions of shillings annually. The tax shield was announced by National Treasury secretary Ukur Yatani in a Kenya Gazette notice dated 17 March 2021. The national carrier has been making losses over the years, which has seen it pay minimal corporate taxes. In the financial year ended December 2020, it even received a tax credit of KES354-million. The company, however, faced significant cash outflows from the introduction of the minimum tax on 1 January 2021, with the new levy to be paid if a firm’s normal corporate taxes fall below 1% of gross revenue. But Mr Yatani has protected KQ, as the carrier is known by its international code, from this new tax that is designed to ensure that firms that are in perpetual losses also contribute to the state’s coffers.
Source: Business Daily
MadagascarIMF Executive Board approves USD312.4-million ECF arrangement for Madagascar
The Executive Board of the International Monetary Fund (IMF) has approved a 40-month arrangement under the Extended Credit Facility (ECF) equivalent to SDR219.96-million (about USD312.4-million or 90% of quota) for Madagascar. The Board’s decision allows an immediate disbursement of SDR48.88-million (about USD69.4-million). The ECF arrangement follows the Fund’s emergency support to Madagascar in April 2020 for SDR122.2-million (about USD165.99-million or 50% of quota), and in July 2020 for SDR122.2-million (about USD171.9-million or 50% of quota). The arrangement is expected to catalyse additional bilateral and multilateral financial support. The program design considers Madagascar’s fragilities, including its high exposure to climate-related shocks, and will focus on mitigating the economic impact of the pandemic, maintaining macroeconomic stability, and reviving the reform momentum to raise and sustain growth and reduce poverty. It aims to rebuild and further strengthen fiscal space to allow for much needed investment and social spending through revenue mobilisation and improving quality of spending; resuming and advancing the structural reform and anti-corruption efforts and governance agenda; and strengthening the monetary policy framework and supporting financial stability, while maintaining price stability with exchange rate flexibility.
NamibiaIMF Executive Board approves USD270.83-million disbursement to Namibia to address the COVID-19 pandemic
The Executive Board of the International Monetary Fund (IMF) has approved an outright purchase of SDR191.1-million (about USD270.83 -million) to Namibia under the Rapid Financing Instrument (RFI). This will help the country address urgent balance of payments and fiscal financing needs stemming from the negative impact of the COVID-19 pandemic. IMF financing will also contribute to catalysing additional financing from development partners. Namibia has been severely affected by the COVID‑19 pandemic. Worsening global conditions and a local outbreak have deteriorated Namibia’s short-term macroeconomic outlook, hindered mining exports, tourism, investment inflows and weighed on tax revenues. The Namibian economy is estimated to have sharply contracted by 7.2% in 2020, and the recovery is set to remain subdued at 2.1% in 2021. The outright purchase under the RFI will provide needed financing to support the authorities’ implementation of their response to the COVID-19 crisis, including the purchase of vaccines and deployment of the vaccination campaign, and interventions needed to mitigate the pandemic’s severe socio-economic impact.
NamibiaUntapped potential for automotive industry
The Namibian government says it recognises the importance of developing a fully-fledged automotive assembly industry to help boost the local economy. Industrialisation minister Lucia Iipumbu, on the occasion of the National Automotive Assembly Development Policy framework (NAADP) 2019-2021, said the development aims to optimise contribution to the gross domestic product (GDP), employment creation, technology transfer, value addition, fostering of backward and forward linkages and the immersion of micro, small and medium enterprises (MSMEs). Iipumbu noted that Namibia currently has a promising motor assembly sector whilst the sector policy development is not fully optimised. Regionally, the sector major anchor programme, the Automotive Production Development Programme (APDP) is set to end in 2021 – and according to her, it could accentuate the policy vacuum more markedly. The Namibian masterplan is to be finalised at the end of 2021. The NAADP framework is, therefore, designed as a measure to provide adequate transitory policy provisions in terms of promoting and sustaining investment in local assembly and component manufacturing. NAADP also aims to promote the exportation of locally produced or assembled motor vehicles as well as increasing the capacity utilisation of automotive assembles.
Source: New Era
RwandaNew incentives for local manufacturers explained
In December last year, Cabinet approved the ‘Manufacture and Build to Recover Programme’, which the government says is aimed at fostering economic recovery following a recession resulting from the COVID-19 pandemic and measures to curb it. Manufacture and Build to Recover Programme will extend tax breaks and tax credits to businesses with an aim to reduce the cost of investment for new manufacturers as well as those seeking to expand existing operations. The programme is expected to lead to over USD1-billion worth of investments as well as create over 27,000 jobs across the country which is expected to put the country on the path to recovery. The New Times’ Collins Mwai spoke to Rwanda Development Board deputy chief executive Zephanie Niyonkuru on the programme scope, investor eligibility among other aspects.
Source: The New Times
RwandaRwanda cushions ailing businesses with RWF350-milllion economic recovery fund
Rwanda has unveiled an additional RWF350-billion stimulus plan for its economy to support businesses hard hit by the pandemic, boost jobs and reduce poverty. “Businesses negatively impacted by the restrictions put in place to prevent the spread of the virus, or exposed to consumer discretionary spending, and those with global supply chains that have been disrupted are eligible to apply for the support provided by the Economic Recovery Fund,” said Rwanda’s Prime Minister Edouard Ngirente, presenting the revised economic recovery plan in Parliament. The funding, under the Economic Recovery Fund (ERF), was initially set up in June 2020 with an allocation of approximately RWF100-billion for two years, targeting tourism and hospitality, manufacturing, transport and logistics as well as small and medium enterprises linked to domestic and global supply chains. While the latest source of the funding has not been made public, COVID-19 related spending, health and economic measures have cost the government more than 3.3% of GDP as of September 2020, according to the International Monetary Fund. The additional funding relief will also support construction.
Source: The EastAfrican
South SudanIMF Executive Board approves USD174.2-million emergency assistance for South Sudan to address the COVID-19 pandemic
The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of SDR123-million (50% of quota or about USD174.2-million) to South Sudan under the Rapid Credit Facility (RCF). This is the second IMF financial assistance to South Sudan since it joined the IMF in 2012. The disbursement will help finance South Sudan’s urgent balance of payments needs and provide critical fiscal space to maintain poverty-reducing and growth-enhancing spending. A sharp decline in international oil prices triggered by the pandemic and devastating floods have eroded economic gains of the peace process. The economy is slated to contract by 4.2% in FY20/21. The economic downturn widened the fiscal and the balance of payments deficits, opening large financing gaps in the absence of concessional financing. In the past, the monetisation of the fiscal deficit resulted in high inflation and significant exchange rate depreciation. A modest economic recovery is projected in FY21/22 on the heels of oil price recovery.
TanzaniaPresident Samia: Stop frustrating taxpayers, expand tax base
Tanzania’s President Samia Suluhu Hassan has told the taxman through the Ministry of Finance to stop frustrating businesses and instead look for new ways to expand the tax base. “You have been given a threshold of TZS2-trillion per month, go and expand the tax base and come up with new taxpayers,” said the president. The president was speaking at the swearing in of the newly appointed chief secretary, ministers and their deputies at State House Dodoma. According to the president, the prevailing trend is killing taxpayers instead of making the environment conducive for doing business. “You use a lot of force in the collection of taxes, now those whom you impose heavy taxes upon, you take away their tools of work, close their bank accounts, forcefully take money from accounts, just because the law allows you to do so, once this happens most business people opt to close shop and go to other countries,” said the president.
Source: The Citizen
The GambiaIMF staff completes virtual mission for the second review of the Extended Credit Facility for The Gambia
A team from the International Monetary Fund (IMF), led by Mr Ivohasina Fizara Razafimahefa, mission chief for The Gambia, held a virtual mission with the Gambian authorities during the period 22 March to 1 April 2021 to discuss the second review of The Gambia’s economic program supported by the IMF’s Extended Credit Facility (ECF). At the conclusion of the mission, Mr Razafimahefa issued the following statement: “The mission team reached a staff-level agreement with the Gambian authorities on economic and financial policies that could support the approval of the second review of the ECF-supported program. Performance under the program has been strong despite the challenges caused by the COVID-19 pandemic. All quantitative targets at end-December 2020 were met. The structural benchmarks were also completed. The staff-level agreement is subject to approval by IMF management and the IMF Executive Board. Consideration by the Board is tentatively scheduled for May 2021; upon approval of this second review of the program, SDR10-million (around USD14-million) will be made available to The Gambia.
The GambiaTrade ministry asks importers of essential commodities to obtain licensing system it reintroduces
The Ministry of Trade, Industry, Regional Integration and Employment has asked importers of essential commodities in The Gambia to obtain the licensing system it is reintroducing to be able to continue importing commodities into the country. The ministry in a dispatch stated that the Essential Commodity Act, enacted in 2015 is being brought into force, saying the Act aims to regulate importation, distribution and retailing of essential commodities to ensure availability at fair and reasonable prices. “The Act requires importers of essential commodities to obtain an import licence from the ministry to be able to import these commodities,” the dispatch stated. “The enforcement of the import licence will commence by 1 May 2021. No importer will be allowed to import the [essential] commodities without an import licence,” the ministry indicated.
UgandaStanbic, CNOOC seal deal to collaborate on oil, gas national content
CNOOC Uganda Limited and Stanbic Business Incubator Limited (SBIL) have signed a Memorandum of Understanding (MoU) to facilitate a partnership and collaboration that will significantly contribute to the development and sustainability of national content in the oil and gas sector. Tony Otoa, the chief executive of Stanbic Business Incubator and Chen Zhuobiao, the president of CNOOC Uganda Limited, signed the MoU in Kampala that will see both parties focus on enterprise development, training and information dissemination, as well as the strengthening of their mutual relationship. The MoU shall promote national content capacity building, through among others, facilitating training on different business aspects, sharing information and enterprise development. The MoU will also facilitate technology transfer and create employment opportunities amongst Ugandan contractors in the provision of goods and services to the oil and gas sector.
Source: The Independent
UgandaUganda seeks USD130-million for pipeline deal
To fund its 15% share of the East African Crude Oil Pipeline, Uganda is opting to borrow UGX481-billion (USD130-million) from the domestic market to financially back its shareholding with equity. The 15% is owned through the Uganda National Oil Company and the money is a precondition for the government to solidify its ownership in the project. The loan will also pay for “historical costs,” which international oil companies have been footing since 2017 on behalf of the government, such as the project’s design and environmental impact studies. After failing twice, Parliament’s Committee on National Economy will have the last say on whether the government gets the money in time for the final investment decision (FID) to tie up its equity in the USD3.5-billion pipeline project. “We are still scrutinising this loan request and the different agreements, before deciding whether to grant authorisation to borrow domestically,” committee chair Syda Bbumba told The EastAfrican. The East African Crude Oil Pipeline agreements that are being scrutinised include the Inter-Governmental Agreement, signed in 2017, the Host Government Agreement, the Shareholder Agreement, the Tariff Agreement and the Transportation Agreement all signed in 2020.
Source: The EastAfrican