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issue 453 | 19 Jun 2022

Africa

Investment flows to Africa reached a record USD83-billion in 2021

Foreign direct investment (FDI) to African countries hit a record USD83-billion in 2021, according to United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2022 published on 9 June. This was more than double the amount reported in 2020, when the COVID-19 pandemic weighed heavily on investment flows to the continent. Despite the strong growth, investment flows to Africa accounted for only 5.2% of global FDI, up from 4.1% in 2020. While most Africa countries saw a moderate rise in FDI in 2021, around 45% of the total was due to an intrafirm financial transaction in South Africa. “If we exclude this transaction, the increase in FDI flows to Africa, while still positive, would be more in line with what we observed in other developing regions,” said James Zhan, director of UNCTAD’s Investment and Enterprise division. In terms of subregions, Southern Africa, East Africa and West Africa saw their investment flows rise while those to Central Africa remained flat and North Africa registered a decline. The largest holders of foreign assets in Africa remained European, led by investors in the United Kingdom (USD65-billion) and France (USD60-billion).

Source: UNCTAD

East Africa

East Africa's private sector wants rules of origin finalised

The private sector in the East African region wants finalisation of rules of origin under the African Continental Free Trade Area (AfCFTA) speeded up. The call was made recently in Nairobi by the business leaders during a consultative meeting organised on the AfCFTA and Tripartite Free Trade Area (TFTA). It emerged at the forum, co-organised by the East African Business Council and TradeMark East Africa, that 43 out of 55 African countries have ratified the AfCFTA agreement. Forty-five countries have already submitted the schedule of liberalisation plus 87% of rules of origin for products that have been agreed upon. However, according to Mr Prudence Sebahizi, the chief technical advisor on the AfCFTA at the African Union Commission, the process is yet to be finalised. He said products such as textiles and clothing products alone compose 10.5% of the outstanding rules of origin yet to be finalised under the AfCFTA trade arrangement. Motor vehicle parts and accessories compose 1.4% of the outstanding rules of origin, while tobacco and tobacco substitutes and fish and others compose 1%.

Source: The Citizen

East Africa

Increasing cross border trade in Africa’s Great Lakes region

Burundi, the Democratic Republic of the Congo (DRC), and neighbouring countries within the Great Lakes Region of eastern Africa are set to benefit from the new Great Lakes Trade Facilitation and Integration Project approved on 9 June 2022, by the World Bank’s Board of Executive Directors. The USD250-million International Development Association (IDA) financing aims to facilitate cross-border trade and enhance the commercialisation of selected value chains, primarily targeting small-scale and women traders in the borderlands of the Great Lakes region. “Local cross-border trade, if properly facilitated, can be an important way to address poverty, food insecurity, conflict, and other socioeconomic vulnerabilities that populations in the border areas face,” said Dr Chris Onyango, director of Customs and Trade of the Common Market for Eastern and Southern Africa (COMESA). “We seek to reduce the cost and time to trade and improve the volume and quality of goods that are traded to boost incomes, prosperity and stability in Burundi, the DRC and the wider region.” 

Source: World Bank

West Africa

ECOWAS pushes launch of single currency to 2027

Mr Jean-Claude Brou, president of the Economic Community of West African States (ECOWAS) Commission, has said that the community has resumed convergence to launch of the ECOWAS single currency “ECO” in 2027. Brou made this known while delivering reports of the ECOWAS Commission before the ECOWAS Parliament during the ongoing 2022 First Ordinary Session of the Parliament in Abuja. Brou said that the process of launching the single currency was stalled following the outbreak of the COVID-19 pandemic in 2020, as countries needed to focus on handling the pandemic. He explained that the convergence criteria had to be thorough so that the currency once implemented will serve the citizens effectively. “We had to suspend that in 2022, 2021. We are looking at 2022 to 2026 to be able to create conditions that will enable us to stabilise the economies. And so, 2027 we go back to the currency. The process of the performance criteria is always prioritised if we want to be in a very favourable condition to introduce a single currency,” Brou said.

Source: The Guardian

Ethiopia / Equatorial Guinea

Ethiopia, Equatorial Guinea ink MoU to collaborate on mining, petroleum sector

Ethiopia and Equatorial Guinea have signed a memorandum of understanding (MoU) to collaborate on the mining and petroleum sector. Minister of Mines of Ethiopia, Takele Uma and Minister of Mines and Hydrocarbons of Equatorial Guinea, Gabriel Mbaga Obiang Lima signed the MoU. The agreement includes exchanges of information in the mining, natural gas and petroleum sector. Expected services by Ethiopian Airlines to various companies in Equatorial Guinea are also included in the agreement, according to the Ministry of Foreign Affairs.

Source: ENA

The Gambia

IMF Executive Board completes fourth review under ECF arrangement for The Gambia, approves USD6.72-million disbursement

The Executive Board of the International Monetary Fund (IMF) recently completed the fourth review under the Extended Credit Facility (ECF) arrangement for The Gambia. The completion of the review enables an immediate disbursement of SDR5-million (about USD6.72-million) to help meet the country’s balance-of-payments and fiscal financing needs, support the post-pandemic recovery, and address challenges from the war in Ukraine. This brings total disbursements under the ECF arrangement to SDR45-million. The Board also completed a financing assurances review and granted a waiver of nonobservance of a performance criterion on the ceiling on the net domestic borrowing of the central government. The ECF arrangement for The Gambia was approved by the IMF’s Executive Board on 23 March 2020, with an initial total access of SDR35-million (or 56.3% of quota) that was augmented to SDR55-million (88.4% of quota) at the time of the completion of the first review under the ECF, on 15 January 2021. The Gambia’s economic growth is estimated at 4.3% in 2021 despite the various waves of the COVID-19 pandemic. Growth is projected to reach 5.6% in 2022, predicated on strong remittance inflows, a robust expansion of the construction sector, and large public investment projects. 

Source: IMF

The Gambia

World Bank approves USD68-million to support diversification of tourism in The Gambia

The World Bank’s Board of Executive Directors approved on 9 June, a USD68-million grant from the International Development Association (IDA) to support the diversification and climate resilience of the tourism sector in The Gambia. The Tourism Diversification and Resilience in The Gambia project aims to assist the country by strengthening the institutional and policy framework, improve capabilities and access to funds for tourism-related micro, small and medium enterprises (MSME) suppliers, and enhance the attractiveness of selected existing but underdeveloped destinations. The project will also strengthen the sustainability of the coastal areas. “The Gambia’s tourism sector is a key contributor to GDP and employment generation, but it is prone to both, endogenous and exogenous risks that limit the sector’s potential for inclusive and resilient growth,” said Feyi Boroffice, World Bank resident representative for The Gambia. The five-year project will take a targeted approach to integrate gender and climate actions across components and leverage significant global knowledge and experience in tourism recovery, particularly related to building back better in post COVID-19 situations.

Source: World Bank

Ghana

Bawumia launches bank-wide mobile money service, GhanaPay

The Vice President Dr Mahamudu Bawumia has on Wednesday, 15 June 2022, launched the GhanaPay Mobile Money Service in Accra. GhanaPay is the first bank-wide mobile money service by universal banks, rural banks as well as savings and loans companies to individuals and businesses. The GhanaPay service, which operates like the existing mobile money service, with additional banking services, is open to everyone with access to a mobile phone (including a yam phone) with or without a traditional bank account. Speaking at the launch, Vice President Bawumia described the introduction of the GhanaPay mobile money service as “another groundbreaking initiative”, as the service, he added, further expands the government’s vision of financial inclusion to all Ghanaians through digital banking. “One of the biggest challenges that we faced as a country was the huge unbanked population. For a long time, over 70% of the adult population was unbanked. However, thanks to reforms in the payment channels, we have significantly reduced the unbanked population,” said the Vice President.

Source: MyJoyOnline

Ghana

Boost for SMEs as Development Bank Ghana takes off

The Development Bank Ghana (DBG) has begun operations with an initial government equity investment of USD250-million. Apart from the government’s initial investment, the bank has also enjoyed some investment from the European Investment Bank, which has provided EUR170-million; the World Bank, which has given the DBG USD225-million, and the African Development Bank (AfDB), which has given a grant of USD40-million to the DBG. The coming on board of the DBG is in fulfilment of the government’s plan of increasing the number of banks that will support small and medium-sized enterprises (SMEs). The bank’s primary focus will be to support enterprises in agribusiness, information and communications technology (ICT), manufacturing, and those businesses that offer high-value services to scale up. While urging the DBG to partner research institutions to undertake sector research, support innovation centres and business accelerators, President Nana Akufo-Addo also asked the bank to partner the private sector. He said the bank must work with those institutions to provide access to long-term funds, access to markets, both domestic and foreign, as well as the development of skills.

Source: Graphic Online

Kenya

IMF says only flexible exchange rate will pull Kenya out of currency shock

The International Monetary Fund (IMF) says a flexible exchange rate will help Kenya insulate its economy from the external shocks facing its local currency, at a time it is trading at record lows, choking supply chains. The weakened Kenya shilling has prompted fears that the depreciation could further feed into consumer prices. The shilling hit a new record low trading against the dollar after it weakened to 117.04 recently, signalling a continued rally in prices of imported commodities like fuel and cooking oil. If the shilling falls further the risk is that distressed consumers – already hit hard by big food and fuel price rises – may turn restive ahead of key elections in 2022. "The Kenyan economy has demonstrated notable resilience in very difficult circumstances," said an IMF spokesperson recently in response to Business Daily queries. "In this context, a flexible exchange rate is an important shock absorber." The Central Bank of Kenya maintains it is committed to a flexible exchange rate regime and will not deviate from that policy despite the weakening of the shilling.

Source: Business Daily

Kenya

KRA gives ultimatum to Biden’s global taxation plan

Kenya is seeking an explicit revenue-sharing deal before backing United States President Joe Biden administration’s push for a global minimum tax rate on multinational companies. Kenya Revenue Authority (KRA) says the country is seeking to know the share of taxes it will get from Washington’s push for multinationals to pay most of their taxes in the country where they are headquartered, even if their profits are sourced from developing countries. The call for an explicit revenue-sharing deal comes amid lobbying for Kenya to join the 134 countries that have backed the agreement. Countries like Kenya are fretful that the agreement is unlikely to reflect their interests amid the promise that an estimated USD125-billion (KES14.6-trillion) worth of multinational profits would be available for reallocation to nations. The agreement seeks to introduce a global minimum tax rate in a bid to end what it dubbed a “race to the bottom” where businesses channel profits through low-tax jurisdictions. It will tax 100 of the world’s largest companies on profits made in countries where they have little or no physical presence but derive substantial revenues. Kenya, Nigeria and Algeria are among the nine economies that have yet to back the deal. Major African economies, including Egypt, South Africa and Morocco are among the 134 countries that have backed the agreement.

Source: Business Daily

Lesotho

LRA launches e-Customs Tariff

Delays in obtaining information on goods classification, applicable duties and taxes will now be a thing of the past. This follows the government’s decision to launch the e-Customs Tariff, the launch was held in Maseru recently. e-Customs Tariff is an online service that reduces delays in obtaining information on goods classification and applicable duties and taxes. On behalf of the Minister of Trade and Industry, the Deputy Principal Secretary, Mrs Tšireletso Mojela said trade and customs play an interlinked and critical role in creating conditions for economic development across frontiers. She said both the Ministry of Finance through the Lesotho Revenue Authority (LRA) and the Ministry of Trade and Industry have a huge responsibility to facilitate trade hence making a real difference in people’s lives by helping to deliver jobs, growth and development that trade supports. She said the government of Lesotho undertook accession to the Trade Facilitation Agreement in 2016, saying the LRA remains an integral arm for the country to implement the agreement as Lesotho is an inevitable partner in this journey.

Source: African Business

Malawi

RBM sees elevated commodity prices

The Reserve Bank of Malawi (RBM) says as the Russia-Ukraine war rages on, the price of key commodities such as oil, food and fertilisers remain elevated, thereby putting pressure on the country’s inflation. In its April 2022 RBM Market Intelligence Report issued recently, the central bank said although some of the commodities’ prices moderated during the month under review, it remains unlikely that the supply disruptions will normalise soon. The central bank said unless there are interventions to reverse the soaring prices for crucial commodity prices, heightened inflation pressures could persist in 2022. Reads the report in part: “Beyond the broader impact on inflation, supply disruptions of key commodities could severely affect a wide range of economic sectors including crop agriculture, manufacturing, construction, and transport. Consequently, inflation is expected to remain high, derailing the post-COVID-19 economic recovery even further.” RBM was however quick to mention that that it remains vigilant and will take required action to minimise the social welfare losses associated with the persistence of the costs of the prevailing shocks. Meanwhile, Malawi inflation is fast rising, triggered by a rise in food and non-food inflation.

Source: The Nation

Nigeria

FG intensifies efforts to remove Nigerian exports from EU’s restriction list

The Nigerian Export Promotion Council (NEPC) has stated that the Ministry of Industry, Trade and Investment, has inaugurated a committee composed of the NEPC and other regulatory agencies to ensure the removal of Nigeria from the European Union’s (EU) restriction list. The executive director and CEO, NEPC, Dr Ezra Yakusah, on the sidelines of its advocacy programme on export trade house, Cairo, Egypt, said the committee which has less than two months to go, was specifically set up to make recommendations on how to remove Nigerian products from the EU list. According to him, the council is also taking proactive measures to ensure that some of these products are removed from EU restrictions by ensuring these products meet stipulated EU requirements. In his words: “Sometimes the problem is due to poor packaging and a lack of mandatory or voluntary certifications. So, we decided to take the challenge by deploying our ‘go global, go for certification’ programme to train over 150 small and medium-sized enterprises (SMEs) free of charge. We want to ensure that these products are removed from the EU list.

Source: The Guardian

Nigeria

Financial sector dominates trading with 64% volume

The financial services industry (measured by volume) dominated in volume terms on the equities sector of the Nigerian Stock Exchange (NGX) recently with 1.7 billion shares valued at NGN12.5-billion. The sector led the activity chart, thus contributing 64% to total equities turnover volume and value, respectively. Trading in the top three equities namely FBN Holdings Plc, Transnational Corporation Plc and United Bank for Africa Plc (measured by volume) accounted for 1.1 billion shares worth NGN8.323-billion in 2 906 deals, contributing 62.1% to the total equity turnover volume. Following the financial sector, was the conglomerate industry with 419 million shares worth NGN607.7-million in 1 095 deals and the consumer goods industry, with a turnover of 69.7 million shares worth NGN2.8-billion in 3 158 deals. In all, a turnover of 1.8 billion shares worth NGN19.5-billion was recorded in 21 723 deals by investors on the floor of the exchange.

Source: The Guardian

Nigeria

IMF staff concludes staff visit with Nigeria

An International Monetary Fund (IMF) team led by Ms Jesmin Rahman held meetings with the Nigerian authorities from 6-10 June 2022, to discuss recent economic and financial developments, and the economic outlook for the country. At the end of the visit, Ms Rahman issued the following statement, in part: “Economic recovery continues to gain strength on the back of services and agriculture with GDP growth reaching 3.6% year-on-year (y/y) in Q1 2022. Latest data shows economic growth broadening to all sectors except oil, where production remains weak reflecting continued security and technical challenges. Inflation has reached 17.7% y/y in May led by a renewed surge in food prices, exacerbated by the war in Ukraine, and raising food security concerns as over 40% of the population lives below the poverty line. To contain inflationary pressures, the Central Bank of Nigeria has recently hiked its monetary policy rate by 150 basis points to 13%. Regarding the economic outlook, GDP growth is projected at 3.4% y/y in 2022 while inflation is expected to remain elevated.”.

Source: IMF

Zambia / DRC

Zambia, DRC revive plans to build a power plant on Luapula River

Zambia and the Democratic Republic of the Congo (DRC) recently signed a memorandum of understanding (MoU) to revive ambitious plans to construct over 1 000-megawatts (MW) power stations on the Luapula River Basin as well as build a new power interconnector. The bilateral agreements initially signed in 2015 but not implemented, are jointly going to be executed by ZESCO and the DRC power utility SNEL will also herald a new 330 kV Solwezi – Kolwezi Interconnector. The joint ministerial signing ceremony of the inter-governmental MoU and the inter-utility MoU, between the DRC and Zambia was held at Pamodzi Hotel in Lusaka. Energy Minister, Peter Kapala signed on behalf of the Zambian government, whilst the Minister of Hydraulic Resources and Electricity Olivier Mwenze Mukaleng signed on behalf of the DRC. The agreement will see the development of the 1 188 MW, Luapula River generation project and the Kolwezi / Solwezi transmission line.

Source: Lusakatimes