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issue 452 | 12 Jun 2022

Africa

2021 African Integration Report shows significant progress in achieving the continental integration agenda

The 2021 African Integration Report issued under the theme Putting Free Movement of Persons at the centre of Continental Integration, is based on the African Multidimensional Regional Integration Index (AMRII). The AMRII was developed by the African Union Commission (AUC) and the Regional Economic Communities (RECs), with the participation of the Association of African Central Banks and national statistical agencies. The 2021 Africa Regional Integration Index (ARII) assesses the regional integration status and efforts of African countries. The overall AMRII scores reflect the efforts made within each of the RECs. The RECs which are making the most effort are: the East African Community (EAC); the Economic Community of West African States (ECOWAS); the Common Market for Eastern and Southern Africa (COMESA); the Economic Community of Central African States (ECCAS). Overall, they have scores exceeding 0.6 in a rating range between 0 and 1. On the other hand, the Intergovernmental Authority on Development (IGAD); the Community of Sahel-Saharan States (CEN-SAD); and the Arab Maghreb Union (AMU) are just above the average value of 0.5. The fact of not having defined plans or programmes in certain dimensions of integration such as free movement, financial and monetary integration is one reason for the poor overall performance of these RECs.

Source: African Union

East Africa

World Bank provides USD385-million to Horn of Africa countries to tap groundwater potential and boost climate resilience

The World Bank’s Board of Executive Directors approved the Horn of Africa Ground Water for Resilience Project (HoAGWRP), a new multi-phase project benefitting from USD385-million in International Development Association (IDA) financing that will boost the region’s capacity to adapt to the impacts of climate change. The project fosters cooperation with Ethiopia, Kenya, Somalia, and the Intergovernmental Authority on Development (IGAD), who will work together to tap into the region’s largely untapped groundwater resources to cope with and adapt to drought and other climate stressors impacting their vulnerable borderlands. Djibouti and South Sudan have also expressed interest in joining the programme in subsequent phases. “Groundwater constitutes a natural buffer against climate variability and change, as it is available in times of drought when other surface or subsurface resources are scarce,” said Daher Elmi Housssein, IGAD’s Director of Agriculture and Environment Division. “The potential is vast, and we are committed to building inclusive community-level use of this shared resource, along with better information, infrastructure, and institutions to ensure our groundwater is sustainably managed for generations to come.”

Source: World Bank

Democratic Republic of the Congo

World Bank commends deepening engagement in DRC

The World Bank's director of Strategy and Operations for Eastern and Southern Africa, Humberto Lopez, has concluded a two-day visit to the Democratic Republic of the Congo (DRC) during which he and the country director, Jean-Christophe Carret, met with DRC Finance Minister Nicolas Kazadi, and visited projects under implementation in Kinshasa, including the construction of the future Ozone water treatment plant. “I appreciate the close partnership and collaboration between the Ministry of Finance, and more generally the DRC, and would like to personally thank Minister Kazadi for his efforts to build a solid programme with the World Bank that will soon total about USD7-billion in grants and credits,” said Mr Lopez after the meeting. The bank’s active portfolio for the DRC will reach about USD7-billion at the end of June 2022 due to a significant increase in financing from the International Development Association (IDA) in recent years. The IDA provides grants and zero or low-interest loans called credits boost economic growth, reduce inequalities, and improve people’s living conditions in the world’s poorest countries.

Source: World Bank

The Gambia

AfDB, Global Center on Adaptation host dialogue to look at climate risks facing Gambia’s Port of Banjul Fourth Expansion Project

The African Development Bank (AfDB) and the Global Center on Adaptation recently hosted a virtual dialogue recently to discuss climate adaptation related to the Port of Banjul Fourth Expansion Project in The Gambia. The proposed project will increase cargo handling and storage capacity of the terminal in order to cope with increasing cargo volumes and trade. The discussions centred on the climate hazards the Port of Banjul is exposed to, and the impact of these hazards on the port’s assets, operations and services. The AfDB and European Investment Bank are considering financing the proposed expansion of the Port of Banjul, estimated at USD114-million. To this end, the AfDB has committed USD531 275 to The Gambia Ports Authority to finance a feasibility assessment and investment preparation studies to lay the groundwork for the project. Within the framework of the Africa Adaptation Acceleration Program (AAAP) – a partnership between the AfDB and the Global Center on Adaptation (GCA) – GCA is providing technical assistance worth around USD200 000 to mainstream climate resilience into the expansion project.

Source: AfDB

The Gambia

Reversing the impact of the pandemic and aiming for long-term sustainable growth will require evidence-based and data-driven policies

The Gambia came through the pandemic less impacted than many of its regional and similarly tourism-dependent peers. Even as the number of tourists collapsed, the economy has been supported by a strong agricultural performance, international support measures, and record levels of official remittances which in turn have driven private sector investment. The Gambia Economic Update, titled Coming Back Stronger, states that just as it suffered less in 2020 than its peers, its recovery in 2021 has exposed some of the long-standing structural issues in the economy. “As the immediate impact of the pandemic recedes, The Gambia looks set for modest growth in the medium term, driven by a rebound in tourism, investment and agriculture. However, a low vaccination rate, weather-related risks to agriculture, and the rising cost of living globally, exacerbated by the war in Ukraine, could slow the recovery,” said Feyi Boroffice, World Bank resident representative. The report, therefore, suggests actions to strengthen governance and institutional structures, build fiscal resilience to respond to future shocks, and address the binding constraints of underinvestment, low productivity and lack of diversification that are preventing the economy from reaching its full potential.

Source: World Bank

Ghana

Inflation hits 27.6% in May

Ghana's Consumer Price Inflation accelerated to 27.6% year-on-year in May from 23.6% in April hitting a new 18-year high, the Ghana Statistical Services said on Wednesday, 8 June 2022. This means that in the month of May 2022, the general price level was 27.6% higher than in May 2021 and more than double the government's targeted band of 6% to 10%. The Ghana Statistical Services figures also indicated that month-on-month inflation between April 2022 and May 2022 was 4.1%. The data also indicated that food inflation was up 30.1% from 26.6% last month and month-on-month food inflation was 4.0%. Per the data, oils and fats, water, cereal products and fruit and vegetable juices have seen the largest increases in prices this year. Non-food inflation was 25.7% up from 21.3% last month and month-on-month non-food inflation was 4.1%. Inflation for locally produced items was 27.3 while that of imported items was 28.2%. Government Statistician Samuel Kobina Annim told reporters that a downtrend in food inflation in the coming months would be dependent on the availability of fertiliser and favourable rains.

Source: Graphic Online

Ghana

Leveraging trade policy reforms to diversify and transform Ghana for better jobs

Ghana’s merchandise trade competitiveness declined over the last decade, resulting in a reduction in the number of exporting firms and their participation in Global Value Chains (GVCs). There were, however, improvements in transport logistics and access to information and communications technology (ICT) infrastructure, which can be leveraged for expanded trade and economic transformation; a key pathway to produce quality jobs, says the World Bank’s latest trade analysis for the country. “Ghana’s trade in services on the other hand quadrupled in value and doubled its contribution to GDP between 2010 and 2019,” says Pierre Laporte World Bank director for Ghana, Liberia and Sierra Leone. “Despite this achievement, Ghana remains a net importer of services, between 2010-2019, Ghana’s trade in services grew from 14% to 35% of GDP.” The report notes that, trade policies are an essential enabler of economic growth, job creation, and poverty reduction for developed as well as developing countries such as Ghana. Trade provides new market opportunities for domestic firms, stronger productivity, and innovation through competition.

Source: World Bank

Ghana

World Bank supports Ghana to scale up and improve urban services to two million people in 35 secondary cities

The World Bank recently approved an additional financing of USD145-million International Development Association (IDA) credit for the Ghana Secondary Cities Support Program. This builds on an existing programme of support to secondary cities agreed in 2018 and enables the programme to scale up to support 35 secondary cites across the country. The additional financing will continue enhancing institutional capacity for urban management and providing improved basic urban infrastructure in 35 secondary cities, including the six newly created regional capitals. Over the last decades, the urban population of Ghana grew substantially. More than 56% of the population resided in urban areas in 2021. Urbanisation has resulted in a greater share of the population with access to basic services, but continuously growing urban population and demand have outpaced infrastructure and service provision. Climate change and natural disasters will further exacerbate the challenge in service delivery. If urbansation is not managed well, growing urban population and spatial development patterns of cities would put more people and assets at risk. However, if managed well with integrated land use planning, urbanisation can lead the country to sustainable growth by increasing productivity, livability and inclusivity.

Source: World Bank

Kenya

CBK set to regulate financial super-apps

The Central Bank of Kenya (CBK) says it will start regulating financial super applications (apps) such as Safaricom’s M-Pesa and Craft Silicon’s Little, with the regulator saying the platforms have the potential to account for more transactions that have traditionally been handled by banks directly. The platforms host apps from different businesses including banks, airlines, and utility firms, making them popular among consumers seeking the convenience of a one-stop solution. The M-Pesa app, for instance, has seen downloads of more than five million on Play Store. “Super-apps integrate financial services into their platforms to provide seamless payment experiences for their customers. For banks, this means that an increasing number of users may bypass banking apps and simply use the more integrated super-app,” the CBK says in its latest banking supervision report. “The regulatory framework will need to be agile to regulate super-apps offering e-commerce, loans, insurance products, investing platforms, etc. within the same platform. Collaboration among different sector regulators will be critical for a 360-degree oversight of super apps.”

Source: Business Daily

Kenya

Foreign investor outflows at NSE hit KES4.2-billion in May

Foreign investors withdrew a net of KES4.2-billion from the Nairobi Securities Exchange (NSE) last month, continuing the flight to western markets where interest rates have risen sharply in the last few months. Net sales by foreign investors have been on the rise for the past three months, a period in which the United States has increased its benchmark rates in line with a rise in inflation. In March, they sold a net of KES1.45-billion, rising to KES1.74-billion in April and KES4.2-billion last month. Foreign investors normally trade almost exclusively on large blue-chip stocks at the NSE, with the selloff correlating to a fall in the share price of large firms such as Safaricom, BAT Kenya and Equity Group. The telco’s stock shed 23% in May, ending the month at KES26 per share, while BAT Kenya shed 6.3% to KES420. Equity Holdings shed 5% to close May at KES45.50 per share. Safaricom’s stock accounts for 52% of the NSE’s total valuation of KES2.004-trillion, meaning its movement influences the whole market’s performance significantly. It is also the most traded stock at the NSE, being preferred by foreign investors in particular due to its large liquidity and solid fundamentals that have seen it defy market downturns in the past three years.

Source: Business Daily

Kenya

Kenya’s growth expected to slow in 2022 due to ongoing drought, Ukraine crisis

Kenya’s real GDP is projected to grow by 5.5% in 2022 and 5.2% on average in 2023–24. This growth rate, while still strong, will be a moderation following a remarkable recovery in 2021 from the worst economic effects of the pandemic, when the country’s economy grew by 7.5%, much higher than the estimated average growth in sub-Saharan Africa of 4%. According to the 25th edition of the World Bank Kenya Economic Update, Aiming High: Securing Education to Sustain the Recovery, the impact of the war in Ukraine is weighing on the global economic recovery from the pandemic. Domestically, a key risk to the outlook is a further worsening of the current drought, which is having a devastating effect on food security and livelihoods in affected parts of the country and is necessitating increased social spending on food assistance. “While Kenya’s economy has been resilient, the multiple recent shocks show the urgency of improving social protection mechanisms to cushion the most vulnerable households,” said World Bank country director, Keith Hansen. “This will enable Kenya to move away from other more costly and less well-targeted support measures such as fuel subsidies.”

Source: World Bank

Lesotho

IMF Executive Board concludes 2022 Article IV consultation with Lesotho

On 1 June 2022, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Lesotho. Since early 2020, Lesotho has been hit simultaneously by the pandemic, declining transfers from the Southern African Customs Union (SACU), climate shocks, and the impact of the war in Ukraine. Despite a swift response by the authorities, the fallout from the pandemic – including delays to large infrastructure projects, supply chain disruptions, layoffs in the textiles sector, and weak external demand – has weighed on social and economic development, amplifying legacy structural challenges. Growth has been revised down to 2.1% in financial year (FY) 2021/2022 after contracting by 6% in FY2020/2021 and is forecast by staff at 2.7% in FY2022/2023 and 1.4% on average thereafter. The war in Ukraine has hindered food imports, exacerbating agricultural disruptions due to floods and the pandemic. Global price increases in food and fuel, which account for over half of the consumer basket, are hurting the vulnerable, with inflation expected to reach 6.8% in FY2022/2023.

Source: IMF

Malawi

AfDB extends grants of USD9.25-million for rollout of Climate Disaster Risk Financing

The Board of Directors of the African Development Bank (AfDB) has approved two grants of USD9.25-million to implement the Africa Disaster Risk Financing Programme (ADRiFi) in Malawi. The move will boost the country’s resilience against climate-related shocks and food insecurity. The funding will support the government of Malawi to develop climate risk management solutions and pay its sovereign risk premium for the transfer of drought risks under the Africa Disaster Risk Financing Programme. The initiative, a partnership between the AfDB and African Risk Capacity Group (ARC), enhances preparedness and strengthens countries’ financial resilience against climate hazards by supporting participation in ARC’s sovereign risk pool. The first grant, worth USD4.9-million, will come from the African Development Fund. The ADRiFi Multi-Donor Trust Fund will provide financing for the second grant valued at USD4.35-million. The grants will support the first of two phases of the programme, covering the 2022-2023 period. The government of Malawi and ARC will also contribute funding toward total costs of USD10.13-million for Phase 1 of the programme. 

Source: AfDB

Malawi

Experts, government speak on export proceeds law

The Ministry of Finance has gazetted the Exchange Control (Repatriation and Export Proceeds and Operations of Foreign Currency Denominated Accounts) Regulations of 2022 that are expected to bring sanity in the foreign currency market. This comes as Malawi continues to grapple with foreign exchange shortages. The law was gazetted on 27 May by Minister of Finance Sosten Gwengwe. According to the law, authorised dealer banks will be allowed to open foreign currency denominated accounts for exporters of goods, services and other customers receiving foreign exchange on a regular basis. The law further stipulates that export proceeds or foreign exchange accrued to residents of Malawi will be received in Malawi within 120 days from the date of exportation and be repatriated to Malawi and disposed of in accordance with the regulations. “The objectives of these regulations are to guide operations of foreign currency denominated accounts, increase the circulation of scarce foreign currency resources in the Malawi economy and ensure timely repatriation of all export proceeds to Malawi,” the law adds.

Source: The Times

Malawi

IMF staff completes mission to Malawi for discussions on request for a four-year ECF arrangement

An International Monetary Fund (IMF) team led by Mika Saito held discussions from 25 May to 3 June 2022, via hybrid and in-person meetings in Lilongwe on the authorities’ request for a four-year Extended Credit Facility (ECF) arrangement. The authorities have requested an arrangement in the back of the protracted balance of payments problem. While IMF support and its catalytic role in mobilising donor support are critical at this juncture, being able to restore debt sustainability and resolving the misreporting case are pre-requisites for such support. While the authorities are addressing these issues, the IMF team conducted a mission to agree on a macroeconomic framework, policies, and reforms. At the conclusion of these discussions, Ms Saito issued the following statement, in part: "We had positive and productive discussions with the authorities on the current macroeconomic conditions and policies to steer the country towards macroeconomic stability and a sustainable debt path. "We welcome the authorities’ recent steps to normalise the [foreign exchange] market in line with the recommendations of Article IV consultation concluded by the IMF Executive Board in December 2021 to help to improve foreign exchange availability.

Source: IMF

Mauritania

IMF staff concludes Governance Diagnostic Assessment mission to Mauritania

An International Monetary Fund (IMF) mission visited Nouakchott, Mauritania from 23 May to 2 June 2022, to undertake a study of governance at the request of the government of Mauritania. A team of 10 experts under the leadership of Mr Joel Turkewitz met virtually and in-person with government officials, private sector representatives, civil society and other development partners. The Governance Diagnostic Assessment is intended to support continued reform and progress in establishing effective governance arrangements and the rule of law. Similar assessments have been recently conducted in Moldova and the Republic of the Congo and have led to publicly available reports jointly produced by governments and the IMF, and government action plans for implementing reforms. The request by the government of Mauritania for the governance assessment reflects the government’s commitment to addressing issues of governance and integrity in a transparent manner. The dedication of resources to this topic indicates that both the government and IMF recognise that improving governance and fighting corruption are essential for further economic development. 

Source: IMF

Mozambique

After cyclones, conflict and COVID-19, recovering Mozambique prepares next five-year strategy

The African Development Bank (AfDB) has launched preparations for its next five-year Mozambique country strategy after a trying period that included cyclones, security challenges and the COVID-19 pandemic. The AfDB in coordination with Mozambique’s Ministry of Economy and Finance, hosted a workshop on 12, 13 and 16 May 2022 on the bank’s 2018-2022 Country Strategy Paper completion report, which will detail the results of the strategy. The event also covered the new 2023-2027 Country Strategy Paper and a review of the bank’s portfolio of projects in Mozambique. According to the 2022 African Economic Outlook, Mozambique’s economy is gradually recovering from the impact of COVID-19 and conflict in its Cabo Delgado region. GDP grew by 2.2% in 2021 from a 1.2% contraction in 2020, aided on the supply side by recovery in agriculture and mining, and on the demand side by exports and government expenditure, according to the report, published by the AfDB on 25 May. GDP growth is projected to surpass pre-pandemic levels by 3.7% in 2022 and 4.5% in 2023, partly reflecting mineral projects.

Source: AfDB

Nigeria

NEPZA, FIRS seal pact on revenue collection at free trade zones

The Nigeria Export Processing Zones Authority (NEPZA) and the Federal Inland Revenue Service (FIRS) have signed a memorandum of understanding (MoU), to boost revenue collection at the nation’s free trade zone areas across the country. Speaking at the signing ceremony recently in Abuja, NEPZA managing director, Prof Adesoji Adesugba said the MoU only aims at unbundling and strengthening existing tax schedules for compliance purposes in line with section 19 of the NEPZA Act. According to him, section 19 of the Act mandates free zones enterprises to file returns for statistical data, as such information makes public the records of sales, purchases and other key operations of the enterprises as the authority may require from time to time in line with the Act. He stated, “The importance of the country’s zone scheme in growing the nation’s economy cannot be over emphasised, suffice to say that the authority has through the management of the zones, attracted a cumulative investment of over USD22-billion and generated over NGN40-billion as [GDP] for Nigeria.’’

Source: The Guardian

Uganda

Uganda says exploration results show it has 31 Mt of gold ore

Uganda said recent exploration surveys have shown it has gold ore deposits of about 31 million tonnes and it wants to attract big investors to develop the sector hitherto dominated by small wildcat miners. Over the last two years, aerial exploration was done across the country followed by geophysical and geochemical surveys and analyses, Solomon Muyita, Spokesperson for the Ministry of Energy and Mineral Development, told Reuters. Muyita said an estimated 320 158 tonnes of refined gold could be extracted from the 31 million tonnes of ore. Most of the deposits were discovered in Karamoja, a parched sprawling area in the country's northeastern corner on the border with Kenya. Large reserves were also found in eastern, central and western areas of the East African country. Muyita said Wagagai, a Chinese company, had set up a mine in Busia in eastern Uganda and was expected to start production this year. Wagagai had invested USD200-million, he said, and its mine will have a refining unit.

Source: Mining Weekly