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Africa Business in Brief

 

issue 509 | 13 Aug 2023

Africa

AfDB, UN Environment Programme, partner to drive implementation of Kunming-Montreal Global Biodiversity Framework in Africa

The African Development Bank (AfDB) is joining forces with the United Nations Environment Programme (UNEP) to advance the implementation of the Kunming-Montreal Global Biodiversity Framework in Africa (KMGBF). The framework sets out an ambitious pathway to reach the global vision of a world living in harmony with nature by 2050. The AfDB and UNEP will partner to establish an Expert Group on Biodiversity Finance, which will provide African countries with knowledge and technical assistance to mobilise greater biodiversity finance for implementation of the framework. It will also offer policymakers and development partners in Africa a platform to connect, share knowledge, approaches, opportunities, and solutions to mobilise biodiversity finance for, nature-positive development pathways in Africa. The partnership was announced following the Africa, Caribbean and the Pacific regions Multilateral Environmental Agreements Programme Phase III Sub-Regional Workshop hosted by UN Economic Commission for Africa (UNECA) in Addis-Ababa from 25 – 28 July 2023. It is the result of an intensive and rigorous consultation process led by the AfDB and UNEP to develop the forthcoming Africa Biodiversity Coordination Platform, which will be jointly hosted by both organisations. 

Source: AfDB

Africa

SmartAfCFTA: AfCFTA Secretariat partners with Zenith Bank Plc to create a one-stop online trade data interface

In a significant move to bolster intra-African trade, the Secretariat of the African Continental Free Trade Area (AfCFTA) and Zenith Bank Plc have signed a memorandum of understanding (MoU) to develop a comprehensive online portal. This initiative aims to consolidate trade-related data and simplify business transactions across the continent, marking a pivotal step in making the AfCFTA more operational. Zenith Bank Plc, with its impressive credentials as a licensed commercial bank by the Central Bank of Nigeria, boasts assets totalling USD22.9-billion and a shareholders’ equity of USD854-million. Its footprint extends across several African countries, emphasising its vested interest in regional commerce. The forthcoming portal will provide a one-stop interface offering country-specific and product-centric information pertinent to the AfCFTA. This initiative stands to benefit various stakeholders, ranging from governments and companies to ordinary citizens, fostering financial inclusion, especially for women. The collaboration’s essence is to reduce operational costs, amplify efficiency and transparency, and drive sustainable and inclusive economic growth across the continent.

Source: AfCFTA

East Africa

Intra-EAC trade down by USD1.8-billion on barriers, taxation

East African economies are losing millions of dollars as stiff trading policies, including slow implementation of agreed taxation rules, yet again force a drop in intra-regional commerce. A new report on regional commerce shows that policymakers have not been putting their words into action, agreeing on significant policies but delaying implementation. In turn, this has seen the East African Community (EAC) member states frequently flout the Common Market Protocol and undermine the regional integration agenda through the imposition of non-tariff barriers (NTBs) to trade and repeated requests for preferential tax treatment and exemptions. The Intra-EAC Trade Brief Analysis report by the East African Business Council (EABC) shows that the value of trade among the EAC member states fell by more than 33% (USD1.8-billion) to USD3.6-billion in 2022, from USD5.4-billion in 2021. The report seen by The EastAfrican shows the intra-EAC trade was mainly impacted by trade in cereals, which fell to USD285.5-million from USD607.2-million and trade in mineral fuels, which fell to USD175.1-million from USD618.2-million in the period. Trade in sorghum and rice declined, but intra-export trade in maize increased by 63% to USD187.1-million from USD114.6-million.

Source: The EastAfrican

Burundi

AfDB’s 2019-2023 Country Strategy Paper impactful, says evaluation team

The African Development Bank (AfDB) Group has expressed satisfaction with the implementation of its Country Strategy Paper (CSP) for Burundi for 2019-2023 based on an evaluation by a bank team led by country representative Pascal Yembiline. Approved in 2019, the CSP helped Burundi mitigate fragility and build resilience through two main pillars: support for the development and transformation of agriculture; and improvement of transport and energy infrastructure. The AfDB mobilised about USD131-million to finance projects under the CSP, some of which have been co-financed by development partners. Funding for two flagship projects under preparation could increase the figure to USD245-million. The bank provided technical assistance to the private sector to develop two hydro-solar power stations. It also set up a transaction guarantee facility for a private bank. A total of 12 projects were approved across energy, transport, agriculture, social and private sectors. The resource mobilisation rate for the plan currently stands at 70% and is ranked satisfactory. However, the bank team noted that the performance of the public sector portfolio was weak, with an average disbursement rate of 35.6%.

Source: AfDB

Côte d'Ivoire

Côte d'Ivoire, Eni ink Natural Gas Supply Agreement

The Ivorian Government – through the Ministry of Mines, Petroleum and Energy, electric utility CI-Energies and National Oil Company Petroci – has signed a contract with global oil and gas major Eni for the supply of natural gas sourced from blocks CI-101 and CI-802 in the Baleine field. Signed by Mamadou Sangafowa-Coulibaly, Minister of Mines, Petroleum and Energy and Noumory Sidibe, managing director of CI-Energies, the contract enables Eni to supply the state utility with natural gas for electricity production. Minister Sangafowa, stated that the agreement increases Côte d'Ivoire’s natural gas supply to boost electricity generation and security while supporting economic growth and the country’s energy transition and decarbonisation agenda. “This signature marks a decisive step for the energy future of Côte d’Ivoire and confirms the country’s commitment to developing a sustainable and environmentally friendly natural gas industry,” said the minister. As Africa’s first net zero emissions development, the Baleine field project is expected to help the West African country reduce the share of fossil fuels in its energy mix from 70% to 55% and reach 45% of renewable energies by 2030.

Source: Energy Capital & Power

Eswatini

Efficient SOEs will boost Eswatini’s economic growth

Restructuring key state-owned enterprises (SOEs) in Eswatini will create new opportunities for the private sector and accelerate economic growth, says a recent World Bank. Making SOEs more efficient will reduce their reliance on public funding and boost private sector-led growth, which is much needed to absorb the growing youth labour force, according to the report. Eswatini's economy has faced low growth, high fiscal deficits, and unprofitable SOEs in the past few years. The first edition of the Eswatini Economic Update - Raising the Game with Efficient State-Owned Enterprises, highlights that SOEs provide basic infrastructure services to businesses and households, and as such, improving their performance will support private sector activity. The report analyses recent global and domestic economic developments and assesses Eswatini's short- and medium-term prospects. It also examines the role of SOEs in enhancing economic performance, evaluating their contribution to the economy, identifying limitations, and proposing areas and actions for reform. The report highlights the urgent need for action to achieve socio-economic aspirations, reduce poverty, and address high unemployment rates.

Source: World Bank

Ghana

Ghana greenlights minerals policy to enhance beneficiation

The Ghanaian Government has approved the country’s Green Minerals Policy in an effort to maximise value created from critical mineral resources. Aimed at stimulating the development of the local mineral value chain, the policy comprises regulatory guidelines and fiscal terms for critical mineral activities across the country. Specific clauses in the policy document include a national ban on the export of unprocessed minerals. Ghana’s Minister of Lands and Natural Resources Samuel Jinapor explained that the country “is seeking to operate at a level that makes the best out of its resources.” He added that, “Ghana’s Green Minerals Policy as approved by Cabinet demands that not a single volume of lithium produced in this country will be allowed to be exported in its raw state.” The policy document will be incorporated into the country’s existing Mining Policy Document and features specific regulatory clauses covering the ‘green mineral industry.’ Rich in a number of minerals essential for the development of renewable energy technologies such as batteries, electric vehicles and green energy components, Ghana’s recent policy document aims to incentivise the participation of local companies in the mineral value chain while increasing revenue generated from mineral processing.

Source: Energy Capital & Power

Ghana

Green corporate loan to fund 100 MW solar plant

A 100 megawatts (MW) solar plant in Ghana is to be financed through a green corporate loan facilitated by Absa Bank. Absa Ghana said the funds “will finance a pioneering 100 MW solar plant for the Bui Power Authority (BPA), further strengthening the country’s energy capacity and advancing its commitment to sustainable development.” The bank said Meinergy Technology Limited, a company specialising in renewable energy solutions, is set to spearhead the project. “The deal also marks the first-ever green loan undertaken by Absa Ghana, solidifying its position as a leading advocate for green energy and regional sustainability,” the bank said. Ellen Ohene-Afoakwa, director of Corporate and Investment Banking at Absa Bank, said: “The world’s attention is increasingly turning towards clean energy and climate change mitigation. We firmly believe that a diversified power sector, combining thermal and renewables, is the key to addressing Africa’s energy needs.” Ghana ranked fourth in Africa for installed capacity in 2022 at 71.2 MW, with the country’s 50 MW phase of the BPA hybrid solar-hydro project boosting its installed solar capacity in 2022. Ghana aims to increase its utility-scale solar power by 150 to 250 MW to achieve its climate change commitments.

Source: ESI Africa

Kenya

Geothermal well expected to feed 22 MW into grid

Kenya’s state-owned Geothermal Development Company (GDC) has discovered a geothermal well at Paka Hills in Baringo County expected to produce at least 22 megawatts (MW) of power. The country’s Energy and Petroleum Cabinet Secretary Davis Chirchir and Principal Secretary, State Department for Energy, Alex Wachira, recently joined the Geothermal Resource Management team during the horizontal discharge of Paka Well 8A. “Together we can harness the power of innovation, technology and partnership to address our energy challenges and unlock the vast potential that lies within our continent,” said Chirchir. Chirchir, while presiding over the opening of the well, described the resource as a significant ingredient in the ongoing government’s efforts to lower the cost of power, according to state media. He said the government intends to tender and invite investors to convert the steam to affordable hydroelectricity. The GDC contributes about 48.4% of geothermal power to Kenya’s national grid. The government is banking on geothermal energy to arrest the rising cost of power. Chirchir said Kenya Electricity Transmission Company (KETRACO) will start work on the modalities of evacuating cheaper power from Paka hills to the national grid making geothermal power competitive in the energy market.

Source: ESI Africa

Kenya

Private investor to run National Oil fuel stations

The government will hand more than 100 fuel stations owned by the National Oil Corporation of Kenya (National Oil) to a private investor in a rescue deal aimed at shielding it from collapse. The move is part of a restructuring process that will see the state-owned parastatal split into three subsidiaries, under one holding company. The government will then hold onto the strategic assets through two subsidiaries but allow the downstream market entity, which will control the fuel stations, to be run profitably by a private investor. The profits from the entity will then be split with the deep-pocketed investor, who will be sourced from licensed oil marketers locally and abroad. However, the investor will not own shares in the company. As part of the plan, the Cabinet has approved the conversion of National Oil into a group holding company with three distinct subsidiaries, including NOC Upstream Limited to handle exploration and upstream production activities and services. NOC Trading Limited will operate in the midstream, specialising in holding strategic stocks of petroleum products for import and export while NOC Downstream Limited will focus on marketing and distribution of petroleum products. At present, National Oil is a fully integrated state corporation involved in all aspects of the petroleum supply chain as a single unit.

Source: Business Daily Africa

Kenya

Why Kenya's credit market is overheating

The benchmark lending rate for banks is now at a seven-year high after it hit peaks last seen in 2016, setting up consumers for another season of costly loans. The spikes have been driven by recent monetary policy measures that have led to reduced liquidity in the banking sector. The costlier rates have also been blamed on recent policy measures such as approvals of risk-based loan pricing combined with competition for cash among players. Demand for credit by the private sector and increased government involvement in the domestic credit market have led to key rates hitting historic highs. The Central Bank of Kenya (CBK) has been raising the base lending rate to combat inflation that had stayed above the 7.5% target for 13 consecutive months. The rate that now stands at 10.5% has been increased twice this year having been at 8.25% at the beginning of the year. Key players in the credit market are now paying a premium to access cash. Data from the banking sector regulator indicates that the private sector was paying an average of 13.2% annually in May. However, the rate has gone up, with banks that have received approvals for risk-based pricing lending at over 20% in a move that will likely starve businesses of cash in an economy that is already struggling with depressed purchasing power.

Source: Business Daily Africa

Mali

Mali adopts new Mining Code that boosts state interests

Mali has adopted a new Mining Code that mining sector officials said would channel a greater share of revenue to state coffers and increase state and private Malian interests in new projects. The government announced the review of the Mining Code in January after it said an internal audit had shown that Mali, one of Africa's biggest gold producers, was not receiving a fair slice of profits while granting too many tax breaks. The new Code now allows the government to take a 10% stake in mining projects and the option to buy an additional 20% within the first two years of commercial production, Mining Commission chairman Assane Sidibe told reporters. A further 5% stake could be ceded to locals, taking state and private Malian interests in new projects to 35%, from up to 20% today. Meanwhile certain tax exemptions have been abolished, Sidibe said. International miners in July said they were in talks with the government over new rules for the sector that has remained attractive despite coups and a deadly Islamist insurgency. The approved code would generate an additional XOF500-billion (USD803-million) per year for the state and increase the mining sector's contribution to the economy by up to 20% of GDP, from the current 9%, Economy Minister Alousseni Sanou and Mines Minister Amadou Keita said.

Source: Reuters

Namibia

Could personal income tax breaks ensure that all Namibians benefit from petroleum royalties?

Estimates suggest that the Namibian Government could receive close to USD106-billion (NAD2-trillion at the time of writing) from its petroleum royalties alone (calculated at 12.5% of the market price). This is if “11 billion barrels of oil reserves” are recovered and sold at the current market price of USD77 per barrel, according to Energy Capital & Power. Although the oil blocks are yet to be commercially appraised, there is significant potential for petroleum royalties to be a highly lucrative source of income for the Namibian Government. Based on the estimated petroleum royalties cashflow projections, the state revenue of the Namibian Government could be boosted to almost 30 000 more, taking the current state budget of NAD67.7-billion into perspective. The proceeds from petroleum royalties will be a huge source of income for Namibia, and the government must ensure that locals, both present and future, benefit in line with article 95 (l) of the Namibian Constitution, 1990. 

Source: ENSafrica

Namibia

What does ESG mean for oil and gas sector?

For international oil companies (IOCs) to develop oil and gas fields sizable funding is required, however, there has been a noticeable trend by some financial institutions who announced that they will no longer fund oil and gas projects. For example, in December 2022, the global banking and financial services company HSBC resolved to no longer provide financing for new oil and gas projects and new metallurgical coal mines. On 11 May 2023, the Paris-based global bank BNP Paribas followed suit and announced that it will end its direct financing for new oil and gas fields. A study titled Banking on Climate Chaos found that between 2021 and 2022, loans and underwriting bonds and equities to IOCs declined by USD128-billion. There is no doubt that this trend is driven by commitments made by nearly 200 countries in the Paris Agreement to decarbonise and achieve net zero by 2050. However, the transition to a decarbonised economy will take time and questions around baseload power will remain until there is sufficient renewable energy capacity and enhanced and scalable battery capability.

Source: ENSafrica

Senegal

Natural gas to fuel Senegal’s agricultural sector

Senegal is on track for first gas production from the Greater Tortue Ahmeyim project in the first quarter of 2024. With first gas, the country anticipates an increase in revenue generation and the introduction of new domestic energy supplies, thereby creating opportunities for the development of other economic sectors such as agriculture. The agriculture sector employs more than 60% of the Senegalese people, and is therefore essential to the country’s economy. The nation has an abundance of water and fertile land, making it ideal for grain and horticulture production. However, the sector is largely made up of subsistence farming, with significant levels of investment and energy required to industrialise the industry. President Macky Sall‘s economic agenda recognises agriculture as an engine of development, and his administration committed to investing USD4-billion in the industry between 2019 and 2023 under the Acceleration of Senegalese Agriculture (PRCAS II) initiative. Massive investments in irrigation and rural roads, access to credit through the establishment of a Guarantee Fund, the construction of storage facilities, the expansion of the fishing industry, and the establishment of an agricultural stock exchange market represent key features of the agricultural plan. 

Source: Energy Capital & Power

South Sudan / Egypt

Egypt supports construction of 20 solar stations in South Sudan

Egypt has supported the construction of 20 solar-powered stations in South Sudan in order to meet the East African country’s sustainability standards. The development projects serve to promote Egyptian-South Sudanese collaboration in various fields including electricity, health, education, transportation and local content development. Announced by Egypt’s Minister of Water Resources and Irrigation, Hani Sewilam, on 2 August, the development of solar power in South Sudan falls in line with Egypt’s commitment towards participating in the country’s energy and construction sectors. Minister Sewilam called the development project a “model for cooperation,” that serves to facilitate “further work on strengthening the bonds of cooperation, integration and investment in various fields.” Meanwhile, it was announced that eight further solar stations are being launched in the East African country to meet the energy needs of South Sudan’s population. Minister Sewilam also met with Egypt’s Ambassador to South Sudan, Moatez Mostafa Abdelkader, to review joint water projects between the two countries, highlighting Egypt’s interest in meeting South Sudan’s sustainability and development goals through clean water schemes and renewable energy development.

Source: Energy Capital & Power

Tanzania

BoT: Economy resilient despite global challenges

Although the global economy is exposed to tightened financial conditions, climate-related risks, ongoing war in Ukraine, and the cumulative effects of the COVID-19 pandemic, risks to the Tanzania’s economy remained moderate, a new report has shown. The Financial Stability Report issued by the Bank of Tanzania (BoT) says the moderate risk was mainly on account of the sound macroeconomic environment, recovery of business activities and policy measures by the government. The report says the risk to households and non-financial corporates was subdued mainly due to a rebound in business activities, increased household income, and eased credit conditions by banks. “Further, risks to banking and non-banking sectors were moderate on account of adequate capital and liquidity to withstand potential shocks,” said the report. The performance of the domestic economy remained stable amid external shocks. According to the report, the domestic economy grew 4.7% and 5.4% in 2022 for Tanzania Mainland and Zanzibar, respectively. The growth was partly contributed by the recovery of economic activities coupled with sustained public and private sector investments.

Source: The Citizen

Uganda / Kenya

Uganda, Kenya seek funds in joint bid to take SGR to the DRC

Uganda and Kenya are seeking at least USD6-billion from multiple lenders to jumpstart construction of the joint Standard Gauge Railway (SGR) project, which stalled after the pull-out of the initial financier, China. Recently, the two partners announced their intention to start construction of the line by December this year to improve flow of cargo and make the Northern Corridor competitive against Tanzania’s Central Corridor. Transport ministers from the two states signed a deal to finalise a joint resource mobilisation drive in the next four months that will fund the railway line from Naivasha to Malaba to Kampala and from Kampala to Kasese to Mpondwe near Congo, with a branch line from Bihanga to Mirama Hills, near Rwanda. Once the project is completed, goods from Mombasa to the Ugandan border with the Democratic Republic of the Congo (DRC), to Rwanda and South Sudan will be ferried by rail. Now, the Northern Corridor partner states have tasked Kampala and Nairobi to ensure the project is on track. During the announcement of the deal between the two governments in Mombasa on 28 July, Kenya’s Transport Cabinet Secretary Kipchumba Murkomen said Nairobi has already done a feasibility study of the project. “We are now going for financiers either from Europe or the United Arab Emirates (UAE), or whoever comes with a good deal for our people in East Africa,” Murkomen said. 

Source: The EastAfrican

Uganda / Russia / South Korea

Russia, South Korea to build two nuclear power stations in Uganda

Russia and South Korea will build two nuclear power stations that will generate 15 600 megawatts (MW) of power in Uganda, President Yoweri Museveni says. He said one unit will generate 7 000 MW while another would produce 8 400 MW, but the timeline and the funding of the projects are not yet known. “We have agreed with Russia and South Korea to build two uranium power stations for electricity,” President Museveni said at a recent coffee summit. Uganda’s current power generation capacity is 1 402 MW and has power for only 800 MW leaving the rest not consumed. The government plans to export power abroad. President Museveni said Uganda has uranium deposits, a mineral used for the production of nuclear power, and several investors have approached him to mine them for export which he rejected.

Source: The EastAfrican