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issue 502 | 25 Jun 2023

Africa

Afreximbank launches Africa Trade Gateway, a single window for digital services

On Wednesday, 20 June, the African Export-Import Bank (Afreximbank) in Accra launched the Africa Trade Gateway (ATG), a suite of five digital platforms that have been designed as a single window to enable the bank to better deliver on its mandate by providing critical services to support and promote African trade and the implementation of the African Continental Free Trade Area (AfCFTA) Agreement. Launched by Mrs Kanayo Awani, executive vice president, Intra-African Trade Bank, of Afreximbank on the sidelines of the ongoing 30th Afreximbank Annual Meetings (AAM2023), the gateway digital ecosystem comprises the MANSA due diligence platform (named after Mansa Musa, the Emperor of the Malian Empire in the 1300s), the Pan-African Payment and Settlement System (PAPSS), the TRADAR Club, the Africa Trade Exchange (ATEX) and ATG Connect. Addressing guests at the launch, Mrs Awani said that Afreximbank’s digital evolution was part of its deliberate strategic response to address Africa’s key challenges to accelerate the pace of development and foster economic prosperity for Africans using and applying digital technologies and business models.

Source: Afreximbank

Africa

Afreximbank launches insurance subsidiary to support intra-African trade

The African Export-Import Bank (Afreximbank) has launched its wholly owned insurance management services subsidiary, AFREXInsure, with a commitment to provide a single-entry point for all specialty insurance needs to assist in optimally managing related risks for the trade and commerce sector in Africa. Established in 2021, AFREXInsure is set up to offer specialty insurance solutions for trade and trade-related investments across Africa with access to quality, best-in-breed specialty insurance that is tailor-made for Africa. With credible knowledge of Africa, AFREXInsure will leverage on its risk expertise by using its continent-wide presence and deep understanding of the African market to provide solutions around cargo handling, construction, operations and energy – sectors critical for the growth and establishment of trade and investment intercontinentally. 

Source: Afreximbank

Africa

“De-risking capital is key to scaling up development finance”, AfDB’s president, Adesina tells OPEC Fund forum

Global development financiers attending this year’s Organization of the Petroleum Exporting Countries (OPEC) Fund’s forum in Vienna, Austria, have pledged a strong commitment to remodel their investments to support green projects at scale. The delegates, representing multilateral development banks and intergovernmental institutions, said business and political leaders must do more to stimulate capital deployment from the private sector. The African Development Bank (AfDB) Group president Akinwumi Adesina called for new ways of project preparation and de-risking of projects to mobilise private sector investment at scale for sustainable development. "We have got where the private sector is. We have got USD145-trillion of assets under management (and) by 2026 it's going to be there… but the issue here is that we need new ways of aggregation to prepare the projects, to de-risk the projects and lower the transaction cost for those deploying capital," Adesina reiterated. He cited the Africa Investment Forum, initiated by the AfDB and seven partners, as a leading continental platform that is aggregating bankable projects to reduce fragmentation and make it easier to attract institutional investments. 

Source: AfDB

Africa / Asia

Exploiting natural gas can be a win-win for both Africa and Asia – Experts

Against the backdrop of the Russia-Ukraine conflict and its impacts on food and fuel prices worldwide, representatives of the private and development sectors attending an online conference organised by the African Development Bank (AfDB) expressed consensus that exploiting Africa’s natural gas resources offered benefits for both African and Asian countries. The AfDB’s Asia External Representation Office and its African Natural Resources Management and Investment Centre jointly organised the event, titled A New Vision for Africa: Asia-Africa Cooperation on Natural Gas. It aimed to spur exploration of the challenges facing global natural gas markets, including inadequate long-term investments, climate change risks and energy security concerns. The event brought together over 140 participants, including representatives of government agencies, the private sector, development partners and academics from Asia and Africa with a view to developing a new vision for Africa’s gas sector that will ensure energy security as well as serve as an energy source that will advance the transition to net-zero emissions. 

Source: AfDB

East / Southern Africa

National sensitisation programmes on the Single African Air Transport Market underway

The Common Market for Eastern and Southern Africa (COMESA) has kicked-off a series of workshops to create awareness about the Single African Air Transport Market (SAATM), which provides for the full liberalisation of intra-African air transport services in terms of market access, traffic rights for scheduled and freight air services by eligible airlines thereby improving air services connectivity and air carrier efficiencies. The first workshop took place in Mogadishu, Somalia, from 18 – 19 June, organised by COMESA under the programme on Support to Air Transport Sector Development (SATSD) in Eastern Africa, Southern Africa and the Indian Ocean Region (EA-SA-IO). Malawi, Seychelles and Burundi are next. SATSD is a EUR8-million programme funded by the European Union (EU). The Deputy Minister of Transport and Civil Aviation, Mr Mudane Ahmed Jama Omar opened the workshop. He underscored the need to establish enabling legal and institutional frameworks and the necessary infrastructure at the continental, regional and national levels that will ensure safe, effective and efficient air transport systems. 

Source: COMESA

Benin

Better mobilisation of domestic resources and expenditure management to finance public services

The World Bank has approved USD150-million in financing from the International Development Association (IDA) to help Benin increase the efficiency of domestic resource mobilisation and public expenditure. The Economic Governance for Service Delivery Program for Results (PforR) will support actions aimed at increasing the efficiency of domestic resource mobilisation and public expenditure to enable the government to have more resources to finance public services and respond to shocks. The programme targets more inclusive access to e-declaration and performance-based management in customs administration. It also aims to increase the efficiency of expenditure management and public procurement and supports the establishment of a space conducive to citizen oversight of public finances. “Benin has made significant progress in improving budget management over the past decade, but further efforts are needed to increase domestic resource mobilisation and the efficiency of public spending,” said Atou Seck, World Bank country manager for Benin. “This funding will help scale up the results of the reforms undertaken to improve tax management, increase domestic revenue and modernise the country's statistical system." 

Source: World Bank

Botswana

World Bank to support inclusive, resilient and low-carbon growth in Botswana

The World Bank Board of Directors approved a Development Policy Loan (DPL) to the Government of Botswana, aimed at supporting reforms to stimulate inclusive, resilient and low-carbon growth following the combined impacts of the COVID-19 pandemic and the global food, energy and climate shocks. The USD150-million Economic Resilience and Green Recovery DPL II is the second in a programmatic series of two operations, following the disbursement of USD250-million under the first loan, approved in June 2021. This second operation builds on the government’s programme and progress made to strengthen social protection, improve access to finance by small businesses, and prioritise energy access and a move toward a low-carbon recovery. The objectives of this operation are to support the government’s response to multiple shocks, strengthen the development of the private sector and promote a resilient, low-carbon recovery and it is aligned with the last Country Partnership Framework. 

Source: World Bank

Burundi

Building a framework to enhance debt management

The international isolation in 2015-2020 led Burundi to rely massively on its domestic market to meet its financing needs. In addition, the overlapping crisis of the COVID-19 health pandemic and Russia’s invasion of Ukraine had further weakened the country’s economic situation. Over the last eight years, domestic borrowing grew, on average, by 20.5%. At the end of June 2022, nominal public debt stood at USD1.9-billion (or 54.6% of GDP), of which domestic debt represented 77% of total debt. The latest joint International Monetary Fund, World Bank, Low-Income Countries, Debt Sustainability Analysis (IMF-WB LIC-DSA) (2022) assessed Burundi as at high risk of external and public debt distress. However, the government has made efforts to ensure that the debt risk rating does not deteriorate further. Improving debt management in Burundi will require continued support and technical assistance from the country’s development partners to build capacity and strengthen institutions. In the government programme, the intermediate results in the medium terms, among others, would include the submission of a Medium-Term Debt Management Strategy (MTDS) and an Annual Borrowing Plan (ABP) to Parliament in June 2024. 

Source: World Bank

Comoros

In Comoros, leaders outline a common vision to harness Africa’s maritime potential

A historic ministerial meeting took place on 14 June in Moroni, Comoros, where blue economy experts and government officials from across Africa gathered with President Azali Assoumani to discuss how to leverage the potential of the oceans, seas and rivers for sustainable development. The meeting resulted in the adoption of a strategy known as the Moroni declaration, which outlines a common vision and commitment to promoting the blue economy as a key driver of growth, innovation and resilience in Africa. The blue economy refers to the sustainable use of oceans, rivers and lakes resources for economic and social benefits while preserving the health and diversity of marine ecosystems. According to the United Nations Economic Commission for Africa (UNECA), the blue economy could contribute up to USD1.5-trillion to the global economy if effectively and sustainably managed. Africa has a unique position in the global blue economy, with 38 coastal states, 90% of its imports and exports conducted by sea, and an estimated value added of USD100-billion generated by coastal tourism by 2030. The continent also has 49 million jobs currently generated in the blue economy sectors, and a projected value of USD405-billion by 2030. 

Source: UNECA

Djibouti

IMF staff concludes visit to Djibouti

An International Monetary Fund (IMF) team, led by Joyce Wong, visited Djibouti from 11-15 June. Discussions covered recent economic developments, the outlook, and progress on key reforms. At the end of the mission, Ms Wong made the following statement, in part: “The economic rebound post-COVID-19 was held back in 2022 by international trade disruptions and the conflict in Ethiopia. The authorities’ preliminary estimates point to real GDP growth moderating to 3.7% in 2022 relative to 4.8% in 2021. Despite the decline in revenues from the slower economic activity and the shortfall of taxes on domestic fuel, the fiscal deficit narrowed to 1.4% of GDP in 2022. This outturn reflects in part some arrears accumulation, both domestic and external, pending the outcome of debt restructuring with their main external creditor. The recent peace agreement in Ethiopia, Djibouti’s main trade partner, has resulted in an increase in port activity, as well as rail and road freight. Inflation remains below regional trends, aided by exchange rate stability and unchanged domestic fuel prices. A continued recovery is expected for 2023, but the outlook remains highly dependent on global and regional developments.” 

Source: IMF

Gabon

New World Bank Gabon Economic Update highlights the importance of pro-poor fuel subsidy reforms for a green and resilient economy

Over the course of 2022, Gabon's economy has benefited from high oil prices. However, the rise in global energy prices has also led to high fiscal cost which is affecting social spending for the most vulnerable and impacting the environment. The latest edition of Gabon Economic Update highlights the importance of implementing adequate reforms to limit the economic, environmental, and social costs of fuel subsidies, while strengthening social protection programmes to support the most vulnerable and improving fiscal sustainability. Gabon’s economic recovery picked up, reaching 3.1% in 2022. The country’s trade balance and its public finances have benefited from high commodity prices and a good performance of commodity exports such as oil, timber and manganese. As a result, Gabon recorded its strongest budgetary surplus in 2022 since the 2014 oil price shocks. In an attempt to contain the rising fiscal cost of fuel subsidies, the government decided to gradually liberalise fuel prices for industrial consumers from June 2022, while maintaining prices for households unchanged. Despite these efforts, the fiscal cost of fuel subsidies has continued to rise. 

Source: World Bank

Ghana

AfDB approves USD23.04-million for modern floating dock facility

The Board of Directors of the African Development Bank (AfDB) has approved a USD23.04-million loan to Prime Meridian Docks AssetCo Ltd (PMD), a special purpose entity to co-finance the construction of a modern floating dock ship repair facility in Ghana’s western Takoradi port. The loan will support the company to design, build, operate and maintain a world-class ship repair and maintenance facility in the Gulf of Guinea under a 25-year concession granted to the company by the Ghana Ports and Harbours Authority. The project, estimated to cost USD137-million, will involve constructing a 200-metre jetty, dredging 300 000 cubic metres of rock in the port basin, and procuring and installing a 13 500-tonne lift capacity floating dock. The facility will also have offices, a warehouse, mechanical workshops for steel and pipe fabrication, electrical works, blasting and painting, and equipment maintenance. The board also authorised the syndication, on a “best efforts basis”, of additional financing of up to USD11-million. 

Source: AfDB

Ghana

IMF staff concludes visit to Ghana

An International Monetary Fund (IMF) staff team led by Stéphane Roudet visited Ghana from 8-15 June as part of its regular engagement with the Ghanaian authorities and other stakeholders. The discussions focused on recent economic developments and implementation of the fund-supported programme approved on 17 May 2023. At the conclusion of the visit, Mr Roudet issued the following statement, in part: “During the visit, we discussed recent macroeconomic developments. Against a complex global economic backdrop, the Ghanaian economy is showing signs of stabilisation, with softening inflation, an increase in international reserves, and a less volatile exchange rate. We also took stock of the authorities’ progress in meeting key commitments under the fund-supported programme. These will be formally assessed in the context of the first review of the Extended Credit Facility (ECF) arrangement, which is expected to be undertaken in Autumn. In discussing progress on the debt restructuring operations, we reiterated that timely restructuring agreements with creditors are essential to secure the expected benefits of the fund-supported programme.” 

Source: IMF

Kenya

Kenya to benefit from KES12.5-billion United States green energy for Africa funds

Kenya has been listed among countries that will receive a combined KES12.5-billion (USD88.9-million) from the United States Agency for International Development (USAID) to fund renewable energy projects. The billions to be released through the Power Africa initiative for East and Central Africa will fund the construction of 10 million on-grid and off-grid connections for an estimated 50 million people in sub-Saharan Africa. USAID administrator Samantha Power announced the signing of the deal at the Africa Energy Forum but did not give a breakdown of the amount that is expected to be channelled to Kenya. The funding will significantly boost Kenya’s efforts to scale up electricity access to homes and businesses in the far-flung regions by tapping the vast solar potential. “The Power Africa programme will support 10 million on and off-grid connections for households and businesses in the region, providing 50 million people access to new or improved electricity generated from cleaner fuel sources,” said Ms Power. At least 87% of Kenya’s electricity comes from clean sources with geothermal accounting for half of the power generated in the first three months of this year followed by wind at 18%, hydro (14%) and solar at 4.3%. 

Source: Business Daily Africa

Niger

Strong agricultural season boosts economic rebound in 2022

Niger's economy recovered strongly in 2022 after two years of weak growth. This is primarily due to a good agricultural season, thanks to favourable rainfall and an expansion of irrigated land. However, there are uncertainties and risks that could affect future growth, such as the security situation and climatic shocks. These are the findings of the World Bank’s latest economic update for Niger. The report titled Strengthening Financial Resilience of Pastoralists to Drought provides an overview of Niger's economic situation and poverty levels in 2022 as well as the outlook for the next three years. The report also analyses the potential of using disaster risk financing and insurance instruments for pastoralists to mitigate the adverse socio-economic impacts of climate shocks. "Niger's economy depends to a large extent on the livestock sector, which contributes almost 15% of the national GDP. However, this sector is significantly affected by climate shocks," says Han Fraeters, World Bank country manager for Niger. The favourable agricultural season of 2022 contributed to the growth of the economy, leading to a 7.5% increase in average per capita income. 

Source: World Bank

São Tomé and Príncipe

São Tomé and Príncipe accedes to the establishment agreement for Afreximbank’s Fund for Export Development in Africa

The Fund for Export Development in Africa (FEDA), the development impact-focused subsidiary of the African Export-Import Bank (Afreximbank), has announced that São Tomé and Príncipe has become the latest country to sign the FEDA Establishment Agreement. The accession to the agreement, achieved under the guidance of Prime Minister Patrice Trovoada of São Tomé and Príncipe, demonstrates the country’s support for Afreximbank’s efforts to broaden FEDA’s effectiveness by mobilising its member states to sign and ratify the FEDA Establishment Agreement and to support the organisation’s impact investing objectives. New memberships broaden the scope of FEDA’s interventions and underpin the fund’s dedication to its mission of delivering long-term capital to African economies with a focus on industrialisation, intra-African trade and value-added exports. 

Source: Afreximbank

Senegal

Fiscal consolidation is a priority in view of tighter financial conditions - Annual report on the economic situation in Senegal

Senegal's economic growth slowed in 2022, against a backdrop of rising world commodity prices, says the World Bank in its Senegal Economic Update 2023. A decline in private investment and exports, as well as a contraction in the agricultural sector and industrial production, are at the root of this slowdown. The result is a deceleration in real GDP growth in 2022 of 4.2%, after a strong recovery post-COVID-19 in 2021 at 6.5%. “The country's growth remains resilient despite multiple crises, and the macroeconomic outlook is favourable. However, this growth needs to be more inclusive, given the inflation that has accentuated poverty in 2022”, said Keiko Miwa, World Bank country director for Cabo Verde, The Gambia, Guinea-Bissau, Mauritania, and Senegal. Strong inflationary pressures, with a significant impact on low-income households, led to shock mitigation measures, which combined with borrowing by state-owned enterprises, mainly to finance investment in the oil and gas sector, resulted in an increase in public debt in 2022. The macroeconomic outlook, while subject to considerable variability, is nonetheless favourable. This should result in a rebound in growth to 9.9% in 2024, driven by strong industrial production marked by the start of hydrocarbon exploitation. 

Source: World Bank

South Sudan / Djibouti / Kenya

South Sudan shifts oil supply routes to Djibouti and Mombasa ports

South Sudan has announced that it will import essential oil supplies through Djibouti and Kenyan ports instead of using Port Sudan due to ongoing conflict. Minister of Petroleum, Puot Kang Chuol, stated during a press briefing that the ministry, with the approval of the Cabinet and the country’s top leadership, including President Salva Kiir and First Vice President Riek Machar, has formed an Emergency Response Team. “The Emergency Response Team, guided by a well-defined and structured contingency plan, will proactively mitigate the impact of the fighting in Sudan by rerouting all logistics and transportation of critical materials, chemicals, and equipment,” said Minister Chuol. The minister assured that the current inventories of critical materials, chemicals, and equipment in the oilfields are sufficient to sustain smooth production and exportation of crude oil for the next three months. The Emergency Response Team is actively working with stakeholders and their Sudanese counterparts to ensure uninterrupted crude oil production in South Sudan amid the ongoing conflict. 

Source: Sudan Tribune

Uganda

IMF Executive Board concludes the fourth review under the ECF arrangement with Uganda

The Executive Board of the International Monetary Fund (IMF) has concluded the fourth review of Uganda’s Extended Credit Facility (ECF) arrangement. Further, the executive board granted a waiver of nonobservance of a performance criterion on the net credit to the government from the Bank of Uganda (BoU). The completion of the fourth review enables the immediate disbursement of SDR90.25-million (about USD120-million). This brings the aggregate disbursement under the ECF arrangement to SDR541.5million (about USD750-million). In completing the fourth review, the executive board also approved the authorities’ request for a waiver of nonobservance of a performance criterion on the ceiling on net credit to the central government from the BoU. The ECF arrangement for Uganda for a total of SDR722-million (200% of quota) or about USD1-billion was approved by the executive board on 28 June 2021, aiming to support the near-term response to the COVID-19 pandemic and boost more inclusive private sector-led long-term growth. Reforms focus on creating fiscal space for priority social spending, preserving debt sustainability, strengthening governance and reducing corruption, and enhancing the monetary and financial sector frameworks. 

Source: IMF

Uganda

Licensing of foreign lenders in Uganda: much ado about nothing

The Supreme Court of Uganda recently gave its judgment in the much-anticipated appeal by Ham Enterprises against Diamond Trust Bank Uganda and Diamond Trust Bank Kenya. The court held that a lending transaction between a foreign bank and a Ugandan borrower does not constitute “transacting financial institutions business” as defined by the Financial Institutions Act 2004 (FIA).  This finally clarifies that a foreign lender does not require a licence from the Bank of Uganda (BoU) under the FIA in order to extend credit to Ugandan borrowers. Regardless of the finding of the court on the alleged illegality, this does not absolve a borrower from repaying its debts.

Source: ENSafrica