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issue 501 | 18 Jun 2023

Africa

Building foundations for a safe, green and inclusive built environment in sub-Saharan Africa

Building regulatory frameworks, which comprise a set of laws, regulations and implementation mechanisms that reference the planning, design, construction, and control mechanisms, have proven to be the most effective tools to protect health and safety in the built environment and reduce disaster risk. This is especially true in sub-Saharan Africa where population growth and a rapid transition from rural to urban development is expected to lead to a demand for hundreds of millions of new buildings over the next few decades. The study, Building Regulations in Sub-Saharan Africa: A Status Review of Sub-Saharan Africa’s Building Regulatory Environment, supported by the Global Facility for Disaster Reduction and Recovery (GFDRR), provides the first comprehensive snapshot of the building regulatory environment in the region. Data was gathered through a desktop review of regulatory documents from all 48 countries in the region, with additional information provided by survey data and interviews from public and private sector experts on the ground.

Source: World Bank

East Africa

Private sector pushes harmonised taxation to ease cost of business

The private sector in East Africa has added its voice to the debate on the un-harmonised proposed tax increments in partner states ahead of the reading of the financial year 2023/24 budgets. Most of the taxes have not been harmonised across the region thereby likely to lead to a high cost of doing business. Of those proposed in the Kenya, Uganda, Tanzania and Rwanda budgets, the only one that has been harmonised is the income tax, at 30%. The rest, including value added tax (VAT), vary in their application, a factor that impacts cross-border business. Simon Kaheru, vice-chairperson of the East African Business Council (EABC), Kampala Chapter, has applauded the harmonisation of corporate income tax and personal income taxes, set at 30% across the four partner states. But he noted that many of the other tax heads are disparate – “which does not support the spirit of harmonisation that should enable competitiveness and a common market.” Of concern to the business community in East Africa is Kenya’s proposed tax on digital assets as part of the Finance Bill 2023. The Bill seeks to regulate and tax digital asset transactions, including cryptocurrencies as well as non-fungible tokens.

Source: The EastAfrican

East / Southern Africa

COMESA SG outlines key achievements on regional integration

Secretary General (SG) Chileshe Mpundu Kapwepwe presented a detailed report on key developments and achievements recorded in the past year in the Common Market for Eastern and Southern Africa (COMESA) region under the market integration and physical integration pillars. Presenting the State of Integration Report to the 22nd COMESA Heads of State and Governments Summit, the SG revealed that under trade liberalisation, membership to the COMESA Free Trade Area remained at 16 states with the four countries – the Democratic Republic of the Congo (DRC), Eritrea, Eswatini and Somalia – at different stages of full liberalisation. The value of intra-COMESA total exports increased by 28% from USD10-billion in 2020 to USD13-billion in 2021. Key exports include palm oil, cement, copper ores and concentrates, beet/cane sugar, live animals and petroleum oils. Among the largest exporting countries in the COMESA region, are Egypt, the DRC, Tunisia, Seychelles, Uganda, Zimbabwe, Kenya and Zambia. They registered a combined increase of 41% in exported manufactured products in 2021 compared to 2020. The report also mentioned key challenges and constraints.

Source: COMESA

Benin

Supporting Benin's reforms of governance and anti-corruption

At the request of the Beninese authorities, the International Monetary Fund (IMF) conducted a Governance Diagnostic Assessment of Benin in 2022. The review helped identify corruption vulnerabilities that may hamper the country’s development agenda and proposed recommendations to address these weaknesses. The review addressed state functions that are most relevant to economic development and are covered in the IMF’s 2018 Framework for Enhanced Engagement on Governance (fiscal governance, financial sector oversight, market regulation and the rule of law, as well as anti-money laundering and combatting the financing of terrorism (AML/CFT)). The central bank governance and operations were not covered since Benin is part of the West African Economic and Monetary Union (WAEMU). The government strongly supported the assessment. After his re-election in 2021, the president of Benin has made improving governance the first axis of the Government Action Plan 2021-2026, in keeping with efforts already undertaken since 2016. The IMF team found out that Benin had made substantial progress in improving governance over the last few years in several areas.

Source: IMF Public Financial Management Blog

Burkina Faso

Recent trends and outlook for the economy and poverty - building financial resilience to climate risks

According to the latest Burkina Faso Economic Update, economic growth slowed to 2.5% in 2022, with the country posting the highest inflation rate in the West African Economic and Monetary Union (WAEMU), thereby exacerbating food insecurity. Following a robust recovery of 6.9% in 2021, GDP growth slowed in 2022 to 2.5% (corresponding to a contraction in GDP per capita of 0.1%), owing primarily to a 13.7% decline in mining activity as a result of mine closures. Average inflation reached 14.1% while food prices increased on average by 23.4% over the year. There are glimmers of hope worth mentioning: growth is projected to rebound to 4.3% in 2023, driven mainly by private and public consumption, with public spending remaining high. Over the medium term, private investment is expected to recover and pick up pace, while the primary and tertiary sectors will remain the main drivers of growth.

Source: World Bank

Eritrea

Eritrea rejoins regional East African bloc after 16-year absence

Eritrea has rejoined a regional East African bloc it left 16 years ago, its information minister said, in the country's latest move to rebuild ties with its neighbours. The Asmara government quit the Intergovernmental Authority on Development in Eastern Africa (IGAD) in 2007. "Eritrea resumed its activity in IGAD and took its seat at the 14th Ordinary Summit in Djibouti," Information Minister Yemane Meskel recently wrote on Twitter after the summit. He did not say what had prompted the decision but said Eritrea wanted to join other IGAD members and help advance peace and stability in the region.

Source: Reuters

Ethiopia

Flagship telecommunications project to bring affordable, reliable internet and mobile services to millions more in Ethiopia

The International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) – members of the World Bank Group – have announced an equity investment, a loan and guarantees to support the ongoing construction and operation of Safaricom Ethiopia's greenfield telecommunications network across Ethiopia, leading to more affordable internet, reliable mobile connectivity and technology access for people and businesses in the country. This first partnership between the IFC, MIGA, Vodafone, Vodacom, Safaricom, Sumitomo Corporation, and British International Investment in Ethiopia addresses the World Bank Group's core mandate to help countries end poverty and meet their citizens' demands for services including digital connectivity. The IFC will make a USD157.4-million equity investment in Global Partnership for Ethiopia BV (GPE) and a USD100-million loan to its wholly owned subsidiary, Safaricom Telecommunications Ethiopia Private Limited Company (Safaricom Ethiopia). Following the transaction, the IFC will hold a minority position in Safaricom Ethiopia. MIGA will provide 10-year guarantees of USD1-billion to cover the equity investments of Safaricom Ethiopia's shareholders: Vodafone Group, Vodacom, Safaricom, and British International Investment.

Source: International Finance Corporation

Equatorial Guinea

IMF staff concludes visit to Equatorial Guinea

A team from the International Monetary Fund (IMF), led by Mesmin Koulet-Vickot, conducted a mission from 29 May – 7 June 2023, to update macroeconomic projections based on recent developments and take stock of the authorities’ policy vision and priorities. At the end of the visit, Mr Koulet-Vickot issued the following statement, in part: “Equatorial Guinea’s economy expanded in 2022 for the first time since 2014, with real GDP growth estimated at 2.2%, reflecting higher global hydrocarbon prices and Bata reconstruction. Inflation reached 4.8% in 2022 on account of high food import prices. A significant part of the hydrocarbon revenue windfall was saved as reflected in the fiscal surplus of 10.1% of GDP, and a significant strengthening of the external current account. However, the non-oil primary fiscal deficit increased to 9.9% of GDP in 2022 from 8.7% of GDP in 2021. The banking sector prudential indicators weakened. For 2023, real economic activity is projected to decline by 6.4%, a more pronounced recession than initially envisaged, reflecting a more severe impact of the incident to the Zafiro oil field. Inflation will moderate to 2.8%. The non-oil primary fiscal deficit is projected to be 11.5% of GDP.”

Source: IMF

The Gambia

IMF Executive Board completes the sixth and final review under the ECF arrangement for The Gambia and approves USD6.66-million disbursement

The Executive Board of the International Monetary Fund (IMF) has completed the sixth and final review under The Gambia’s Extended Credit Facility (ECF) arrangement. The completion of the review enables the disbursement of SDR5-million (about USD6.66-million) to help meet the country’s balance-of-payments and fiscal financing needs amid challenges, related primarily to the war in Ukraine and the lingering impacts of the COVID-19 pandemic. This disbursement brings the total disbursements under the ECF arrangement to SDR70.5-million (about USD94-million). In completing the sixth review, the executive board also approved the authorities’ request for a waiver for nonobservance of the continuous performance criterion on the accumulation of new external payment arrears by the central government, based on corrective actions taken by the authorities. 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). The Gambia has also benefited from an IMF Rapid Credit Facility of SDR15.55-million and received debt service relief from the IMF under the Catastrophe Containment and Relief Trust, totalling SDR7.9-million.

Source: IMF

Kenya / Djibouti

Kenya, Djibouti agree on visa-free travel in a move to enhance trade

Kenya and Djibouti have endorsed the reciprocal abolishing of visa requirements for their citizens. President William Ruto said recently, during a joint press conference with his Djibouti counterpart President Ismail Guelleh, that the move is aimed at fostering people-to-people interactions, trade, and investment. He reiterated his administration’s commitment to eliminating the barriers imposed by visa requirements for Djiboutian citizens travelling to Kenya. “Therefore, Kenya has concluded necessary procedures to enable visa-free visits for citizens of Djibouti to Kenya,” he said. The two leaders did not, however, give a timeline for the realisation of the new visa-free arrangement. To improve coordination on labour migration and ensure predictability, President Ruto said that both governments had agreed to accelerate the negotiation and finalisation of a comprehensive labour agreement between the two states. President Ruto stated that to facilitate the process of harnessing Kenya’s skilled workforce, both governments had established a Joint Technical Committee dedicated to these efforts.

Source: Capital News

Kenya / Djibouti

Kenya, Djibouti sign MoU on geothermal energy development

Kenya and Djibouti have signed several memorandums of understanding (MoUs), including cooperation in the energy development field, especially in the geothermal sector. During a recent state visit to Djibouti, Kenyan President William Ruto confirmed that the two nations had signed four MoUs. In terms of the energy sector, the focus will be on geothermal development. “The agreement entails sharing technical skills, techniques, experiences, information, documentation, knowledge, and materials between the parties through reciprocal participation, focusing on geothermal development.” President Ruto said the Kenya Electricity Generating Company (KenGen) will drill two geothermal wells in Djibouti. “KenGen has already fulfilled phase one of the contract with the Office Djiboutien De Development De Energie Geothermique (ODDEG) and successfully drilled one geothermal well in the Galla Le Koma project’s initial phase.” Other MoUs signed include developing youth affairs and the arts, tourism and on “mutual cooperation in the Foreign Service Academy.” President Ruto said the strengthening of ties between Kenya and Djibouti will also inspire stability in the region.

Source: ESI Africa

Madagascar

Madagascar receives USD100-million for reforms to help unleash drivers of equitable and resilient growth

The World Bank Group Board of Directors has approved a USD100-million credit for a Development Policy Operation (DPO) in Madagascar aimed at supporting reforms to unleash drivers of inclusive and resilient growth. The reforms are geared toward improving transparency and macro-fiscal stability; market competition; and corporate governance in the energy, telecommunications, and mining sectors. Madagascar has been trapped for decades in a low-growth, high-poverty state, essentially caused by persistent weaknesses in governance, low human and physical capital accumulation, and slow progress economic transformation. More frequent and extreme climate events and, more recently, the COVID-19 pandemic, have exacerbated those challenges. High exposure to climate risks such as cyclones, droughts, floods, and rising sea levels make Madagascar one of the countries most severely affected by climate change impacts in the region. The operation, the first in a programmatic series of three DPOs, is anchored in two mutually reinforcing pillars. The first is aimed at strengthening the governance and macro-fiscal frameworks including through climate-smart fiscal and decentralised management, and the second pillar will help enhance the enabling investment environment and deepen structural reforms in critical infrastructure sectors including mining, energy, and digital connectivity.

Source: World Bank

Namibia

Namibia bans export of unprocessed critical minerals

Namibia has banned the export of unprocessed lithium and other critical minerals, the government announced recently, as it seeks to profit from growing global demand for metals used in clean energy technologies. The Southern African country has significant deposits of lithium, which is vital for renewable energy storage, as well as rare earth minerals such as dysprosium and terbium needed for permanent magnets in the batteries of electric cars and wind turbines. "Cabinet approved the prohibition of the export of certain critical minerals such as unprocessed crushed lithium ore, cobalt, manganese, graphite and rare earth minerals," Namibia's information ministry said in a statement. Only small quantities of the specified minerals would be allowed, after approval by the mines minister, it said. Namibia is one of the top global producers of uranium and gem-quality diamonds, but its battery metals are attracting growing interest as the world shifts away from polluting fuels to renewable energy. Last year, Namibia signed an agreement to supply rare earth minerals to the European Union (EU) under the bloc's plan to reduce its reliance on China for critical minerals.

Source: Reuters

Nigeria

New finance vehicle looks to unlock renewable energy projects

Distributed renewable energy (DRE) projects in Nigeria could get a USD50-million shot in the arm through the establishment of a new financing initiative. The Global Energy Alliance for People and Planet (GEAPP) and Nigerian investment firm, Chapel Hill Denham (CHD), announced the establishment of a new local currency subordinated debt vehicle – the Energy Transition & Access Facility for Africa (ETAFA). ETAFA is a financing initiative which will enable the deployment of USD50-million to support DRE projects in Nigeria. The GEAPP will contribute an initial USD10-million, which will, in turn, mobilise an additional USD40-million from the Chapel Hill Denham Nigeria Infrastructure Debt Fund. “ETAFA’s financing is structured as a naira-denominated, low-cost long-term financing, which will directly contribute towards making DRE solutions more affordable, particularly for lower income consumers,” said GEAPP. The alliance said DRE is acknowledged to be the fastest and most cost-effective solution to accelerate clean electricity access to the African continent.

Source: ESI Africa

Rwanda

Rwanda, AU sign continental medicines agency hosting pact

Rwanda and the African Union (AU) have signed a host country agreement for the African Medicines Agency (AMA), paving the way for the beginning of operations of the newly launched continental regulatory body for medical products. Rwandan Minister of Health Sabin Nsanzimana recently signed the agreement on behalf of his government while the African Union Commissioner for Health, Humanitarian Affairs and Social Development, Minata Samate Cessouma, signed on behalf of the AU at a ceremony in Kigali, Rwanda's capital city. "AMA will play a key role in building confidence in the quality of health products on the continent, promote cooperation and mutual recognition in regulatory decisions and facilitate the movement of health products," Nsanzimana said. The signing ceremony came days after the Rwandan Cabinet endorsed the hosting of the agency's headquarters as well as allocation of state land, where the agency will operate. Cessouma, hailed Rwanda for its commitment to promoting the country's health, saying AMA will contribute enormously to the production and distribution of medicine on the continent. Rwanda was selected to host the agency during a 2022 AU Executive Council meeting in Lusaka, Zambia.

Source: Xinhua

Rwanda / Europe

EU-Rwanda business forum to boost trade, investments

Hundreds of business operators from Europe and Rwanda will gather in Kigali, from 26-27 June 2023 for the European Union (EU)-Rwanda Business Forum to explore investment and trade opportunities, as well as partnerships with businesses in the country, according to the Rwanda Development Board (RDB). This first-ever forum is organised by the delegation of the EU to Rwanda and the Government of Rwanda through the RDB. It will convene private sector companies from the EU member states and Rwanda. Held under the theme, Rwanda-your gateway to Africa, the two-day interactive event, open for all companies to attend, will feature plenary sessions on Rwanda’s business environment and investment opportunities with a focus on sectors with outstanding growth potential including agribusiness, mining, health and pharmaceuticals, financial and digital services, green and sustainable economy. In a press release dated 9 June, the RDB indicated that the EU is the biggest source of foreign direct investment to Rwanda, with investments worth USD210-million registered in 2022.

Source: The New Times

Uganda

Uganda’s first quarter foreign currency lending slows

Uganda is experiencing a lower uptake of loans in foreign currency in tandem with the ongoing fluctuation in exchange rates and increased funding costs faced by commercial banks. Available official data shows that overall private sector credit grew 9.8% in the first quarter of 2023 compared to 10.2% last quarter of 2022. This is largely because of a decline in foreign currency lending – from 2.4% in the previous quarter to 0.1% in the first three months of 2023. The weighted average lending rate, attached to foreign currency loans fell to 7.7% between January and March 2023 compared to a market average rate of 8-10% recorded in the past. In contrast, Uganda shilling-denominated loans grew by 12.1% in the period compared to 13.5% in the final quarter of 2022, the latest Bank of Uganda data shows. Prime lending rates charged on the local shilling loans rose to 20.5% in the period. Total loan extensions fell to UGX531.9-billion (USD140-million) during the first quarter compared to UGX1-trillion (USD236.7-million) recorded between October and December 2022.

Source: The EastAfrican

Zambia

Zambia receives USD100-million boost for green, resilient, and transformational tourism development

The World Bank’s Board of Executive Directors approved a USD100-million credit to strengthen Zambia’s nature-based economy and increase economic opportunities in emerging tourism destinations in the country such as Liuwa Plains National Park, Source of the Zambezi, and Kasaba Bay. In Zambia, the nature-based economy spans many sectors and offers multiple environmental, social, economic, and fiscal benefits however more effective natural resource management is needed to improve economic opportunities for local populations and community incomes. Currently, several potential tourism areas in Zambia suffer from poor accessibility, poverty, and environmental degradation. The project is expected to increase economic opportunities and revenue from tourism and the broader nature-based economy sector by improving the enabling environment, engaging key stakeholders, financing key basic infrastructure, and providing matching grants to communities for investments in the nature-based economy. The project will also enhance sector governance through investments in regulatory reform and building capacity of core sectoral agencies.

Source: World Bank