African states to trade in local currencies under AfCFTA
African states will be able to trade in their local currencies for intra-Africa trade under the African Continental Free Trade Area (AfCFTA) agreement, an official said. Wamkele Mene, secretary-general of the AfCFTA Secretariat told journalists in Nairobi that the trading bloc is working with the African Export–Import Bank (Afreximbank) to establish a payment and settlement platform to eliminate the need for currency convertibility. "When the platform is fully operational, African companies will be able to transact with their counterparties in other Africa countries in their local currencies," Mene said. Mene noted that the payment and settlement platform is currently being piloted amongst six African countries and will be rolled out across the continent by the end of 2021. "The aim is to deal with the administrative burden cost of converting local currencies," Mene added. According to the AfCFTA Secretariat, there are 42 currencies in the continent and this remains a constraint to intra-Africa trade due to the need to use international currencies for trade.
More African nations seen tapping G20 debt plan on revenue drop
The economic damage wrought by the Coronavirus (COVID-19) will probably lead more African nations to seek debt restructuring, the head of the United Nations Economic Commission for Africa (UNECA) said. Last month, Chad became the first state in Africa to request relief under a Group of 20 (G20) initiative to help countries cope with the economic fallout from the pandemic. Ethiopia applied two days later, followed by Zambia, which last year became the first African country to default on its debt since the onset of the pandemic. With government revenue taking strain because of the slowdown in economic growth, some countries are less equipped to meet the demands of their citizens, UNECA executive secretary Vera Songwe said in an interview. She did not specify which nations might seek relief, but said it would be those made most vulnerable by the crisis. The G20 framework aims to bring creditors, including China, into an agreement to rework the debt of countries in danger of defaulting. Under the G20 program, debtors are committed to seek similar terms of the resulting bilateral restructuring with private creditors. It is unclear what that will mean for Eurobond-holders, said Songwe. “We will get better clarity as one or two countries take it and start doing it,” she said. “But essentially when you restructure your debt, you put everything in the basket.”
EABC wants fast-tracking of cargo across borders
The East African Business Council (EABC) is calling upon East African Community (EAC) partner states to prioritise the improvement of infrastructure at border posts. The improvement, according to EABC, will facilitate the seamless flow of goods and movement of people across borders. Poor infrastructure continues to be a huge trade barrier in East Africa and a major constraint to regional integration and development. Following a recent visit to the Busia One-Stop Border Post (OSBP), EABC noted that the OSBP is efficiently operating with only a kilometre truck traffic holding an average of 55 trucks. EABC chief executive officer Dr Peter Mathuki has thus recommended the improvement of the infrastructure at the Busia OSBP through the construction of a four-lane road to ease cargo clearance. EABC also urged revenue authorities to install cargo scanners at border points to facilitate trade.
Source: Daily News
AfDB assists West African countries to deliver carbon emission reductions and meet their Paris Agreement commitments
The African Development Bank (AfDB) has extended financial support to a project that will strengthen the efforts of West African countries to meet their Nationally Determined Contributions (NDCs) targets under the Paris climate accord. The Bank will underwrite the preparation of concept notes exploring the use of internationally transferable mitigation outcomes (ITMOs) in selected West African countries. The project is financed through the African Climate Technology and Finance Center and Network (ACTFCN), a Bank-managed initiative that draws on funds from the GEF Trust Fund and the Special Climate Change Fund. The project is being implemented by a consortium led by Triple E Systems. “This intervention will put in place a robust platform, including processes, procedures and structures that will ensure real and practical participation of the West African sub-region in the use of ITMOs to deliver some of their NDC aspirations. It will form the basis for the replication of these activities in other African countries,” said Gareth Phillips, manager of Climate and Environment Finance at the AfDB. The initiative will help governments develop technical capacity and institutional infrastructure to enable the private sector to access new sources of climate finance as well as promote new financing mechanisms for energy efficiency and mitigation projects.
Burundian products set to access wider regional markets
Burundi export products are set to access the larger regional market following improvement of their quality standards. This has been made possible through the provision of laboratory equipment to the agency responsible for Standardization and Quality Control (BBN) in Burundi. The equipment, provided under the Common Market for Eastern and Southern Africa (COMESA) Regional Integration Support Mechanism (RISM), include an ultraviolet-visible (UV-Vis) spectrophotometer, flame photometer, pH meter, distillation unit for protein analysis, and fiber, sugar, alcohol, oxygen and carbon dioxide analysers. A report indicated that the equipment has positively impacted on product certification and cut down on costs and the certification process as the laboratory does not need to subcontract part of its analysis, as was the case in the past. All the testing parameters are now done in-house. Under the RISM programme, funded by the European Union (EU) through the COMESA Adjustment Fund (CAF), Burundi has received financial support of close to EUR16-million over the 2010-2020 period.
Fitch downgrades Ethiopia to 'CCC'
Fitch Ratings has downgraded Ethiopia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'B'. Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of 'CCC' or below. The downgrade reflects the government's announcement that it is looking to make use of the Group of 20 (G20) "Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI)" (G20 CF), which although still an untested mechanism, explicitly raises the risk of a default event. The G20 CF, agreed in November 2020 by the G20 and Paris Club, goes beyond the DSSI that took effect in May 2020, in that it requires countries to seek debt treatment by private creditors and that this should be comparable with the debt treatment provided by official bilateral creditors. This could mean that Ethiopia's one outstanding Eurobond and other commercial debt would need to be restructured, potentially representing a distressed debt exchange under Fitch's sovereign rating criteria. There remains uncertainty over how the G20 CF will be implemented in practice, including the requirement for private sector participation and comparable treatment. Fitch's sovereign ratings apply to borrowing from the private sector, so official bilateral debt relief does not constitute a default, although it can point to increasing credit stress.
Source: Fitch Ratings
BoG develops new LAF for solvent banks, savings and loans companies
The Bank of Ghana (BoG) has developed a new Liquidity Assistance Framework (LAF) to provide emergency financial support to solvent Banks, Savings and Loans Companies, and Finance Houses (BSF) when the need arises. The LAF move, according to the BoG, was to promote financial stability and minimise moral hazard as well as risks to the BoG’s balance sheet. The new policy and operational framework which covers the Intraday Liquidity Facility (ILF) and Emergency Liquidity Assistance (ELA), is also to forestall the recent banking crisis, among others, occasioned by poor governance and corporate practices and low liquidity of banks. The LAF provides that the ILF “is to support efficient functioning of the payment and settlement systems and the ELA is to provide liquidity support to eligible and solvent BSFs facing temporary liquidity challenges.” The document explained that the two liquidity instruments supplement the Global Master Repurchase Agreement (GMRA)-backed reverse purchase facility that the BoG currently provides to banks as part of its monetary policy framework.
AFD and EU finance companies’ green projects
The French Development Agency (AFD) plans to support Ivorian companies in their projects to acquire renewable energy and energy efficiency systems. The bank will participate in financing their green projects through the Sunref program. AFD’s green financing label aims to work with (local) banks for green growth in low-income countries. In the framework of this project, AFD has signed a financing agreement for over F.CFA1-billion (EUR1.67-million) with the European Union and the General Confederation of Businesses in Ivory Coast (CGECI). The funds are earmarked for technical assistance for the green projects of Ivorian companies. Within the framework of its Sunref program, the French financial institution will work with local banks, particularly Société Générale Cote d'Ivoire (SGCI) and the Nouvelle Société Interafricaine d'Assurance (NSIA). According to the AFD, the program will meet the green financing needs of Ivorian companies.
Source: AFRIK 21
Court clears Telkom, Airtel merger
Telkom Kenya and Airtel have the green light to revive their planned merger after the High Court quashed a letter by the anti-graft agency questioning the sale of the former’s properties during the privatisation period. In a judgment, High Court judge Jairus Ngaa said that the purported move by the Ethics and Anti-Corruption Commission (EACC) to recover property already sold or stop those on sale was illegal. The decision clears the way for the merger which Telkom said had stalled because of the EACC investigations, heightening the risk of Airtel walking away from the negotiating table. Plans to privatise Telkom started in 2007 when the government disposed of 51% of its shares to Orange E.A. Limited, whose shares were in turn owned by France Télécom S.A. In 2012, the company recorded an unsatisfactory and impaired financial position and was faced with imminent insolvency. To avert the situation, the two shareholders resolved to restructure the applicant’s balance sheet. The exercise involved, among other things, writing off part of the company’s debt, injection of capital by the two shareholders and, adjustment of the government shares to 30% and France Télécom shares to 70% on account of each shareholder’s contribution.
Source: Business Daily
Kenya Power enters solar to curb consumers’ switch
Electricity distributor Kenya Power is set to join the solar business, hoping to stay relevant and protect its long-term revenues increasingly threatened by a fast uptake of home solar panels by its main customers. The utility firm – eager to cash in rather than lose out on the millions of solar kits being mounted on the roofs of homes and business premises around the country – plans to install panels in private houses and office blocks with the promise of cheap uninterrupted electricity. In the arrangement, Kenya Power will scout for customers seeking to have solar panels installed on their rooftops and contract private firms to do the job under a design-build-finance and operate (DBFO) model. “KPLC will undertake the role of project development by liaising with interested commercial and industrial customers who will provide rooftop space or ground space for installation of the PV (photovoltaic) modules,” says Kenya Power. “A private sector investor will then be selected competitively through a request for proposal (RFP) to develop and operate the grid-tied captive solar plants at the customer premises.” Kenya Power would then sell the generated power at a discounted rate to the owners of homes and office blocks hosting its solar plants.
Source: Business Daily
KES3.7-billion taxpayer bill for Malaba rail link
Taxpayers will foot a KES3.7-billion bill for the construction of a line connecting the Standard Gauge Railway (SGR) to the old track from Naivasha to the border town of Malaba. A supplementary budget tabled in Parliament shows that KES2.7-billion will be spent on the construction between Naivasha Inland Container Depot (ICD) and the Longonot railway link. A further KES1-billion will fund the rehabilitation works of the century-old Longonot-Malaba Metre Gauge Railway as Kenya seeks to create a seamless connection from the Port of Mombasa to Uganda. Construction of the new 23.5 kilometre track from Naivasha to Longonot started in August last year. Kenya had initially mulled tapping a private investor to fund the project and use a Chinese contractor, but dropped the plan after the firm quoted in excess of KES50-billion to upgrade the old line and link it to the Mombasa-Naivasha SGR track. The works are set for completion before end of the year.
Source: Business Daily
Kenya / Djibouti
KenGen bags USD6.5-million geothermal deal in Djibouti
The Kenya Electricity Generating Company (KenGen) has signed a KES709-million (about USD6.5-million) contract to drill three geothermal wells in Djibouti. The deal, signed between state-owned power producer and Djiboutien De Développement De lenergie Géothermique (Djiboutian Office of Geothermal Energy Development) (ODDEG), will see the firm export its expertise in the field, the third such deals in the region. The deal will see the Horn of Africa country benefit from KenGen's experience and expertise, which has so far drilled more than 300 wells within the Olkaria field. Kenya has a geothermal energy potential of 10,000 MW but just under 1,000 MW has been successfully exploited. Through KenGen, the country hopes to offer more commercial drilling services, geothermal consulting and other energy-related services across Africa. This is the third geothermal drilling contract that KenGen has won in Africa.
Source: The EastAfrican
Malawi lists AfCFTA protected products
Malawi will shield over 231 products from competition under the African Continental Free Trade Area (AfCFTA) terms. Under the AfCFTA agreement, signatories are obliged to remove tariffs on 90% of goods that they produce by 2022 and eliminate non-tariff barriers to trade, such as long customs delays at borders, import quotas, subsidies and regulatory bottlenecks. But countries are also permitted to single out products that require shielding for the purposes of protecting an infant industry. The AfCFTA provides for differential treatment in order to protect Least Developed Countries (LDCs) from bigger and more competitive countries such as South Africa, Nigeria or Egypt. In an interview, Ministry of Trade spokesperson, Mayeso Msokera said the agreement allows 7% of products to be categorised under the sensitive list and 3% under the exclusion list, which caters for almost 231 products under protection. “These lists have been developed in consultation with the private sector and essentially cover all essential products for Malawi. “They will also be sent to the African Union Secretariat for negotiations. Therefore, it would not be ideal at this moment to start disclosing the specifics,” Msokera said.
Source: The Times
Air Namibia enters liquidation
Namibia's Finance minister, Iipumbu Shiimi, said government decided to file for voluntary liquidation of the country's national airline, Air Namibia. Shiimi, at a press briefing, said the difficult decision was taken after careful consideration of the various options to save the national airline which employs around 644 workers. "All options assessed point to the fact that the national airline is not profitable, and it has not been profitable since its inception," he said, adding that the government had spent about NAD8-billion (USD550-million) in supporting Air Namibia. According to the minister, the welfare of the employees remains a priority, and it is for this reason that the government commits to an ex gratia payment to the value of 12 months' salary for each employee. Meanwhile, the country's national airline, effective 11 February 2021, said all flight operations will be cancelled, with all aircraft returning to base, while the reservation system for taking new bookings has also been suspended.
DPR deepens floating LNG production with new licence
A few years after the Floating Liquefied Natural Gas (FLNG) technology became feasible, the Department of Petroleum Resources (DPR) has granted Nigeria’s first licence for the production of 176 million cubic feet per day of gas. FLNGs are water-based LNG, which use modern technology in the development of offshore natural gas resources. With the initiative, natural gas would be produced, liquefied, stored and transferred. These activities take place on the sea before the gas is shipped directly to the market. DPR’s director/chief executive officer Sarki Auwalu, while presenting the licence in Abuja, explained that the milestone was a reinforcement of the promise and commitment of President Muhammadu Buhari to Nigerians to promote indigenous participation in the oil and gas sector, and ensure that companies come to Nigeria and do business in an equitable way. The managing director of UTM Offshore Ltd., Julius Rone, while receiving the licence promised to abide by the terms of issuance within the 24-month validity period of the LTE from the date of issue. With this development, Nigeria may become the second African country that would leverage the technology after a USD2-billion facility being championed by the government of Equatorial Guinea and Ophir Energy and Golar LNG.
Source: The Guardian
Senate summons CBN, SEC over ban on cryptocurrency
The recent ban of cryptocurrency transactions in Nigeria by the Central Bank of Nigeria (CBN) has prompted the Senate to summon the governor of Central Bank, Godwin Emefiele, and Securities Exchange Commission (SEC) for an explanation. The Senate is inviting the apex bank and SEC through its Committees on Banking, Insurance and Other Financial Institutions, Information and Communications Technology (ICT) and Cybercrime, and Capital Market to brief the Committees on the opportunities and threats of cryptocurrency on the nation’s economy and security, and to report findings within two weeks. “Reali[sing] that cryptocurrency is both an opportunity and a threat, the Senate has a responsibility to ensure that the nation and citizens do not miss out on the opportunities that cryptocurrency offers and in the same vein, mitigate and prevent likely consequential effects on the nation’s economy and security,” senator Istifanus Dung Gyang (PDP – Plateau North) said.
Source: The Guardian
AG tables Kiswahili Bill in dispensation of justice
Attorney General Dr Adelardus Kilangi has tabled a Bill for the amendment of the Written Laws (Miscellaneous Amendments) Act, 2021, which among others, declares Kiswahili as the language of the laws of the country. The proposed Bill seeks to declare Kiswahili as the language of the laws of the country and the language to be used in the administration and dispensation of justice. He said the amendment is necessitated in cognisance of the use of Kiswahili as a national language vastly used in day-to-day activities. Thus, he said, its use will facilitate the realisation of access to justice by all. Dr Kilangi said the amendment further gives power to the minister responsible for justice in consultation with the Chief Justice to determine circumstances and conditions where the dispensation of justice may be made in a language other than Kiswahili. The amendment also gives power to the minister responsible for legal affairs to determine circumstances and conditions where a law may be in a language other than Kiswahili.
Source: Daily News
Zambia is latest country to ratify AfCFTA agreement
Zambia has submitted the instruments of its ratification of the African Continental Free Trade Area (AfCFTA) agreement to the African Union Commission (AUC) Moussa Faki Mahamat, AUC Chairperson, said. “I was delighted to receive the Ambassador of the Republic of Zambia H.E. Emmanuel Mwamba, alongside AU Commissioner Albert Muchamba, who deposited the instruments of ratification to the AfCFTA, making Zambia the 36th AU member to fully accede to the agreement,” Mr Mahamat said on 5 February 2021. With Zambia’s ratification, only 18 member states are left to comply with the requirement. They are Benin, Botswana, Burundi, Cape Verde, Central African Republic, Comoros, Democratic Republic of the Congo, Guinea-Bissau, Liberia, Libya, Madagascar, Morocco, Mozambique, Seychelles, Somalia, South Sudan, Sudan and Tanzania. Only Eritrea out of the continent’s 55 countries is yet to sign the agreement. Zambia’s ratification comes as the country finalises its national AfCFTA strategy, which will guide its implementation of the agreement.
Source: United Nations Economic Commission for Africa
Zambia to ban car, grocery exports via Victoria Falls border
The Zambia Revenue Authority (ZRA) has announced that it will ban the exportation of a cocktail of goods including vehicles, household items and groceries through the Victoria Falls border starting on 1 March 2021. The decision is expected to hit hard, especially on residents of Zimbabwe’s Victoria Falls town who before the lockdown, relied on buying groceries, electrical gadgets, second-hand clothes, among others, from Livingstone, Zambia. Clearing agents based in Victoria Falls are also fretting over the drastic policy measure as there will be no more imported vehicles entering Zimbabwe through Victoria Falls border. In a statement, ZRA released restriction of points of exit for the exportation of selected commercial goods by road. It said 16 categories of goods listed in the Seventh Schedule to Statutory Instrument No. 115 of 2020 (Customs and Excise Ports of Entry and Routes) which came into effect on 1 January 2021, will not be allowed to leave that country through the Victoria Falls border by any other mode of transport other than rail.
Source: Lusaka Times
‘Take advantage of Zim opportunities’
Zimbabwe has investment opportunities across economic sectors, President Emmerson Mnangagwa told the Africa Reconstruction Global Summit recently hosted virtually by the World Economic Congress as he continues to stress the country’s willingness to accommodate investors and attract foreign capital. “The vast opportunities in our country are expansive and extend across all sectors of the economy,” he said. In mining Zimbabwe had already found reserves of more than 55 minerals and that scope and breadth of riches should underpin the country’s future economic growth. Exploration, mining, beneficiation and value addition were all open for investment. “The strategy of creating a USD12-billion mining industry by 2023 is a reflection of our commitment to facilitate and support investment in the mining sector. “Reforms in the sector saw the removal of the previous shareholding restrictions for investors,” President Mnangagwa said. Incentives had been put in place for those who invest in exploration, development and operations of mines.
Source: The Herald