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issue 437 | 27 Feb 2022

Africa

AfCFTA, WCO sign MoU to enhance trade in Africa

The African Continental Free Trade Area (AfCFTA) Secretariat and the World Customs Organization (WCO) have signed a Memorandum of Understanding (MoU) aimed at operationalising the tariff schedules and ensuring additional free and efficient movement of goods in Africa. The MoU, which was signed in Brussels, Belgium on 15 February by the secretary-general of the AfCFTA Secretariat, Wamkele Mene and the secretary-general of the WCO, Kunio Mikuriya, is expected to strengthen the organisational capacity, transparency and effectiveness of African customs administrations sustainably, through cooperation between both organisations. The shared goal of both organisations remains to enhance continental trade by eradicating trade barriers through connecting customs systems, populating the AfCFTA tariff book and providing capacity building for customs officials and administration. Mene said that good progress has been made since the establishment of the AfCFTA Secretariat, saying that one major milestone is the ratification of Rules of Origin for 87.7% of tariff headings agreed upon by 41 of its 54 member states.

Source: The EastAfrican

Africa

Six African countries to receive initial transfer of mRNA vaccine technology

Egypt, Senegal, Kenya, South Africa, Tunisia and Nigeria have emerged as the first African recipients of messenger ribonucleic acid (mRNA) technology under the global mRNA technology transfer hub initiative. South African President Cyril Ramaphosa, French President Emmanuel Macron, World Health Organization (WHO) director general Tedros Ghebreyesus and European Council president Charles Michel made a joint announcement at the European Union-African Union summit in Brussels. African Development Bank (AfDB) Group president Dr Akinwumi A. Adesina, who has championed African vaccine manufacturing, attended the summit. The announcement marks a major step forward in the development of mRNA vaccine technology in Africa, a goal of the continent’s leaders. Under the initiative’s hub and spoke model, a hub was established in Cape Town, South Africa, made up of Afrigen Biologics, the South African Medical Research Council (SAMRC) and Biovac, a South African vaccine producer, which is also the programme’s first spoke. Afrigen’s mandate is to establish mRNA vaccine production technology. SAMRC is providing the research, while Biovac is the first manufacturing spoke. 

Source: AfDB

Africa / Europe

Historic MoU signed between 12 private sector automotive associations

A Memorandum of Understanding (MoU) was signed virtually between 12 automotive associations within the ambit of the European Union (EU) – Africa Business Forum 2022 on 16 February with the aim of driving the development of the automotive industry in Africa. The automotive sector whilst key for the industrialisation of Africa is often associated with several challenges including, persistent market fragmentation, lack of regulatory alignment between African countries and the two continents, industrial and trade policies not conducive to local and foreign investment, lack of access to finance for consumers, local suppliers, and affordability. The launch of the African Continental Free Trade Area (AfCFTA) gives a boost to pan-African trade and investment opportunities, especially for the automotive industry, and creates the momentum to stimulate a European-African dialogue between policy makers and important stakeholders. This was one of the catalysts that led to a joint initiative to develop an MoU amongst European and African automotive associations, which initially driven by the African Association of Automotive Manufacturers (AAAM), the German Association of the Automotive Industry (VDA) and the German-African Business Association (Afrika-Verein), has now grown into a cooperation between 12 associations which signed the MoU. The MoU has the support of both the African Union and the EU. 

Source: BusinessGhana

East Africa

EAC partner states meet minimum requirements for Category A trading under AfCFTA

East African Community (EAC) partner states have adopted the EAC Tariff Offer for Category A products amounting to 90.2% (5 129 tariff lines out of the total 5 688 lines) to be liberalised in 10 years after the start of trading under the African Continental Free Trade Area (AfCFTA). The EAC is now among the state parties that have met the minimum requirements for Category A to start trading on a provisional basis under the AfCFTA. The EAC is negotiating the AfCFTA as a bloc. An EAC Extra-Ordinary Meeting of the Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) further directed the EAC Secretariat to submit the EAC Tariff Offer for Category A to the AfCFTA as soon as possible. The Extra-Ordinary SCTIFI also directed the EAC Secretariat to convene an experts meeting by 15 April 2022 to consider Categories B and C of the EAC Tariff Offer. The EAC partner states tariff offers will now be subjected to verification by the AfCFTA Secretariat. The AfCFTA Secretariat has so far verified 29 tariff offers to ensure that they meet the modalities, and this will increase to 34 once the EAC partner states offers are verified. Verification of the tariff offers will ensure that AfCFTA member states that meet the minimum requirements start trading under the AfCFTA Agreement. 

Source: EAC

East Africa

Proposed 35% CET aims to boost East Africa trade to USD6.8-billion

The proposed 35% common external tariff (CET) for imported goods, will boost intra-East African Community (EAC) trade to USD6.8-billion. In 2020, the total trade within the six-nation bloc stood at 11.8%, amounting to USD6.39-billion. This means the trade among the six partner states - Tanzania, Uganda, Kenya, Burundi, Rwanda and South Sudan, will increase by USD18.9-million. Enforcement of the proposed maximum CET for goods entering the region is, however, subject to adoption by the EAC member countries. The expected trade gains are revealed in an analysis done by the Arusha-based EAC Secretariat. The analysis proposed the CET rates of 30%, 33% and 35% for products classified under the fourth band (maximum band). The EAC partner states are urged to adopt them also in a bid to promote industrialisation and strengthen the regional value chain. Under the current EAC CET structure, the maximum tariff is 25% while the other bands are 0% and 10% with few sensitive products attracting higher tariffs ranging from 30% to 100%. The 35% maximum CET rate is central to boosting the competitiveness of East African manufactured products in the continent and the globe.

Source: The Citizen

Ethiopia

Ethiopia revising policy to open door to foreign banks

Indicating that the government of Ethiopia is engaged in policy revision to open its doors to foreign banks, Prime Minister Abiy Ahmed told domestic banks to modernise their systems with information technology (IT) and prepare themselves for competition with the soon-coming foreign banks. “We will bring foreign banks because we need additional wealth and hard currency,” he said. He noted that in countries where there are foreign banks, relatively hard currency shortage will be minimised. He stated that the country is working on policy improvements to open its doors to foreign banks liberalising the financial sector of the country. Prime Minister Abiy Ahmed made the remark while responding to questions raised by members of parliament. The banks in the country have also extended a total loan of ETB147-billion within the first six months of the year, of which ETB70-billion went to services, ETB50-billion to industry, and the remaining to the agriculture sector. Over 68% of the loan went to the private sector, according to Prime Minister Abiy Ahmed. The total assets of private banks in Ethiopia over the last six months has increased to ETB2-trillion of which ETB159-billion belongs to the shareholders. 

Source: New Business Ethiopia

Ghana

Manufacturing, trade sectors inspire hope in economy’s recovery

The Business Tracker survey has revealed that the country’s manufacturing and trade sectors, which were hit hard by the COVID-19 pandemic, have almost fully recovered as both saw an appreciable increase in activities during the third wave of the pandemic (from January to September), thereby inspiring hope that the economy is getting back on track. According to data published by the Ghana Statistical Services (GSS), the manufacturing sector’s recovery during the third wave of pandemic that swept the country has hit 96.9%; the highest recovery in all sectors of the economy. This is higher than the 80.2% and 88.9% recovery recorded in the first and second waves of the pandemic respectively. The same trend is also observed in the trade sector, as it saw 96.3% of firms fully recovered; up from the 79.9% and 90.4% recorded in the previous two waves. The report adds that there is a correlation between government support and recovery, as firms which received some stimulus experienced more growth in sales than those that did not. Thus, firms with government support experienced 11.5% higher sales than firms that did not receive any government support.

Source: GhanaWeb

Ghana

World Bank Group launches new country partnership framework for Ghana

The World Bank Group’s board of executive directors discussed a new five-year Country Partnership Framework (CPF) for Ghana for 2022 to 2026. The CPF prioritises investments in human capital, job creation, economic diversification, building a resilient health system, and fostering a greener and more inclusive society. Ghana has achieved considerable economic and social progress in the past 30 years. The CPF will support Ghana in its COVID-19 and medium-term development agenda. It is designed around three mutually reinforcing focus areas, namely: enhancing conditions for private sector development and quality job creation; improving inclusive service delivery; and promoting resilient and sustainable development. Exploiting the opportunities of digital transformation will be a cross-cutting theme. The USD4.5-billion CPF was prepared jointly by the World Bank, the International Finance Corporation and the Multilateral Investment Guarantee Agency. The CPF will move towards larger and more cohesive and transformational interventions, potentially across multiple sectors, that align closely to strong government programmes and with greater use of results-based financing, where appropriate. 

Source: World Bank

Kenya

CBK seeks digital and mobile payment platforms fees cut

The Central Bank of Kenya (CBK) has asked digital payment service providers including mobile money firms to cut their prices, arguing that they have the headroom to charge customers less. The mobile and internet-based payment platforms charge relatively higher fees for cash transfer and payments compared to banks. The regulator says in the National Payments Strategy 2022-2025 paper that the recent reduction in the fees charged by the digital platforms mandated in the wake of the COVID-19 pandemic has not gone far enough. Safaricom’s M-Pesa platform, which has the biggest market share in the mobile money category, reduced its charges by up to 45% for lower value transactions. “Prices and tariffs of some payment services can be high in relative terms, while others are not easily understood by the average customer,” the regulator says in the strategy paper. “CBK is determined, working with the industry, to change this reality and ensure that benefits of digitalisation translate to affordable, transparent and customer-centric payment services.” The CBK said the objectives will be achieved through gradual implementation of pricing principles which require the balancing of “short-term commercial targets and long-term sustainable growth.” 

Source: Business Daily

Kenya

Industries want import duty on raw materials scrapped

Manufacturers are pushing for the removal of import duty on raw materials and a reduction in the number of levies in a bid to lower production costs and increase competitiveness of locally-made goods. The Kenya Association of Manufacturers (KAM) said the government should tax the final product and harmonise taxes to avoid double taxes by national and county governments. KAM said the proposal will lower production costs of local goods and improve their competitiveness in the global market, boosting job creation and contribution of the sector to GDP. Imported raw materials and semi-processed goods attract a duty of 10% which KAM says has been a major contributor to the high prices of locally-made goods, making them less competitive in the global market. “Kenya is increasingly subjecting many raw materials and intermediate goods to taxation thereby harming export competitiveness of our manufacturing firms,” KAM chief executive officer Phyllis Wakiaga said while launching the second manifesto for the sector to guide debate on key issues facing manufacturers into the election. 

Source: Business Daily

Kenya / Egypt / Mauritius / Nigeria / South Africa

CAK, African regulators team up to check digital markets

The Competition Authority of Kenya (CAK) has teamed up with four other African regulators to tackle competition and consumer protection concerns in digital markets. The commitment by competition regulators from Kenya, Mauritius, Nigeria, Egypt and South Africa was ratified during a two-day Africa Heads of Competition Dialogue (AHCD) meeting in Johannesburg, South Africa on 17 and 18 February 2022. In a statement released on Friday, 18 February, they said that digital markets are transforming global economies rapidly by disrupting traditional markets, presenting enormous challenges for competition law enforcement. “Accordingly, as regulators on the continent, we are required to consider how digital markets impact on domestic participation in the local and global economy and the terms of that participation, beyond simply as a consumer of global [technology] firm services,” the statement reads. The regulators agreed to research barriers to emerging and expanding African digital platforms and sharing information on existing laws and protocols, among others.

Source: Business Daily

Malawi

Budget not addressing investment constraints

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has faulted some priority areas in the proposed 2022/23 National Budget, arguing that the fiscal plan falls short of addressing challenges affecting domestic investment. In his presentation of the MWK2.84-trillion National Budget Statement in Lilongwe, Minister of Finance and Economic Affairs Sosten Gwengwe said the focus of the fiscal plan is to recover the economy from the global slowdown caused by the COVID-19 pandemic. He said attention will also be on fiscal consolidation, public debt management, fiscal discipline, export diversification and import substitution and promotion of local manufacturing. But in reaction to the proposed budget, the MCCCI argues in a statement that issues such as availability of affordable finance for the private sector, which is the proverbial goose that lays the golden eggs, are not addressed. Reads the statement in part: “Private businesses make the biggest tax contribution, as such, ensuring the presence of a conducive business environment must be of chief importance to government.”

Source: The Nation

Malawi

IFC in MWK825-billion private investment

The International Finance Corporation (IFC), the private sector financing arm of the World Bank, says it will in the next five years invest USD1-billion (about MWK825-billion) in the country’s energy and agriculture sectors. In an exclusive interview in Lilongwe, IFC regional director for Eastern Africa Jumoke Jagun-Dokunmu said this during her visit to Malawi for private sector investment engagements. While in the country, she met private sector representatives, Minister of Finance and Economic Affairs Sosten Gwengwe and Minister of Energy Ibrahim Matola. Jagun-Dokunmu urged government to undertake rigorous reforms to attract more private sector investment. She said the IFC is looking forward to the macroeconomic policies government will undertake in the 2022/23 fiscal year to foster improvement in the country’s macroeconomic dimensions. She said in her engagements with government officials, she was informed about priority areas of expanding large commercial agriculture. She cited the USD5-million (about MWK4-billion) financing to Sable Farms for macadamia production, adding that they are looking forward to financing more.

Source: The Nation

Rwanda

Inside RWF15-billion deal to boost agricultural exports in Rwanda

Exports of coffee, tea, horticulture and spices commodities, and livestock products such as dairy and hides could soon be boosted following a new USD14.8-million (approximately RWF15-billion) investment to support public and private sector actors to attract, direct and leverage financing and investment towards increased agricultural exports. Funded by USAID, the five-year project, dubbed “prosper while expanding markets”, is expected to boost economic growth of Rwanda by promoting agricultural export growth and building resilience up to 2026. The activity will work with and through the government of Rwanda, the private sector, and civil society to facilitate an inclusive and resilient policy and regulatory environment, and mobilise public and private investment toward increased high-value agricultural products. It plans facilitation of USD300-million in new investments into Rwanda’s high-value agricultural export sector. The project will be implemented in 13 districts, namely Bugesera, Kayonza, Ngoma, Gatsibo, Burera, Gakenke, Nyamagabe, Nyamasheke, Karongi, Rutsiro, Ngororero, Rubavu and Nyabihu.

Source: The New Times

Rwanda

Rwanda, DCO member states root for better data privacy terms

Rwanda says it has joined other Digital Cooperation Organization (DCO) member states to appeal to global technology companies to better protect user data. The appeal was made on Wednesday, 23 February. According to the DCO, global technology companies are urgently called on to work with governments and develop privacy and user terms that protect user data and ensure that data use aligns with informed user consent. The DCO is a global multilateral organisation established to enable digital prosperity for all, with a focus on digital economy initiatives supporting youth, entrepreneurs and women. Rwanda is the latest founding member to join the organisation. DCO secretary general Deemah AlYahya pointed out that in 2021, almost half of global data breaches involved personal user data. “Through the DCO, our member states, representing more than half a billion people, are today calling on global [technology] leaders to better protect users from the misuse of personal information,” she said.

Source: The New Times

Tanzania

Tanzania to establish bank for small-scale miners

The Tanzanian government plans to establish a bank designed for artisans and small-scale miners, in a bid to boost their investments by channelling a dedicated line of credit. Dr Philip Mpango, the country’s Vice President, recently told a mining forum that the idea is to establish a financial institution that is specialised in providing loans and other funding services to groups of small-scale miners. “While the government is working to bring in Mineral Bank, all the industry players, including banks, artisans and small-scale miners, should work hand in hand with the State Mining Corporation (STAMICO) to facilitate loans for miners,” he told participants at the 4th International Mineral and Mining Investment Conference 2020, at Julius Nyerere International Convention Centre (JNICC) in Dar es Salaam. Dr Mpango did not give timelines.

Source: The EastAfrican

Tanzania

Tanzanian economy to expand by 5.2% in 2022 with tourism and mining on strong rebound, central bank forecasts

The Bank of Tanzania (BoT) recently released its Economic Bulletin for the quarter ending December 2021, in which it projects that in 2022, GDP growth will reach 5.2%. The central bank explains that in the first quarter (Q1) 2021, the economy continued to recover from the adverse effects of the COVID-19 pandemic, owing to the re-opening of the global economy and policy recovery measures implemented. In Tanzania Mainland, the economy grew by 5.2% in the quarter ending September 2021 compared with 4.4% in the corresponding quarter in 2020, largely driven by construction, agriculture, mining and quarrying, manufacturing, and public administration activities. As a result, growth was 4.9% in the first three quarters of 2021 compared with the target of 5%. During the quarter ending September 2021, accommodation and restaurants recorded the highest growth of 14.3% compared to a negative growth of 25.1% in the corresponding period in 2020, mainly attributed to a sharp increase in the number of tourist arrivals. The other activities that significantly improved were mining and quarrying (+12.2%) mainly on account of increase in production of gold, coal, and gypsum; electricity (+10%) following an increase in electricity demanded and distributed; and information and communication (+9.3%) attributed to the expansion of broadcasting and internet services.

Source: TanzaniaInvest

Uganda

Deposit Protection Fund assets hit USD280-million

Uganda’s Deposit Protection Fund’s total assets hit UGX1-trillion (USD282.95-million) in 2021 while its total income was UGX177-billion (USD50-million). This indicated increased ability for settlement of future depositors’ claims arising from failed financial institutions as well as minimal impact from the COVID-19 pandemic against the fund. The Deposit Protection Fund provides insurance cover for depositors’ claims arising from failed financial institutions that may include commercial banks, credit institutions and micro deposit taking institutions licensed by the Bank of Uganda. The fund’s maximum insurance cover for local depositors is UGX10-million (USD2 829). Depositors can be compensated for any claim below this. The latest financial results released by the Deposit Protection Fund show its total assets rose from UGX820-billion (USD232-million) in June 2020 to UGX1-trillion (USD282.95-million) in June 2021, while the fund’s coverage ratio for affected depositors stood at 18.6% compared with the recommended global minimum ratio of 10%.

Source:  The EastAfrican

Uganda

Uganda looks to Kenya, Jamaica for its digital currency

Uganda is considering a Central Bank Digital Currency (CBDC) in a move that has drawn policy attention to the large investments required for a successful trading ecosystem and crucial mileage offered by digital payments systems such as mobile money services and internet banking. Whereas the actual cost of issuing a government-owned digital currency remains unclear, the costs surrounding this venture are reflected in the development of software tools, improved electricity generation for running high energy consuming block chain technology platforms, and recruitment of specialist personnel. Implementation timelines are yet to be confirmed. “We are studying the idea of a [CBDC] with the aid of case studies developed by peer central banks in Jamaica, Nigeria, Ghana and Kenya, among others. The law does not accommodate digital currency use in Uganda, but we are exploring legal options for future amendments in financial laws that will facilitate circulation of digital currency denominations,” said George Wilson Sonko, a performance measurement analyst at the Bank of Uganda.

Source: The Citizen

Zambia

Government to redefine trade policy

Government has reaffirmed its commitment to restructure, reposition and redefine the role that trade plays in the development equation of the country. Ministry of Commerce, Trade and Industry (MCTI) Permanent Secretary Chawe Chuulu observed that this is in recognition of the role that trade plays in reducing poverty and inequality that most countries are faced with. Mrs Chuulu notes that there is, therefore, a need for concerted efforts in redesigning policies targeted at addressing these issues. ZANIS reports that Mrs Chuulu said this in a speech read by MCTI Director Foreign Trade Bessie Chilemu during a two-day media seminar in Lusaka. Mrs Chuulu explained that her ministry has plans to establish a clear and coherent trade facilitation approach which will enhance trade for both small and large traders. She said the objective of trade facilitation is to reposition the country to gain competitiveness in the domestic, regional and international markets through various interventions. She cited the upgrading of the Chirundu, Mwami and Nakonde One Stop Border Posts (OSBP); addressing the low uptake and implementation of Coordinated Border Management (CBM) principles; inadequate legal framework on trade facilitation; and lack of equipment at three border posts, among others.

Source: Lusakatimes

Zambia

African Development Bank's 2017-2021 Country Strategy Paper extended to 2023

The board of directors of the African Development Bank (AfDB) has approved a two-year update and extension of Zambia's 2017-2021 Country Strategy Paper (CSP) through to 2023, according to a report released on 14 January 2022. According to the report, "an update of the CSP and its extension is necessary as Zambia's new medium-term development plan, the 8th National Development Plan, is still under preparation and could be completed in the first quarter of 2022. It is also important to await possible policy changes that may occur after the country's general elections held on 12 August 2021." The paper has two priorities: support for infrastructure development and private sector development. For infrastructure, the AfDB will support ongoing projects to build operational efficiency in the sector, create a better environment for private sector participation, and invest in renewable energy to boost production and productivity across the economy. To support the private sector, the AfDB will focus on enterprise development and agriculture to create jobs and improve food security through increased productivity and agricultural value chain development. The Bank will also continue to support improvements in the business climate to attract private sector capital that can help diversify the economy.

Source: AfDB