In this article, we highlight some of the key recent developments in East Africa amid the Covid-19 outbreak. The article looks at how governments and private sector companies in the region continue to pursue major economic projects across key sectors, while addressing the challenges they are facing in light of the COVID-19 pandemic.
Government allocates 13.5 hectares for palm farming
With a view to increasing domestic production of edible oils, the government has allocated to the Tanzania Investment Centre (TIC) 13.5 hectares of land in Uvinza District, Kigoma to be used for palm farming. This was confirmed by TIC’s executive director, Godfrey Mwambe during his tour in the district. According to Mr. Mwambe, the statistics show that Tanzania currently imports 400,000 tons of palm oil and spends up to Tanzanian shillings 600 billion (approximately USD 260 million) to import edible oil.
The TIC is established under the Tanzania Investment Act (TIA). The primary objective of the TIC is to be a one-stop centre for investors and the primary agency of the government to co-ordinate, encourage, promote and facilitate investment in Tanzania and to advise the government on investment policy and related matters.
An investor can apply to be registered by the TIC in order access fiscal and non-fiscal incentives, benefits and protection under the TIA. Once registered the investor will be issued with a Certificate of Incentives.
Other than businesses that are involved in activities such as mining, and oil and gas, businesses which meet the following criteria may be registered for incentives under the TIC:
- If wholly owned by a foreign investor or a joint venture, the minimum investment is USD 500,0000; and
- If locally owned the minimum investment is USD 100,000.
Government to construct mineral strong rooms
The government plans to construct strong rooms at various airports in the country, as a strategy to ensure promotion of the mineral business, safety and to improve the business environment in general. This was said by the Deputy Minister for Works, Construction and Communication, Mr Elias Kwandikwa, at a consultative meeting held in Mwanza with various stakeholders in the mining sector.
To ensure improvement in the business environment, the government through various ministries has been undertaking consultative meetings in order to understand the challenges facing various sectors and to get the stakeholders' view on how those challenges can be dealt with. There have been several consultative meetings in the mineral sector following which we have seen various initiatives being implemented such as the established mineral trading hubs in various parts of the country.
The Mining Act 2010 (MA) and the regulations made under it regulate the mining sector in Tanzania. The MA sets out the following broad categories of licences which can be obtained in Tanzania:
- primary mining licences (these are generally used for small-scale mining and are exclusively for Tanzanian citizens);
- prospecting licences (these are licences to facilitate exploration);
- mining licences (the licence for the production stage of an asset); and
- special mining licences (for large projects of USD 300 million+).
Tullow exits Uganda
Positive news out of Uganda is that a USD 575 million deal has now been reached between Tullow and Total SA in relation to the acquisition of Tullow's assets in the Lake Albert oil project.
However, it is noted that completion of the transaction and payment of the purchase price remain subject to the clearance by the government and the final investment decision.
According to Total E&P Uganda "under the terms of the deal, Total will acquire all of Tullow’s existing 33.3% stake in each of the Lake Albert project licenses EA1, EA1A, EA2 and EA3A, and the proposed East African Crude Oil Pipeline system".
MTN to pay USD 100 million for licence renewal
According to the secretary to the treasury of the Uganda Communications Commission, Keith Muhakanizi, MTN has agreed to pay the government USD 100 million for a 10 years’ operating licence. It is understood that as a condition for renewal of the licence, MTN is required to list at least 20% of its shares on the Uganda Securities Exchange.
MTN Uganda is a subsidiary of the Johannesburg listed MTN group. It is also the country's largest company by revenue. It is reported that MTN Uganda generated Ugandan shillings 514.6 billion (approximately USD 136 million) in operating profit in 2019 representing a 56.3% increase from 2018.
Rwanda economy to continue to spur growth
The Rwandan Head of State, Paul Kagame recently provided some reassurance about the country’s economy at Invest Africa, a leading pan-African business platform for trade and investment, which was held virtually due to the COVID-19 outbreak.
While Rwanda is currently in a lockdown following the outbreak, it is noted that Rwanda has secured an additional USD 109.4 million from the International Monetary Fund and debt relief worth approximately USD 11 million.
The main sectors identified for investment purposes following the lifting of the lockdown include “technology, service sector, financial, tourism, and hospitality, among others”.
Digital boom in Rwanda
Rwanda has been taking small steps spread out over the last ten years to aid in the development of its ICT infrastructure and increasing accessibility for digital learning. This includes the investment in internet infrastructure and laptops for education purposes.
The current climate in Rwanda has resulted in a digital boom with church masses being held online on digital platforms; even Rwanda is forced to step up and use more digital tools to enable communication and provide a sense of normalcy.
Use of mobile money platforms are on the rise, with more partnerships between the Government and private sector to enable zero-rated mobile money transfers.
It is envisaged that this trend of increased ICT use will continue in the years to follow post COVID-19.
Kenya lead in financial deals
It has been reported that Kenya continues to lead as an investment hub in East Africa. According to I&M Burbidge Capital (IMBC), in 2019 Kenya attracted over 70% of the financial deals in the region. The report states that notable deals that boosted Kenya's position include the Africinvest Azure SPV acquisition of 16.26% shares in Britam Holdings for Kenyan shillings 450 million (approximately USD 4 million) and the AfricInvest Tunisia SARL acquisition of 24.2 % stake in Prime Bank for a total Kenyan shillings 5.1 billion (approximately USD 48 million).
While there was a decrease in total deal value compared to 2018 (whereby Kenyan shillings 204.5 billion (approximately USD 2 billion) was recorded), according to IMBC, in 2019 Kenya recorded a total deal value of Kenyan shillings 104.9 billion (approximately USD 980 million), followed by Tanzania that recorded Kenyan shillings 28.8 billion (approximately USD 270 million)..
Support for businesses in Kenya during COVID - 19
Start-up, small and medium scale businesses have been urged to seek financial support to ensure survival during the COVID – 19 outbreak.
The UK Kenya Tech Hub supported by the Association of Startup and Small and Medium Enterprises Enablers of Kenya maintain a list of opportunities available to businesses in Kenya.
The financial support comes in the form of a credit, grants and funding. It is offered by multinational organisations and NGOs such as Google, Facebook, IBM, GSMA and NGOs including the Bill and Melinda Gates Foundation.
Kenya's economy to rebound in 2021
While things remain uncertain and the global economy continues to suffer due to the ongoing COVID-19 pandemic, there has been positive news from the International Monetary Fund (IMF) in relation to Kenya's economy. The IMF has predicted a rebound in Kenya's economy by predicting a 6.1% growth in 2021.
The above is significantly good news as the IMF predicts a 1% growth in Kenya's economy this year which is worse than the 1.5% growth that was recorded in the post-election violence period in 2008.
The IMF also predicts a rise in the national debt as the country continues to borrow in order to fight the COVID-19 outbreak. Nonetheless, the IMF has urged the Kenyan government to provide much-needed support to the hard – hit sectors.
USD 5 billion investment in Ethiopia by the US
The US is looking to invest USD 5 billion in Ethiopia through the International Development Finance Corporation to support private-sector reform.
In particular the sectors that are targeted are telecoms, geothermal energy, logistics and sugar, which are all sectors undergoing some degree of privatisation.
The Ethiopian Finance Minister has clarified that this investment is dependent on Ethiopia making certain reforms to its laws relating to foreign investors’ ability to hold offshore accounts, the repatriation of foreign currency and the settlement of disputes under New York arbitration rules.
Developments in mobile money in Ethiopia
Currently financial inclusion in Ethiopia is limited but the National Bank of Ethiopia intends to increase this by permitting non-banks to be alternative mobile money providers.
From 2018 the Ethiopian government has held talks with leading MNOs in Kenya to aid in this advancement. This new development would “encourage and diversify the interest of investors in financial services that have been largely restricted to banks, insurance firms, lease financiers and micro-finance institutions”.
This would allow Ethiopia to match other Sub-Saharan countries in terms of reducing the number of the unbanked population and also in light of the COVID-19 pandemic, this would come at the right time due to concerns surrounding the use of cash to make payments.