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issue 454 | 26 Jun 2022

Africa

Africa50, AfDB, newly launched ASIF signal strong desire to jointly mobilise capital for infrastructure projects

The African Development Bank (AfDB), Africa50, and Africa Sovereign Investors Forum (ASIF), have signed a letter of intent to collaborate on developing green and climate resilient infrastructure projects across Africa. The three entities will work together to galvanize financing and to drive the development of skills and expertise within the infrastructure sector. The signing took place on 20 June 2022 in Rabat, Morocco, during an event to launch the ASIF. Under the high patronage of His Majesty King Mohammed VI of Morocco, 10 African sovereign investors agreed to set up the forum. The newly formed platform will accelerate coordination to mobilise patient capital for the continent’s development. Ithmar Capital CEO Obaid Amrane, who will serve as the inaugural chair of ASIF, said “ASIF’s main objective is to accelerate the development of investment opportunities and to mobilise patient capital. As sovereign investors, we see strong complementarities with [the AfDB] and Africa50, especially that our visions are aligned with regard to project preparation and capital mobilisation. We are pleased today to formalise ASIF, AfDB and Africa50’s mutual desire to collaborate, for we have a common objective to foster investment in climate resilient projects, among others, according to our respective mandate.” 

Source: AfDB

Africa

Information sharing boosts tax collections

Countries across Africa collected USD38.9-million more in tax in 2021 owing to improved information sharing between revenue authorities and cooperation to fight evasion, and illicit flow of funds. A report by the Global Forum on Transparency and Exchange of Information for Tax Purposes released on 14 May shows that more African countries are giving high priority to exchange of information (EOI) between regimes, despite hurdles. The Tax Transparency in Africa 2022 report shows that most of the 33 African countries that are members of the African Initiative of the Global Forum are setting up the necessary infrastructure for exchange of information. According to the report, 30 countries have already set up delegations of competent authorities and specialised units on EOI, 22 have developed EOI manuals and 19 have so far created tracking systems. Kenya and Uganda are among countries that ramped up efforts to facilitate tax information sharing in 2021 and have realised gains in revenue in the last three years due to EOI. Tanzania and Rwanda are still in the process of developing competent authority delegations and EOI units and have not reported a significant rise in tax revenue from information sharing in the last three years to 2021.

Source: The EastAfrican

Africa

Sub-Saharan Africa reveals lessons for governance

Countries in the region have made important strides in tackling corruption, with some outperforming emerging markets and even advanced economies. A new book by the International Monetary Fund (IMF), Good Governance in Sub-Saharan Africa, features three countries – Botswana, Rwanda and Seychelles – that are leading in the effort to improve governance. A panel discussion moderated by deputy managing director Antoinette Sayeh, was organised as part of the virtual launch. In an interview with Country Focus, Ms Antoinette Sayeh said “Poor governance and corruption have a negative impact on economic growth. They distort public spending and undermine domestic revenue mobilisation – an estimated tax revenue loss globally of USD1-trillion. Which is why the IMF has been working with countries on this issue for over 20 years. And now, at a time when the world faces multiple crises – the COVID-19 pandemic, the war in Ukraine, and the ongoing challenges of climate change – the need for good governance has become more urgent. It is about more than wasting money; good governance enables growth.”

Source: IMF

Cabo Verde

AfDB Group supports Cabo Verde’s Investment Forum as it targets EUR2-billion in investments

The fourth edition of the Cabo Verde Investment Forum has successfully ended in Sal Island, with active support from the African Development Bank (AfDB). The forum, held from 16-17 June 2022, was set up to accelerate private and public financial sector investments to drive sustainable economic growth and job creation in Cabo Verde. The island nation’s Prime Minister, Dr Ulisses Correia e Silva, who presided over the two-day event, noted that it offers the island nation new avenues to mobilise partners and resources for local economic diversification and private sector investment. The forum’s goal for this year was to mobilise EUR2-billion in financing for projects in the tourism, agriculture, fishery, energy, digital, transport, youth, and small and medium-sized enterprises sectors. The bank’s current portfolio in Cabo Verde stands at around USD98-million, covering its thematic development priorities known as the High 5s. Its operations and activities range from fisheries and aquaculture, trade facilitation and policy harmonisation, to ports development and enhancement, money markets support and climate resilience.

Source: AfDB

Cabo Verde

Cabo Verde declares economic emergency

The Cabo Verdean government on Monday, 20 June, declared a social and economic emergency in the archipelago, which is driven by the effects of the war in Ukraine after those of COVID-19 and the drought. Inflation has reached 8%, according to data from last May. At the same time in 2021, inflation was at 1.9%. With the loss of purchasing power, nine out of every 100 Cabo Verdeans are at risk of food insecurity, whereas in 2020, at the height of the pandemic, the figure was only 2%, Prime Minister Ulisses Correia e Silva told a press conference in Praia. By declaring a social and economic emergency, the government intends to obtain more support from the international community so that it can continue to finance the protection measures for families and businesses already adopted, he explained. "We have adopted several measures since last March to stabilise food and oil prices and to help the most vulnerable families, and the total cost of these measures is CVE9-billion (EUR81.6-million) by the end of 2022," he said. Cabo Verde is therefore now engaging in "a strong diplomatic offensive with our partners to mobilise more resources," he said, encouraging his compatriots to save. 

Source: Africanews

Côte d’Ivoire

IMF Executive Board concludes 2022 Article IV consultation with Côte d’Ivoire

The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Côte d’Ivoire and endorsed the staff appraisal without a meeting on a lapse-of-time basis. Supported by solid macroeconomic stability, the Ivorian economy proved resilient to the COVID-19 pandemic thanks to the authorities’ effective policy response. COVID-19-related fatalities remain at low levels by international standards. Vaccination efforts continue and about 70% of the target population has already received a first dose. The economy recovered strongly in 2021, with growth estimated at 7% (from 2% in 2020), while annual inflation rose to 4.2% due to external and supply shocks. The overall fiscal deficit reached 5.1% of GDP, lower than anticipated, mainly due to improvements in customs collection and tax administration which offset higher security spending. The deterioration in the external environment linked to the war in Ukraine and regional security challenges are expected to weigh on the macroeconomic outlook in 2022. IMF staff forecasts growth to slow down to 6% this year due to subdued global demand, worsened terms of trade, and increased uncertainty, while inflation is expected to increase further to about 5.5%. 

Source: IMF

Djibouti

IMF staff concludes visit to Djibouti

An International Monetary Fund (IMF) team, led by Brett Rayner, visited Djibouti from 12¬16 June. Discussions covered recent economic developments, the outlook, and progress on key reforms. At the end of the mission, Mr Rayner made the following statement, in part: “Following a series of external shocks, the economic recovery in Djibouti appears uneven. While the economy has rebounded from pandemic-related disruptions with growth of nearly 5% in 2021, port activity remains weak due to the conflict in Ethiopia and trade disruptions in China. Meanwhile, rising commodity prices are putting additional pressure on the balance of payments and reserves have fallen significantly over the past year. Rising global food prices have also put pressure on inflation, adversely affecting the purchasing power of the population. Growth in 2022 will depend on the resumption of port activity and is tentatively forecast at 3.5%.”

Source: IMF

Ethiopia

IMF staff visit discusses reform plans and economic developments in Ethiopia

A staff team from the International Monetary Fund (IMF), led by Sonali Jain-Chandra, visited Ethiopia for a technical staff visit with the Ethiopian authorities from 13-17June. The purpose of the staff visit was to discuss the authorities’ reform plans and economic developments, which could provide important input for a future mission to negotiate a potential new Fund programme. At the conclusion of the mission, Ms Jain-Chandra issued the following statement, in part: “Delivery of a debt treatment for Ethiopia under the G20 Common Framework, as part of a package supported by an IMF programme, is essential to reduce debt vulnerabilities. The authorities reiterated their interest in an IMF programme to support their reform agenda. The IMF will continue to cooperate closely with the Creditor Committee to provide technical support to the Common Framework process and is working on steps towards commencing discussions on an IMF programme as soon as conditions allow. Growth is projected to have fallen to 3.8% for the 2021/22 fiscal year resulting from the conflict in northern Ethiopia, lower agricultural production, a sharp fall in donor financing and intensifying foreign exchange shortages, drought, and spillovers from the war in Ukraine. Inflation has been high and rising, including due to rapidly increasing food prices and supply-side constraints.”

Source: IMF

Guinea-Bissau

IMF management completes third review of SMP, and IMF Executive Board concludes 2022 Article IV consultation with Guinea-Bissau

International Monetary Fund (IMF) management approved on 25 May 2022, the completion of the third and final review of Guinea-Bissau’s Staff-Monitored Program (SMP) which was approved on 19 July 2021 to support an ambitious programme of reforms aimed at stabilising the economy, improving competitiveness, and strengthening governance. The completion of the third and final review of the SMP is based on an overall satisfactory performance of the reform programme despite the challenges caused by the COVID-19 pandemic and rising commodity prices associated with the war in Ukraine. Most quantitative targets assessed at end-March 2022 and structural benchmarks were met. On 17 June 2022, the Executive Board of the IMF also concluded the 2022 Article IV consultation with Guinea-Bissau. Following a modest GDP growth of 1.5% in 2020, growth is estimated to have accelerated to 5% in 2021 on the back of record cashew nut production, public investment in infrastructure, the gradual lifting of COVID-19 containment measures, and an improvement in business confidence associated with a more stable political situation. Average inflation accelerated to 3.3% in 2021, reflecting pressures on prices of imported goods, especially food and fuel due to disruptions in global supply chain and increase in maritime transportation costs.

Source: IMF

Kenya

Kenyan MPs double tax on sale of property and securities

Investors in Kenya are looking at lower yields from the sale of property, privately held shares and marketable securities after the Parliamentary Finance and Planning Committee approved a proposal to double tax on the sale of related assets. The capital gains tax (CGT) levied on the sale of property or shares by private owners will rise to 10% from January next year, something analysts say may lower the frequency of such transactions or discourage them altogether. Adding to the already challenging Kenyan capital markets environment – which has suffered massive foreign outflows, a falling benchmark index and tenacious investor apathy – the net tax could be an added burden. Previous attempts to raise the CGT in 2018 and 2019 failed, but now increasing pressure to raise more tax revenue and narrow down the budget deficit has given latitude for this reform. The parliamentary committee rejected a proposal by manufacturers and experts to allow for the introduction of inflation adjustment in calculating the CGT – technically known as indexation. Now there are fears that will expose investors to higher tax rates on the cost of assets. 

Source: The EastAfrican

Mauritania

Mauritania Economic Update 2022: The private sector at the center of economic transformation and job creation

According to the fifth edition of the World Bank's Report on the Economic Situation in Mauritania, the country's economic recovery in 2021 was robust but below pre-COVID-19 levels and growth potential. Growth is estimated to have rebounded by 2.4% in 2021 thanks to an increase in private consumption and investment, as well as an improvement in the performance of the services sector. Likewise, the negative impact of the pandemic on human, economic and social activities decreased significantly in 2021, reflecting the recovery in growth and the effectiveness of the mitigation measures put in place by the government. The report notes that Mauritania has presented positive recent economic developments, including a surplus budget balance, a reduction in the total public debt-to-GDP ratio and a monetary policy favourable to the return of growth. With successful COVID-19 vaccination campaigns, a thriving extractive sector and an expected increase in public sector contribution, the country looks set for a more optimistic growth in 2022. Mauritania benefits from a resilient and job-creating formal private sector. However, in comparison with other economies, formal sector actors are few, representing only a small part of economic activity. 

Source: World Bank

Mauritania

Mauritania to cooperate with EIB to scale up green investment

Mauritanian President Mohamed Ould Ghazouani recently met Werner Hoyer, president of the European Investment Bank (EIB), to discuss cooperation with the international public bank. They agreed to strengthen cooperation to scale up wind, solar and green hydrogen investment. “Development of Mauritania’s huge renewable energy potential can both enhance access to affordable energy in our country and allow clean energy to be converted to green hydrogen. Closer cooperation with the EIB will allow Mauritania to benefit from the EIB’s unique technical experience and financial strength,” said Ghazouani. “The EIB is committed to supporting climate action and clean energy investment across Africa. [These] discussions with President Ghazouani will unlock closer cooperation between the EIB and Mauritanian partners and build on 54 years of EIB engagement in the country. We are committed to bringing this cooperation to the next level, by harnessing Mauritania’s renewable energy potential and through our partnership with the Sahel Alliance,” said Hoyer.

Source: ESI Africa

Mauritius

IMF Executive Board concludes 2022 Article IV consultation with Mauritius

The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Mauritius on a lapse-of-time basis. Mauritius has been gradually recovering from the pandemic. The authorities have successfully managed the health impact of the pandemic and vaccinated most of the population. Real GDP expanded by 4% in 2021 as many sectors recovered to pre-pandemic levels of economic activity while the tourism sector remained subdued. Against this backdrop, the current account deficit widened substantially. Fiscal performance is expected to improve in fiscal year 2021/22 helped by quasi-fiscal operations although the pandemic and new pressures on current spending burden the fiscal balance. Inflation increased substantially from 2.7% at end-2020 to 6.8% at end-2021 and further to 11% at end-April 2022. The financial sector, including the Global Business Companies (GBCs) segment was stable in 2021. Mauritius exited from the Financial Action Task Force (FATF) list of jurisdictions under increased monitoring in October 2021 and the analogous European Union and United Kingdom lists soon after. Staff projects real GDP growth of 6.1% in 2022. 

Source: IMF

Namibia

Economy expected to grow by around 3%, inflation projected to average around 5.9% this year – BoN

The economy is expected to grow by around 3% this year, the central bank said recently. According to the Bank of Namibia (BoN) governor, Johannes !Gawaxab, domestic economic activity rebounded in the first four months of 2022 compared to 2021. “The recovery was mainly driven by increased activity in the mining, agriculture, transport, tourism, wholesale and retail trade, as well as communication sectors,” he added. !Gawaxab said, on the contrary, that the positive performance was offset by a continued decline in construction activity over the same period, as both public and private construction work slackened further. “Risks to the domestic economic outlook in the medium term continue to be dominated by the Russia-Ukraine war, climatic swings, global supply chain disruptions, higher oil and food prices, and the possible emergence of new COVID-19 variants, coupled with national vaccine hesitancy,” he said. Meanwhile, the annual inflation rate stood at 5.4% in May compared to 3.8% recorded in May 2021, according to statistics released by the country’s statistics agency. According to !Gawaxab, overall inflation is projected to average around 5.9% for 2022, from the previously projected 6%.

Source: Namibia Economist

Nigeria

Nigeria hikes freight rate on imported fuel as oil prices soar

Nigeria has doubled its freight rate on subsidised imported petrol in a bid to help ease distribution challenge as global oil prices rise, the country's regulator said on Tuesday, 21 June. Farouk Ahmed, CEO of Nigerian Midstream and Downstream Petroleum Regulatory Authority, said the freight rate had been increased to NGN20.46 per litre of gasoline from NGN10.46. Nigeria, Africa's biggest economy and top oil exporter, has faced crippling fuel shortages this year, caused by the rise in oil prices, dollar shortages and disruptions by local truck drivers who often refuse to transport the product due to high operating costs. President Muhammadu Buhari, who approved the new rate, did not say how it will be funded, given Nigeria's already stretched finances and costly subsidy on petrol. Nigeria subsidises imported petrol, which many in the country see as the only benefit for living in an oil-producing nation. The government tried to remove the subsidy in January but had to reverse course to placate unions. With national elections due in February 2023, the government suspended the subsidy removal and added USD9.6-billion to planned spending to cover it, a cost that has risen as oil prices surge.

Source: Times Live

Rwanda

BioNTech launches construction of vaccines plant in Rwanda

BioNTech, a leading biotechnology company on Thursday, 23 June laid a foundation stone for the construction of the first manufacturing site for messenger ribonucleic acid (mRNA)-based vaccines in Africa, expected to address the issue of vaccine equity. The facility in Rwanda's capital city, Kigali, will be based on BioNTainer concept – exact replications of the BioNTech factory in Marburg, Germany, according to Ugur Sahin, the CEO and co-founder of BioNTech. At an event in Rwanda's Special Economic Zone in Kigali, Sahin described the groundbreaking ceremony as a milestone in the setting up of scalable mRNA vaccine production in Africa. The company expects to set up additional factories in Senegal and South Africa in close coordination with its partners in the respective countries. "We have reached the next milestone with the construction start of the first African mRNA manufacturing facility based on our BioNTainers – just four months after we introduced the BioNTainer concept in February," he said. 

Source: Xinhua

Somalia

IMF Executive Board completes the second and third reviews of the ECF for Somalia

The Executive Board of the International Monetary Fund (IMF) has completed the second and third reviews of the Extended Credit Facility (ECF) arrangement for Somalia. The board’s decision enables the immediate disbursement of SDR14-million (about USD18.8-million), bringing Somalia’s total disbursement under the ECF and the Extended Fund Facility (EFF) to SDR271.4-million (about USD384.3-million). Somalia’s ECF arrangement was originally approved by the executive board on 25 March 2020 as part of a three-year blended arrangement under the ECF and the EFF, which involved access of SDR252.86-million (155% of quota) under the ECF and SDR39.57-million (24% of quota) under the EFF. As the full amount of the EFF arrangement was made available on approval and drawn at the first purchase, the EFF arrangement lapsed immediately. The ECF arrangement supports the implementation of the authorities’ National Development Plan and anchors reforms between the Heavily Indebted Poor Countries (HIPC) Decision and Completion Points.

Source: IMF

Somalia

Somalia implements the IMF’s Enhanced General Data Dissemination System

Somalia has joined the IMF Data Standards Initiatives, implementing the recommendations of the Enhanced General Data Dissemination System (e-GDDS) by publishing essential macro-economic and financial data through a National Summary Data Page (NSDP). Established in 2015, the e-GDDS promotes statistical development and synergies between data dissemination and policymaking. In concluding the Tenth Review of the IMF Data Standards Initiatives in March 2022, the IMF Executive Board recently commended the substantial progress in data transparency achieved by nearly 70 e-GDDS participants over the past five years. The NSDP is a national data portal that serves as a one-stop publication vehicle for essential macroeconomic data on the national accounts, government operations, monetary and financial sector, and external sector. The NSDP is hosted by the Somalia National Bureau of Statistics, utilising the Open Data Platform developed by the African Development Bank.

Source: IMF

Tanzania / Oman

Tanzania, Oman oil and gas bodies ink deal

The Association of Tanzania Oil and Gas Service Providers (ATOGS) and Zanzibar Association of Oil and Gas Services Limited (ZAOGS) have signed a memorandum of understanding (MoU) with the Oman Society for Petroleum Services that will see the three organisations cooperating in a number of areas in the oil and gas sector. The development follows a visit made by President Samia Suluhu Hassan to Oman when the MoU was signed during the Tanzania–Oman Business Forum held in Muscat in the presence of Oman’s Minister for Commerce, Industry and Investment Promotion, Qais bin Mohammed Al Yousef, Tanzania’s Ambassador to Oman Abdallah Abasi Kilima and government representatives from the two countries. ATOGS was represented by its chairman Abdulsamad Abdulrahim while ZAOGS was represented by Ali Amour, a board member. Speaking shortly after the signing ceremony, ATOGS chairman said the MoU will enable the three organisations to share local content experience in the oil and gas industry and showcase and share business opportunities available in oil and gas and in strategic projects.

Source: The Citizen

Tanzania / Uganda

Tanzania, Uganda insurance players ink deal for oil pipeline premiums

Insurers from Tanzania and Uganda have agreed to form a consortium that will ensure that 5% of premiums are retained locally under local content in the East Africa Crude Oil Pipeline (EACOP). This comes as actual construction of the EACOP is slated to begin in July this year and first oil output is anticipated in 2025. The Uganda Association of Insurers (UAI) and Association of Tanzania Insurers said globally, oil firms would prefer to do everything offshore as many have their own insurance companies. “The consortium will enable us to speak the same language. We insure oil and gas for the first time…The percentage agreed is 5% of retention and we will work closely together on this,” said the chairman of the UAI, Mr Latimer Mukasa. Upon completion in 2025, the EACOP will be transporting 216 000 barrels of oil per day from Hoima in Uganda’s Lake Albert region to the Tanzania Indian ocean port of Tanga, spanning a distance of 1 443km. TotalEnergies and China National Offshore Oil Corporation took the Final Investment Decision in February to invest USD10-billion toward production and transportation infrastructure to drill, produce and commercialise Uganda’s oil.

Source: The Citizen

Uganda

Government commits UGX872-billion to oil financing

Government has allocated UGX872-billion in the 2022/23 budget to oil-related activities, which signals commitment towards going through the development phase to achieve first oil. Finance Minister Matia Kasaija confirmed the allocation during the Budget Speech in which he said government had fulfilled its earlier commitment that had been made early this year. The UGX872-billion will be shared with a number of oil-related government agencies, with UGX720-billion going into oil financing, while the Petroleum Authority of Uganda, the oil regulator, and the Ministry of Energy taking UGX64-billion and UGX87.3-billion. Construction of the East African Crude Oil Pipeline, Mr Kasaija said, is expected to commence in the coming financial year while: “The capacity of the Uganda National Oil Company to invest in oil and gas development has also been enhanced.” “While there have been negative campaigns against the development of the crude oil pipeline, government will develop the country’s oil and gas resources in a responsible and sustainable manner for the benefit of all Ugandans,” he said. 

Source: Daily Monitor

Uganda

Uganda Airlines gets approval for direct flights to southern China

Uganda Airlines has received landing rights at Guangzhou Baiyun International Airport located in southern China, the national carrier has announced. In a tweet on Saturday,18 June, the national carrier described the development as a “milestone” as flights to China had been halted due to COVID-19. “Ni Hao #Guangzhou! A toast to yet another great milestone! Uganda Airlines has been granted landing rights to China! Cheers to a new world of greater connectivity,” the tweet stated. Speaking to Monitor, the public relations manager of Uganda Airlines, Ms Shakira Rahim, said this is the first ever direct flight from Uganda to China in the post COVID-19 era. “Currently, there is no direct flight from Entebbe to China, which brings an amazing opportunity to tap into this gap. Before the COVID-19 pandemic, there were more than 25 000 passengers from China to Uganda, according to 2019 travel data,” she said. Ms Rahim added that the direct flights will benefit the business community given that the national carrier will handle both passengers and cargo.

Source: Daily Monitor