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issue 554 | 14 Jul 2024

Africa

More investment in skills development is key to Africa’s growth potential

Improving access to, and the quality of, skills development will help Africa harness the growth potential of a fast-growing and increasingly skilled workforce of young Africans, according to the 2024 edition of Africa’s Development Dynamics: Skills, Jobs and Productivity, published on Friday, 5 July. Eighty-five percent of the total expected increase in the global working-age population by 2050 will be in Africa. The working-age population (15-64 years old) will almost double in Africa by that year, from 849 million in 2024 to 1.56 billion in 2050. Those new entrants to labour markets will be more educated than previous generations, as the total number of young Africans completing secondary or tertiary education will more than double, from 103 million to 240 million, between 2020 and 2040. They will be looking for work in dynamic economies; Africa’s GDP growth is projected to increase from 3.2% in 2023 to 3.5% in 2024 and reach an average rate of 4.0% in 2025, outpacing Latin America and the Caribbean (2.5%), and close behind developing Asia (4.8%), compared to 3.2% for the world. According to the report, many African economies are facing a dual challenge: workers lack the specific skillsets required by existing jobs, while not enough quality jobs are available to give workers an incentive to further build their skills. Skill shortages – notably in sectors such as agrifood, renewable energies and mining – hold back private investment. 

Source: Organisation for Economic Co-operation and Development

Africa / Republic of Korea

AfDB and Korea Customs Service sign aide-mémoire to boost trade facilitation in Africa

Africa is set to benefit from improved customs technologies to boost intra-African trade. The African Development Bank (AfDB) and the Korea Customs Service (KCS) have signed an aide-mémoire on Facilitation of Customs Reforms and Modernisation that will tap Korean customs expertise and systems to enhance Africa's trade processes, potentially increasing intra-continental commerce and supporting regional integration efforts. Mr Solomon Quaynor, AfDB Vice President for Private Sector, Infrastructure and Industrialisation, and Mr Ko Kwang-hyo, Commissioner of the KCS, represented their respective institutions at a virtual signing ceremony, held on Wednesday, 3 July. Through the aide-mémoire, the collaboration aims to promote trade facilitation among the AfDB Group regional member countries by supporting customs reforms and modernisation, focusing on transparent operations and enhanced border management to increase revenues. 

Source: AfDB

Angola

Post Financing Assessment consultation with Angola

The Executive Board of the International Monetary Fund (IMF) concluded the Post Financing Assessment (PFA) consultation with Angola. Angola’s capacity to repay the fund is adequate though subject to risks. Angola remained resilient in the face of significant challenges in 2023, including weaker oil production and prices. The authorities’ efforts to follow through on economic reforms started during the Extended Fund Facility 2018–21, including in the areas of fiscal management, revenue mobilisation, debt management, monetary policy, and financial stability, have helped enhance the resilience of the Angola economy. Output growth remained positive at 0.9% in 2023, thanks to the recovery in oil production in the fourth quarter; and is expected to stabilise at an average of 3.2% in the medium term, aided by the authorities’ continued structural reform and diversification agenda. Inflation increased to its highest level in recent years, due to currency depreciation and supply constraints. However, inflation is expected to start declining in the second half of 2024 with improved monetary policy transmission and fading supply shocks.

Source: IMF

Angola

Trafigura signs MoU for 2 GW power interconnector in Angola

Multinational commodity company Trafigura, in partnership with international engineering firm ProMarks, signed a memorandum of understanding (MoU) with Angola’s Government for the development of a cross-border power transmission project. The project involves building a 2 000 MW high-voltage power interconnector, which will transmit electricity from hydroelectric projects in Angola to mines across the copper belts of Zambia and the Democratic Republic of the Congo. The construction process is expected to take four years, pending a final investment decision. The companies involved are expected to begin conducting feasibility studies soon. “We see that the demand for power is significantly increasing across the copper belt region where mining activities are growing and are being supported by the logistics provided by the Lobito Atlantic Railway,” stated Julien Rolland, Head of Strategic Project and Investment, Trafigura. The project will be integrated within the broader Southern African Power Pool – a regionally integrated energy market – and will be developed, financed, constructed and operated by a joint venture company between Trafigura and ProMarks. Financing will be derived from a combination of equity capital and third-party debt, with the project operating under a public-private partnership model.

Source: Energy Capital & Power

Angola / China

Chinese investment, cooperation to boost multi-sector development in Angola

Angola represents the second largest destination for Chinese foreign investment, with Chinese firms investing approximately USD12-billion in the country over the past decade. Covering various sectors of the economy, Chinese investment has served as a linchpin for project development in Angola. Strengthened trade and commercial ties between the two countries represent a priority for both Angolan President João Lourenço and his Chinese counterpart Xi Jinping, creating new opportunities for multi-sector development in Angola. China imported approximately 572 000 barrels per day of Angolan crude between January and February 2024, showcasing a 7.5% year-on-year increase. While Angola is only the eighth largest supplier to the country, as an import-heavy oil economy, China is seeking diversified energy supplies to support industrial growth and is thereby strengthening trade dynamics with Angola – sub-Saharan Africa’s second largest oil producer. The Chinese Embassy in Angola estimates that Chinese companies have supported up to 2 800 km worth of railway restoration in Angola; 20 000 km of roads development; the construction of 100 000 housing units; and over 50 hospitals in the country. Recent investments include Chinese construction firm China Road and Bridge Corporation winning a USD2.5-billion deal in July 2024 to construct Angola’s first motorway.

Source: Energy Capital & Power

Cameroon

IMF Executive Board completes first review of the RSF and the sixth reviews of the ECF and EFF arrangements

On Wednesday, 3 July, the Executive Board of the International Monetary Fund (IMF) completed the sixth reviews under Cameroon’s Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements. The completion of the ECF-EFF reviews allows for an immediate disbursement of SDR55.2-million (about USD72.7-million), bringing total disbursements under the arrangements to SDR483-million (USD644.6-million). The executive board also completed the first review under the Resilience and Sustainability Facility (RSF) arrangement. Completion of this review makes available SDR34.5-million (USD45.4-million). The executive board approved waivers of nonobservance of two performance criteria on the floor on the non-oil primary fiscal balance at end-December 2023 and the continuous zero ceiling on the accumulation of new external payment arrears on the ground that the nonobservance was minor and temporary. In addition, the executive board approved a waiver of applicability for four end-June 2024 performance criteria, for which data are not yet available and there is no evidence that they were not observed. 

Source: IMF

Cameroon / Algeria

Cameroon exports first aluminium ingots to Algeria under AfCFTA

On 5 July 2024, Cameroon’s Minister of Commerce, Luc Magloire Mbarga Atangana, presided over the ceremony at the Douala port marking the first containerised export of 99.4 tonnes of aluminium ingots under the African Continental Free Trade Area (AfCFTA). The shipment, consisting of four 20-foot containers of aluminium ingots produced by the Cameroon Aluminum Company (ALUCAM), is destined for Alfilect, an Algerian company. The ingots will be used as components in the manufacture of electrical cables. "This is the culmination of negotiations that began in Egypt in November 2023 at the Intra-African Trade Fair between the Cameroon National Shippers’ Council, which hosts the ad-hoc subcommittee responsible for monitoring and operationalising the guided trade of the unified African market in Cameroon, and Alfilect," said Luc Magloire Mbarga Atangana. The government official noted that this marks the first containerised export of Cameroonian goods to Algeria under this new regime, aimed at strengthening trade between the two countries. 

Source: Business in Cameroon

The Gambia

IMF Executive Board completes the first review under the ECF arrangementiew under the ECF arrangement

On Tuesday, 9 July, the Executive Board of the International Monetary Fund (IMF) completed the first review under the Extended Credit Facility (ECF) arrangement, approved by the IMF Executive Board on 12 January 2024, in the amount of SDR74.64-million (about USD98.7-million). The completion of the review allows for an immediate disbursement of SDR8.29-million (about USD10.95-million) bringing the total disbursement under the arrangement to about SDR16.6-million (USD21.9-million). Economic activity continued to recover robustly. Economic growth is estimated at 5.3% in 2023, supported by good performance of the agriculture, services, telecommunications, and construction sectors. Tourist arrivals continued to increase in 2023 but remain slightly below pre-pandemic levels. Remittance inflows also showed a sustained good performance. Headline inflation eased from a peak of 18.5% (year-on-year) in September 2023 to 11% in April 2024 mainly due to declining global food and energy prices, but it remains well above the central bank’s medium-term objective of 5%.

Source: IMF

Guinea-Bissau

Guinea-Bissau implements the IMF’s Enhanced General Data Dissemination System

With the successful launch of a new data portal – the National Summary Data Page – Guinea-Bissau has implemented a key recommendation of the Internatinal Monetary Fund’s (IMF) Enhanced General Data Dissemination System (e-GDDS) to publish essential macroeconomic and financial data. The e-GDDS is the first tier of the IMF Data Standards Initiatives, which aim to promote transparency as a global public good and encourage countries to voluntarily publish timely data essential for monitoring and analysing economic performance. The implementation of the e-GDDS recommendation and the launch of the National Summary Data Page are testament to Guinea-Bissau’s commitment to data transparency. The National Summary Data Page will serve as a one-stop publication for disseminating the data recommended under the e-GDDS, covering national accounts and prices, government operations and debt, the monetary and financial sector, and the external sector. Moreover, it will facilitate access for data users in Guinea-Bissau and abroad, including policymakers, the financial sector, private investors, think tanks, and the media. 

Source: IMF

Kenya

Kenya’s taxation dilemma in face of EAC-CET scheme

Kenya could be allowed to withdraw duty imposed on items by the East African Community (EAC) after the withdrawal of its controversial Finance Bill 2024, experts say. John Kalisa, Chief Executive of the East African Business Council said the country could apply for a stay of application in line with the provisions of the EAC Treaty. The gazette notice dated 30 June and signed by the Council of Ministers Chair Deng Alor Kuol, lists the approved measures on import duty in the EAC Common External Tariff (CET) that will affect partner states. Businesses in Kenya are bracing for “unintended consequences” of the EAC harmonised tax, which was earlier agreed on by finance ministers. “It may have a distortionary effect on business. It will have an impact on revenues, as it implies that Kenya will be applying a different rate from that of other partners,” Mr Kalisa said. This is the second time the four-band CET is being implemented in the region. In a Cabinet meeting held recently, President William Ruto said the National Treasury was re-organising the budget to accommodate the new reality. He announced again on Friday, 5 July that his government was going to implement measures to ensure more austerity. These would include substantial cutting down of budgets to balance between what [is] to be implemented and what can wait and ensuring that key national programmes are not affected. But the Kenya Association of Manufacturers warned that it may not be easy for Kenya to review the duty as per the CET requirements.

Source: The EastAfrican

Kenya

Moody's pushes Kenya's rating deeper into junk

Moody's cut Kenya's sovereign rating deeper into junk territory on Monday, 8 July, citing diminished capacity to implement a fiscal consolidation strategy to contain its debt burden. The credit ratings agency downgraded the country's local- and foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to "Caa1" from "B3". In June, Kenyan President Willian Ruto withdrew planned tax hikes in response to mass protests that turned deadly, killing at least 24 people. The scrapped Finance Bill contained measures intended to aid the government's aim to raise USD2.7-billion in additional taxes to reduce budget deficit and state borrowing. In order to compensate for the withdrawn Finance Bill, President Ruto's administration has proposed cuts in spending. Moody's said that while the spending cuts should narrow fiscal deficit, it would be at a more gradual pace than previously assumed, and as a result expect Kenya's debt affordability to remain weaker for longer. "In the context of heightened social tensions, we do not expect the government to be able to introduce significant revenue-raising measures in the foreseeable future," the ratings agency said. Moody's affirmed its 'negative' outlook for Kenya, stating that the larger fiscal deficits will push up borrowing requirements and subsequently increase government liquidity risks.

Source: Reuters

Kenya

President Ruto dismisses Cabinet Secretaries

President William Ruto has dismissed the Cabinet to pave the way for the formation of a “broad-based government”. The president said he had acted after an extensive appraisal of the Cabinet performance. He noted that he will consult different sectors and political formations to identify those who will assist him in accelerating Kenya’s transformation. President Ruto said he was keen on the implementation of radical programmes to deal with corruption, debt, domestic resources, jobs and wastage in government. “During this process, the operations of government will continue uninterrupted under the guidance of Principal Secretaries and other relevant officials,” he said. Speaking during a press conference at State House Nairobi, President Ruto said the offices of the Deputy President and Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs are not affected.

Source: Office of the President of the Republic of Kenya

Kenya / Democratic Republic of the Congo

The DRC now Kenya’s fastest-growing EAC export market

The Democratic Republic of the Congo (DRC) has overtaken Uganda to become Kenya’s fastest-growing export market within the East African Community (EAC) bloc, new data shows, despite frosty diplomatic relations between Nairobi and Kinshasa. Kenya’s exports to the DRC jumped by more than half (56.04%) to KES8.62-billion (USD66-million at current exchange rates) in the first three months of the year, according to the latest official data, the biggest year-on-year growth in over a decade. “Notably, there was increased domestic exports of …wheat flour to [the DRC],” the Kenya National Bureau of Statistics (KNBS) wrote in the latest Balance of Payment report, covering the first quarter of 2024. Analysis of the KNBS data shows quarterly exports to Africa’s second-largest country by land mass have remained elevated above KES7-billion (USD54-million) since July last year when Kenya cut import duty on wheat imports from 35% to 10%. Kenya’s Treasury Cabinet Secretary, Njuguna Ndung’u, said last year the reduced taxes, which have been maintained for the current year ending June 2025, were aimed at ensuring “that there is enough wheat to meet local demand, while at the same time protecting wheat farmers from unfair competition from imported wheat”.

Source: The EastAfrican

Liberia

IMF staff completes mission to Liberia

An International Monetary Fund (IMF) staff team, led by Mr Daehaeng Kim, Mission Chief for Liberia, visited Monrovia from 24 June – 5 July 2024, to discuss with the Liberian authorities a new Extended Credit Facility (ECF) arrangement to support the new administration’s implementation of an ambitious reform agenda. At the conclusion of the mission, Mr Kim issued the following statement, in part: “The authorities’ efforts to tackle immediate policy challenges and restore policy credibility are proceeding well. They have streamlined recurrent public spending and enhanced revenue management, which have significantly reduced the fiscal deficit in the first five months of 2024. Additionally, the current prudent monetary policy stance has contributed to a gradual decrease in inflation to single digits and a stable exchange rate. The IMF team welcomes the authorities’ focus on policy priorities aimed at restoring fiscal sustainability, rebuilding external reserves, and revitalising a reform agenda to tackle issues related to governance and corruption.” 

Source: IMF

Mali / Russia

Mali, Russia sign three nuclear energy agreements

Mali and Russia have signed three memoranda of understanding (MoUs) in the field of nuclear energy. The agreements cover the development of infrastructure, improving capacity building and generating increased awareness for the safe utilisation of nuclear energy. Signed by Mali’s Ministry of Energy and Water and Russia’s state-owned nuclear company ROSATOM, the first MoU entails the assessment and development of nuclear infrastructure in Mali while the second MoU focuses on promoting public awareness regarding the peaceful utilisation of nuclear energy. The agreements align with Mali’s goal of increasing access to clean energy. Additionally, the third MoU, signed by Mali’s Ministry of Higher Education and Scientific Research and ROSATOM, focuses on capacity building and knowledge transfer in the nuclear energy industry. The parties will collaborate on management training, providing technical training for engineers and developing local expertise in the field.

Source: Energy Capital & Power

Mauritania

Dig deep to aim high: how to use mining to unlock Mauritania’s potential

These are exciting times in Mauritania. This nation connecting West and North Africa is transforming its economy through mining, green hydrogen, and natural gas. During the campaign for presidential elections, held on 29 June, President Mohamed Ould Ghazouani announced he would scale up the mining industry if re-elected. According to the African Development Bank’s (AfDB) take on the sector and what it means for the Mauritanian economy, Mauritania is a treasure trove of untapped mineral wealth. With several billion tonnes of iron ore deposits, the country is the second-largest producer of this important mineral in Africa. In 2022 alone, Mauritania produced 13 million tonnes of iron ore, thanks to proactive reforms and attractive mining policies, according to data from the Extractive Industries Transparency Initiative. Mining sources say they are well underway to double this by 2030. According to the AfDB African Economic Outlook 2024, Mauritania's economic future looks bright, with real GDP growth projected at 4.2% in 2024 and 5.5% in 2025 – which is above the forecasts for both African and global growth. That above average growth is largely thanks to the activities of the mining sector.

Source: AfDB

Mozambique

IMF Executive Board completes fourth review under the ECF arrangement and the 2024 Article IV consultation

The Executive Board of the International Monetary Fund (IMF) completed the 2024 Article IV consultation and the fourth review under Mozambique’s three-year Extended Credit Facility (ECF) arrangement. The executive board’s decision allows for an immediate disbursement of SDR45.44-million (about USD60.03-million), usable for budget support, bringing Mozambique’s total disbursements under the ECF arrangement to SDR249.92-million (about USD330.14-million). The three-year ECF arrangement aims to support Mozambique’s economic recovery and reduce public debt and financing vulnerabilities, while fostering higher and more inclusive growth through structural reforms. Programme performance has been mixed. Three of four structural benchmarks were met as of end-June 2024, and two of four quantitative performance criteria were observed. Based on remedial actions adopted by the authorities as well as the minor and temporary nature of the nonobservance, the executive board approved waivers of nonobservance of (i) the continuous performance criterion on non-accumulation of new public and publicly guaranteed external payment arrears, which was missed due to operational constraints related to debt management; and (ii) the performance criterion on the domestic primary balance, which was missed, in part due to higher than expected wage-bill spending and debt service.

Source: IMF

Nigeria

FDI inflows to Nigeria drops 35% amid multinationals’ exodus

Foreign direct investment (FDI) inflows in Nigeria declined by 35.2% in the first quarter (Q1) of 2024 as more multinationals continued to exit the country. According to the latest Nigeria Capital Importation report by the National Bureau of Statistics, FDI fell to USD119.2-million in Q1 from USD183.9-million in the previous quarter. But it rose on a year-on-year basis by 150.4% from USD47.6-million. The country’s harsh business environment which has worsened by the removal of the petrol subsidy and naira devaluation has forced seven multinationals to exit one of Africa’s biggest economies in the last 11 months. This situation could affect the country’s USD1-trillion economy target by 2030. Direct investment reduced due to high operational rates and insecurity challenges in Nigeria which are waning investors’ confidence, said Adeola Adenikinju, President of Nigerian Economic Society. “Since the macroeconomic conditions are stifling, investors outside go for portfolio investment because [it is] less risky and it allows them to quickly take away their money. But in the long term, we need FDI for a stronger economy,” Adenikinju added. The Economics professor stated that the government needs to focus more on stabilising the economy, especially exchange rate volatility and inflation while fixing infrastructural gaps and insecurity concerns in the country.

Source: Business Day

Nigeria

REA signs MoUs for renewable energy projects and energy access in Nigeria

The Rural Electrification Agency (REA) of Nigeria has signed six memoranda of understanding (MoUs) to scale up energy access across the West African country. Five were signed with five private renewable energy project developers for the delivery of a combined 1 265 MW capacity of distributed renewable energy projects. This includes the commissioning of inter-connected mini-grids, isolated mini-grids, commercial and industrial solar and productive use of energy (PUE) projects. These would all be developed with the purpose of electrifying peri-urban and rural communities (including markets, businesses, households, public institutions, health clinics and schools) in both weak-grid and off-grid areas in Nigeria. These projects fall under the Distributed Access through Renewable Energy Scale-up project, which is administered by the REA. This partnership will also bring about the introduction of new energy service models, including Virtual Power Plants; enable the mass adoption of energy-efficient appliances and PUE devices through sales, distribution and credit financing and bring about the introduction of a range of value-added services, including e-mobility, agricultural processing, cold storage and e-cooking.

Source: ESI Africa

Senegal

Senegal to review mining contracts over environmental concerns

The Senegalese Government is set to review contracts with mining companies that fail to meet environmental obligations, according to Minister of Energy and Mines, Birame Souleye Diop. The Kédougou region – known for its industrial and artisanal gold mining activities – has been subject to environmental degradation and pollution over the years. Minister Diop has proposed that foreign companies allocate a portion of profits to local projects and communities, with a focus on job creation, technology transfer and long-term partnership and growth. “Our partners in the extractive industries are obliged to respect all the clauses of the contracts and we, as a state, have the responsibility to intervene and restore public order,” said Minister Diop. The announcement follows a directive from Senegalese President Bassirou Diomaye Faye last April to audit contracts with foreign mining, oil and gas firms.

Source: Energy Capital & Power

Tanzania

Tanzania amends sugar laws to tame shortages, prices

Targeting to stabilise sugar supply and control prices, Tanzania has imposed regulations on sugar production, importation and distribution within its borders. Parliament has passed a Bill containing amendments to the Sugar Industry Act that gave the National Food Reserve Agency exclusive mandate to import, store and distribute sugar for domestic consumption. Finance Minister Mwigulu Nchemba said that the newly amended Sugar Act would help to control arbitrary shortages, hoarding of the commodity and inflating of prices. “This amendment will monitor price stabilisation. It is the government's responsibility to intervene during market failures,” Mr Nchemba said. The newly amended Sugar Act gives the Sugar Board of Tanzania (SBT) discretion in issuing import licences. SBT will not issue licences unless it is satisfied that the local production is below the required level. The new amendments require local sugar producers to declare their production costs then submit any relevant information that may be required by the SBT at the beginning of every production season. Domestic manufacturers are also required to declare and publish in a widely circulated Tanzanian newspaper the names of their distributors in every region at the beginning of every production season. The Act now directs issuance of provisional licenses and registration of sugar manufacturers, small-scale sugar plant operators and industrial consumers through the SBT.

Source: The EastAfrican

Uganda

CEHA to boost growth in Uganda

On 21 June 2024, the Uganda chapter of the Common Market for Eastern and Southern Africa (COMESA) – East African Community (EAC) Horticultural Accelerator (CEHA) launched in Kampala at an event that brought together representatives from the private sector, the government, and various partners, signalling a major advancement in the growth of the horticulture industry in the country and region. Established in 2022, CEHA is a collaborative initiative created by public and private sector partners to better coordinate policy, value chain development programs, financing, and Research and Development in the horticulture industry. The primary aim of CEHA is to accelerate the growth of the Fruit and Vegetable sub-sector across the COMESA and EAC regions, which includes Ethiopia, Kenya, Rwanda, Tanzania, and Uganda; chapters launched this far are Kenya, Rwanda and Uganda, while Ethiopia and Tanzania are lined up for launching. Hortifresh, the Uganda CEHA Secretariat, serves as the apex association for exporters of fresh fruits and vegetables in Uganda.

Source: COMESA

Uganda

Key 2024/2025 tax amendments for investors in Uganda

Uganda’s Minister of Finance, Planning and Economic Development presented the national 2024/25 budget on 13 June 2024. Although the economy continues to endure the effects of internal and external shocks, the honourable minister portrayed an optimistic outlook for the next fiscal year, proposing a total expenditure of UGX72.1-trillion (USD19.5-billion). Steady economic growth is expected to be driven by projected oil production, increased exports and continued foreign direct investment. The annual budget reading also highlighted amendments to the tax laws, which will come into effect if assented to by the president.

Source: ENS