issue 444 | 17 Apr 2022
WorldTax deal sets ground to collect at least 15% tax on online sales
A new global tax agreement will allow low income countries to collect taxes from multinational companies with physical presence in foreign countries but whose products are sold in countries where such multinationals have no physical presence. Under the new arrangement, if a country has physical presence in Europe or another country but sells its products through online platforms, such a company will be required to pay taxes in the country where its products have been sold. The agreement also introduces minimum tax rates of 15% below which no country will be allowed to charge tax rates. This, the agreement says, will prevent multinational companies from migrating from countries with higher tax rates to countries with lower tax rates. Currently, it is estimated that between USD100-billion and USD240-billion - about 4% to 10% of global corporate income taxes in revenue is lost each year because multinational companies take advantage of gaps and mismatches between different countries’ tax systems. Africa loses approximately USD50-billion each year through illicit financial activities of multinationals and wealthy individuals, and approximately USD88.9-billion in capital flight.
AfricaAfCFTA to significantly increase traffic flows on all transport modes
The African Continental Free Trade Area (AfCFTA) will boost intra-African trade by around 40%, with substantial benefits to the transport sectors, according to the latest estimates by the Economic Commission for Africa (ECA). If fully implemented the AfCFTA is therefore expected to significantly increase traffic flows on all transport modes: road, rail, maritime and air. It will also increase transport equipment needs significantly for all modes of transport. The ECA’s estimates on investment opportunities in the transport sector as a result of full implementation of the AfCFTA were released by the African Centre for Statistics and Private Sector Development and Finance Division at the commission’s 6th webinar for ministers of Finance of African member states on 7 April in Addis Ababa, Ethiopia. While presenting the findings, Robert Lisinge, chief, Energy Infrastructure and Services Section in the Private Sector Development and Finance Division of the commission said if the AfCFTA is fully implemented intra-African trade in transport services has the potential to increase by nearly 50%.
Central African RepublicIMF management completes first review of Staff Monitored Program
The management of the International Monetary Fund (IMF) approved on 31 March 2022, the completion of the first review of a seven-month (December 2021 - June 2022) Staff Monitored Program (SMP) with the Central African Republic. Policies under the SMP aim to address the challenges caused by the security crisis and the COVID-19 pandemic, provide a roadmap to improve the track record of policy implementation and help the country to benefit from budget support by development partners. Fiscal policy centres on the sustainable financing of additional high-priority social spending and investments. Structural reforms focus on strengthening revenue mobilisation, fiscal transparency, and governance, including in the extractive sector. The authorities made satisfactory progress through end-December 2021. Thanks to a slightly higher revenue mobilisation and improved spending execution, they met all quantitative targets. They also met all structural benchmarks. Downside risks related to the food and fuel shocks and uncertainties about budget support are mounting. Reaching an agreement with development partners on the disbursement of the budget support will be critical to preserve stability and limit hardship on the population.
Djibouti / Eritrea / Ethiopia / SudanADF approves USD5.5-million grant to fund phase two of flagship Desert to Power energy project
The Board of Directors of the African Development Fund (ADF) has approved a USD5.5-million technical assistance grant to kick-start the roll-out of the flagship Desert to Power initiative in the Eastern Sahel region countries of Djibouti, Eritrea, Ethiopia and Sudan. Known as the East Africa Regional Energy Project, it will be financed through the ADF-15 Regional Public Good window of the ADF, the concessional arm of the African Development Bank (AfDB) Group. The project will develop technical studies for regional solar parks and associated battery storage near regional energy interconnectors, high-voltage cables that connect the electricity systems of neighbouring countries. The initiative will also strengthen the technical capacity of the implementing agency, the Intergovernmental Authority on Development (IGAD). The East Africa Regional Energy Project follows on the approval by the Board of Directors of the ADF of the West Africa Regional Energy Project, in July 2021. The Desert to Power initiative is a flagship renewable energy and economic development initiative led by the ADF. It aims to accelerate socioeconomic development through the deployment of solar technologies at scale in the 11 countries of the Sahel region (Burkina Faso, Chad, Djibouti, Eritrea, Ethiopia, Mali, Mauritania, Niger, Nigeria, Senegal and Sudan).
EthiopiaEthiopia’s Yirgalem Integrated Agro-Industrial Park gets USD4.4-million from a year’s exports
Yirgalem Integrated Agro-Industrial Park has obtained over USD4.4-million from exports since it went operational in March 2021, the Industrial Parks Development Corporation of Ethiopia's Sidama region announced. Yirgalem Integrated Agro-Industrial Park now houses five companies that produce avocado oil, honey, milk and coffee. The industrial park has been able to create a direct linkage between the industrial companies and farmers, Memiru Moke, CEO of the Sidama Industrial Parks Development Corporation said. In doing so, he remarked, over 135 000 farmers have benefited. Efforts are underway in the industrial park to replace imported value-added coffee and milk-related products, Memiru Moke pointed out. Yirgalem Integrated Agro-Industrial Park can serve up to 150 manufacturing companies, with all necessary infrastructure, the CEO noted. In light of this, as well as abundance of agricultural produce that can be used as input for production, as well as the availability of sufficient labour in the area, he has extended calls to investors to take advantage of the investment opportunities at Yirgalem.
EthiopiaMinistry of Finance lifts restrictions on Franco-Valuta privileges
The Ministry of Finance has lifted conditions on Franco-Valuta privileges for individuals to allow Ethiopians living abroad to import basic food items without restrictions. The ministry communicated its decision to in a letter to the Ethiopian Customs Commission (ECC). The move came almost a year after the government first granted the Franco-Valuta privileges, allowing individuals to import basic commodities worth a minimum of USD250 000 while assigning the National Bank of Ethiopia to check the source of their foreign currency. In the letter, the Ministry of Finance informed the ECC that the conditions have been lifted for the import of the basic goods. The move is aimed at narrowing the supply-demand deficit on basic food items as well as tackling increasing inflation. The ministry said the decision was made after a request from the diaspora community to lift the restrictions and allow them to play their part in addressing inflation. Ethiopian nationals living abroad can now import basic commodities – wheat, sugar, instant baby milk and rice – without any restriction of both in terms of value and volume.
Source: Ethiopian Monitor
The GambiaIMF staff completes discussions for fourth review under the ECF arrangement
A team from the International Monetary Fund (IMF), led by Mr Ivohasina Fizara Razafimahefa, mission chief for the Gambia, held discussions with the Gambian authorities from 28 March to 8 April 2022 on the fourth review of The Gambia’s economic programme supported by the IMF’s Extended Credit Facility (ECF) arrangement. At the conclusion of the mission, Mr Razafimahefa issued the following statement: “The mission team reached staff-level agreement with the authorities on the financial and economic policies that could support the IMF executive board’s completion of the fourth review under the ECF arrangement. Despite the challenges caused by the COVID-19 pandemic and a shortfall in external budget support grants, all but one quantitative performance criterion and all but one indicative target at end-December 2021 were met. Structural reforms are advancing. The IMF executive board’s consideration of the staff report on the review is tentatively scheduled in June 2022. Upon the board’s approval, SDR5-million (about USD7-million) will be made available to The Gambia.”
GhanaGhana begins construction of vaccine plant in July
Ghana will start the construction of a vaccine plant by July 2022, Professor Frimpong-Boateng, chairman, Presidential Vaccine Manufacturing Committee, has disclosed. He said so far, feasibility studies had been completed, financial partners identified, and were currently working to “produce a remarkable project.” The chairman disclosed this at a joint meeting organised by the German Development Cooperation in collaboration with the Presidential Vaccine Manufacturing Committee to commemorate World Health Day celebration and the anniversary of the founding of the World Health Organization (WHO) in 1948. The theme of the event was: “Two-years of COVID-19 Management in Ghana: Lessons and Interventions towards a better Ghana”. Prof Frimpong-Boateng noted that a 10-year roadmap had been developed for the vaccine manufacturing which spanned three phases: short-term, medium-term and long-term. “However, the emphasis now is on the short-term, which requires the production of COVID-19 vaccines within two years,” he stated.
Source: Ghana Business News
GhanaGIPC builds consensus on capital restrictions on foreign investors
The Ghana Investment Promotion Centre (GIPC) has started stakeholder engagements to review capital restrictions for foreign businesses which seek to operate in the country. The process is expected to help position Ghana as the investment destination in the sub region. The GIPC Act, 2013 (Act 865) requires foreign companies which seek to partner local businesses to provide a capital requirement of USD200 000, while wholly foreign businesses which desire to operate are required to provide a capital of USD500 000. For foreign businesses which want to do business in the trading space, the capital requirement is pegged at USD1-million. Speaking at the Access Bank/ AHK Economic Outlook event, the deputy chief executive officer of the GIPC, Yaw Amoateng Afriyie, described the present conditions as problematic because it is prohibitive against doing business in the country. He said the GIPC would, however, consult broadly before removing what he described as capital restrictions.
Source: Graphic Online
KenyaKenya’s budget proposes to raise debt ceiling to fund recovery
Kenya’s Cabinet Secretary for the National Treasury Ukur Yatani tabled a KES3.3-trillion (USD28.69-billion) spending plan for the 2022/2023 fiscal year with a focus on accelerating growth of an economy destroyed by COVID-19. The plan also seeks to ensure implementation of the Jubilee government’s legacy projects in agriculture, manufacturing, housing and health sectors. The budget, the last under President Uhuru Kenyatta’s administration, has been crafted with a view to improving the livelihoods of Kenyans weighed down by a high cost of living and create additional employment opportunities in an economy that lost over 1.7 million jobs to the pandemic in 2020. The ambitious spending plan that focuses on the enhancement of the Economic Stimulus Programme and implementation of the infrastructure projects under the ‘Big Four’ agenda calls for increased funding, with Yatani targeting KES50.4-billion (USD438.26-million) in additional tax revenues and KES862.5-billion (USD7.5-billion) in new borrowing during 2022/23. With the government debt closing in on the KES9-trillion (USD78.26-billion) ceiling, Yatani has proposed an amendment to the Public Finance Management Act to create more room for increased borrowing to ease the growing expenditure pressures.
Source: The EastAfrican
KenyaPensions raise investments in offshore, private equity
Pension funds have raised their offshore and private equity investments threefold in the past two years, underlining the push for income diversification from equities and property whose returns have contracted. The funds raised their offshore investments from KES6.32-billion in 2019 to KES19.4-billion at the end of last year, the latest industry data from the Retirement Benefits Authority (RBA) shows. Private equity investments meanwhile went up from KES969-million to KES2.96-billion in the period. While alternative investment classes are still dwarfed by the traditional types such as government securities, equities, property and guaranteed funds, they are expected to keep growing as funds seek the higher returns they offer – especially from private equity. “The offshore investments also continued to record an upward trend… this can be partly attributed to the depreciation of the Kenya shilling against the dollar and the fact that schemes are pursuing diversification due to the stock market volatility,” said the RBA.
Source: Business Daily
KenyaQueries in KRA plan for 50% tax appeal deposit
Tax experts have raised constitutional questions over a proposal requiring firms and individuals to deposit half of tax demands by the Kenya Revenue Authority (KRA) before escalating the dispute from the appeals tribunal to the High Court. They argue that passing the proposed changes to the Tax Appeals Tribunal Act will amount to denying taxpayers unable to raise 50% of the disputed taxes the right of appeal, contrary to section 50 of the Constitution and usurp the powers of the High Court. Currently, courts determine whether the KRA’s demands for security are justifiable and then set the cash to be used as a deposit or bank guarantee. Treasury Cabinet Secretary Ukur Yatani said the proposed changes were aimed at encouraging out-of-court settlements for faster resolution of cases in a bid to unlock billions of shillings tied in legal processes for years. If successful, Kenya will be joining other countries on the continent such as Tanzania (where there is no option of objection to the High court) and Ghana where the deposit is 30% of assessed taxes before appealing. A similar provision – which can have significant cash flow challenges – was in July 2020 ruled unconstitutional in Uganda after a 10-year court battle.
Source: Business Daily
MalawiPML upbeat on low-cost consumer electricity
Malawians should expect to enjoy affordable electricity in five years courtesy of interventions and private sector-led investments being facilitated by the country’s single electricity buyer, Power Market Limited (PML). PML director of marketing and corporate services Villant Jana, while acknowledging that most power generation projects take time to develop and are capital intensive, said in a written response that the actual benefit may only be feasible between three to five years from now. She said: “In its power procurement plan, PML is focusing on procuring various power generation technologies from hydropower generation spread across the country, which means reducing dependence on the Shire River, gas power generation, wind, solar and geothermal power generation, among others. The interventions will ensure a quality and dependable power supply that can propel the economy and support the growth of the manufacturing and mining industries.” Consumers Association of Malawi executive director John Kapito observed that Malawi is already one of the countries with the highest electricity tariffs in the region, adding that investors look at several factors before they invest, one of them being the capacity of consumers to purchase and use electricity.
Source: The Nation
MalawiRenewable energy players want VAT-free solar products
The Renewable Energy Industries Association of Malawi (REIAMA) has lobbied government to consider removing value added tax (VAT) on solar energy products to make them cheaper. In a written response this week, REIAMA president Sosten Chigalu said removing 16.5% VAT on solar energy products would lessen the tax burden on the rural people who desire to use solar lamps. He said REIAMA welcomes the gesture by government to remove 25% import duties on two solar electric lamps and lighting fittings. Chigalu said: “These lamps are life essentials and must not be taxed at all. Just like government had removed import duties and VAT on solar panels, solar batteries, solar chargers and inverters in 2019, REIAMA has repeatedly asked and engaged government to remove all taxes on lamps, TVs, radios, fridges and water heaters powered by solar energy. Product pricing is dynamic because there are many factors that go into pricing such as financing charges, cost of products, logistics, marketing, competition and others. We expect prices to drop in the range of 20% to 30% for the selected products.”
Source: The Nation
NigeriaVehicle importers kick as customs implements ECOWAS common tariffs
The Nigeria Customs Service (NCS) has commenced the implementation of the new version of the Economic Community of West African States (ECOWAS) Common External Tariff (CET) 2022-2026 on imported vehicles. According to the NCS, the migration from the old CET (2017-2021) to the new version, which is in line with the World Customs Organization (WCO), takes immediate effect. In a recent statement, the customs spokesman, Timi Bomodi, said the new rates apply to both new and used vehicles imported into the country. New and used vehicles are subjected to a National Automotive Council (NAC) levy of 20% and 15% respectively. The NCS also confirmed the reduction of import duty on imported vehicles from 35% to 20%. The statement reads: “The nation has adopted all tariff lines with few adjustments in the extant CET. As allowed for in annex II of the 2022-2026 CET edition, and in line with the Finance Act and the NAC, the NCS has retained a duty rate of 20% for used vehicles as was transmitted by ECOWAS with a NAC levy of 15%.
Source: The Guardian
RwandaRwanda launches Centre for Fourth Industrial Revolution, joins global network
The Ministry of Information Communication Technology and Innovation of Rwanda, in partnership with the World Economic Forum, recently launched the Centre for the Fourth Industrial Revolution (C4IR) in Rwanda. The C4IR shapes new policies and strategies in technology governance that enable agile implementation and iteration via a fast-growing network of national and sub-national centres. C4IR Rwanda will have a particular focus on data governance, artificial intelligence (AI) and machine learning. “The launch of this centre is enabled by investments that we, as a country, have been making in science and technology. I hope the centre will build on this by making the fourth industrial revolution an equalising force and contributing solutions to some of today’s most pressing challenges. We are very happy to have the World Economic Forum as a partner in this crucial and other endeavors,” said President of Rwanda Paul Kagame, who officiated at the centre’s opening ceremony.
Source: World Economic Forum
TanzaniaTanzania’s SGR set to start operations end of April
The Tanzania Railways Corporation (TRC) has announced that the Dar es Salaam-Morogoro Phase 1 of the Standard Gauge Railway (SGR) will start operations at the end of this month. The whole project is almost complete with the construction of the Morogoro-Dodoma stretch having reached 82.2% and set for completion by December 2022, Director-General Masanja Kadogosa said “The first and the second phase are all under the Turkish contractor Yapı Merkezi”. Mr Kadogosa did not, however, delve into the details regarding the first phase’s operations which is expected to use electric trains. He spoke at a ceremony to lay the foundation stone for the Mkutopora-Dodoma Phase Three SGR construction that was graced by President Samia Suluhu Hassan. According to Mr Kadogosa, the government of Tanzania has released TZS609.6-billion (USD261-million) out of the total of TZS4.6-trillion (USD1.9-billion) for the construction of the 368 km project.
Source: The EastAfrican
Tanzania / JapanTanzania, Japan sign deal to decongest Dar es Salaam
Japan International Cooperation Agency (JICA) and the government of Tanzania have signed a cooperation agreement for a project that seeks to decongest the commercial capital. The project titled “Transit-Oriented Development (TOD) for Dar es Salaam” will be jointly implemented for the first time in Tanzania’s economic development trajectory, to improve urban development in connection with the public transport infrastructures and services. “It is one of the concrete strategies to decongest Dar es Salaam as proposed in the Transport Master Plan supported by JICA in 2018,” the agency said in a statement. In response to the request from the government of Tanzania, JICA dispatched a detailed planning study team to Tanzania from 3 to 8 February 2022 for the project. The team held a series of discussions with the officials from the President’s Office - Regional Administration and Local Government (PO-RALG), Dar Rapid Transit Agency (DART), and other stakeholders to develop a detailed plan for the project. “The project overall goal is to promote Transport Oriented Development (TOD) pragmatic methodology in the urban planning of Dar es Salaam.”
Source: The Citizen
UgandaContractors tipped on opportunities in oil, gas sector
Contractors have been tipped on how to prepare and take up opportunities in the oil and gas sector. This was during the Uganda National Association of Building and Civil Engineering Contractors (UNABCEC) CEO Breakfast meeting at Hotel Africana under the theme “Contractors Readiness to Undertake Projects in the Oil and Gas Sector”. “For the Oil and Gas sector to deliver meaningful value to firms in the construction sector, there is a need to educate, train, and sensitise the public on the existing prospects as well as provide affordable financial support to them through financial institutions like KCB Bank Uganda to enable them to make their contribution to the sector. Finance continues to be a fundamental aspect that facilitates the smooth operation of small and large enterprises in equal measures. It is therefore key that the banking industry designs and provides financial products and services that suit the needs of players in the construction sector like we have done for others in supporting sectors,” noted, KCB Bank Uganda, managing director Edgar Byamah.
Source: The Independent
ZambiaFitch sees disagreements with private creditors pushing Zambia IMF deal to 2023
Rating agency Fitch has warned that disagreements and prolonged negotiations with some official and private creditors over Zambia’s debt might push the eventual International Monetary Fund (IMF) deal into 2023. It says the timelines issued by the Zambian government for the final IMF approval within the first half of 2022 is optimistic. It says Zambia has just conducted an IMF / World Bank Debt Sustainability Analysis (DSA) which will be the basis of discussions within the creditor committee. The rating agency added that the outcome of the creditor committee will be enshrined in a memorandum of understanding (MOU) outlining a proposed debt treatment. “Zambia will then approach its private creditors to negotiate debt treatment on comparable terms. The government’s announced timeline anticipates the formation of the creditor committee, agreement with private creditors, and final IMF board approval of the Extended Credit Facility all within [the first half of 2022]. Fitch believes that this timeline is optimistic,” it said in a note to investors. It stated that disagreements among official creditors or prolonged negotiations with private creditors could push the date of an eventual agreement back into the first half of 2022 or 2023.