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issue 546 | 19 May 2024

World

New data: Private sector pumps USD86-billion into infrastructure in low- to middle-income nations

New World Bank data finds that private infrastructure investment in low- and middle-income countries totalled USD86-billion in 2023. Investments declined 5% compared with 2022, however, they were on par with the previous five-year average. Despite the decline in total investment, more countries received private investments in infrastructure across a wider sample of projects. In 2023, 68 countries received investments across 322 projects, compared to 54 countries and 260 projects in 2022. Guinea-Bissau, Libya, Papua New Guinea, São Tomé and Príncipe, and Suriname achieved their first private participation in infrastructure (PPI) transactions in more than a decade. The PPI report dates back to 1984. It tracks investments in 10 000 infrastructure projects in low- and middle-income countries on a continuous basis. As infrastructure financing becomes a bigger priority for countries around the globe, this dataset is an important resource for tracking progress and identifying trends. PPIs declined in most regions in 2023, with notable exceptions being the Middle East and North Africa (MENA) and East Asia and Pacific (EAP). MENA continued its growth trajectory, with PPI investment levels almost doubling from USD1.4-billion in 2022 to USD2.9-billion in 2023. 

Source: World Bank

Africa

African countries could leverage their vast renewable energy and natural resources to export premium carbon credits for new revenue streams

African countries could leverage their vast renewable energy resources, tropical forests, peatlands, and marine ecosystems to export premium carbon credits, providing a new revenue stream, according to the Economic Report on Africa 2024 by the United Nations Economic Commission for Africa (ECA) launched at the recently concluded 10th Africa Regional Forum on Sustainable Development in Addis Ababa, Ethiopia. The report says, carbon markets could support Africa’s goals of resilience and prosperity, in line with Agenda 2063. They also present a potential path for achieving the Paris Agreement’s climate goals. “A failure, however, to ensure credit additionality, appropriate governance, and high enough prices could lead to perverse market incentives that increase carbon emissions and slow the climate transition on the continent,” says the report. Nassim Oulmane, Acting Director of the ECA's Technology Climate Change, and Natural Resource Management Division explains that there are two types of carbon markets that Africa could invest in: the regulatory compliance market and the voluntary carbon market (VCM). But so far, credits from the VCM, where many African countries participate, have been only a small fraction of those supplied by the overall regulatory compliance market.

Source: ECA

Africa

Revised OHADA Uniform Act on debt recovery and enforcement – “a major qualitative leap”

One of the main pillars of the legal framework established by the Organization for the Harmonization of Business Law in Africa (l'Organisation pour l'Harmonisation en Afrique du Droit des Affaires (OHADA)) is the simple, swift and effective recovery of debt by creditors across the 17 OHADA member states. The revised Uniform Act Organizing Simplified Recovery Procedures and Enforcement Measures was adopted by the OHADA Council of Ministers on 17 October 2023 to facilitate this objective. Published on 15 November 2023 in the OHADA Official Gazette, the Uniform Act came into effect on 16 February 2024 and repeals and replaces its predecessor Uniform Act Organizing Simplified Recovery Procedures and Enforcement Measures which was adopted on 10 April 1998. According to the OHADA Permanent Secretary, Prof Mayatta Ndiaye Mbaye, the improved Uniform Act “marks a major qualitative leap”. It is anticipated that the revised Uniform Act will lead to a significant improvement in the legal framework for debt recovery and enforcement in OHADA member states.

Source: ENS

Benin

Climate adaptation efforts necessary for sustainable and resilient growth

According to the second edition of the Benin Economic Update Report, achieving sustainable and resilient economic growth in the coming decades will depend on efforts to adapt and finance climate investments. Titled Adapting to Climate Change for Sustainable, Resilient Economic Growth, the first part of the report analyses recent economic developments and presents the country's medium-term outlook. It projects that annual growth will stabilise at an average of 6.2% between 2024 and 2026 (3.5% on average per capita), driven by investment and the expansion of the Glo-Djigbe Industrial Zone. The end of the gasoline subsidy in Nigeria in May 2023; supply chain bottlenecks following the closure of the border with Niger; and growing demand pressures have led to an increase in inflation to 2.8% in 2023, below the regional average of 3.7% in 2023. Fiscal consolidation efforts were successful in 2023, owing to the adoption of innovative tax measures and spending restraint. As a result, the budget deficit was reduced to 4.1% of GDP, the lowest level since 2019, and down from 5.5% in 2022. This improvement was due to an increase in total revenues, which rose by 0.7 percentage point to 15.0% of GDP, while public spending fell by 0.6 percentage point to 19.2% of GDP. Fiscal consolidation is expected to continue in the medium term, with the budget deficit projected to decline further to 2.7% of GDP by 2026.

Source: World Bank

Benin

IMF reaches staff-level agreement on fourth review of EFF and ECF, the first review of RSF, and concludes 2024 Article IV consultation

An International Monetary Fund (IMF) team, led by Constant Lonkeng, visited Cotonou from 25 April - 8 May 2024 to hold discussions on the fourth review of Benin’s economic programme under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) and the first review of the Resilience and Sustainability Facility (RSF) arrangement, and to conduct the 2024 Article IV consultation. At the end of the mission, Mr Lonkeng issued the following statement, in part: “I am pleased to announce that IMF staff and Beninese authorities have reached a staff level agreement on policies to complete the fourth review of Benin’s 42-month blended EFF/ECF and the first review of the RSF. Subject to approval by the IMF Executive Board, Benin will receive a disbursement of SDR31.2-million (about USD42-million) under the ECF and EFF arrangements and SDR19.8-million (about USD26-million) under the RSF arrangement, bringing total disbursement under the EFF/ECF to SDR420.8-million (about USD555-million). The Beninese economy has shown remarkable resilience in the face of multiple shocks, with economic activity estimated to have expanded by 6.4% in 2023, above expectations, driven by public and private investment. Growth is expected to remain strong in the coming years, as activities in the special economic zone expand and the economy diversifies.”

Source: IMF

Cabo Verde

IMF reaches staff-level agreement with Cabo Verde on the fourth review under the ECF and the first review under the RSF

An International Monetary Fund (IMF) team led by Mr Justin Tyson, IMF Mission Chief for Cabo Verde, visited Praia from 2-10 May 2024, to hold discussions with the authorities on the fourth review of Cabo’s Verde economic programme supported by the IMF and the first review under the Resilience and Sustainability Facility (RSF). The SDR45.03-million (about USD63.3-million), 36-month Extended Credit Facility (ECF) was approved by the IMF Executive Board on 15 June 2022. The 18-month, SDR23.69-million (about USD31.69-million) RSF was approved by the board on 11 December 2023. At the conclusion of the mission, Mr Tyson issued the following statement, in part: “I am pleased to announce that the IMF team and the Cabo Verdean authorities have reached a staff-level agreement on the policies needed to complete the fourth review under the ECF-supported programme and the first review of the RSF arrangement. Subject to approval by the IMF Executive Board in the coming weeks. Cabo Verde will receive a disbursement of SDR4.50-million (approximately USD5.94-million) and SDR5.264-million (approximately USD6.95-million), respectively. Cabo Verde’s near-term economic outlook remains favourable but has moderated from recent highs.”

Source: IMF

Cameroon

Cameroon's trade with Africa remains marginal despite the AfCFTA implementation

In 2023, only 12.7% of Cameroon's export earnings (F.CFA2 988.6-billion) came from African trading partners. According to figures released by the Institut National de la Statistique du Cameroun, the Cameroon National Institute of Statistics (INS), this share of export earnings is equivalent to what Cameroon captured solely from its exports to France, its second-largest customer in 2023, behind the Netherlands. As far as imports are concerned, trade between Cameroon and African countries presents an even bleaker picture. “Imports from African countries (in 2023) fell by 2.2% percentage points on the previous year, representing 9.5% of total import expenditure (F.CFA4 993-billion). Within this sub-group, Côte d'Ivoire leads with a share of 1.5%, followed by Morocco and South Africa. This low proportion of trade between African countries highlights the opportunity offered by the African Continental Free Trade Area (AfCFTA) to strengthen and promote intra-African economic ties", said the INS. However, INS data revealed a lack of adoption by many African states of this preferential trade regime, which came into force on 1 January 2021, opening the doors to a vast market of around 1.3 billion consumers on the continent.

Source: Business in Cameroon

Democratic Republic of the Congo

IMF reaches staff-level agreement on the sixth review of the ECF with the DRC and completes 2024 Article IV consultation

An International Monetary Fund (IMF) mission led by Calixte Ahokpossi visited Kinshasa from 25 April to 8 May to conduct discussions on the 2024 Article IV consultation and the sixth and last review of the Democratic Republic of the Congo’s (DRC) economic and financial programme supported by an Extended Credit Facility (ECF) arrangement. The DRC’s three-year ECF arrangement for SDR1 066-million (100% of quota, about USD1.52-billion) was approved by the executive board on 15 July 2021. The fifth review was completed on 14 December 2023. At the end of the mission, Mr Ahokpossi issued the following statement, in part: “The [DRC’s] authorities and the IMF team reached a staff-level agreement for the conclusion of the sixth review under the ECF arrangement, subject to IMF management approval. Consideration by the IMF’s Executive Board for this review and Article IV consultation is expected by early-July 2024. Completion of the review will make SDR152.3-million (slightly more than USD200-million) available to build up international reserves.”

Source: IMF

Guinea-Bissau

IMF Executive Board completes fourth and fifth reviews under the ECF for Guinea-Bissau and approves USD8.1-million disbursement

On Monday, 13 May 2024 the Executive Board of the International Monetary Fund (IMF) completed the fourth and fifth reviews under Guinea-Bissau’s Extended Credit Facility (ECF) arrangement. The three-year ECF-supported programme, approved on 30 January 2023, aims to reduce poverty, secure debt sustainability, improve governance, and reduce corruption, while creating fiscal space for inclusive growth. The completion of the fourth and fifth reviews enables the disbursement of SDR6.17-million (about USD8.1-million) to help meet the country’s balance-of-payments and fiscal financing needs. This brings the total disbursement under the arrangement to SDR19.44-million (about USD25.7-million). In completing the fourth and fifth reviews, the executive board granted waivers of non-observance for the missed performance criteria for end-September 2023 and end-December 2023. Furthermore, the executive board approved the request to modify programme conditionality and the request to complete financing assurances review. The executive board also approved the authorities’ request for rephasing of access and for creating an additional quarterly review for an April 2024 test date.

Source: IMF

Kenya

Bill proposes to give workers 15% relief on Housing Levy deductions

Employees are expected to get a relief of 15% on Housing Levy contributions in new proposals that would expand the number of rebates available to four. The Finance Bill 2024 proposes a new relief, which would marginally reduce the amount of tax payable by each employee. “The amount of affordable housing relief shall be 15% of the employee’s contribution but shall not exceed KES108 000 per annum,” states the Bill. This implies that an employee earning a gross salary of KES50 000 per month and has a Housing Levy contribution of KES750 shall earn a relief of KES112.50. Persons earning at least KES4-million or more per month paying a levy of KES60 000 will stand to benefit from a relief of KES9 000 which is the maximum allowable in the Bill. Employees began paying the Housing Levy last year, with their contributions being matched at the same rate by employers. Each employee and employer is obligated to pay the affordable Housing Levy at the rate of 1.5% of the employee’s total gross monthly salary, and it is remitted within nine working days after the end of the month. At present, employees qualify for three tax reliefs, including the personal relief set at a flat KES2 400 per month or KES28 800 annually. 

Source: Nation

Kenya

New Finance Bill 2024 proposes new Motor Vehicle Tax to support Kenya Kwanza Government projects

The Finance Bill 2024 has proposed the introduction of a Motor Vehicle Tax, levied at 2.5% of a vehicle’s market value. The government says the new tax is designed to provide a steady revenue stream to support the government’s ambitious development projects. The Bill specifies that the tax will range from a minimum of KES5 000 to a maximum of KES100 000, payable at the time an insurance cover is issued. The amount is determined based on factors like the vehicle’s make, model, engine capacity, and year of manufacture. Insurance companies will be responsible for collecting and remitting the tax within five working days after issuing an insurance policy. under the new Bill, insurers will be required to comply with the timeframe to ensure efficient tax collection. If insurers fail to comply, they will face a penalty, with those failing to collect and remit the Motor Vehicle Tax being liable for a penalty equivalent to 50% of the uncollected tax plus the actual amount of the uncollected tax. Certain vehicles are exempt from this tax, including ambulances and vehicles owned by governmental bodies such as the Kenya Defence Forces and the National Police Service, as well as those owned by individuals protected under the Privileges and Immunities Act Cap. 179.

Source: Capital News

Kenya / Uganda

Kenya, Uganda to extend oil pipeline from Eldoret to Kampala

Kenya and Uganda have agreed to jointly extend the oil pipeline from Eldoret to Uganda in a deal that will see Kampala import refined petroleum products directly through Nairobi. Nairobi says the extension will facilitate trade relations between the two nations. The two countries also signed a tripartite agreement paving the way for the Uganda National Oil Company (UNOC) to import petroleum products through the port of Mombasa. "The agreement on the importation and transit of refined petroleum products through Kenya to Uganda whose signing [we have] just witnessed enables [UNOC] to import refined petroleum products directly from producers in different jurisdictions thus bringing to an end the challenges faced by Uganda," President William Ruto said, adding that the move serves to bring to an end to the myriad of challenges faced by the sector in Uganda. He was speaking in Nairobi when he met with his Uganda counterpart President Yoweri Museveni, who was on a two-day state visit to Kenya.

Source: Nation

Madagascar

Mid-term review of the AfDB Country Strategy Paper 2022-2026 highlights positive results

The Government of Madagascar and the African Development Bank (AfDB) have agreed to consolidate the mid-term results of the Country Strategy Paper (CSP) 2022-2026 and to maintain its strategic directions until 2026. This was the conclusion of the workshop of 6 May 2024 in Madagascar discussing the results of the CSP mid-term review and examining the country’s 2024 portfolio performance. During the first two years of the CSP’s implementation, the AfDB-funded projects contributed to the development of over 20 000 hectares of irrigated land, building and equipping over 270 km of roads and creating thousands of direct and indirect jobs. During the workshop, the two parties agreed to maintain the focus on the bank’s key areas – transport, energy, agriculture and industry – for the next two years. The two CSP 2022-2026 priority areas thus remain transport and energy infrastructure development for inclusive growth, and support for transforming agriculture and developing manufacturing industries.

Source: AfDB

Malawi

Propelling growth: ADF’s tourism project revitalises Malawi’s economy

Implemented in Malawi from 2018-2023, the Promoting Investment and Competitiveness in the Tourism Sector Project has significantly bolstered investment in the tourism sector, propelling economic growth and sustainable development, according to the African Development Bank’s (AfDB) Project Completion Report, published on 26 April 2024. Supported by a USD10-million grant from the African Development Fund (ADF), the AfDB Group’s concessional window, the initiative focused on enhancing the capacity of local businesses to plan and improve governance in natural resources management. A notable outcome of the project was a comprehensive strategy that attracted heightened interest from private investors, governmental entities, and development partners. This strategic blueprint also fuelled a surge in the sector’s direct contribution to Malawi’s GDP  from 7.2% in 2016 to 9% by 2022. The project also facilitated the country’s inaugural survey of foreign and domestic tourism, offering valuable insights into the country’s tourism landscape. With technical assistance from the World Tourism Organization, the project also helped complete capacity building in tourism statistics, culminating in the establishment of a Tourism Satellite Account system.

Source: AfDB

Mauritius

Mauritius formally accepts Agreement on Fisheries Subsidies

Mauritius deposited its instrument of acceptance of the Agreement on Fisheries Subsidies on 13 May, advancing the tally of formal acceptances to 75. Ambassador Usha Chandnee Dwarka-Canabady presented Mauritius's instrument of acceptance to Director-General Ngozi Okonjo-Iweala. Director-General Okonjo-Iweala said: “I warmly welcome the formal acceptance by Mauritius of the Agreement on Fisheries Subsidies. This is a concrete demonstration of Mauritius's commitment to the [World Trade Organization (WTO)] system and to global efforts to improve the sustainability of the world's marine fisheries. The fisheries sector has historically been an important source of employment and exports for Mauritius and continues to figure prominently in its plans to develop its blue economy. A healthy ocean, built on strong and cooperative fisheries management, will be a reliable source of long-lasting economic and environmental benefits, paying dividends for future generations of Mauritians.” Mauritius's instrument of acceptance brings to 75 the total number of WTO members that have formally accepted the agreement. Thirteen members from Africa have formally accepted the agreement. Thirty-five more formal acceptances are needed for the agreement to come into effect. The agreement will enter into force upon acceptance by two-thirds of the membership.

Source: WTO

Namibia

Namibia advocates for the combination of AGOA and the AfCFTA

The Minister of Industrialisation and Trade, Lucia Iipumbu said Namibia is advocating for the establishment of a nexus between the African Growth and Opportunity Act (AGOA) and the African Continental Free Trade Area (AfCFTA). According to Iipumbu, combining the two trade initiatives will be a game changer in terms of increasing the size of the market for African countries by creating an attractive environment for investment and allowing the continent to industrialise. The minister was speaking at the Invest in Namibia session at the 16th United States (US) – Africa Business Summit that took place from 6-9 May 2024 in Dallas, Texas, US. She said Namibia is also calling for the inclusive extension of AGOA, which must include the African Union member states that have signed and ratified the agreement establishing the AfCFTA. This is important because the AfCFTA allows for cumulation among African countries and regional value chains to form and enable better utilisation of AGOA. 

Source: Windhoek Observer

Nigeria

IMF Executive Board concludes 2024 Article IV consultation with Nigeria

On 29 April 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Nigeria. Nigeria, under its new administration, has set out on an ambitious reform path to restore macroeconomic stability and support inclusive growth. The authorities reformed the fuel price subsidies, unified official foreign exchange windows, and are focused on revenue mobilisation, governance, and enhancing the monetary and exchange rate policy frameworks, as well as strengthening social safety nets. Over the last decade, limited reforms, security challenges, weak growth and now high inflation have worsened poverty and food insecurity. While Nigeria swiftly exited the COVID-19 recession, per-capita income has stagnated. Real GDP growth slowed to 2.9% in 2023, with weak agriculture and trade, and despite the improvement in oil production and financial services. Growth is projected at 3.3% for 2024 as both oil and agriculture outputs are expected to improve with better security. The financial sector has remained stable, despite heightened risks. Determined and well-sequenced implementation of the authorities’ policy intentions would pave the way for faster, more inclusive, resilient growth. Inflation reached 32% year-on-year in February 2024, driven mainly by food price inflation 38% and loose financial conditions. With continued monetary tightening, inflation is projected to gradually decline to 24% year-on-year at end-2024.

Source: IMF

Uganda

Uganda receives IAEA legislative assistance to strengthen its national legal framework for the development of its nuclear power programme

From 11-13 March 2024, the International Atomic Energy Agency (IAEA) facilitated a national workshop and a high-level meeting in Kampala to discuss nuclear law and raise awareness among officials. This initiative supports Uganda's efforts to adhere to the relevant international legal instruments under IAEA auspices and improve its current national legal framework set by the 2008 Atomic Energy Act. Gathering more than 20 officials, the national workshop covered all main areas of national and international nuclear law. Over the course of three days, participants and experts engaged in discussions about the international legal frameworks for nuclear safety, security, safeguards and civil liability for nuclear damage. “This workshop is very relevant for the national legal framework of Uganda, and it puts us in a safe place” said Minister Ruth Nankabirwa Ssentamu, Ministry of Energy and Mineral Development. “We feel confident to move forward together with the IAEA”. This mission helped to generate an exchange between experts and participants, not only on the main areas of nuclear law, but also about the current national legal framework to identify gaps and areas to be strengthened to support a nuclear power programme. 

Source: IAEA

Zambia

IMF Managing Director Kristalina Georgieva statement to the financial community on Zambia

Ms Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), recently issued the following statement, in part, about Zambia to members of the financial community: “The Zambian authorities have been implementing an ambitious economic reform programme supported by the IMF, which aims to restore fiscal and debt sustainability, create fiscal space for much-needed social spending, and strengthen economic governance and transparency. Zambia’s economic reform programme is supported by an SDR978.2-million (about USD1.3-billion), 38-month Extended Credit Facility arrangement, approved by the IMF's Executive Board on 31 August 2022, and by assistance from multilateral and bilateral institutions. In October 2023, complementing the broader reform agenda, Zambia agreed on a memorandum of understanding with the Official Creditors Committee (OCC) under the Group of Twenty Common Framework that would deliver a debt treatment by official creditors aimed at restoring debt sustainability consistent with IMF programme parameters. Building on this progress, and following several months of constructive discussions, the agreement reached between the Zambian authorities and the Steering Committee of the Ad Hoc Creditor Committee of holders of Zambia’s Eurobonds marks a significant step forward.”

Source: IMF

Zambia

IMF staff completes mission to Zambia

An International Monetary Fund (IMF) mission team led by Ms Vera Martin visited Lusaka from 24 April to 7 May 2024, to discuss economic and financial policies that could underpin the approval of the third review under the Extended Credit Facility (ECF) supported arrangement. At the end of the mission, Ms Vera Martin issued the following statement, in part: “The Zambian authorities and IMF staff advanced the technical work as part of their discussions for the third review under the [ECF]. Discussions focused on analysing recent economic developments and assessing the economic impact of the drought. Growth in 2024 is now projected at [2.3%], while inflation pressures persist driven by external supply factors and the depreciation of the exchange rate. There was agreement between the IMF staff and the Zambian authorities on the need to durably sustain macroeconomic stability and restore fiscal and debt sustainability in line with programme parameters. Against continued uncertainty, agile policymaking will be paramount to respond to the impact of the drought while maintaining external buffers. The Zambian authorities have made commendable progress in implementing crucial reforms under the IMF-supported programme, including significant fiscal efforts in 2023 despite lower mining revenues.”

Source: IMF