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Africa Business in Brief

 

issue 542 | 21 Apr 2024

World

Why our world needs fiscal restraint in biggest-ever election year

The global economic and financial outlook has improved in the last six months. Inflation has fallen, financial conditions have eased, and risks to the outlook are balanced. However, many countries continue to struggle with high public debt and fiscal deficits amid new challenges from high real interest rates and dimming medium-term growth prospects. Our latest Fiscal Monitor calls for governments to avoid slippages and focus more on rebuilding buffers and safeguarding fiscal sustainability over the medium-term. Fiscal policy shifted to be more expansionary last year after a rapid improvement in debt and deficits in the prior two years. Only half of the world’s economies tightened fiscal policy last year, down from about 70% in 2022. In 2024, a record number of countries, home to more than half of the world’s population, are holding national elections. History shows governments tend to spend more and tax less during election years. Deficits in election years tend to exceed forecasts by 0.4 percentage points of GDP, compared to non-election years. In this great election year, governments should exercise fiscal restraint to preserve sound public finances.

Source: IMF Blog

Africa

AfDB and GIABA launch new project to combat money laundering and terrorist financing in Africa

On 18 April 2024, the African Development Bank (AfDB) and the Intergovernmental Action Group against Money Laundering in West Africa (GIABA) officially launched a three-year support project to combat money laundering and terrorist financing in their member countries. The project, entitled Capacity Building on Anti-Money Laundering and Countering the Financing of Terrorism in GIABA Member States in Transition, will receive a grant of USD5-million from the AfDB Group. The launch ceremony, held in Dakar, Senegal, was attended by staff from both institutions, representatives of beneficiary countries, which are members of GIABA, and the Financial Intelligence Unit of Senegal. Mohamed Cherif, Country Manager of the AfDB for Senegal, and Edwin Harris Jr, Director General of GIABA, represented their respective institutions. The project will be financed by a grant of UA3.5-million (about USD5-million) from the Transition Support Facility, a structure created by the AfDB. The project will contribute to resilience in the West African region, by improving anti-money laundering and countering the financing of terrorism regimes, and by developing the capacities of GIABA member states, with a particular focus on countries with economies in transition.

Source: AfDB

Africa

High flight ticket taxes and fees slowing air transport in Africa

Taxes and fees charged on African air tickets are higher than what airlines in other continents charge and are inhibiting air transport on the continent. According to the African Airlines Association (AFRAA), a leading trade association of airlines based in Ghana that researches aviation, the average amount paid in taxes and fees by passengers in Africa is more than twice what air travellers in other continents pay. Taxes and fees on African air tickets averages USD64 while in Europe it averages USD30 per ticket while it is even lower in Middle East at USD29.65. The high add-on fees has inhibited the growth of air travel on the continent that is grappling with high poverty rates. Regionally, western and central Africa rank as the most expensive regarding international passenger charges averaging USD94.59 and USD93.74, respectively. However, passengers from northern Africa pay the lowest in taxes and fees averaging USD26.27. The charges have been blamed on the unfriendly business environment, poor governance, and less subsidies given to airlines in Africa compared to those abroad. East African Business Council in a study on air space liberalisation in the East African Community (EAC) shows average departure charges account for 13% of the ticket prices for flights in the EAC and 8% for flights to other African countries.

Source: Business Daily

Africa

How AI can revolutionise Africa’s labour landscape

The rapid advancement of artificial intelligence (AI) has sparked widespread debate about its potential impact, particularly on jobs, in recent years. Africa is on the verge of a transformative era that has the potential to reshape the continent's labour landscape. To be sure, the potential benefits and challenges of AI in Africa's labour markets are complex and multifaceted, necessitating a nuanced approach to capitalise on the opportunities while mitigating the risks. One of the potential consequences for Africa is the possible displacement of jobs. As AI technologies improve, entire industries will find new ways to work in collaboration with AI, potentially with a reduction in the routine and repetitive clerical work done by people. While this disruption is a global phenomenon, it has special implications for Africa because the continent has the youngest population, which will continue to enter the labour market over the next few decades. However, it is critical to recognise that AI has the potential to be a driver of job creation in Africa. As the burden of routine work is reduced, human capital is freed up to engage in more complex, creative, and high-value activities. Additionally, the development and implementation of AI technologies will create a demand for skilled workers ranging from AI specialists and data scientists to technicians who can maintain and optimise these systems.

Source: Business Daily

Southern Africa

World Nuclear Association to highlight Southern Africa’s nuclear prospects at IAE 2024

Director General of the World Nuclear Association (WNA) Dr Sama Bilbao y León will speak at the Invest in African Energy (IAE) 2024 forum in Paris this May, unpacking unprecedented opportunities in Southern Africa’s energy sector. The WNA is an international organisation that promotes nuclear power with the goal of tripling nuclear capacity by 2050 to achieve net-zero greenhouse gas emissions. On the African continent, South Africa is currently the only country with an operational nuclear power plant – the 1 860 MW Koeberg Nuclear Power Station – which accounts for approximately 5% of power generation. Last December, the country’s Department of Mineral Resources and Energy announced plans to procure 2 500 MW of additional nuclear capacity and is in the process of seeking bids to commission new projects. IAE 2024 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place from 14-25 May 2024 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers.

Source: Energy Capital & Power

Ethiopia

Ethiopia opens up retail sector to foreigners in economic liberalisation move

The Ethiopian Ministry of Trade and Regional Integration has recently announced that the East African country has opened its retail sector to foreign investors in a major economic liberalisation move. In a press statement, the ministry said foreign investors who meet the conditions set by the Ethiopian Government can invest in all retail trade activities that have previously been set aside for local businesspeople. The statement further said foreign investors can now engage in a wide array of wholesale trade activities apart from fertiliser products. The ministry also disclosed that foreign businesspeople who meet preconditions are now allowed to export raw coffee, oil seeds, cereals, hides and skins, forestry products, and livestock. Ethiopia, Africa's second most populous nation, is currently embarking on a major economic reform that mainly envisages boosting the private sector's contribution to its overall economy.

Source: Xinhua

Ethiopia

Ethiopia revives its 2015 Transfer Pricing Directive

The dormant 2015 Transfer Pricing (TP) Directive was recently renumbered and reissued by the Ethiopian Ministry of Finance as “Directive to Provide Rules on Transfer Pricing Directive No. 981/2024.” The reissued Directive deals with procedural requirements of laws issued after the 2015 TP Directive. The Ministry of Finance has announced in 2023 that it would start implementing the TP rules from the beginning of this tax year, and this renaming is a clear signal that the government is serious about the implementation of TP rules and regulations. The renumbered Directive does not apply retrospectively but would become effective from the date of its registration by the Ministry of Justice and uploading on the website of the Ministry of Finance. The Directive imposes an obligation upon taxpayers to maintain up-to-date documentation justifying that their related party transactions are consistent with arm’s length principles. The onus is also on taxpayers to show that the selected transfer pricing method is the “most appropriate pricing method,” taking into account the taxpayers’ relevant facts and circumstances.

Source: ENS

Ghana

Exciting administrative changes in Ghana’s Industrial Property Office

At a recent stakeholder workshop organised by the Ghana Industrial Property Office (GHIPO), the governmental agency which manages and promotes intellectual property rights in Ghana, several upcoming changes to its administrative system were announced. The changes are aimed at modernising and enhancing efficiency in trade mark registration and enforcement processes. The proposed changes, if effectively implemented, are poised to simplify and expedite trade mark applications, fostering a more efficient and transparent trade mark ecosystem in Ghana. As stakeholders await these reforms, anticipation is high for a smoother and more accessible intellectual property registration and enforcement framework in the country.

Source: ENS

Ghana

Ghana mulls listing cocoa on national commodities exchange to increase value

Ghana, the world's second-largest cocoa producer, plans to list cocoa on the Ghana Commodity Exchange (GCX) to boost the value of the product and drive up prices, an official has said. Setutsi Goka Ivowi, CEO of the GCX, said during a recent one-day symposium in the capital, Accra that cocoa, the country's leading export cash crop, would be listed on the exchange to deepen the confidence of traders and stakeholders. To facilitate the process, Ivowi said, the GCX has been holding discussions with the Ghana Cocoa Board, the regulator of the cocoa industry in Ghana, and the International Cocoa Organization (ICO) to support the initiative. The discussions with the ICO also included supporting the continent to establish an African cocoa exchange or supporting African countries with commodity exchanges to trade cocoa, she said. Ghana established the GCX in 2018 and has since traded agriculture commodities including maize, millet, rice, sorghum, sesame, and soybean on spot contracts.

Source: Xinhua

Ghana

IMF reaches staff-level agreement on the second review of the ECF with Ghana

An International Monetary Fund (IMF) staff team, led by Mr Stéphane Roudet, Mission Chief for Ghana, held meetings in Accra from 2-12 April 2024, to discuss progress on reforms and the authorities’ policy priorities in the context of the second review of Ghana’s three-year programme under the Extended Credit Facility (ECF). The arrangement was approved by the IMF Executive Board for a total amount of SDR2.242-billion (USD3-billion) on 17 May 2023. At the end of the mission, Mr Roudet issued the following statement, in part: “I am pleased to announce that IMF staff and the Ghanaian authorities have reached a staff-level agreement on the second review of Ghana’s economic programme under the [ECF] arrangement. This staff-level agreement is subject to IMF management approval and Executive Board consideration once the necessary financing assurances have been received. An agreement between the Ghanaian authorities and their official creditors on a [memorandum of understanding] for a debt treatment in line with programme parameters, would provide the needed financing assurances. Upon completion of the executive board review, Ghana would have access to SDR269.1-million (about USD360-million), bringing the total IMF financial support disbursed under the arrangement since May 2023 to SDR1 171.9 million (about USD1 560-million).”

Source: IMF

Kenya

CBK’s new rules in bid to stamp out greenwashing

The Central Bank of Kenya (CBK) has published draft rules to guide banks in classifying whether particular economic activities are environmentally sustainable or ‘green’, joining the global push to stamp out greenwashing. Greenwashing is conveying a false impression or misleading information about how a company’s products are more environmentally sound than they are. Largely, greenwashing is an attempt to capitalise on the growing demand for environmentally sound products, whether that means they are more natural, healthier, free of chemicals, recyclable, or less wasteful of natural resources. In a bid to curb deception, the CBK has published the draft Kenya Green Finance Taxonomy that if accepted, would guide banks in properly classifying projects as either ‘green’ or ‘not green’ so as not to end up funding projects that harm the environment. A green finance taxonomy is a classification system that highlights which investments are environmentally sustainable and, by extension, those that are not. It defines a minimum set of assets, projects, activities, and sectors that are eligible to be defined as "green" in line with international best practices and national priorities.

Source: Business Daily

Kenya

CBK to police credit guarantee firms in expanded mandate

The Central Bank of Kenya (CBK) is set for an expanded mandate after a move by the National Treasury to have the banking sector regulator oversee credit guarantee companies. The exchequer wants the various credit guarantee schemes in the country, including its own unit, spun out into separate legal entities that will fall under the ambit of the CBK. Credit guarantee companies refer to businesses providing a guarantee to a lender through the absorption of all or a portion of the lender’s risk on credit facility made to a borrower in the case of default. The National Treasury has moved proposed amendments to the CBK Act for purposes of regulation and supervision of credit guarantee business. The CBK shall be expected to issue new licences to the credit guarantee businesses while designating capital adequacy standards and related requirements for the firms, prescribing the minimum liquidity requirements and permissible and prohibited activities. The apex bank shall also oversee the integrity of the credit guarantee business including anti-money laundering/combating the financing of terrorism standards, among other roles.

Source: Business Daily

Kenya

Kenyan Government plans merger of financial regulatory bodies

Kenya revived plans to merge the functions of three financial industry regulatory bodies to remove overlaps and duplication, Prime Cabinet Secretary Musalia Mudavadi has said. The East African nation is working on a plan to combine the Capital Markets Authority, the Insurance Regulatory Authority and the Saccos Societies Regulatory Authority, Mudavadi said in a statement dated 11 April. “Tough decisions will have to be taken to give effect to the merging of certain regulators,” he said. “Consolidating their functions under a unified framework would undoubtedly enhance their collective impact and streamline regulatory processes.” Kenya’s Cabinet in 2017 approved a draft law to merge four finance regulators including the body responsible for pension funds, but the plan fell through. Reforming state-owned agencies – including regulatory bodies – is a key pillar of Kenya’s USD4.4-billion International Monetary Fund-backed loan programme, which seeks to address the nation’s debt vulnerabilities. The planned merger of regulatory bodies will extend to a number of other sectors, including quality control, intellectual property and aviation, according to Mudavadi. It will include the Kenya Bureau of Standards, the National Environment Management Authority and the Department of Weights and Measures. 

Source: Bloomberg

Kenya

Production of cheaper hydropower hits two-year high as dams spill

KenGen and other hydropower producers increased the generation of cheaper electricity to the highest level in 26 months in March, even as dams across the country started to overflow on heavy rains. Data from the Energy and Petroleum Regulatory Authority shows hydropower generation jumped by 11.3% to 290.48 million kWh in March, up from 260.88 million units in February. It is the highest quantity of production since January 2022 when generation hit 320.3 million units, handing consumers cheaper prices. As hydro is the cheapest source of electricity in Kenya, an increase in output from the more than a dozen power stations helps displace a significant chunk of expensive thermal power from the grid. Heavy rains that have been pounding the country in recent months have filled dams, and the Interior Ministry has recently warned of possible spillovers.

Source: Business Daily

Namibia

Corporate blue bonds: a first in Africa

Within the global trend towards sustainable finance opportunities and initiatives, green bonds have gained significant attention. Perhaps less well known, a sub-category of green bonds called ‘blue bonds’ has started appearing more commonly in the market and arguably serves equally important sustainable targets and projects around the world. As can be gleaned from its name, a blue bond is a green bond that is focused on initiatives related to the sustainable use or protection of water resources and the promotion of sustainable activities within the blue economy. Two teams within ENS, those led by Clinton van Loggerenberg and Wolf Wohlers (together with Jordan Maze and Wayne Rukero), are currently advising the Namibia-based sustainable kelp farming business, Kelp Blue Trading Proprietary Limited (Kelp Blue), in the establishment of an innovative blue bond programme which is intended to be listed on the Namibian Stock Exchange and the issuance of blue bonds thereunder. The funding raised by Kelp Blue is intended to be utilised for, among other things, the planting and maintaining of up to 1 000 hectares of sustainable kelp forests offshore Lüderitz, Namibia.

Source: ENS

Namibia

Namibia suspends issuing of independent power producer power export licences

The Ministry of Mines and Energy has suspended the issuance of new independent power generation meant for export, in a bid to improve domestic electricity supply. This was confirmed by Electricity Control Board (ECB) CEO Robert Kahimise, who said the power regulator had made a recommendation to the minister to impose the moratorium. “The moratorium pertains to electricity generated by intermittent plants such as solar and wind plants,” says Kahimise. The reason for the suspension of issuing of new licences is that there is limited capacity on the interconnectors connecting Namibia with Zambia and South Africa for the export of electricity and there is limited transmission capacity in the Northern Cape for the evacuation of power produced in Namibia, he adds. “These limitations are exacerbated by the intermittent or variable nature of renewable energy generation and its impact on the required reverse levels to ensure a reliable supply of electricity.” Kahimise says the moratorium came into effect on 5 March and is for a period of 18 months, during which the country’s power utility, NamPower, will conduct studies and also engage other national utilities to address the constraints.

Source: The Namibian

Niger / Mali

Niger signs deal to supply Mali with cheaper diesel

Niger is set to deliver 150 million litres of diesel to neighbouring country Mali, after the two countries signed recently signed a partnership. The diesel is to be supplied to Énergie du Mali (EDM-SA), Mali's national energy company, as the country suffers from regular power cuts. EDM-SA, which is heavily indebted, struggles to consistently provide power to those with access to electricity in the capital and other Malian towns. Under the terms of the deal agreed between Mali’s junta leader, Colonel Assimi Goïta, and Niger’s Minister of Oil, Mahaman Moustapha Barké, Niger will sell the diesel at almost half the normal rate. Nigerien authorities in November inaugurated a pipeline that will carry crude oil to Benin. The oil will first be extracted by the Chinese state-owned China National Petroleum Corporation. In February, the country announced the signing of a memorandum of understanding to supply diesel to Mali and Burkina Faso, its two partners in the Alliance of Sahel States, as well as Chad. Niger intends to increase its oil production to 110 000 barrels per day, of which 90 000 barrels are to be exported.

Source: Africanews

Somalia

AfDB undertakes mission to Somalia to assess portfolio and implementation of development objectives

The African Development Bank (AfDB) has concluded a three-day mission to Mogadishu, Somalia in preparation for completion of the country’s Interim Country Strategy Paper 2022-2024 and annual Country Portfolio performance review. The AfDB team participants in the visit, which took place from 26-28 March 2024, sought to discuss implementation of the bank’s strategy for the country, assess the bank’s portfolio performance, and to draw lessons for the design of the new Country Strategy Paper for 2025-2029. With sustainable development in Somalia being hindered by conflict and insecurity, governance shortfalls, institutional capacity weaknesses, infrastructural deficits, low human capital, poverty and economic inequalities, climate change impacts, and forced displacement, the main objective of the AfDB Group’s strategy 2022-2024 is to support the Somali government to address the core drivers of fragility and to foster high and inclusive growth, and economic resilience. The 2022-24 strategy focuses on two priority areas - development of quality and sustainable infrastructure for a resilient economy and capacity building for a stronger state and inclusive economy.

Source: AfDB

Zambia

New 60 MW solar plant commissioned in Zambia

The newly commissioned 60 MW Itimpi Solar Plant in Kitwe comes at a critical time as Zambia faces a severe power shortage, posing threats to energy and food security. The investment has been hailed as a significant milestone in achieving diversification within the energy sector, with the potential to mitigate the current power deficit in the country. President Hakainde Hichilema has commissioned phase 1 of Copperbelt Energy Corporation’s (CEC) 60 MW Itimpi solar power project. Last year, the president also commissioned the CEC 34 MW solar energy in Riverside, Kitwe bringing the total solar energy brought online by CEC to 94 MW in the recent past. Stakeholders say the plant not only marks a significant step forward in addressing Zambia’s energy challenges but also sets a precedent for sustainable development and cooperation within the energy sector. Zambian energy expert Dr Johnstone Chikwanda described the investment as a leap of faith based on understanding that the days of depending on the hydro-electricity pathway are numbered. Speaking to ESI Africa, Dr Chikwanda said hydropower in Zambia’s days are numbered because the maximum hydro-electric potential in the country is widely considered to be 6 000 MW.

Source: ESI Africa