issue 429 | 05 Dec 2021
AfricaLusophone Compact: AfDB and IFC partner to advance economic development in Lusophone African countries
The African Development Bank (AfDB) and International Finance Corporation (IFC), a member of the World Bank Group, on Wednesday, 1 December signed a partnership agreement admitting IFC as the first institutional partner to the Development Finance Compact for Portuguese-speaking Countries of Africa, or the Lusophone Compact. The agreement was signed by AfDB’s vice president for Corporate Services and Human Resources and Chair of the Lusophone Compact Steering Committee, Dr Mateus Magala and Sérgio Pimenta, regional vice president for Africa, IFC, in a brief ceremony in the Ivorian commercial capital Abidjan. The signing follows the Lusophone Compact Steering Committee’s approval of IFC’s submission of a proposal to partner in the initiative, based on the Compact’s Membership and Partnership Eligibility Criteria Framework, adopted in December 2020. Acceptance into the Lusophone Compact is based on two broad principles: support to the initiative’s goal of accelerating inclusive private sector growth and promoting regional integration of the Portuguese-speaking countries of Africa, and the provision of specific, value-added contributions aligned with the initiative’s anchors.
Africa / ChinaChina signals cuts in loans to Africa after reduction of financing pledge
China has signalled a reduction in loans to Kenya and other African countries in coming years after it cut financial commitment to projects in the continent as much as a third in the next three years. Nairobi has been a major beneficiary of China’s loans for the development of mega infrastructure projects such as roads and a modern railway over the last decade, making Beijing the largest bilateral creditor since 2015. President Xi Jinping has pledged – through a video link to the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) in Senegal – to invest USD40-billion (KES4.5-trillion) in African countries for three years. That represents a 33.33% drop from the USD60-billion (KES6.75-trillion) the world’s second-largest economy has committed to African countries in the last two FOCAC summits, which takes place every three years.
Source: The EastAfrican
East AfricaA region in debt as top banks record USD125-million in bad loans
East Africa’s top retail banks booked more than USD125-million of bad loans in the nine months to September 2021, as borrowers struggled to repay their loans following the expiry of a 12-month loan repayment relief programme for customers adversely impacted by the COVID-19 pandemic. This comes as regional banking regulators in Kenya, Tanzania and Rwanda have raised concern over the rise of bad loans, which is now threatening the financial sector. Recently, Rwanda’s central bank reinstated regulatory requirements for commercial banks to increase provisions on loans that had been suspended due to the pandemic to allow banks to continue lending. The reinstatement could affect loans to the private sector. Meanwhile, the Bank of Tanzania has introduced measures to address non-performing loans, which include zeroing in on individual bank employees who are directly responsible for issuing the loans. The latest unaudited financial statements for regional lenders KCB, Equity and Co-operative banks show that the volume of gross non-performing loans (NPLs) rose 8% to USD1.81-billion, from USD1.68-billion in the same period last year.
Source: The EastAfrican
Ghana / MauritiusBank of Ghana signs historic MoU with the Bank of Mauritius
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison together with Governor Harvesh Kumar Seegolam of the Bank of Mauritius (BoM), have signed an historic Cooperation Memorandum of Understanding (MoU) in Port Louis to deepen the existing ties of engagement between the two central banks. The objectives of the MoU are to establish an arrangement for the exchange of information concerning the stability and development of their respective banking systems and to establish a framework for capacity building in the financial services industry. The MoU is also expected to strengthen areas of compliance with international standards and regulations related to the financial market and the performance and development of the payments system. Other areas include but are not limited to: the retail payments system, large-value payments and settlement system, financial inclusion, digital innovation in financial services including digital currencies, fintech regulations, risk-based supervision/macro-prudential supervision, anti-money laundering and combating the financing of terrorism and proliferation (AML/CFT), cyber security, climate change policies and other areas of central banking that are of mutual interest to the BoG and the BoM.
KenyaAfDB board approves USD217-million to finance Horn of Africa road project
The Board of Directors of the African Development Bank Group (AfDB) has approved USD217-million in loans to fund a project that will improve road transport services in Kenya's northeastern region. The loans comprise USD75-million from the non-concessional window of the AfDB Group and USD142-million from the concessional lending division, known as the African Development Fund. The Kenyan government will contribute USD6.3-million. The USD223.3-million project covers the 740 km Isiolo-Mandera corridor and will enhance regional integration and trade between Kenya, Somalia and Ethiopia. About 867 000 people who reside around the project area are expected to benefit from the initiative. The road network, including the 142 km El Wak-Rhamu stretch, is one of the four priority corridors identified under the Horn of Africa Initiative, driven by the governments of Kenya, Ethiopia, Somalia, Sudan, Eritrea and Djibouti. The initiative is supported by the AfDB, World Bank and European Union.
KenyaKenya’s SACCO regulator sets up unit to police activities, probe fraud
An anti-fraud unit has been established to serve Kenya’s Savings and Credit Co-operative Organisations (SACCOs). Set up by regulator SACCO Societies Regulatory Authority (SASRA), the Sacco Societies Fraud Investigation Unit (SSFIU) will probe and address increasing graft cases in the sector. SASRA has signed a Memorandum of Understanding with the country’s Directorate of Criminal Investigations (DCI) to formalise the establishment of the unit. It will be similar to the Anti-Fraud Unit at the Central Bank of Kenya, which polices activities of banks. The SSFIU is part of improved corporate governance in the sector in line with SASRA’s strategic plan for 2018 to 2022. The unit comprises five specialised officers seconded from the DCI, and is functionally supported by SASRA’s technical staff. It will be housed within SASRA’s offices, and is expected to collaborate with the authority to develop and implement a robust market surveillance and monitoring mechanism to prevent fraud or disrupt planned fraudulent activities.
Source: The EastAfrican
LesothoLesotho to get its first utility-sized, grid-connected solar plant
Scatec has entered an agreement with the Lesotho Electricity Company and the Government of Lesotho to build the country’s first Independent Power Producer (IPP) solar project of 20 MW. The Power Purchase Agreement, the Connection Agreement and the Implementation Agreement were recently signed at an official ceremony in the Lesotho capital, Maseru. The project will be funded by the Renewable Energy Performance Platform (REPP) and equity co-sponsors Scatec, Norfund, One Power Lesotho, Izuba Energy and the Lesotho Pension Fund. Scatec general manager for sub-Sahara Africa, Jan Fourie, said: “We are proud to be the first IPP to develop a solar project in Lesotho, an important step for Scatec in the country.” Scatec will build, operate and majority own the facility under a 25-year Power Purchase Agreement with financial close expected early next year . Lesotho relies mostly on hydropower but is not energy secure and energy access rates are low. Only around 6% of rural households are connected to the grid. It imports electricity from Mozambique and South Africa during peak demand times as it forms part of the Southern African Power Pool.
Source: ESI Africa
MadagascarNew hybrid energy power plant for graphite mine in Madagascar
Crossboundary Energy has been awarded the contract to supply a hybrid solar plant using solar and thermal generation to NextSource’s Molo graphite mine in Madagascar. The 20-year contract has been designed to scale up alongside the projected production output of the Molo mine. Delivery of power will increase alongside future expansion capacity requirements. A Crossboundary Energy subsidiary in Madagascar will develop, build, own and operate the Molo hybrid energy power plant at no capital cost to Canada-headquartered NextSource. The power plant will be situated next to the Molo mine site and is expected to become operational at the same time as Molo mine is commissioned in the second quarter of 2022. The hybrid energy power plant will comprise a 2.5 MW solar photovoltaic energy system (the solar plant), a 1 MW battery energy storage system and a 3.3 MW thermal energy system (diesel generators) to supply the electricity requirements of the Molo mine and processing plant. The thermal energy system will be used in conjunction with the solar plant and battery energy storage system to ensure an uninterrupted power supply to the mine.
Source: ESI Africa
Mauritania / SenegalRegional integration: the presidents of Mauritania and Senegal lay the foundation stone for the Rosso Bridge between the two countries
On Tuesday, 30 November, the President of Mauritania, Mohamed Ould Cheikh El Ghazouani, and the President of Senegal, Macky Sall, launched the construction of the Rosso Bridge that will connect the two neighbouring countries. The bridge, which will span the Senegal River for 1.5 km, will ensure smooth traffic between southern Mauritania and northern Senegal. It is expected to reduce travel times and lower transport costs. It will also advance trade along the Tangier-Lagos and Algiers-Dakar trans-African corridors, strengthening integration between West Africa and the Maghreb. The total cost of the project is approximately EUR88-million. It consists of a EUR20-million grant from the European Union and two loans of around EUR41-million from the African Development Bank (AfDB) to both countries and EUR22-million from the European Investment Bank. The rest of the financing is provided by counterpart funds committed by the two states.
Mozambique / MalawiConstruction of the Mozambique-Malawi power transmission link begins
On Tuesday, 23 November, President Filipe Nyusi, joined his host counterpart President Lazarus Chakwera at Phombeya in Balaka District to kick off construction on the Mozambique-Malawi power transmission link project. The interconnection project comprises the building of a 400 KV Matambo substation in Tete, Mozambique, and 218 km of transmission lines from that source into Malawi, from which Malawi is scheduled to receive 50 MW of power. The transmission lines will run 142 km from Matambo substation to Phombeya, Malawi, passing through Mwanza and Neno districts, and will be finished in 2023. The completion of this project will result in enhanced access to power in Malawi, with an initial capacity of 50 MW and the ability to expand in the future. Malawi’s existing power-producing capacity is now hovering around 50 MW, according to the 2017 Integrated Resource Plan. By 2030, peak energy demand is expected to reach 1 860 MW. The interconnection project aims to contribute to regional economic growth by linking Malawi’s electricity market with the Southern African Power Pool to balance the region’s power deficit through regional power trading.
Source: Construction Review
NigeriaNigeria’s new national carrier to take-off with three planes
Nigeria is floating a new national airline Nigeria Air, 18 years after national carrier Nigeria Airways was liquidated. The new national carrier will to start operations in April 2022 with its three planes under a wet lease from Europe, said Mr Tilmann Gabriel, the transaction adviser to Nigeria Air. It was approved by the Federal Executive Council (FEC) at a meeting presided over by President Muhammadu Buhari. Nigeria’s Aviation Minister Hadi Sirika announced on 24 November 2021 that the FEC approved the take-off of the new airline, after a failed attempt in 2018 to float the national carrier. Mr Gabriel, a seasoned aviation consultant who has been a part of many start-up airlines across the world, described the lease as the easier, cost-effective way to start an airline. The veteran flight captain added that conversations with other lessors in Europe had begun. Minister Sirika confirmed that the name and the logo of the airline were already approved. Majority shares (49%) of the Nigeria Air project will be owned by strategic equity partners, 46% by Nigerians and the federal government will own 5%, he said.
Source: The EastAfrican
TanzaniaTanzanian banks pledge further cuts in interest rates
Tanzanians should expect a reduction in lending rates if the ongoing strategies between commercial banks and the Bank of Tanzania (BoT) are anything to go by. Giving his remarks during the 20th Conference of Financial Institutions, the Tanzania Bankers Association chairman, Mr Abdulmajid Nsekela, said lending interest rates would soon start going down, saying a number of issues were being deliberated between lenders and the BoT. “President Samia Suluhu Hassan has continuously called upon banks to improve lending and reduce interest rates. The BoT has come up with a number of interventions for policy reforms that will see banks reducing interest rates soon,” he said during the conference that was themed: Tanzania Economy: Recovery from COVID-19 Pandemic and Beyond. Debate on reduction of lending rates had been heightened during the past few months after BoT introduced in July, some policy measures that were meant to lay a solid framework to increase liquidity and reduce the cost of lending to the private sector. Among the measures that the BoT said it would introduce were a TZS1-trillion special loan fund for banks and other financial institutions to access money for lending to the private sector.
Source: The Citizen
TanzaniaTanzania’s GDP poised to top 8% in five years
The Tanzanian economy is poised to grow steadily to reach 8.0% in five years, which hinges on increased positive utilisation of resources and growth in productivity. Last year, the country’s GDP grew by 4.8% and is expected to be in the same region this year, not exceeding 5.0%. The Bank of Tanzania’s Governor, Professor Florens Luoga said this while addressing the 20th Conference of Financial Institutions (COFI), saying that the economy will be pushed by increased productivity and utilisation of raw material. "Looking forward, [the] economy is poised to grow steadily, reaching more than 8.0% in the next five years," Professor Luoga said when addressing the COFI on Thursday, 25 November. In his presentation on Economic growth and sustainability during and beyond COVID-19: Priorities and policy options, Professor Samwel Wangwe of Daima Associates highlighted six areas of priority for the economy to surge forward beyond the pandemic. "First, we need to prioritise our response to the COVID-19 pandemic in the country through health, economic and several social aspects and decisions on the allocation of fiscal resources," Professor Wangwe said.
Source: Africa Business Communities
Tanzania / UgandaTanzania, Uganda to resolve non-tariff barriers
Tanzania and Uganda have agreed to remove non-tariff barriers to trade between East African countries. In their discussion shortly after Ugandan President Yoweri Museveni arrived in the country and received by his counterpart, President Samia Suluhu Hassan, the two heads of state in command agreed to end existing trade barriers in a bid to strengthen ties. Speaking shortly after the private talks, President Hassan said there were non-tariff impediments that had hampered trade activities between the two countries and explained that they had already agreed to end them. “We have instructed the ministers in charge of trade to meet within two months and find a solution to the issue,” said President Hassan. Also, the two heads of state discussed the need to strengthen trade cooperation which for over the past seven years has continued to grow between the two countries. President Hassan said the volume of trade between Tanzania and Uganda has increased from TZS200-billion in 2014 to TZS607-billion in 2020. President Hassan said they have discussed cooperation in the investment sector, saying that Uganda has the second largest investment in Tanzania in the East African region.
Source: The Citizen
UgandaRise in Uganda coffee exports earns USD657-million
Uganda’s coffee exports have continued to increase in both value and quantity, despite a ravaging pandemic, at the backdrop of adverse weather conditions and COVID-19 restrictions in the world’s biggest exporters like Brazil and supply disruptions around the world. Uganda Coffee Development Authority (UCDA) data shows that the country exported 6.55 million bags of coffee worth USD657.23-million in the year to October 2021, compared with 5.41 million in the same period last year, earning USD513.79-million. They project to export 500 000 bags in December as the main harvest season kicks off in the central and eastern parts of the country. The increase in exports is attributed to government efforts in 2012 which saw millions of seedlings distributed to farmers to grow new bushes across the 98 coffee growing districts. “Increasing exports were due to newly planted coffee which started yielding supported by favourable weather. This was also complimented by a positive trend in global coffee prices,” the report reads.
Source: The EastAfrican