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Africa Business in Brief

 

issue 423 | 24 Oct 2021

World

Platform for Collaboration on Tax strengthened support to countries during the COVID-19 pandemic

The Platform for Collaboration on Tax (PCT) – a joint initiative of the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development, United Nations and the World Bank – enhanced its support to countries in the area of domestic resource mobilisation during the COVID-19 pandemic, according to the PCT Progress Report 2021. The report, released on 20 October, highlights that the PCT partners are committed to deepening their tax collaboration further with a revamped work program to help countries develop resilient tax systems and better fiscal policies in response to the crisis. The PCT Progress Report 2021 examines activities that the PCT has undertaken in five focus areas since July 2020: medium-term revenue strategies (MTRS), COVID-19, tax and Sustainable Development Goals (SDGs), international taxation, and coordination. The new work streams reflect the changing global tax landscape and the challenges of the pandemic for governments and policymakers as countries around the world try to balance the increased spending and lower revenues due to the COVID-19 crisis.

Source: IMF

Africa

Sub-Saharan Africa: one planet, two worlds, three stories

Sub-Saharan Africa’s economy is set to recover in 2021 – a marked improvement over the extraordinary contraction of 2020. This rebound is most welcome and primarily results from a favourable external environment, including a sharp improvement in trade and commodity prices. In addition, improved harvests have lifted agricultural production. Yet, the outlook remains highly uncertain as the recovery depends on progress in the fight against COVID-19 and is vulnerable to disruptions in global activity and financial markets, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa. “At 3.7% this year, the recovery in sub-Saharan Africa will be the slowest in the world – as advanced markets grow by more than 5%, while other emerging markets and developing countries grow by more than 6%. This mismatch reflects sub-Saharan Africa’s slow vaccine rollout and stark differences in policy space. Real per capita income is expected to remain close to 5.5% below pre-crisis trends, with permanent real output losses ranging between -21% and -2%.

Source: IMF

Southern Africa / South America

SACU and South America to deepen trade relations

Despite severe challenges caused by COVID-19, officials from the Southern Africa Customs Union (SACU) and the South American-based Southern Common Market (MERCOSUR) have reaffirmed their commitment to the full implementation of the Preferential Trade Agreement (PTA). Senior trade officials from the two regions further undertook to deepen their partnership in the spirit of south-south cooperation. In this regard, the two parties further agreed to keep the momentum through facilitating the business community in MERCOSUR and SACU to leverage on the benefits created by the PTA. On 5 October 2021, trade officials from SACU and MERCOSUR held their second meeting of the Joint Administrative Committee (JAC) under the framework of the PTA. The JAC is responsible for overseeing the implementation of the PTA. “The SACU-MERCOSUR PTA is a limited-scope agreement that aims to promote trade between MERCOSUR and the SACU regions. It offers tariff preferences on approximately 1000 tariff lines from each side with the Margins of Preference ranging between 10% and 100%,” SACU executive secretary Paulina Elago explained in a statement.

Source: New Era

Botswana

Botswana signs 10MW PPA with power solutions company

The Botswana Power Corporation (BPC) has signed a Power Purchase Agreement (PPA) with Tlou Energy Limited. Under the terms of the PPA, BPC will purchase up to 10MW of power generated at Tlou’s Lesedi power project. The PPA is for an initial five-year term with the 10MW project being the first phase of Tlou’s planned power project expansion. Tony Gilby, Tlou’s managing director, said “[The] signing of the 10MW PPA is a major step forward for Tlou and builds on the excellent progress made to date. It has taken some time and considerable effort to get to this point, as all of those involved [will] appreciate. This achievement puts the company on a firm path towards the development of the Lesedi power project and considerable growth potential.” “With strong demand for reliable and cleaner power in the region, this 10MW project is expected to be the start of much larger developments by the company. This is great news for Tlou, our shareholders and for Botswana. After a long wait, we can now look forward to getting the project up and running.”

Source: ESI Africa

Botswana

IMF expects Botswana’s growth to top Africa

The International Monetary Fund (IMF) expects the local economy to expand by 9.2% this year, the highest in Africa, in a significant revision of its 7.5% forecast made earlier in the year. The IMF’s World Economic Outlook recently released indicates that researchers at the institute expect Botswana’s growth this year to considerably beat its sub-Saharan peers, with Seychelles second at 6.9%, Burkina Faso third with 6.7% and Côte d’Ivoire fourth with 6%. Regionally, Zimbabwe is forecast to come second after Botswana in terms of growth with 5.1%, followed by South Africa with 5% and Lesotho with 2.8%. Botswana’s forecast growth is also comfortably above the sub-Saharan average of 3.7% forecast by the IMF. While the IMF did not provide reasons for its improved forecast for Botswana, local fiscal authorities have said they expect the resurgent performance of the minerals sector, led by diamonds, to power the economy’s bounce-back from the COVID-19-induced recession last year. The Finance ministry recently revised its forecast for 2021 from 8.8% to 9.7%, as data from diamond mining showed a better-than-expected performance.

Source: Mmegi

Cabo Verde

AfDB extends USD350 000 grant for technical assistance to deepen national capital markets

The African Development Bank Group (AfDB) has approved USD350 000 in grant funding for technical assistance to consolidate the country’s capital markets strategy and increase the liquidity of its fixed income markets. The grant will be sourced from the Capital Markets Development Trust Fund, a multi-donor fund administered by the AfDB. The national stock exchange, Bolsa de Valores de Cabo Verde (BVC), will use the funds to develop a capital markets masterplan and upgrade current infrastructure to stimulate liquidity in secondary bond markets. “We are delighted [about] the partnership with the BVC and the domestic capital markets ecosystem to support capital markets development in Cabo Verde,” said Ahmed Attout, manager of the AfDB’s capital markets development division. The programme design emerged from a participatory process involving the BVC, the national Ministry of Finance, the capital markets regulator, Auditoria Geral do Mercado de Valores Mobiliários, and the country’s central bank, Banco de Cabo Verde.

Source: AfDB

Kenya

Bankers to offer mobile application for deaf customers

Bankers are developing a mobile application to ease access to services for deaf customers, who study shows are the least satisfied clients due to communication hitches. The Kenya Bankers Association (KBA) has partnered with the Financial Sector Deepening Trust (FSD Kenya) to develop the first of its kind self-training application that will use the Kenya Sign Language (KSL). The platform will have at least 100 banking terms in sign language and about ten bank-related phrases. “The [application] will play a huge role in building capacity among bank staff on [KSL], facilitating enhanced interactions among bank staff and the deaf community,” says KBA chief executive officer Habil Olaka. The 2020 Banking Industry Persons with Disabilities Accessibility Report by KBA and FSD revealed that both deaf customers and bank staff experienced frustrations due to communication barriers. The application, to be developed by software engineering firm Deaf eLimu Plus, will also aid bankers to learn basic KSL to better their interactions with persons with hearing impairments. Dubbed Deaf eLimu Banking, the application will ease communication and enable the deaf to access banking services, the Deaf eLimu Plus founder Hudson Asiema said.

Source: Business Daily

Kenya

Local COVID-19 vaccine production starts April

Kenya will next year start manufacturing COVID-19 vaccines locally in a move aimed at easing supply hitches that have derailed mass inoculation. Speaking during the Mashujaa Day celebration in Kirinyaga, President Uhuru Kenyatta directed the Ministry of Health to work with Kenya Biovax Limited, a local firm, to 'form and fill ' with a view to start vaccine production by Easter 2022. A form and fill facility helps third parties put the vaccine from the main manufacturers into vials or syringes, sealing them and packaging them for distribution. Many manufacturers use third parties to fill and finish their vaccines and African countries like Senegal, Rwanda and South Africa are in talks with investors to start the production of COVID-19 vaccines. "If there is anything, we have learnt from the COVID-19 pandemic is the essence of self-reliance. As the first step towards this goal, we have established a company to facilitate this venture in the name of Kenya Biovax Limited," said Mr Kenyatta.

Source: Business Daily

Malawi

Forex situation bothers industry

Players in the private sector have lamented the volatile forex situation in the country, which they say could affect business for most importers going forward. This comes at a time figures contained in Reserve Bank of Malawi (RBM) Weekly Financial Market Developments brief for the week ending 8 October 2021 show that gross official reserves held by the central bank declined to USD468.1-million, an equivalent to 1.87 worth months of imports. Forex reserves position has been dwindling in the recent past, a situation which private sector players’ mouth piece, the Malawi Confederation of Chambers of Commerce and Industry, has rated as worrisome. In a recent interview, MCCCI president James Chimwaza said the situation would have a negative effect on businesses, especially for importers, which could trickle down to consumers. He said the situation could be improved if the country focused on import substitutions and value addition on local products. In a recent interview, RBM Governor Wilson Banda also attributed the Kwacha depreciation to market forces. He said the medium to-long term strategy was to increase supply through export growth and diversification. In the short term, Banda said the central bank was attempting to get some accommodation from regional banks and other institutions to ensure that Malawi has enough foreign currency.

Source: The Times

Malawi / Kenya

Malawi, Kenya sign 8 bilateral agreements

Malawi and Kenya have signed eight bilateral agreements that seek to strengthen cooperation between the two countries. In his speech made available to The Nation after the signing ceremony, President Lazarus Chakwera, who was in Kenya for a three-day visit, said the bilateral agreements signal an impending great working relationship between the two countries. He said: “It is no small thing that we have successfully agreed to and signed eight instruments of cooperation in defence, diplomacy, health, cooperatives, tourism, agriculture and other areas for the mutual benefit and development of our two nations and our peoples. And now that there is a ratified African Continental Free Trade Area that we are set to fully leverage to ensure that the future we are working towards is one of shared prosperity, I believe that these agreements are a sign that the best days of our kinship are yet to come.” Chakwera said he is also looking forward to finalising other bilateral agreements with Kenya, including continued exchanges between Malawians and Kenyans.

Source: The Nation

Mozambique / United Kingdom

UK boosts trade ties with Mozambique

The British Prime Minister’s Trade Envoy to Mozambique, Katherine Fletcher, visited Mozambique from 11 to 15 October and held a meeting with President Filipe Nyusi in Maputo, O País reports. According to a press release from the British High Commission in Maputo, during the meeting with President Nyusi, Fletcher welcomed the increase in trade between Mozambique and the United Kingdom (UK) and highlighted specific opportunities in the sectors of renewable energy and agriculture. The British envoy also congratulated the Mozambican government for sending a delegation, led by Prime Minister Carlos Agostinho do Rosário, to attend the United Nations Climate Change Conference (COP 26) in Glasgow, between 31 October and 12 November 2021. Fletcher’s visit had, additionally, the objectives of promoting long-term mutually beneficial partnerships that promote sustainable development for Mozambique and the UK, in the areas of agriculture, technology, and railways and ports infrastructure; and emphasised the UK’s commitment to working with Mozambique on women’s economic empowerment.

Source: Club of Mozambique

Namibia

Central bank maintains repo rate at 3.75%

The Bank of Namibia has decided to keep the repo rate unchanged at 3.75%, citing the rate remains appropriate to support the weak domestic economic activity that is still being weighed down by the COVID-19 pandemic. At this level, the repo rate is deemed appropriate to safeguard the one-to-one link between the Namibia Dollar and the South African Rand, while meeting the country’s international financial obligations. A review of the GDP shows there has been improvement in the second quarter of 2021, while economic activity remained subdued year-to-date. “The [GDP] increase was attributed to better growth in sectors such as hotels and restaurants, wholesale and retail trade, fishing, administrative and support services as well as information and communication during the second quarter of 2021,” Bank of Namibia Governor, Johannes !Gawaxab said. He said economic indicators showed that the domestic economy slowed year-to-date relative to the corresponding period of 2020.

Source: Namibian Economist

Namibia

Government initiates financial monitoring systems

The Ministry of Public Enterprises has launched a system to monitor the financial performance of all entities under its fold, and to provide accurate and timely data for decision-making. The system, called the Public Enterprises Financial Monitoring system, was launched on Monday, 18 October. The ministry was assisted by the German development and implementation agency GIZ to set it up. The Public Enterprises ministry oversees entities worth over NAD32-billion, including NamPower, NamWater, and the Roads Authority. The new system was announced by the Minister of Public Enterprises Leon Jooste, who said it is simple but valuable as it allows public enterprises to upload their own information. He said dedicated staff members in the ministry will verify the accuracy of information before it is signed off on the system, approved and made available. “This is one of more systems that will be coming. Now, more than ever, we are basing decisions on real-time accurate data, and not on any assumptions or old data,” Jooste said. Attending the event was GIZ project manager John Steytler, who said the main aim of the system is to support sustainable economic development in Namibia.

Source: The Namibian

Nigeria / Turkey

Nigeria, Turkey sign 8 major agreements during presidents' meeting

Nigerian President Muhammadu Buhari and his Turkish counterpart, Recep Tayyip Erdoğan, on Wednesday, 20 October, oversaw the signing of eight bilateral agreements on areas such as energy, defense industry, mining and hydrocarbons during their meeting in the Nigerian capital. Erdoğan arrived in Abuja on Tuesday, 19 October, on a two-day visit to Nigeria, the last leg of his Africa tour that also took him to Angola and Togo. Buhari told a joint press conference that during Erdoğan's visit to Africa's most populous country, the two leaders had "useful discussions on a number of bilateral issues, aimed at strengthening this cordial relationship between Nigeria and Turkey." The key issues touched on included a series of agreements and Memoranda of Understanding (MoUs) that had been finalised, the Nigerian leader said. "As a positive outcome, eight major agreements/MoUs on a number of the key sectors including energy, defense industry, mining, and hydrocarbons, among others were signed today," he said.

Source: Xinhua

Tanzania

Tanzania allocates USD39.1-million for tourism recovery

Tanzania has allocated TZS90.6-billion (about USD39.1-million) for implementation of 23 projects aimed at revamping the tourism sector affected by the COVID-19 pandemic, a cabinet minister said. Damas Ndumbaro, the Minister of Natural Resources and Tourism, told a press conference in the commercial capital Dar es Salaam that the funds were part of the USD567.25-million approved in September by the International Monetary Fund (IMF). The IMF approved the funds in emergency financial assistance to Tanzania under the Rapid Credit Facility and Rapid Financing Instrument to support the authorities' efforts in responding to the COVID-19 pandemic by addressing the urgent health, humanitarian and economic costs. Ndumbaro said projects to be implemented include renovation of infrastructure, installation of security systems, purchase of mobile test kits for testing COVID-19 infections among tourists and acquisition of transportation facilities. "These projects will simplify access to different tourist attractions and subsequently [revive] the tourism sector," said the official.

Source: The New Times

Uganda

Five companies issued with electronic money licences

The Bank of Uganda has licensed five more companies to conduct digital and electronic payments under the new National Payment System law. The five join MTN and Airtel, which were separately issued with Payment Systems Operator and Payment Service Provider licences in May. The National Payment System Act, implemented under the National Payment Systems Regulations, seeks to streamline operations of electronic operators. The five companies include issuers of payment instruments and trust fund operators. Ms Charity Mugumya, the Bank of Uganda director of Communications, told Daily Monitor that the five brings the number to seven of companies that have so far been licensed under the National Payment Systems Act. “As at 20 October, the total number of companies we have licensed are seven in number and six others waiting to go through the evaluation processes,” she said, but did not provide details on those awaiting completion of the evaluation process. The five include Micropay Uganda, Mcash Uganda, Interswitch East Africa, Pegasus Technologies and Wave Transfer.

Source: Daily Monitor

Uganda

IMF staff concludes virtual visit to Uganda

A staff team from the International Monetary Fund (IMF) led by Mr Amine Mati conducted a virtual mission to Uganda from 27 September to 14 October 2021 to discuss the economic outlook, the budget strategy for FY 2021/22, and progress with the implementation of reforms under the Extended Credit Facility (ECF)-supported programme. At the conclusion of the mission, Mr Mati issued the following statement, in part: “Uganda’s recovery remains slow, with the recent COVID-19 lockdown further impacting recovery efforts, particularly in the manufacturing and services industries. Inflation is subdued, despite increases in global energy and food prices. The current account deficit is at an elevated level amid foreign inflows-triggered exchange rate appreciation that helped keep reserves above four months import cover. Private sector credit is weak despite ample liquidity in the well-capitalised banking system as both banks and borrowers remain cautious about prospects. The FY 2020/21 fiscal deficit was lower than planned thanks to higher-than-expected tax revenues and low spending execution. Helped by exchange rate appreciation and delays in repaying advances to the Bank of Uganda (BoU), central government debt remained sustainable and comfortably below the authorities’ 50% of GDP target.”

Source: IMF

Uganda

Uganda exports 400kg of marijuana to Germany

Uganda recently exported 400kg of medical marijuana to Germany, the fourth delivery to foreign countries since the government permitted the business. A kilogramme of medical cannabis (MC), a product claimed to be effective in treating a wide range of deadly diseases, including cancer, costs around EUR4 300 (UGX18-million). Mr Benjamin Cadet, one of the directors at Industrial Hemp Uganda Ltd, the company licensed by the government to grow and process medical cannabis, said they exported the products on Saturday, 16 October. He said they have capacity to produce 30 tonnes of medical marijuana annually but that COVID-19 has been affecting their business. The Narcotic Drugs and Psychotropic Substances Act, 2015 allows cultivation, production and exportation of medical marijuana and mandates the Health minister to issue written consent for medical marijuana. The government has only approved one company to do MC business despite more than 20 companies that expressed interest in the lucrative business. Mr Emmanuel Ainebyoona, the Health ministry spokesperson, said discussions are ongoing on whether to license more companies to grow and export medical marijuana.

Source: Daily Monitor

Zambia

ACCA wants reforms in tax regime

The Association of Chartered Certified Accountants (ACCA) has called for reforms in the current tax regime for government to leverage on opportunities to enhance its revenue collection. Commenting on the 2022 budget expectations, ACCA country head Janice Matwi said the association also wants to see policy consistency in mining taxation for the sector to achieve sustainable growth. Mrs Matwi observed that whenever there is change of government, the mining sector always experiences policy shifts, which affects its growth. “Conversations around the mining tax regimes need to be reopened but policy consistency in this is key, considering mining remains the largest contributor to the country’s GDP,” she said. Mrs Matwi also called for investment in local industries which should provide goods and services to the mining industry.

Source: Zambia Daily Mail

Zimbabwe

Zimbabwe exploring new power supply deals with neighbouring countries

Zimbabwe has been plagued with recent electricity troubles and in a bid to increase supply the country is in negotiations with Zambia and Mozambique. If agreed upon, the country will import an additional 280MW from its two neighbours. In power deals, the southern African country is currently importing 50MW from Mozambique and also has a firm supply agreement of 100MW with Eskom of South Africa. However, due to generation challenges at Eskom, the supplies have been intermittent. “Zambia has indicated that they have a surplus of 100MW from the Kafue Gorge, which they can sell to us and a delegation from ZESA went to Zambia… for the negotiations,” said Minister Zhemu Soda. “Mozambique also told us that they have an additional 180MW over and above what we are currently importing and these two new deals will give us an additional 280MW. That should help us to reduce the deficit of between 200MW and 300MW.” Zimbabwe is looking to achieve electricity self-sufficiency mid next year when unit seven of Hwange thermal power plant is expected to come on stream, the minister said.

Source: ESI Africa