Working group meets to discuss AU-AfDB study on driving inclusive growth in Africa
The African Union Commission (AUC) and the African Development Bank (AfDB) Group have concluded a technical session on how to conduct an upcoming joint study on driving development in Africa. The goal of the study, titled Key Actions to Drive Inclusive Growth and Sustainable Development in Africa, is to identify key actions that will allow Africa to rise and remain at a growth level of 7% GDP. The meeting, held from 12-13 January 2023, brought together global experts in economic development theory and practice. They included Professor Jeffrey D. Sachs of Columbia University, as well as former economy, finance, and trade ministers from across Africa. The study was commissioned by Moussa Faki Mahamat, former chairperson of the AUC and Dr Akinwumi Adesina, president of the AfDB Group. It aims to draw a transformational roadmap and identify key actions to deliver high-quality growth across African countries for the period 2023 – 2063. Growth of up to 7% to 10% in GDP would include high levels of inclusion and progress in global Sustainable Development Goals, the AfDB’s High 5s strategies and Agenda 2063.
African countries assume OPEC, APPO and GECF rotating presidencies in 2023
In 2023, African countries will hold the presidencies of the energy sector’s leading intergovernmental organisations – the Organization of the Petroleum Exporting Countries (OPEC), African Petroleum Producers’ Organization (APPO) and Gas Exporting Countries Forum (GECF). In addition to amplifying the voice of African oil and gas producers within global energy dialogue, the appointments are set to have a tangible impact on new investments in hydrocarbon exploration and production. By being at the helm of these organisations, African oil and gas producers can ensure coordination and dialogue with fellow member countries and consumers, preserve sovereignty over their natural resources, foster more open and transparent energy markets, more effectively attract capital and foster closer diplomatic ties with fellow member countries. Earlier this month, Equatorial Guinea assumed the rotating presidency of OPEC for 2023 under the leadership of its Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima. Equatorial Guinea serves as one of Africa’s more mature petroleum producers, and while crude production has fallen to around 54 000 barrels per day, the country has sizable plans to boost output by attracting new players to its exploration scene and extend the lifespan of maturing fields.
Source: Energy Capital & Power
EAC to set up regional central bank this year
A decision to set up the East African Monetary Institute (EAMI) – the Central Bank of East Africa – will be made this year, a key establishment required in implementing a single currency regime. The East African Community (EAC) secretary-general Dr Peter Mathuki said the Council of Ministers is expected to plan on the location of the EAMI this year. Over the recent past, member states have been jostling to host the EAMI, each angling to avail themselves of the massive potential to attract foreign capital and become the region’s financial hub. “The EAMI will be in place this year in what will allow us to harmonise member states’ fiscal and monetary policies, then in about three years we will have a common currency in place,” he told journalists recently. The single currency will ease business and movement of persons within the region, which would achieve the bloc’s goal as envisioned in the Common Market Protocol. The common currency marks the third pillar of integration of the EAC after the establishment of the customs union and the Common Market Protocol that deepened cooperation among the partner states. Statistics from the EAC Secretariat show that intra-regional trade within the regional bloc is on an upward trajectory, standing at USD10.17-billion by September 2022.
Source: The EastAfrican
Intra-EAC trade hits the USD10-billion mark as EAC readies to send out verification mission team to assess Somalia's readiness to join the bloc
Intra-regional trade within the East African Community (EAC) is on an upward trajectory. By September 2022, the EAC trade value was recorded at USD10.17-billion representing a 20% share of intra-trade to global trade. EAC secretary-general Dr Peter Mathuki attributed the increase in intra-regional trade to political goodwill among the members of the Summit of EAC Heads of State and the relaxation of COVID-19 restrictions in the region among other factors. He also disclosed that the EAC’s total trade with the rest of the world stood at USD62-billion, adding that there was still room for improvement. Dr Mathuki said that high-level discussions among the heads of state had eliminated many non-tariff barriers (NTBs) hampering intra-regional trade and expressed hope that this and other factors would help raise the level of intra-regional trade in East Africa to at least 40% over the next five years. On the directive by the summit to the council to follow up on the application by Somalia to join the community, Dr Mathuki said that the EAC is scheduled to send a verification mission to Somalia, at the end of this month, to assess the country’s readiness to join the community. He described Somalia’s long Indian Ocean Red Sea route that links Africa to the Arabian Peninsula as a vibrant economic zone saying that it will bring immense benefits for the EAC.
East / Southern Africa
Over USD1-billion worth of customs bonds executed in the northern and central transport corridors
Over 1 282 Regional Customs Transit Bonds, amounting to USD1-billion have been executed in the northern and central transport corridors in 2022 alone, signifying a reduction in the cost of transit and transport of goods by between 15% and 20%. The two corridors link Kenya, Uganda, Rwanda, Burundi, Tanzania and the Democratic Republic of the Congo (DRC) which are part of 13 countries that have joined the Common Market for Eastern and Southern Africa (COMESA) Regional Customs Transit Guarantee (RCTG) Scheme. Other countries in the scheme are Djibouti, Ethiopia, Madagascar, Malawi, South Sudan, Sudan and Zimbabwe. The RCTG, also known as Carnet, is a customs transit regime designed to facilitate the movement of goods under customs seals in the region. It provides a uniform basis for transit movement through the region, where only one guarantee is used to cover goods in transit throughout all transiting countries. Currently, it is fully operational in Burundi, Kenya, Rwanda, Tanzania and Uganda. The COMESA RCTG is the first regional guarantee system in Africa, recognised by the World Customs Organization (WCO) and has attracted membership from non-COMESA states such as Tanzania and South Sudan.
IMF Executive Board completes first review under the ECF for Cabo Verde
The Executive Board of the International Monetary Fund (IMF) completed the first review of Cabo Verde’s performance under the 36-month Extended Credit Facility (ECF) that was approved on 15 June 2022. The completion of the review allows the authorities to draw the equivalent of SDR11.26-million (47.50% of quota or about USD15.19-million), bringing total disbursement to SDR22.52-million (95% of quota or about USD30.18-million). The executive board’s decision was taken on a lapse-of-time basis. The economic rebound is well entrenched, driven by the faster than expected recovery in the tourism sector. Real GDP growth is currently estimated at 10.5% in 2022 and is projected to moderate to 4.4% in 2023. Inflation remains relatively high (8.5% year-on-year at end October 2022), with rising global food and energy prices exerting upward pressure on the cost of food and fuel in Cabo Verde. In response, the authorities stepped up support to the vulnerable through well targeted subsidies on basic food items and electricity, which are expected to continue through the first half of 2023. Inflation is forecast to decline in 2023 but remain above its recent five-year historical average.
KRA to track mobile money transactions in tax cheats purge
Mobile money transactions will now be on the Kenya Revenue Authority’s (KRA) radar after it links its system to telecommunication companies as the taxman moves to increase tax compliance. The KRA will be tracking the 16% value-added tax (VAT) on sales as well as the 20% excise duty charged on transactions. Customers also pay a 20% excise duty on airtime. Integrating the systems is one of the reforms under the revenue administration, as it targets to hit a KES3-trillion tax collection target in the 2023/2024 budget. “As part of the economic turnaround plan, the government will scale up revenue collection efforts by the [KRA] to KES3-trillion in the financial year 2023/24 and KES4-trillion over the medium term,” said Treasury in the draft 2023 Budget Policy Statement released recently. Mobile money transactions started in 2007 as a means of sending money between friends and relatives but have since evolved to include the payment of bills and government services, with banks riding on this financial technology to mint billions in fees through mobile banking.
Source: Business Daily Africa
99.7% of government’s set target of reaching one million tourists by December 2022 achieved
The arrival of tourists has surpassed the expectations of government and the tourism industry post COVID-19 with the arrival of 997 290 tourists as at 31 December 2022, stated the Deputy Prime Minister, Minister of Housing and Land Use Planning, Minister of Tourism, Mr Louis Steven Obeegadoo, recently, at a cocktail party where he received representatives of the travel and tourism industry in Ebène. Deputy Prime Minister Obeegadoo recalled that government has set a target of reaching one million tourists by December 2022 adding that 99.7% of the target has been achieved. Tourism earnings have increased by almost 13%, the number of tourist arrivals has shown significant growth and the length of stay in Mauritius has also increased, he highlighted. Speaking on the rate of recovery of different markets for the months of October to December 2022, he indicated that the European markets account for up to 40%. The three main countries are Germany, France, and Great Britain with a recovery rate of 89%, 97%, and 109% respectively. As for the African countries, the recovery rate stands at 92% and for Reunion Island, it is at 95%. India is also doing fairly well with 58%, he remarked.
Source: Government of Mauritius
Mauritius / United Kingdom
Mauritius cooperates with the UK in the pharmaceuticals and biotechnology fields
A memorandum of understanding (MoU) between the Mauritius Institute of Biotechnology Ltd and the Department for International Trade of the United Kingdom (UK) on cooperation in the fields of pharmaceuticals and biotechnology, was signed on Thursday, 19 January, during a ceremony, held in Port-Louis, in the presence of the Minister of Finance, Economic Planning and Development, Dr Renganaden Padayachy. Other dignitaries, including the Minister of Health and Wellness, Dr Kailesh Kumar Singh Jagutpal, and the British High Commissioner to Mauritius, Ms Charlotte Pierre, were present on the occasion. The MoU will cover the promotion, development and acceleration of manufacturing of pharmaceutical products, including vaccines and other drugs. In his address, the finance minister expressed gratitude to the British High Commission for undertaking this partnership with Mauritius which, he said, would bring value and momentum to the pharmaceutical and biotech industries in Mauritius by successfully encouraging the development of a sustainable and prime biopharmaceutical industry.
Source: Government of Mauritius
ICT sector will thrive in 2023 – CRAN
The information and communications technology (ICT) industry on the Namibian Stock Exchange (NSX) index for 2022 reported negative growth, but the sector's regulator is upbeat about 2023. This is largely because this year the Communications Regulatory Authority of Namibia (CRAN) said it would make the 800 megahertz (MHz) and 700 MHz spectrum bands available. This will allow operators to increase the current population coverage from 85% to 88% without adding any towers, reducing the cost to operators and consumers. “These two spectrum bands will also allow operators to roll out 5G services in addition to 4G services, ensuring the optimal use of the spectrum to foster digital inclusivity throughout Namibia,” says the regulator's spokesperson, Katrina Sikeni. Sikeni says growth of the Namibian ICT sector is important if Namibia is to become an active knowledge-based society that benefits from the full socio-economic benefits of technology. There will be improved provision and offering of a variety of affordable services and a wider range of ICT products in 2023, she says. This will be accompanied by enhanced legislative frameworks pertaining to electronic transactions, postal services, data protection, cybersecurity laws, and the implementation of new regulations for the importation of telecommunications equipment into Namibia.
IMF Executive Board completes sixth and final review under the PCI, third and final reviews under the SCF and SBA, and initiates post financing assessment with Senegal
On Monday, 9 January, the Executive Board of the International Monetary Fund (IMF) completed the sixth and final review under the Policy Coordination Instrument (PCI) and the third and final reviews under the Stand-by Arrangement (SBA) and the arrangement under the Standby Credit Facility (SCF). The completion of the reviews enables the immediate release of about USD215.96-million (SDR161.8-million, or about XOF133-billion) to Senegal. Weaker external demand, rising food and energy prices, tightening financial conditions, and the United States dollar appreciation have negatively impacted the Senegalese economy. The country is facing multiple challenges, including heightened regional insecurity and growing social demands amid soaring cost of living. As a result, growth was further revised down to 4.7% and inflation up, while the fiscal accounts are under increasing strain.
World Bank forecasts strong GDP growth for Senegal in 2023
According to the World Bank, Senegal’s economy will witness sizable growth on the back of first gas production in 2023 and an uptick in mining sector investments. The country’s economic expansion will align with that of the region, as Western and Central African economies are expected to grow by 5% in 2023 and 5.6% in 2024. Following the completion of Senegal and Mauritania’s Greater Tortue Ahmeyim project – which will produce 2.5 million tonnes of liquefied natural gas (LNG) per year – Senegal could generate up to USD1.4-billion in oil and gas revenues by 2025. This is significant for the West African nation, as it marks the country’s entry into commercial gas production and five years since the final investment decision was taken by bp for the LNG development. While Senegal’s extractive sector accounts for nearly 40% of total exports, it contributes less than 10% of government revenues – a figure set to change starting this year. Sub-Saharan Africa, for its part, is home to substantial volumes of gas, reaching over 220 trillion cubic feet of proven reserves. Gas production in the region has grown by over 10% in the past decade and the most recent hydrocarbon discoveries on the continent have been gaseous. Senegal’s gas debut aligns with continent-wide efforts to monetize reserves for both domestic use and export, supported by the global energy transition.
Source: Energy Capital & Power
Mining sector employment grows by 96%
Employment in the mining sector has grown by 96% to over six million people, thanks to the changes in the 2017 Mining Law. The changes in the mining laws that also included the adoption of the Local Content Regulations, have made local purchases reach 92%. The Mining Commission Executive Secretary, Yahya Samamba said in Dodoma recently that the changes in the mining laws have contributed to the sector’s growth and its contribution to GDP. “Before changes in the mining laws, most mining companies were employing many foreign nationals even in jobs that could be done by Tanzanians,” he said. He added, the situation led the government to make changes in the mining laws to increase the participation of Tanzanians in the mining economy through employment and provision of services in the mines, such as food and the distribution of mining equipment. He added that the changes also led to an increase in local purchases up to 92% compared to less than 50% before the changes in mining laws, where most of the products were imported even though they were available in the country. “Currently, many companies are buying products and services locally and for products that are not available in the country, the company requests import permission from the Mining Commission,” said Executive Secretary Samamba.
IMF Executive Board concludes the combined second and third reviews under the ECF arrangement for Uganda
The Executive Board of the International Monetary Fund (IMF) concluded the combined second and third reviews under the Extended Credit Facility (ECF) arrangement for Uganda. Further, the executive board granted a waiver of nonobservance of a performance criterion on the stock of net international reserves of the Bank of Uganda. The completion of the combined second and third reviews allowed an immediate disbursement equivalent to SDR180.5-million, about USD240-million, bringing the aggregate disbursement to date to USD625-million. The ECF arrangement for Uganda for a total of SDR722-million (200% of quota) or about USD1-billion was approved by the executive board on 28 June 2021, aiming to support the near-term response to the COVID-19 pandemic and boost more inclusive private sector-led long-term growth. Reforms focus on creating fiscal space for priority social spending, preserving debt sustainability, strengthening governance, and enhancing the monetary and financial sector frameworks. The Ugandan authorities have managed to preserve macroeconomic stability while sustaining the post-COVID-19 recovery despite rising pressure from global shocks and successive domestic shocks, including new public health challenges.
Private sector should gain in the next budget
From COVID-19 to double digit inflation coupled with external factors such as Ebola and the geopolitical conflict in Eastern Europe (Russia-Ukraine war), which brought about imported inflation, subdued global growth, Uganda’s economy has been in turmoil. This three-some tragedy has led to slower economic growth and overall development in Uganda. To avert slowdown in economic growth, the Finance Ministry says the overall objective of the financial year 2023/24 Budget Strategy is to restore the economy back to the medium-term growth path of 6-7% per annum and improve the economy’s competitiveness. The Finance Ministry says in the Budget Framework Paper for financial year 2023/24 in the medium-term, increasing the wealth of households and eliminating poverty, particularly using the Parish Development Model and small and medium-sized enterprises (SMEs) economic recovery programmes is key for socioeconomic transformation. In addition, diversifying the economy and Uganda’s exports are key to achieving the planned economic growth trajectory. According to the plans, the private sector is posed to be one of the key sectors whose issues will be addressed and funded in the national budget for the financial year 2023/24 if Parliament approves the Budget Framework Paper.