Kenya ready to privatise 35 state companies, President Ruto says

Kenya’s President William Ruto said Thursday that his government was ready to privatise 35 state companies “trapped in government bureaucracy” in a bid to boost productivity following a change to laws.

Last month, Ruto’s government signed a revised privatisation bill into law that makes it easier to sell state enterprises to private companies.

The revised law aims to push up the private sector’s participation in the economy, the presidency said at the time of the signing.

“We have identified the first 35 companies that we are going to offer to the private sector,” Ruto told a gathering of African stock market officials in Nairobi.

He added that the government was also exploring options regarding some 100 state-owned firms, saying that many “would-be lucrative companies… are trapped in government bureaucracy, when the services they are offering can be better offered by the private sector.”

“We will make this opportunity available.”

East Africa’s economic powerhouse is facing a host of challenges, including depleted government coffers, skyrocketing inflation and a plunging currency that has led to soaring debt repayment costs.

The International Monetary Fund (IMF) said this month that it had agreed to a $938-million loan for Kenya, which also has a $2-billion-eurobond repayment due next year.

The IMF also urged Ruto’s government to reform public sector firms, particularly the national electricity supplier — Kenya Power and the national carrier Kenya Airways — which suffered record losses in 2022.

The World Bank said on Monday that it expects to provide the country of 53 million people with $12 billion in support over the next three years.

Kenya had accumulated more than $66 billion (Ksh10.1 trillion) in debt by the end of June — according to Treasury figures — equivalent to around two-thirds of gross domestic product.

Kenya’s President William Ruto said Thursday that his government was ready to privatise 35 state companies “trapped in government bureaucracy” in a bid to boost productivity following a change to […]

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Outrage as Kenya tax officials accused of harassing tourists at airport

Lawmakers have joined Kenyans in protesting a directive by the Kenya Revenue Authority (KRA) seeking to tax personal or household items worth $500 (Ksh75,000) and above, whether new or used by tourists visiting the country.

The National Assembly Committee on Defence and Foreign Relations said some KRA officials have been taking advantage of the directive to harass tourists, hence giving the country bad publicity. The committee chairman Nelson Koech said Kenya instead be working on how to grow the number of tourists visiting the country.

“We are entering the peak tourism season and His Majesty’s visit to Kenya is poised to give our tourism a very big boost. The KRA’s passenger Terminal Guidelines could not have come at a worse time. This is not the time to be threatening those coming to Kenya,” Mr Koech said.

“We agree, the laws around the world impose limitations on the amount of goods but that should not be an excuse to threaten passengers, harass travellers or infringe on the privacy of tourists. KRA should make it easy for passengers and travellers coming to Kenya to declare their luggage and where necessary pay duty before landing,” he added.

The Belgut MP pointed out that there is a need to clarify which goods are affected and ensure personal effects and electronics are left out.

“There appears to be mischievous characters at Times Tower who are bent on sustaining negative publicity on taxes. We appreciate that the only way we are going to achieve sustainable development as a country is by paying taxes and becoming dependent on our own resources as a country,” Mr Koech said.

“But even then, there is a need for all agencies of government to go easy on Kenyans and as far as possible avoid coming across as insensitive in making their public announcements,” he said.

“Why would KRA choose when we are preparing for the Royal Visit to remind Kenyans of these new Passenger Rules? Where have they been all along?”

Tourism Cabinet Secretary Alfred Mutua termed the KRA move as one of the reasons the number of tourists visiting the country has been declining.

“You go to Rwanda, they don’t harass you. Does Rwanda not collect taxes? You go to South Africa, and they don’t harass you. In Dubai, they don’t harass you. So, why do our visitors face such challenges in Kenya? And we wonder why people are not coming to Kenya,” Mutua asked.

Senate majority leader Aaron Cheruiyot said on his X account that “the National Assembly finance committee holds the key to alleviating national shame that is the KRA searches at JKIA. By providing the necessary clarity needed to distinguish goods for a commercial venture and personal items”.

Lawmakers have joined Kenyans in protesting a directive by the Kenya Revenue Authority (KRA) seeking to tax personal or household items worth $500 (Ksh75,000) and above, whether new or used […]

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Ruto signs $59m deal with US aid agency to acquire electric buses

Kenya’s President William Ruto has signed a Ksh8.7 billion ($59.2 million) deal with US foreign aid agency Millenium Challenge Corporation (MCC) for the acquisition of electric buses to ease traffic congestion in Nairobi Metro Area.

The buses will operate on Line 2 of the Bus Rapid Transit (BRT).

“The Blended Finance for BRT Project aims to catalyse private financing to support the acquisition of electric (or other low emission) buses to operate one or more lines of the BRT system, currently being prepared for the Nairobi metropolitan area,” MCC said on its website.

“The project aims to facilitate the timely operation of BRT lines and contribute to Kenya’s goals of reducing greenhouse gas emissions related to urban transportation.”

Kenya’s President William Ruto has signed a Ksh8.7 billion ($59.2 million) deal with US foreign aid agency Millenium Challenge Corporation (MCC) for the acquisition of electric buses to ease traffic congestion […]

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Ugandan farmers fed ARVs to animals, official reveals

A top official of Uganda’s National Drug Authority (NDA) on Wednesday stunned MPs on the House Committee of HIV/Aids when he confessed that they knew of, but initially did nothing about potentially deadly abuse of antiretroviral drugs to fatten farm animals.

The legislators were dismayed that the regulator of such a sensitive docket opted to remain silent, yet the shocking practice may result in harmful, and even life-threatening, side effects to humans.

The bizarre confession was contained in a submission made by NDA Senior Inspector of Drugs Amos Atumanya who said the authority learnt about the dangerous malpractice 10 years ago and conducted an investigation in 2014 to verify the claims.

“In 2013, the NDA received reports of the misuse of ARVs in pigs and chicken through the pharmacovigilance system,” Atumanya said.

“Unlike the media reports that focused on fattening pigs, we found out that ARVs were mainly used to treat African Swine Fever, also known as pig Ebola. The disease currently has no remedy. In addition, there were reports of the use of ARVs against New Castle Disease in chicken,” he added.

House Committee members were left almost speechless when Atumanya indicated that NDA did not come out on the issue for fear that this would have an adverse effect on the country’s economy.

“We have known about them and we are trying to do something about it. But there are some concerns that if we blow it out of proportion, what does it mean for the economy if you are going to export food? So, we are trying to find means in which to manage that situation,” he said.

“It is in that context that you find that whereas we have known about that issue for some time, we are taking some measures without necessarily having to alarm the whole country,” he added.

The NDA leadership had appeared to respond to information that was last Wednesday submitted to MPs by researchers from Makerere University College of Health Sciences. 

The researchers revealed that their scientific inquiries had confirmed the presence of antiretroviral therapy medicines in farm chicken consumed in Uganda.

“There were traces of efavirenz in chicken tissue and chicken feed samples in Wakiso District hence potential exposure [of humans] to sub-therapeutic concentrations of the Antiretroviral Therapy (ART) medicines,” the researchers’ reported.

“The community is aware of the misuses of ART commodities in farm animals. This requires urgent mitigation strategies to control misuse of these essential commodities in HIV/Aids treatment.”

Efavirenz is a powerful anti-HIV drug that is taken in combination with other antiretroviral drugs. It works by decreasing the amount of HIV in human blood.

Also contained in the information before the committee, the Makerere University scientists reported that “the main reason for ARV usage in farm chicken is mainly economic; quick profit gains arising from anticipated early growth and fattening of chicken.”

Finer details before the same committee show that the farmers and/or other abusers of the ARV medicines are irregularly acquiring them from public health facilities and some persons living with HIV/Aids. It was reported that some individuals allegedly engage in multiple registration of persons living with HIV/Aids at health facilities which creates room for double access to the ordinarily heavily restricted medicines.

Terego West representative Joel Leku joined Polycarp Ogwari of Agule County in bitterly criticising NDA for concealing such disturbing information for a decade.

“It is a disappointment when you discovered early enough that we are here discussing the same thing. We believe you should have informed the country. The country should have been aware of this and of people who misuse drugs. I think we are on the wrong way. To be honest, it is countrywide; it isn’t only one region, these drugs are used in animals,” Ogwari said.

Deadly side effects

MPs were left even more alarmed when Atumanya revealed that consumption of chicken fattened using ARVs may not only make HIV/Aids negative persons resistant to the life-saving medicine — in the event that they contract the virus — but could also lead to hypertension, which is itself a life-threatening heart condition.

“Misuse of antiretroviral drugs might contribute to the development of resistant viral strains in ART negative persons due to exposure to suboptimal doses of ARVs in food,”  Atumanya said.

“Use of ARVs in animals may lead to the unintended consumption of these drugs which may have unforeseen health consequences for humans such as adverse drug reactions including hypersensitivity,” he further said.

He also indicated that this could compromise the government’s dedicated and well-documented efforts to combat the spread of the deadly disease in Uganda. 

“ARVs are expensive and vital for treating individuals with HIV/Aids. Their diversion from human use could negatively impact public health efforts to curb HIV/Aids as it denies other patients access to these life-saving drugs,” Atumanya said.

Although, the possibility was not raised in the committee yesterday, the revelations will probably call for the need to verify whether perennial ARV drug stock-outs countrywide could partly be linked to the theft and diversion of the medicines for such mercenary purposes.

What is being done?

Based on the information that the government has so far gathered, Atumanya indicated they are now carrying out sensitisation campaigns about the dangers of using ARVs in poultry and other farmed animals.

“As a result of these findings, NDA subsequently instituted sensitisation programmes targeting both the public and farmers. Farmers and veterinary professionals were engaged at the sub-county level while the public was [engaged] through radio and TV talk shows,” Mr Atumanya said.

The official said that “through her market surveillance and enforcement system, NDA conducted enforcement activities in different parts of the country to curb the unauthorised possession and use of drugs, including ARVs.” 

A top official of Uganda’s National Drug Authority (NDA) on Wednesday stunned MPs on the House Committee of HIV/Aids when he confessed that they knew of, but initially did nothing […]

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How new technologies are driving financial inclusion in Kenya

Inclusivity in the financial system is desired by all nations. It enhances economic efficiency, stabilizes the financial system, and protects vulnerable citizens. In Kenya, a developing economy, the government is exploring various measures to ensure everyone participates in its financial system.

New technologies like USSD, SRL, and cryptocurrency can potentially include all Kenyans in the financial system.

Mobile payment offers accessibility for all

In developing countries, mobile payments such as Bangladesh’s bKash, Cambodia’s Wing, and Tanzania’s M-PESA are important in financial inclusion. These services use Unstructured Supplementary Service Data (USSD) to connect with customers.

USSD is vital in financial inclusion. It has become a vital tool for offering mobile financial services to low-income individuals. By dialing numbers starting with * and ending with #, users already engage with USSD.

According to 2016 data, 96 percent of households in Kenya used mobile money M-PESA. The growth in mobile phone penetration contributes to Kenyans’ use of mobile-based payment methods. This method is considered more straightforward than others.ADVERTISEMENT

Despite that, the adoption of mobile payment still meets some challenges. Certain groups — usually impoverished, have lower educational attainment and are predominantly female — have limited access to mobile phones and data.

Past research also revealed that phone owners with higher education may not use their privilege to exercise the so-called savvy money management methods, such as savings. They have the means to do it, but for some reason, they don’t.

These findings challenge the commonly optimistic view of mobile money as a key avenue for financial inclusion. It aligns with qualitative research suggesting that Kenyans have diverse needs and prefer to have their money circulate actively.

Furthermore, potential issues arise when mobile network operators (MNOs) control financial services and essential communication infrastructure like USSD. This can hinder competition and impact benefits like lower costs and improved services for customers.

Entertainment sector boosts inclusion

Entertainment avenues like Simulated Reality League (SRL) are also transforming how people use their money by engaging in virtual sports simulations and digital entertainment. They are designed to mimic real-world sports such as cricket.

SRL today  still follows the same basic formats: Test, One-day Internationals (ODI), and Twenty20 (T20). Unlike real matches that can extend for hours due to various factors, games last for two hours without interruptions.

In a computer-generated Twenty20 match, there are 20 overs, each with six balls, and betting options for every over and special bet for the beginning and end of the game, making it more streamlined without delays caused by penalties or injuries.

SRL cricket offers similar betting markets as official matches, including options like match winners, coin toss winners, ties, and predictions for top batters and bowlers.

Authorities remain cautious about crypto

As digital currencies gain traction, traditional banks remain cautious due to perceived risks that outweigh potential benefits. In 2015, the Central Bank of Kenya (CBK) warned about the risks of cryptocurrencies due to their unstable nature and lack of rules. While they suggested people avoid trading, they didn’t ban it.

Kenyans can legally buy and sell cryptocurrencies. In fact, Kenya holds over $1.5 billion in Bitcoin, about 2.3 percent of the country’s total value. This doesn’t even count other tokens, like Ethereum or Dogecoin. This shows that Kenyans still embrace cryptocurrencies despite the CBK’s advice.

While concerns about digital currencies often revolve around risk and complexity, they can benefit banks and customers. Cryptocurrencies are alternatives to conventional banking. They operate without intermediaries and beyond the control of single entities. Instead, crypto transactions rely on the blockchain’s code and a decentralized structure.

However, the central bank’s control of crypto could lessen the asset’s appeal and challenge banks’ entry into the field. The decentralized nature of cryptocurrencies raises questions about the central bank’s control if digital assets gain widespread adoption.

Inclusivity in the financial system is desired by all nations. It enhances economic efficiency, stabilizes the financial system, and protects vulnerable citizens. In Kenya, a developing economy, the government is […]

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Kenya President Ruto decries ‘unfair’ debt policies

Kenya’s President William Ruto has decried what he termed as an “unfair” framework in the administration of the global financial system, saying the global West continues to disenfranchise Africans by imposing unjust debt repayment policies that are almost unmanageable.

Speaking at the Kenyatta International Convention Centre (KICC) in Nairobi on Tuesday in a speech to delegates at the ongoing Africa Climate Summit, Ruto waded into the often-murky terrain of foreign debt to African nations, saying that a conversation on the punitive policies of the West and its institutions towards Africa “is not an unfair” debate.

His remarks were received with applause from the thousands, including African heads of states, who were gathered at the Tsavo amphitheatre on the second day of the Africa Climate Summit. Also in attendance were leaders from the global North, among them the United Nations Secretary-General Antonio Guterres and the US Special Presidential Envoy for Climate John Kerr

Ruto appeared pained in his remarks, cutting his written speech for a few minutes to embark on a short anecdote about how Africa has been hurt by the unfair debt programmes of the West, and how climate change is exacerbating an already bad situation.

While Africa’s debt debate has become a touchy issue in recent years, it is becoming even louder in the wake of the debilitating effects of climate change.

Spend fortunes

African governments are routinely being forced to spend fortunes of small budgets to fund adaptation projects, and Ruto said the government had been forced to add an additional three million pupils to the national feeding programme, up from one million last year. The holes they burn in their treasuries are often plugged using expensive domestic and foreign borrowing, and African leaders have in recent years decried what they deem as exploitative policies by Western financiers.

“This is the continent with the highest investment potential,” said President Ruto, who went ahead to note that the high potential is hampered by “high interest rates for development capital.

“As a result, nine countries in Africa are already in debt distress, 13 are at high risk and 17 are at medium risk, and African continent is bearing the brunt of the global climate crisis because an unjust financial architecture views African nations as risky borrowers,” he added.

“How do we get Africa to pay five times more (than the rest)?” he wondered. “We are not asking to be favoured or treated differently; we just need a conversation.”

Kenya’s President William Ruto has decried what he termed as an “unfair” framework in the administration of the global financial system, saying the global West continues to disenfranchise Africans by […]

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President Ruto urges global financial institutions to be fair to Africa

Africa is calling for a fair financial system that treats all nations equally, according to Kenya’s President William Ruto, who also chairs the Heads of State Committee on Climate Change.

Speaking on the second day of the Africa Climate Summit, President Ruto said it was not too much to ask as many African nations were facing debt distress due to climate change.

“This is the continent with the highest investment potential. We are only limited by two things: high interest rates for development capital,” President Ruto said, adding that nine countries in Africa are already in debt distress, 13 are at high risk and 17 are at medium risk.

He argued that the suffering was global but the African continent was bearing the brunt and that the financial architecture is such that African nations are seen as risky borrowers.

“How do we get Africa to pay five times more?” The president wondered. “We are not asking to be favoured [or] treated differently… We need a conversation.”

“Climate change was destroying the economies of African nations and forcing affected countries to divert their budgets and resources meant for economic growth to dealing with the effects of climate change,” Dr Ruto said.

“Africa had lost 2.5 million head of livestock, among other things, due to climate change,” he said.

He said the summit was both Africa’s climate summit and a global pre-COp28 meeting where Africa would speak, and the world would listen.

“The ACS is an orientation to familiarise us with our journey into the future, driven by African solutions,” he explained. “We have gathered here to consult, deliberate, collaborate and share the future of climate action globally and for Africa. This summit is about turning ideas into action and forging transformative partnerships to bring our planet back from the brink of climate change.”

Acknowledging that there was still a long way to go to achieve Africa’s aspirations, he urged all stakeholders to keep their promises, even in difficult times.

Nevertheless, he said, there was a need to move fast because climate change was an emergency that required a commitment to climate action and green growth.

“This African moment is a global moment, we are there in word and deed. I urge everyone at this summit to show bold leadership in support of African aspirations. We have a long way to go and no time to lose. We have the permission of our ancestors to innovate a way, not only to go fast, but to go together,” said Dr Ruto.

Even in the face of adversity, the summit host said, there is opportunity. Climate change and the crisis it brings is Africa’s opportunity to unlock the vast resources we have for a green energy transition, he said.

President Ruto said Africa has an unprecedented opportunity to turn away from the well-trodden unsustainable path.

Speaking at the Youth Summit on Sunday, President Ruto said the world had witnessed the immense potential that African youth could unleash.

He added that this underscored the importance of the Youth Commission. Potential and opportunity are all futuristic.

African countries face unique, disproportionate and structural disadvantages that can help them achieve prosperity. And the tragedy of climate change is “relentlessly eating away at this progress”, President Ruto lamented, while declaring that the continent will use its capacity to limit its own emissions as a clear pathway to net zero by 2050.

“Furthermore, to achieve green growth, Africa has committed to move quickly to develop the necessary instruments and institutions, with Kenya, as an outcome of the summit, offering to host the Global Centre for Adaptation (GCA),” President Ruto said.

“We have been negatively profiled, the continent of disease, war and poverty, but we are stepping out to say that Africa is home to 60 percent of the world’s renewable energy assets,” he said.

Standing in for US President Joe Biden, US special climate envoy John Kerry said, “My sense is that after this speech, we have no choice but to act.”

“Africa has the greatest opportunity in the world to win this (climate change) dialogue,” he added.

“I feel that Africa at this moment offers an enormous opportunity. This problem that we face is man-made. Humanity is being threatened by humanity. We need the Loss and Damage Fund in one year, this year, in Dubai. We can win this battle, but we can only win it if we make fundamental choices,” he further said.

Africa is calling for a fair financial system that treats all nations equally, according to Kenya’s President William Ruto, who also chairs the Heads of State Committee on Climate Change. […]

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Rwanda allocates over 7000 hectares of state forests to investors

In a move to boost the forestry sector and promote sustainable management practices, the government has authorized the allocation of 7,716 hectares of state forests to private investors for responsible harvesting and oversight.

The decision, approved by the cabinet, aims to enhance the country’s forest management while driving economic growth through strategic partnerships with selected companies.

The four companies chosen for the management and harvesting responsibilities are Ecopen Ituze Ltd, Kayonza Distributors Company, Ekaterra Tea Rwanda Ltd, and Ikizere Silviculture Limited.

The ambitious target set by the government is to privatize the management of 80 percent of state forests by 2024, amounting to 49,188 hectares. Notably, progress has been made, with 63 percent already achieved, a significant increase from 38 percent recorded last year.

There are currently ongoing negotiations covering an additional 15,198 hectares with potential investors awaiting cabinet approval. The negotiation process includes field visits, vetting, due diligence, and assessment of technical proposals before finalizing agreements under the supervision of the Prime Minister.

World Nature Conservation Day, celebrated on July 28, served as a backdrop to unveil the developments in state forests’ management privatization. This annual event seeks to raise awareness about the crucial need to preserve the environment and natural resources for the betterment of the world.

Forestry sector revenues have seen remarkable growth, surging from Rwf 164 billion in 2007 to Rwf 649 billion in 2021. With the privatization of all state-owned forests, the estimated annual revenue is projected to surpass Rwf 200 billion.

Rwanda currently possesses approximately 27 percent of the nation’s total forests, equivalent to 61,485 hectares, excluding national parks. The total forest cover across the country stands at 30.4 percent, encompassing 724,662 hectares. These forests are primarily 53 percent plantations, 21 percent wooded savannas in the east, 19 percent natural mountain rainforests, and 6.2 percent shrubs.

The Forest Sector Strategic Plan, executed between 2018 and 2024, has been a significant investment for Rwanda, amounting to Rwf 82.2 billion. Private investors have been required to engage in reforestation efforts following the harvesting of mature trees. To bolster the wood industry and ensure long-term sustainability, the Rwanda Forestry Authority (RFA) has designated five tree species with high economic value for reforestation purposes.

These species include Pinus spp, Eucalyptus spp, Podocarpus falcatus (Umufu), Cedrela odorata, and Entandrophragma excelsum (Umuyove or Libuyu). Notably, Umuyove was chosen due to its status as the only premium timber that naturally grows in Rwanda, making it highly sought-after in the local timber market.

As Rwanda continues to promote reforestation and sustainable forest management practices, there is a strong focus on native tree species to preserve the ecological balance. The timber industry has already contributed to the livelihoods of over 75,000 individuals, primarily in rural areas, with employment opportunities stemming from charcoal production, wood production, distribution, and selling.

A recent study revealed a substantial increase in employment within the wood processing and trade sector, growing from 12,000 jobs in 2017 to 23,000 jobs in 2019.

The trade of Rwandan forest timber is estimated to range from 215,000 to 235,000 cubic meters per year, with an approximate total value of $76 million annually.

In a move to boost the forestry sector and promote sustainable management practices, the government has authorized the allocation of 7,716 hectares of state forests to private investors for responsible […]

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Kenya expands storage capacity for fuel, gas to serve EA region

Kenya is upping the ante against Tanzania in the race to supply petroleum products in the region after the Cabinet this week approved takeover of assets belonging to the defunct Kenya Petroleum Refineries Ltd (KPRL) by the Kenya Pipeline Company (KPC).

KPC is taking over KPRL’s 45 storage tanks with a capacity of 484 million litres, out of which 254 million litres is reserved for refined products while the remaining 233 million litres will be used for crude oil.

The acquisition means Kenya will have unlimited space to store petroleum products, taking advantage of the new Kipevu Oil Terminal 2.

With the new Kipevu facility, Kenya seeks to double the capacity of handling transit petroleum products from the current 35,000 tonnes and entice Uganda, Rwanda and Burundi to start due considering Mombasa as their petroleum products source since it will be cheaper than Dar es Salaam.

Kenya’s petroleum products have been among the most expensive in the region as ship waiting time and demurrage charges are factored in along the supply chain.

Targeting Uganda

Kenya transports about 900 million litres of petroleum products per month and is banking on Tanzania’s inadequate fuel transport infrastructure to retain the Ugandan petroleum transshipment business. Kenya is also using the newly constructed $170 million fuel jetty in Kisumu to woo Uganda, its main transit market, to start importing fuel from Mombasa.

Kenyan President William Ruto has directed the scaling up of LPG coverage in the country and in the region and KPC will use part of the land owned by KPRL to build additional storage tanks for LPG.

Already, KPC has contracted Pakistani firm Petrochem Engineering Services to design LPG import and storage facility in Changamwe, Mombasa. Five private companies have applied to tap into the new Kipevu terminal, seeking easier loading of cooking gas for distribution by trucks which will help to cut demurrage costs.

The KPRL storage facility was previously owned by Shell and the British Petroleum Company (BP), which sold it to Indian investor Essar Energy Overseas Ltd at $5 million in 2016. Six months later, Essar Ltd relinquished its shares to the government.

KPRL, which was set up to refine crude oil, stopped operations in 2013 after the government started importing refined oil.

“This additional storage of about 200 million litres of petroleum products would unlock supply chain bottlenecks in Mombasa and ensure steady supply of the commodity in the country and neighbouring countries of Uganda, Rwanda, Burundi, South Sudan and the Democratic Republic of Congo” said Energy Cabinet Secretary Davies Chirchir.

Uganda receives over 185 million litres of petroleum products, mostly channeled through the Kisumu port and the Eldoret depot.

This month, Nairobi has shipped an estimated 27 million litres of fuel to Uganda through the Kisumu oil jetty.

Once licensed, they will cater for the untapped LPG market with the increasing population and demand in the country and in the East African region.

“KPC proposes to install, commission and operate a 500 tonnes per day LPG truck loading facility which will enhance product evacuation and as such ease ullage constraints and subsequently reduce demurrage costs. Current LPG storage capacity in Mombasa is limited and huge demurrage is incurred by LPG ships thus affecting the final consumer price of bottled gas,” read part of KPC in tender documents.

Limited LPG storage capacity in Mombasa means that ships stay longer at the port, leading to higher demurrage costs which are then transferred to consumers thus paying high prices of bottled gas.

KPC currently receives imported LPG from ships berthed at the Shimanzi Oil Terminal and puts it into its tanks – T610 and T611 located within its Changamwe facility the product is then evacuated to local terminals through inter-connecting pipelines for truck loading and bottling respectively.

The lack of loading gantries for truck loading has been a challenge to gas companies and the facility once complete will allow companies to ferry gas in trucks which has proved to be economically viable.

Kenya is upping the ante against Tanzania in the race to supply petroleum products in the region after the Cabinet this week approved takeover of assets belonging to the defunct […]

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Let’s support young people doing small businesses

I recently met a girl called ‘Zai’. She has a fascinating story of resilience. But the greatest lesson in her story is that our young people must never give up, no matter the challenges they come across with.

Zai was a Form Four leaver. Unfortunately, she failed her Form Four National exams. One day, Zai’s father, a stern man with high expectations, confronted her with disappointment in his eyes. “There is nothing else I can do for you since you have failed Form Four exams,” he said in a sordid tone. Those words struck Zai’s heart like a dagger, leaving her feeling lost and defeated. Note ‘Zai’ is not a real name but a hypothetical one.

Being determined to change her circumstances, Zai made a bold decision. She would venture to Dar es Salaam city, where opportunities seemed abundant.

With hope in her eyes and a heavy heart, she bid farewell to her beloved village and embarked on a journey to the big city. It was her grandma who provided the fare.

However, life in the city was not easy. It turned out to be harsh and unforgiving for young Zai. She found herself as a house helper in the rules of an unkind employer. To her dismay, an entire year went by without being paid. That is a story for many girls employed as house helper.

Feeling trapped and exploited, Zai confided in a kind neighbour who lived nearby.

The neighbour, moved by her plight, decided to take her in and offer her sanctuary from the hardships she faced. Little did Zai know that that act of kindness would be a turning point in her life!

Her neighbour was a compassionate and wise person. She introduced her to Mwenge Market, a vibrant part of Dar es Salaam city. Zai took a leap of faith and borrowed Sh20,000 to buy a small assortment of second-hand clothes.

When I met Zai, it had been a month since her business had started flourishing. With each sale she made, she diligently set aside a portion of her earnings to repay the money she had borrowed. After four months, I met Zai again, and said she was struggling to settle and support her parents in the village.

“One of the difficult moments in Dar was when some girls approached me to engage in prostitution” narrated Zai. However, she firmly stated that she held dear to her values and refused to compromise. Zai’s story is a testament that girls should not forsake their morals and dignity for a living.

Parents influence their children’s lives, and their decisions can profoundly impact their children’s future.

Unfortunately, there are instances where parents make choices that go against the best interests of their children. Zai’s story is a painful reminder that this can happen to other children.

Every person engaged in business has a unique story to narrate. Society needs to support business individuals by purchasing their products and contribute to their success. Zai’s journey is about resilience, hard work, and an absence of bitterness despite the many challenges encountered.

Parents should be the pillars of all support and guidance to their children, offering encouragement and understanding during difficult times.

Contrary, Zai’s father responded with a harsh dismissal of her daughter. It’s a hard reality that sometimes even those expected to protect and nurture children fail to provide the support and understanding the children’s need.

We MUST never define our kids solely on their academic performance. Every child possesses talent, dreams, and potential. All these should not be overshadowed by a single setback. For instance, for Zai’s father, instead of abandoning her, he could have explored alternative paths and solutions to help her find a true calling and achieve her dreams.

I recently met a girl called ‘Zai’. She has a fascinating story of resilience. But the greatest lesson in her story is that our young people must never give up, […]

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Kenya households, investors at crossroads over Treasury, CBK policy

Investors and households in Kenya are caught up in a divergence of policies between the National Treasury and the central bank as the new administration grapple with a wave of inflationary pressures, high debt servicing costs and a slowdown in economic growth.

But economists warn that the tightening of both fiscal and monetary policies concurrently by the National Treasury and CBK is a recipe for economic downturn, casting doubt on the government’s efforts to tame inflation, support local businesses and attract foreign direct investment.

Yvonne Mhango, Group Chief Economist and Director of Research at Equity Group Holdings, said that a tighter policy environment both on the fiscal and the monetary policy side implies downside risk to GDP growth.

“The Finance Bill proposes measures that reflect fiscal restraint, which will slow growth going forward. For businesses, it implies a slowdown in retained earnings available for re-investment, which undermines growth prospects,” she said.

The government, apparently dancing to the tune of the Bretton Woods institutions in economic management in efforts to seek debt relief and cheaper credit, is bracing to implement the controversial Finance Act 2023, which spells punitive taxation measures, including doubling of value added tax on fuel to 16 percent and a mandatory housing levy on salaried workers.

The proposed fiscal measures are aimed at boosting revenue collections and reducing budget deficit estimated at Ksh718 billion ($5.12 billion) in the 2023/24 financial year but lay the foundation for increased inflationary pressures triggered by high cost of production and transport.

This week, the Central Bank in a surprise move raised its benchmark rate by 100 basis points to 10.5 percent, arguing the policy shift is to anchor inflation expectations as a result of the tightened fiscal policies.

This was the first key policy action under the newly appointed governor Kamau Thugge, who assumed the office on June 19, replacing Patrick Njoroge after eight years in the role.

IMF Working Paper

This ushers in a high interest rate regime, where households and businesses will find it difficult to access bank loans for expansion and new investments.

According to Reginald Kadzutu, chief executive at the asset management firm Amana Capital Ltd, inflation caused by rising prices of goods and services cannot be controlled by increasing interest rates.

“Taxes affect both owners of capital and labour, but the rate hike will benefit only the owners, creating an even more unequal society,” he said.

The high interest rate will also increase the cost of government borrowing in the domestic market through treasury bills and bonds, making the cost of servicing government debt expensive.

“In terms of the implications of the policy trajectory we are seeing in the economy, it implies that the tightening on the fiscal side, added to the tightening on the monetary policy, we will see some softening of growth going forward,” Ms Mhango said.

According to her, a higher tax burden means that households have less disposable income and hence a slowdown in spending and consumption in the economy, which has implications on GDP growth.

Kenya is under immense pressure from the International Monetary Fund (IMF) to raise taxes and remove subsidies, particularly on fuel, to deal with persistent budget deficit and to maintain a tight monetary policy regime.

Yet, the IMF Working Paper dated 1998 on ‘Coordination of Monetary and Fiscal Policies’ said a balanced monetary and fiscal policy mix is conducive to maintain an economy on its equilibrium path by controlling inflation and promoting financial conditions for sustainable growth.

In effect, setting a restrictive monetary policy to offset a lax fiscal policy may crowd out private investment and significantly increase the borrowing costs for the government.

“The establishment and development of domestic capital markets require an even greater degree of monetary and fiscal policy coordination,” said the IMF.

In 2016, a dispute erupted between the National Treasury and the Central Bank over who was to blame for the rising cost of living after inflation spilled out of the government upper limit of 7.5 per cent. While the Treasury argued that CBK should be vigilant over all aspects of inflation that caused the cost of living to rise by 8.01 per cent in December 2015, the regulator said it could only police risks arising from excess money supply in the market.

The overall inflation for May 2023 rose to eight percent from 7.9 percent in April as a result of high food and energy prices.

Ken Gichinga, chief economist at Mentoria Consulting, says lack of coordination between monetary and fiscal policies and the resultant double tightening on both ends will see a slowdown in business performance.

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The double-edged sword of Africa’s rising petrol price

Several African countries will in July be grappling with increased fuel prices as governments impose more taxes and drop subsidies, moves which, players in the industry argue, present both risks and benefits for the continent’s development.

As Kenya doubles the value-added tax on petroleum products to 16 percent from July 1, Tanzania is introducing excise duty of Tsh80 ($0.033) per litre and increasing the fuel levy by Tsh100 ($0.042). These are expected to significantly increase fuel prices in the two countries.

In Nigeria, petroleum prices have nearly doubled as citizens went into panic-buying after the new administration announced plans to scrap the fuel subsidy that has kept prices below half the real cost since the 1970s.

Coming against the backdrop of international oil market disruptions, experts argue these changes will not only exacerbate the high cost of living that Africans are already struggling with but will also impact the economies wholesomely.

Some players in the energy sector say the increased fuel prices will suppress demand for the products, shrink revenues and force them to lay off some of their staff.

The impact won’t stop in the oil sector, they warn.

“If demand reduces, the entire private sector will have to take measures to reduce their overhead costs, including reducing their workforce,” a senior executive in a regional energy company, who asked not to be named because his firm is still lobbying the government, told The EastAfrican.

According to him, the rise in fuel prices will curtail expenditure on most commodities, reducing the government’s revenue collection from value-added tax and eventually slow the entire economy.

“It’s a zero-sum game. If revenue is not met, government will take austerity measures, and if the state doesn’t spend as it should, it will depress the entire economy,” he said.

In Kenya and Tanzania, the new taxes come after the respective governments dropped fuel subsidies due to persistent calls by multilateral financial institutions, including the International Monetary Fund and the World Bank.

While the lenders argued that the subsidies were unsustainable and put undue pressure on the countries’ budgets, they have also in the past discouraged the subsidisation of fossil fuels because they “encourage pollution, contributing to climate change and premature deaths from local air pollution,” a document on the IMF website says.

Clean energy bonanza

Some stakeholders in the energy sector contend that scrapping subsidies and imposing more taxes on petroleum products is the best way to discourage their consumption and accelerate transition into renewable energy sources to beat the 2030 net-zero emission deadline.

IMF’s principal environmental fiscal policy expert Ian Parry argues that levying more taxes on fossil fuels is the most effective way to disincentivise their continued use, in favour of clean energy sources, thereby limiting the greenhouse gas emissions resulting from the energy sector.

“Other policies are less effective than carbon taxes,” Parry wrote in a column in the lender’s monthly publication Finance and Development.

“For example, incentives for renewable power generation do not promote switching from coal to gas or from these fuels to nuclear, do not reduce electricity demand, and, not least, do not promote emission reductions beyond the power-generation sector.”

Kenneth Oyakhire, managing director of GE Gas Power for Sub-Saharan Africa, says that although the increased fuel prices on the continent will indeed lead to increased inflation, they are for the greater good of the continent in the long run.

“In the short-term, it will stifle business activity for maybe 3 to 6 months, but there is a huge possibility that over the next one year, there will be a boom of opportunities to sell clean energy more,” he told The EastAfrican.

According to Mr Oyakhire, the increased taxation on petroleum products will not just discourage the consumption of these fossil fuels but will also show that African governments have the political will to lead transition into cleaner energy sources and to take meaningful action to tame fossil fuel use.

This, he said, will attract more investors willing to finance the continent’s renewable energy projects and in the end fast-track Africa’s transition from fossil fuels amidst increasing impacts of climate change-related calamities.

“What governments need to do [to avoid backlash from citizens] is to demonstrate that there is value from the additional taxes, or withdrawn subsidies,” he said.

Collective pain

“Everyone is going to feel the pain, in terms of inflation and higher oil prices, but it is only natural that if we all understand that there is going to be a better tomorrow, we can bear with the pain for a short while.”

The IMF says, mass protests resulting from withdrawal of subsidies or increment of taxes on fossil fuels are the primary reason governments across the globe have been reluctant to take such action, albeit the need for it.

They recommend that such reforms should be accompanied with – among other things – transparent and extensive communication with the citizenry on their impact and improving the efficiency of state-owned enterprises.

In Kenya, the government has admitted that, apart from looking to collect more revenue from the additional taxes, it is also meant to discourage fossil fuel use to reduce its impact on climate.

Kimani Kuria, chair of the Finance and Planning Committee in the National Assembly, told legislators that while the state has increased VAT on petroleum products, it has incentivised cleaner energy sources such as biofuels, which are now zero-rated.

“There is a global discussion on climate change and going green. Many countries around the world are moving away from fossil fuels to the consumption of clean energy,” Mr Kuria said.

“If we continue to incentivise use of clean energy, we are going to get away from these fossil fuels and reduce the pressure on our [oil] imports, leading to the stabilisation of our shilling and make the movement of particular sectors much cheaper.”

Several African countries will in July be grappling with increased fuel prices as governments impose more taxes and drop subsidies, moves which, players in the industry argue, present both risks […]

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South Sudan envoy urges nationals to return, invest at home

South Sudan is urging its nationals in Uganda to come home and invest, citing the return of peace in the country torn apart by civil war.

The South Sudanese ambassador to Uganda, Juach Deng, said the agriculture and industrialisation sectors are ripe for investments.

He also urged citizens of neighbouring countries to invest in South Sudan while acknowledging the presence of “some small armed groups” causing economic sabotage by ambushing traders and robbing them of their merchandise.

“The South Sudan economy has improved since 2018. Come back and invest in South Sudan because it is strategically located in the East African Community (EAC). That is why we have both licensed and unlicensed Ugandans doing business. I am inviting you to pass the message that there is peace across the country,” Mr Deng said Tuesday as his country

Read: S.Sudan receives 10,000 civilians fleeing Sudan

According to Mr. Deng, 67 percent of South Sudan is arable land, and only four percent is under cultivation. He added that agriculture, agro-industrialisation, electricity generation, petroleum, and mining are sectors with opportunities for other East African countries to exploit to realize stability in the region.

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Salaried Kenyans, youth hit hard in Ruto’s tax plan

Salaried Kenyans, mainly youth digital content creators and the middle class at large will have it harder under President William Ruto’s taxation plan following a raft of proposals that will hit their earnings.

In the Finance Bill, 2023, which carries tax proposals for the 2023/24 financial year, the National Treasury plans several actions that will leave Kenya’s middle class, who the government has always gone after in seeking more revenues, with more deductions.

The Bill proposes a 3 per cent deduction from workers’ basic salaries towards the National Housing Development Fund, to which the employer will make an equal contribution.

“An employer shall pay to the National Housing Development Fund in respect of each employee, the employer’s contribution at 3 per cent of the employee’s monthly basic salary and the employees contribute,” the Bill states.

Both the employer and the employee’s contributions are, however, capped at Sh5,000 per month.

Kenyans earning at least Sh500,000 monthly also face deeper tax chops as the Bill proposes to raise their income tax from 30 per cent to 35 per cent This will see a worker earning Sh500,000, pay over Sh200,000 in tax. The proposal comes at a time when President Ruto has been hard on the wealthy, even hinting at introducing a wealth tax.

Read: Content creators feel the pinch of YouTube charges

But the pain will not befall only the salaried as Treasury also proposes to raid Kenya’s digital content creators, an industry that has attracted the youth, offering an alternative to a population category hard hit by unemployment.

The Bill proposes a 15 per cent tax on payments relating to digital content monetisation, as a withholding tax. The tax will have huge implications on thousands of youth who currently earn a living from the digital space and comes when the government has been aggressively driving investment in internet connectivity and technology to attract the jobless.

“In respect of payments relating to digital content monetisation, 15 per cent (withholding tax),” the Bill proposes in relation to the sector.

Treasury has also proposed to raise turnover tax for businesses with revenues from as low as Sh500,000, from 1 per cent to 3 per cent, a move that will hit more businesses classified under small and medium-sized enterprises (SMEs), which may not be stable.

National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’u. Treasury has proposed to raise turnover tax for businesses with revenues from as low as Sh500,000, from 1 per cent to 3 per cent, a move that will hit more businesses classified under small and medium-sized enterprises (SMEs), which may not be stable. | Dennis Onsongo | Nation Media Group

“Section 12C of the Income Tax Act is amended in subsection (1), by deleting the words “Sh1 million but does not exceed or is not expected to exceed Sh50 million” and substituting therefore “Sh500,000 but does not exceed or is not expected to exceed Sh15 million,” the Bill proposes, on businesses to be slapped with the 3 per cent turnover tax.

Tax on every business

The tax is charged on every business, notwithstanding whether it has made a profit or a loss.

Read: Digital tax will hurt firms

Consumers of various products will also pay more if the Bill’s proposals are adopted and enacted into law. Among new products proposed to attract Excise Duty in the new financial year include imported fish (Sh100,000 per metric tonne or 20 per cent of the value) and powdered juice (Sh25 per kilo).

Those who consume beauty products such as wigs, false beards, eyebrows and eyelashes, and artificial nails will be hit with a 5 per cent excise tax, as the government goes harder on the industry that has over the past decade grown significantly.

Cement importers will pay a 10 per cent excise tax per kg of the product, or Sh1.50 per kg, whichever is higher.

Other areas Treasury has proposed to slap taxes on include digital assets, targeting owners of platforms that facilitate the exchange or transfer of digital assets. The assets include cryptocurrencies, token codes and numbers held in digital form and generated through cryptographic means.

“The owner of a platform or the person who facilitates the exchange or transfer of a digital asset shall deduct the digital asset tax and remit it to the Commissioner. A person who is required to deduct the digital asset tax shall, within twenty-four hours after making the deduction, remit the amount so deducted to the Commissioner together with a return of the amount of the payment, the amount of tax deducted, and such other information as the Commissioner may require,” the Bill states.

It also adds that any person who receives rental income on behalf of the owner of the premises shall deduct tax and within 24 hours remit the amount to the taxman. This cuts the period the rental income tax is paid from the 20th day of the month, as has been the case.

Read: Tech giants face tripled digital tax in fresh plan

Companies with tax disputes with Kenya Revenue Authority and who wish to pursue the dispute at the tax tribunal will be required to deposit an equivalent of 20 per cent of the disputed taxes with the tribunal, a move that could affect many companies’ cash flows and deter many from pursuing such disputes legally.

The Bill also proposes some reliefs, mainly to consumers and businesses, who have been slapped with annual inflation adjustment that has often raised the cost of consumer goods.

Employees of startups who receive shares from the companies they work for will also not be taxed on the value of the shares immediately, as the Bill proposes to defer the payment.

State targets per diems, allowances

Employees face tighter times as the State plans to tax any travel allowances exceeding the standard rates approved by the Automobile Association of Kenya (AA).

The Finance Bill 2023 proposes that the AA rates will be assumed to be the amount used, ending a common line of wastage of public funds through excessive claims.

“Notwithstanding the provisions of the sub-paragraph(ii), where an amount is received by an employee as payment of travelling allowance to perform official duties, the standard mileage rate approved by the Automobile Association of Kenya shall be deemed to be reimbursement of the amount so expended and shall be excluded in the calculation of the employee’s gains and profit,” the Finance Bill states.

The Finance Bill also targets club membership allowances.

“By inserting the following new paragraph immediately after paragraph(f) (fa) club entrance and subscription fees disallowed against employer’s income,” it says.

“Any amount paid or granted to a public officer to reimburse an expenditure incurred for the purpose of performing official duties, notwithstanding the ownership or control of any assets purchased,” it adds.

This comes amid proposals by the Salaries and Remuneration Commission (SRC) to eliminate four allowances for civil servants, translating to billions of shillings.

The commission has recommended the abolishment of perks including retreat allowance, sitting allowance for institutional internal committee members and task force allowance.

Presently, there are over 247 remunerative and facilitative allowances payable within the public service, up from 31 in 1999, straining the national bill through double payments. Besides trimming allowances, the SRC targets to cap allowances at a maximum of 40 per cent of a public worker’s gross pay.

Retreat allowance is currently paid to public officers participating in special assignments meant to review, develop and produce policy documents away from their work station.

The SRC also targets to scrap sitting allowance for members of internal committees which are constituted to assist the execution of the mandate of institutions.

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EU to inject $574m in women-led businesses in Tanzania

The European Union, through the Europe Investment Bank, has entered into an investment deal with Tanzania that will unlock over $574.4 million worth new business investments in women-led businesses and the blue economy agenda.

The investment is meant to facilitate businesses and projects in different areas including electricity, clean energy, regional airports, Dar es Salaam port, clean water around Lake Victoria and the blue economy agenda in Zanzibar.

This was revealed by the bank’s Vice President Thomas Östro during the opening ceremony of the Tanzania-EU Business Forum on Thursday in Dar es Salaam.

“After a seven-year gap, it is great to be back in Tanzania. These new investments are specifically targeted to support the blue economy and dedicated to finance women-led businesses and entrepreneurs. My colleagues and I are also looking forward to discuss further investment and business opportunities in Tanzania,” he said.

Tanzania also used the platform to market its potential investment areas of agriculture, tourism, the energy sector, manufacturing, logistics and technology to European businesses in a joint business forum with the EU.

“Tanzania is a de facto gateway to and from landlocked countries, making it a strategic investment hub. We welcome investors in our potential investment areas including agriculture, tourism, logistics and energy sector including oil and gas exploration in Zanzibar, different power sources such as wind and water. ICT is also another area posing potential investment for the EU,” noted Tanzania’s Vice President Phillip Isdor Mpango.

The EU-Tanzanian Business Forum brought together high-level dignitaries and businesses from across the host country and various European countries. The forum was jointly organised by the European Union in Tanzania, together with the government of Tanzania, in cooperation with the EU member states and the Tanzanian private sector.

“Tanzania values very highly the good and cooperative relations we have had with the European Union since the 1970s and the support we have been getting from EU to complement our development efforts,” said Dr Mpango.

Data shows that Tanzania has so far received support and investment from the EU to a tune of more than $1 billion.

“But special mention goes to the vaccine support we received from EU which was much needed,” added Dr Mpango

Tanzania signed three investment deals with European Union institutions including an MoU on air service agreement between France and the Tanzania Civil Aviation Agency.

The air service agreement will allow the airlines of both countries to increase the number of flights between them.

Air France will benefit from it as it plans to increase the number of flights to Tanzania with the incoming inauguration of a direct flight between Dar es Salaam and Paris in June 2023.

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The European Union, through the Europe Investment Bank, has entered into an investment deal with Tanzania that will unlock over $574.4 million worth new business investments in women-led businesses and […]

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UAE firms troop into Tanzania after President Samia’s visit

Two more United Arab Emirates companies have made in-roads into Tanzania, following President Samia Suluhu’s trip to the Gulf country last year to seek business.

On February 6, the Tanzania Forest Services Agency (TFS) and UAE-based Blue Carbon LCC announced a joint environmental conservation programme to promote sustainable forest management practices while reducing greenhouse gas emissions.

It came after state-owned Emirates National Oil Company (ENOC) on January 27 signed a memorandum of understanding with Tanzania’s Ministry of Energy to invest up to $500 million in expanding the national imports gateway for fuel products and related storage facilities.

Presidential seal

President Samia’s administration has made the UAE a top target of its international economic diplomacy agenda since she assumed power two years ago. During an official visit to Dubai in February 2022, she made a personal appearance at the Expo Dubai festival where 36 bilateral MoUs were signed between Tanzania and UAE authorities for total investments of $7.49 billion.

The deals involved energy, agriculture, tourism, infrastructure and transport technology sectors. Tangible results of that trip have so far included a $500 million deal for Dubai-based logistics firm DP World to improve ICT and other infrastructural systems at Tanzania’s seaports and another agreement for UAE renewable energy firm Masdar to oversee the development of up to 2GW of renewable energy in Tanzania.

Oil terminal project

Tanzania also reached a formal agreement with UAE authorities in September last year to remove double taxation hurdles in mutual trade, investment and social interactions including labour payments, education exchanges (student bursaries) and sports matters.

A preliminary MoU for the latest oil terminal project was signed between ENOC Group CEO Saif Humaid Al Falasi and Tanzania’s Energy Minister January Makamba in Dodoma on January 27 and ministry officials later said formal negotiations would start “soon” on the project requirements and a detailed implementation framework.

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Two more United Arab Emirates companies have made in-roads into Tanzania, following President Samia Suluhu’s trip to the Gulf country last year to seek business. On February 6, the Tanzania […]

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Ugandan exports to Rwanda flourish on food supplies, raw materials

Rwanda’s appetite for imports from Ugandan grew to a record $60.55 million in the fourth quarter of 2022 from $15.64 million in the first nine months to September as Kigali turned to her regional neighbours for food supplies and raw materials.

Latest Bank of Uganda trading data shows exports, which had stagnated in single-digit millions of dollars between January and September 2022, grew to an average of $20 million monthly between October-December.  

Ugandan economist Fred Muhumuza attributed the growth to lower harvests in Rwanda that necessitated food imports.

“The importer … has to import a lot of food to restock. In future, we might see export levels reduce,” he told local media in Uganda.

Highlights published in the East African Cross Border Trade Bulletin by the Food Security and Nutrition Working Group (FSNWG) show that Rwandan authorities were under pressure to provide adequate food and also ensure sufficient supply for raw material, especially for breweries.

Goods traded

The FSNWG data shows Rwanda breweries imported 3,991 tonnes of sorghum from Uganda, 2,065 tonnes of maize and 2,866 tonnes of rice from Tanzania.

However, small scale cross-border traders – who used to dominate the informal trade business – complain they have not fully benefited from the reopening of the border in January last year.

Previously most of the informal trade at the Gatuna-Katuna border was in foodstuff such as maize flour, rice, Irish potatoes and beans. But the traders say this has stopped because Rwanda now demands for licences to bring in goods.

The licence requirement has also drawn complaints from bigger exporters.

Kanakulya Mulondo, the secretary for security, environment and mediation at the Kampala City Traders Association, said traders remain sceptical about exporting to Rwanda.

“We remain cagey about the Kigali export market because our push to be compensated for losses when the border was closed in 2019 fell on deaf ears,” he said.

The association had sued Rwanda at the East African Court of Justice for closing the border. The court ruled that the closure of the border and restriction of Rwandan nationals from accessing Uganda was in violation of the East African Treaty rules of free movement across member states.

DR Congo

The association says some Ugandan traders now prefer markets in DR Congo, South Sudan and Burundi. Bank of Uganda data shows that in the region, DR Congo remains the biggest informal export market for Uganda, closely followed by Kenya, South Sudan, Tanzania and Rwanda respectively.

Before the closure of the border in 2019, Ugandan exports to Rwanda – predominantly cement and food – totalled more than $211m in 2018, according to World Bank figures, while Rwanda exported $13m worth of goods to Uganda.

John Lwere, the exports executive at the Uganda Export Promotion Board, said trade was just picking up after the reopening of the border a year ago.

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Rwanda’s appetite for imports from Ugandan grew to a record $60.55 million in the fourth quarter of 2022 from $15.64 million in the first nine months to September as Kigali […]

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Africa getting little of $382bn renewable energy projects cash

Renewable energy projects attracted investments worth $382 billion globally in 2021, according to the International Energy Agency, but only $13 billion, or three percent of that, funded projects in Africa, highlighting a major funding gap foiling green transition and energy access on the continent.

With only 48 percent of African population having access to electricity, experts say investment in the continent’s renewable energy sector could both leapfrog the green transition efforts and connect more people to the grid.

Despite this, it has been established that investors with the capacity to invest in this sector shy away from the African market, a problem which brought together several stakeholders in the energy sector in Nairobi this week, attempting to change the narrative.

At a forum convened by the World Resources Institute (WRI) and the Children’s Investment Fund Foundation, participants drawn from the private sector, government, civil society organisations from Kenya and beyond deliberated on how investors can be mobilised to support Africa’s green transition through investments.

Reluctant to invest

Rebekah Shirley, WRI’s deputy regional director told the forum that private sector players are reluctant to invest in this sector, creating a funding gap of billions of dollars every year, despite the wide access gap.

“Even in other regions of the world where energy access is still a challenge like the Southeast Asia, we don’t see funding gaps of this magnitude, why Africa?” she posed.

Alex Wachira, principal secretary for the state department of energy, said that there is a list of challenges contributing to the energy gap, even in Kenya, which slow down economic growth in the country.

“We (the Ministry of Energy) are aware of the many challenges attributed to this, including limited incentives to attract private sector investors,” he said in a speech read by a representative.

Lack of political will

Another challenge identified is the lack of political will for appropriate legislation and implementation of policies to incentivise private sector investment in renewable energy projects, especially in rural areas.

For instance, only two of Kenya’s 47 counties have drafted energy plans that would give way to appropriate energy policies, deprioritising renewable energy projects at the local governments.

This, according to Eva Sawe – a senior programmes officer at the Council of Governors, is because lawmakers have not been sensitised on why renewable energy projects should be a priority.

But even with the right policies and incentives to support private sector investment in renewable energy on the continent, investors said there is a still a shortage of talent in Africa limiting the production capacity of companies investing in the sector.

“If an investor is coming into the country to do any renewable energy project, the first hurdle they will face is the lack of skilled people,” said Andrew Amadi, the chief executive of Kenya Renewable Energy Association.

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Renewable energy projects attracted investments worth $382 billion globally in 2021, according to the International Energy Agency, but only $13 billion, or three percent of that, funded projects in Africa, […]

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Rwanda expects GMO responsibility as African scientists back Kenya

Rwanda says it is counting on Kenya to be a responsible member of the region by ensuring transparent information is shared with neighbouring EAC countries on all genetically modified (GM) seeds and food products imported.

Kigali’s sentiments must have come as a relief to the Kenyan government, coming on the back of recent support by a scientific lobby of African scientists who this week said genetically modified organisms (GMOs) are safe for human consumption and the environment.

There is public debate in Kenya after the government in September lifted a ban on GMO foods and seeds, prompting a suit that resulted in a temporary court order stopping importation.

Now Rwandan authorities have jumped into the fray, saying they want Kenya to abide by international laws such as the Cartagena Protocol to ensure others are not harmed by its actions on GMOs.

The Rwanda Inspectorate, Competition and Consumer Protection Authority (RICA) said it expects Nairobi to keep the imported products within its borders.

Be transparent

“In this regard, testing is not a very important aspect as countries are requested, under the Cartagena Protocol, to which both Kenya and Rwanda are signatories, to be transparent and to share information on transboundary movement of GMO. Both countries have competent authorities that have the mandate to implement provisions of the protocol,” the authority said.

“We believe that this particular trade will be handled through the existing regulatory framework and through the existing good collaboration between the two parties.”

The Cartagena Protocol on Biosafety to the Convention on Biological Diversity, passed in 2003 is the basic international law on biosafety, allowing countries to restrict importation of GMOs if they believe there is insufficient evidence on their safety. Countries routinely require GMO foods to be labelled as such and retain rights to restrict biosafety technologies that could harm public health.

Porous EAC borders

Tanzania, Uganda and Rwanda have raised concerns over potential infiltration of banned GMO products through the porous EAC borders, with Burundi warning that it had neither the capacity nor the technology to test for GMOs.

Rwanda said it uses a national reference laboratory for testing but does not have a GMO policy in place. Officials say this complicates regulation and gatekeeping of GMO products.

But the lobby of African scientists backing Kenya on GMOs has sought to re-assure Kenyans.

“We would like to assure Kenyans that GMO products are safe,” said Prof Ratemo Michieka, the chair of the Kenya National Academy of Sciences, at the close of a three-day conference for scientists under the Network of African Science Academies (Nasac).

The scientists recently met and discussed GMOs as a solution to the growing hunger problem in Africa at the African Science Academies 2022 held in Nairobi from November 28-30.

Enhance research

The scientists called on governments to put in place structures to enhance research and collaboration on the continent.

“Many African countries are facing declining agricultural productivity and food insecurity. The discussions during the three-day conference were focused on the latest ideas and appropriate solutions and technologies that come and enhance sustainable agriculture and food systems in Africa,” said Prof Nobert Hounkonnou, Nasac president.

In Kenya, trials on GMOs have been ongoing in laboratories and in research fields throughout the decade despite the ban.

“GMO plants have no danger whatsoever to the indigenous plants,” argued Prof Michieka.

“They can grow side by side or even mixed, with no impact at all.”

Africa lags behind in the adoption of modern food production technologies and especially GMOs. Only a handful of countries on the continent have commercialised GM crops at various levels, namely South Africa, Sudan, Egypt and Burkina Faso.

“African countries have the scientific infrastructure and the human capacity to carry out the research and give the right advice. We can’t just say don’t allow it without scientific evidence, yet we have a worsening food situation in the region,” said Prof Michieka.

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Kenya’s tea ‘chokes’ under unclear policy, clashing roles

Kenya’s lucrative tea sector is running on contradictory policies, with players clashing on roles.

The East African Tea Trade Association (EATTA) wants some of the policies addressed through a law that will clarify roles and relationships between management agencies, growers, and factory boards, to enhance accountability.

EATTA chairperson Arthur Sewe said the clash in roles can be resolved by adopting the Draft National Tea Policy (2018) to guide on procedures.

“The government initiated a draft National Tea Policy in 2013. However, arising from delay approving it, EATTA contracted a consultant to review it, identify any gaps and suggest remedies. It should be implemented immediately,” said Mr Sewe.

“The key issues to be addressed are low productivity, insufficient development and transfer of technology, high cost of inputs, multiple taxation regime and poor governance,” he proposed this week.

Extreme weather events

Since September, Kenya’s tea production has dropped significantly due to erratic weather, according to records at the Mombasa Tea Auction.

Data from EATTA indicated, a dip in the volume of tea offered by over half a million kilogrammes in October and projected that production is likely to drop further in the coming years.

The lobby blames climate change that had affected small-scale farmers’ livelihoods. According to a Food and Agriculture Organisation report released in May, Kenya’s temperature was expected to rise by 2.5 degrees Celsius between 2000 and 2050.

A new policy, the association argues, would set guidelines on sustainable farming practices to help farmers and small- and mid-sized enterprises in the agricultural sector adapt to the change in weather patterns.

These include selection of the most suitable areas for tea growing, crop diversification in low production areas, efficient management of soil and water resources, catchment protection, soil water conservation and rainwater harvesting.

For years Kenya basked under the optimal climate for tea growing comprising tropical, red volcanic soils, sunny days and stable rainfall.

Other major tea-producers India, Sri Lanka and China also face rising temperatures and extreme weather events that affect production.

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Kenya’s lucrative tea sector is running on contradictory policies, with players clashing on roles. The East African Tea Trade Association (EATTA) wants some of the policies addressed through a law […]

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EAC member states not ready yet for single currency rollout

East African Community member states will have to wait longer for a monetary union. A taskforce to look into the matter has proposed to delay the implementation of the East African Monetary Union (EAMU) until 2031 from initial date of 2024, saying it is too soon considering members have not attained all requirements.

The proposed delay is an indictment on the members’ commitment to achieve EAMU, a key pillar of integration.

The EAMU is the third pillar of the EAC, others being the Customs Union and the Common Markets Protocol. The region, under EAMU, is expected to adopt a single currency by 2024.

“We have a roadmap that was supposed to be implemented between 2013, when the Monetary Union protocol was signed, and 2024. But we did not manage to implement most of the activities in that roadmap,” said Dr Pantaleo Kessy, Principal Economist, EAC Secretariat.

“According to the roadmap, the EAC convergence criteria were to be attained by 2021 and be maintained for three years in the run-up to the establishment of the Monetary Union in 2024.”

Behind schedule

However, going through each activity, shows that all the partner states – Burundi, Kenya, Uganda, Tanzania, Rwanda and South Sudan – are behind schedule.

According to the EAMU roadmap, four broad prerequisites need to be achieved ahead of the establishment of the Monetary Union and the first one includes the full implementation of the Customs Union and Common Market protocols.

However, both the Customs Union and Common Market Protocols are currently under implementation. Although much progress has been made, the protocols are not yet fully implemented.

“Partner states are at different levels of implementation and that partly slows the implementation of the EAC third pillar, the EAMU,” said Dr Kevit Desai, Principal Secretary at the EAC and Regional Ministry of Kenya.

Second, not all partner states have attained the four macroeconomic convergence criteria, for the implementation of the monetary union.

Headline inflation

These include ceilings on headline inflation of 8 percent; reserve cover of 4.5-month import; on overall deficit of 3 percent of GDP; and on gross public debt of 50 percent of GDP.

“Attainment of these criteria has been challenging to most Partner States, partly due to increased demand for infrastructure development and spending to mitigate the economic impact of the Covid-19 pandemic,” Dr Kessy explained.

“Kenya, Uganda, Tanzania and Rwanda attained the headline inflation target of less than 8 percent in 2021. But only three Partner States attained the official foreign exchange reserve target of 4.5 months of imports.”

Long past deadline

Further, three Partner States attained the debt to GDP target of less than 50 percent; while none was able to attain the fiscal deficit criterion of 3 percent of GDP (including grants).

The EAC is yet to put in place institutions that will carry out the mandate and implement the EAMU protocol.

The taskforce is made up of financial experts from EAC’s partner states’ ministries of Finance, Central Banks, capital markets, insurance and pension firms.

The East African Monetary Institute is one of the institutions expected to carry out the preparatory work for the One Single currency under EAMU which was planned to be in place by 2024.

The Council of Ministers designated July 1, 2021, as the date for the coming into effect of the EAMI, the precursor to the East African Central Bank.

But the deadline is long past.

The other three institutions proposed under the EAMU include the EAC Financial Services Commission; the EAC Surveillance, Compliance and Enforcement Commission; and the EAC Statistics Commission. Establishment of these institutions is lagging behind, partly due to lack of resources.

The fourth criteria that is still lacking behind is the harmonisation of Policies and legal frameworks to support implementation of the EAMU Protocol.

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Air Tanzania plane held in the Netherlands in row over land title

A plane belonging to Air Tanzania Company Limited (ATCL) has been seized in the Netherlands after a Swedish firm won a $165 million award against Tanzania due to a revoked land title in the Bagamoyo sugar project.

It is still not clear exactly which particular aircraft on ATCL’s fleet has been seized and under what circumstances.

However, on Wednesday, the government dispelled fears of the possible attachment of an ATCL plane by a Dutch court, with the Attorney-General Eliezer Feleshi saying everything was under control.

Dr Feleshi confirmed to The Citizen that a Swedish firm that won a $165 million award against Tanzania had persuaded the court to uphold the attachment of the aircraft despite the International Centre for Settlement of Investment Disputes (ICSID) having issued a stay of execution, pending annulment proceedings.

“It’s true that they went to court in the Netherlands after we had successfully appealed to the ICSID for a stay of execution. Everything is under control,” he said.

Appealed court’s decision

Dr Feleshi added that the government had already appealed against the Dutch court’s decision but declined to offer further details.

“I can’t disclose further details. Let’s be patient as the matter is in court.”

Tanzania has argued that the attachment is unlawful because it was obtained a day after the state petitioned the ICSID to annul EcoDevelopment’s award.

But the judge reasoned that the ICSID’s provisional stay of execution of the award only took effect on the date the institution registered the state’s annulment request.

EcoDevelopment, which is owned by 18 Swedish nationals, brought its ICSID claim in 2017 under the Sweden-Tanzania bilateral investment treaty.

That came after the government decided to unilaterally revoke the land title for a sugar project in Bagamoyo.

The case commenced at the ICSID, a World Bank organ based in Washington.

The land title revocation was a major blow to the Swedish company, which had for over ten years worked to develop the project and invested $52 million in a ready-to-go project for local production of sugar, renewable electricity and fuel.

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Kenya anti-tobacco crusaders fault President Ruto’s South Korea deal

A group of advocates of tobacco use control have denounced the deal Kenya’s President William Ruto made with South Korea to enhance tobacco trade, saying it will put more Kenyans at risk of diseases linked to the farming and use of the product.

The Kenya Tobacco Control Alliance (Ketca), an umbrella body of civil society organisations fighting tobacco use in the country, said the trade deal threatens to undo the progress made in reducing tobacco farming in the country.

Ketca said the agreement between Nairobi and Seoul is not only detrimental to the health of Kenyans, but also violates the Tobacco Control Act of 2007 which “commits the government to continually phase out tobacco farming in Kenya”.

“We ask the government to immediately cancel aspects of the Kenya-South Korea agreement that touch on tobacco,” Thomas Lindi, Ketca’s chief executive, said at a press conference in Nairobi on Wednesday.

President Ruto, after his first official visit to Seoul last week, announced that Kenya “commits to work together [with South Korea] in deepening and strengthening bilateral trade – especially in tea, coffee, and tobacco,” a move contradicting the very government’s efforts to phase out tobacco farming in the country.

Major problem

“We have a major problem with this because it means Kenya will try and increase tobacco planting in the country,” Mr Lindi said.

In March 2022, the ministry of agriculture partnered with United Nations agencies – World Health Organisation, the World Food Programme and the Agriculture and Food Organisation – to initiate the ‘Tobacco-free farms’ project to help farmers shift from tobacco-farming.

The programme, piloted in Migori County, western Kenya, sought to provide farmers dependent on tobacco farming with seeds, fertilisers, and ready markets to help them shift to more sustainable crops such as maize and beans.

“The project is a major step towards attaining a healthy nation and the Ministry of Health fully supports such ventures,” said former Health minister Mutahi Kagwe during the launch of the programme.

His Agriculture counterpart at the time, Mr Peter Munya, said the project would go a long way in boosting the nation’s food security, in addition to keeping farmers healthy.

Ketca praised the move and encouraged a speedy expansion to other tobacco-growing regions, saying the government was finally honouring the requirements of the Tobacco Control Act.

Speaking to The EastAfrican in March, Ketca Chairman Joel Gitari said “Tobacco growing farmers must be given the necessary support to switch to alternative crops that have the potential to improve their health and livelihoods as well as reduce the supply of tobacco”.

“Every effort made to reduce tobacco use is good for the environment, the economy, the future and the country in general.”

Now, noting that the project has been very successful in Migori, Mr Gitari says the agreement with Seoul could avert the gains made even in Migori and prevent the extension of the project to other tobacco-growing regions.

“The government should be focusing on such positive moves instead of engaging in retrogressive activities because whatever it is doing is illegal and we’re losing the gains that we’ve made,” he said on Wednesday.

Cause deaths

According to Ketca, tobacco use and farming will directly cause the deaths of more than 9,000 Kenyans by end 2022 and at least 40,000 others will be diagnosed with various forms of cancer.

“Numerous studies done in Kenya show tobacco farming is unprofitable, leaves farmers poor and sick,” Mr Lindi said.

A recent study by the University of Nairobi and the American Cancer Centre found that farmers in Migori, Busia, and Meru counties could earn on average Ksh80,000 ($697.47) more per acre from alternative crops like vegetables, grains and cereals, backing this claim.

According to the study, farmers in the tobacco-growing regions stuck to the crop because of “the structured supply chain of tobacco incentivises production” and due to lack of a ready market for the other crops.

The lobby now wants the government to completely discourage tobacco farming and use in the country by increasing excise duty on tobacco products, banning tobacco advertising and promoting health information and warnings against tobacco use.

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A group of advocates of tobacco use control have denounced the deal Kenya’s President William Ruto made with South Korea to enhance tobacco trade, saying it will put more Kenyans at […]

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EA pastoralists fault governments for slow pace of land reforms

Pastoralist communities across East Africa have faulted their governments for the slow pace of land reforms which they argue have adversely affect their livelihoods as the region battles climate change.

At the East Africa Indigenous Peoples’ Land Summit held in Nanyuki, Kenya, representatives from seven countries said that while various land reform programmes had been launched to enable pastoral communities own and manage natural resources, there was lack of political goodwill to complete the processes.

For instance, in Kenya, Uganda and Tanzania, the process of community land registration has been bogged down by a myriad of challenges, which the governments appear not keen to address.

Registration of communal land is meant to empower the pastoral communities in management of natural resources, including enabling them to transact business using the titles, or to seek compensation in case of compulsory acquisition by government for mega projects. When this is not done, it means the communities cannot have legitimate claims.

Land-related challenges

The summit is seeking to identify land-related challenges for indigenous peoples and to lobby continental bodies like the African Union for desirable land reforms.

The meeting brought together representatives of nomadic herders, agro-pastoralists, hunter-gatherer and fisher folks from Kenya, Tanzania, Uganda, Ethiopia, Rwanda Burundi and the Democratic Republic of Congo.

In Kenya, the National Land Commission (NLC) is sorting more than 3,000 historical land injustice claims.

“A good percentage of these claims emanate from what we can describe as indigenous populations,” said NLC Chairman Garshon Otachi.

He noted that most communities from arid and semi-arid areas are yet to benefit from the Community Land Registration Act 2016 that gives legal ownership to communities whose land has for years been held in trust by the government.

“Only about 10 percent of communal land has been registered under the new Act six years down the line. The enactment of the 2016 Land Act was a game-changer as it offered a pathway for the management and governance of customary and indigenous land in Kenya,” said Otachi.

Extremely slow

Gemechu Berhanu, a representative from the Oromo community in Ethiopia, complained that the process of registering communal land, which began in 2021, is extremely slow and as a result, most pastoral lands are not registered.

Hunters and gatherers from the Batwa community in Burundi and the DRC accused their respective governments of kicking them out of their ancestral forests without an alternative.

“We are a population of about 117,000 and traditionally we used to eke a living out of hunting animals, gathering honey and wild fruits and moulding pots… We are no longer able to access clay which is the raw material for moulding pots,” said Gervais Ndihokubwayo.

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Pastoralist communities across East Africa have faulted their governments for the slow pace of land reforms which they argue have adversely affect their livelihoods as the region battles climate change. […]

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Kenya Treasury says country has no room for fresh borrowing

Kenya’s National Treasury has doubled down on its efforts to swap the country’s short-term debt with longer-term issuances. 

This comes barely a week after it commenced a debt swap that will see Sh87.8 billion ($714.6 million) worth of short-term debt converted into long-term debt to ease the pressure it is experiencing from maturities. Last week, the Kenyan government floated its first switch bond since June 2020. 

Treasury Cabinet Secretary Njuguna Ndung’u said that Kenya has little wiggle room left for fresh borrowing, a situation that has been aggravated by the multiplicity of shocks to the economy, including the ongoing drought, effects of the Covid-19 pandemic and the Russia-Ukraine war.

“Right now, we don’t have headroom for accumulating debt, so in a sense, we have to go down into liability management. When you are buffeted by multiple shocks, the reaction is often to use the resources that you have or even borrow to overcome the crisis,” Prof Ndung’u said.

A fortnight ago, President William Ruto directed Treasury not to borrow from the domestic market at rates above 10 per cent. 

Awaiting growth data

Prof Ndung’u further stated that the targeted Sh300 billion ($2.4 billion) worth of budget cuts anticipated in the Ruto government’s debut Supplementary Budget have been calibrated to ensure that it does not derail the economy’s growth momentum.

According to a circular issued by the Treasury on November 7, addressed to all Cabinet secretaries and accounting officers, the Kenyan government is pursuing aggressive rationalisation of the recurrent expenditure for the current financial year. The areas earmarked for slashes include expenditure on foreign travel and training for the remaining three quarters of the current financial year.

Prof Ndung’u said Kenya might be grappling with a recession even as it awaits growth data for the third quarter of 2022 from the Kenya National Bureau of Statistics. The economy grew by 6.8 per cent and 5.2 per cent in the first and second quarters, respectively.

“The budget cuts were necessary to try and shift resources to needy areas. It is austerity measures to try and save lives. We have to look at what is essential and what is not essential. You cannot affect aggregate demand in times of recession and that is why the budget cuts were in areas that are not essential,” the CS said.

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Kenya’s National Treasury has doubled down on its efforts to swap the country’s short-term debt with longer-term issuances.  This comes barely a week after it commenced a debt swap that […]

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Reprieve for Rwanda as China cancels $7.1 million debt

China has offered Rwanda a $7.1 million debt relief or 50 million RMB Yuan on a loan used to build the 6.36-kilometre Masaka-Kabuga road under the Kigali urban road upgrading project.

According to a statement issued by Rwanda, the move is part of the Chinese government’s decision to cancel the outstanding interest-free loan in accordance with the agreement on economic and technical cooperation between the two countries.

“The two countries enjoy a healthy bilateral cooperation. This is evidenced by the substantial contribution of the Republic of China towards Rwanda’s development aspirations. The agreement we signed today cements this relationship,” Rwanda’s Minister for Finance and Economic Planning Uzziel Ndagijimana said on Monday after signing the debt cancellation agreement. China was represented by its ambassador to Rwanda Wang Xuekun.

Strong economic cooperation

Dr Ndagijimana acknowledged the strong economic cooperation between the two countries which has seen Rwanda benefit from China’s support in various sectors including infrastructure, energy, education and health.

China says the debt cancellation is part of the economic package announced by President Xi Jinping at the 8th Ministerial Conference of the Forum on China-Africa Cooperation.

“China hopes, by offering this financial support, to make a contribution to Rwanda’s all-round transformation and recovery from the malign impact of the Covid-19 pandemic. In the future, China will work with Rwanda for deeper practical cooperation in various fields under the Belt and Road Initiative framework to deliver more benefits to the two peoples,” Wang said in a statement.

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China has offered Rwanda a $7.1 million debt relief or 50 million RMB Yuan on a loan used to build the 6.36-kilometre Masaka-Kabuga road under the Kigali urban road upgrading […]

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Looming global recession sparks fear in East Africa region

East Africans are second-guessing what the projected global recession in 2023 could mean for them, given the International Monetary Fund says about a third of the world will be in recession, led by the globe’s largest economies including the US, China, and Europe.

The recent growth projections by the international financier puts East African countries’ prospects for this and next year better than the global average, but analysts say the region will not be spared from the coming recession.

According to the IMF’s World Economic Outlook report released last month, the global GDP growth rate will fall from six percent last year to 3.2 percent in 2022, further decelerating to 2.7 percent in 2023 as a result of disruptions caused by the eastern Europe conflict.

East Africa’s economy is, however, predicted to grow by averagely 5.2 percent this year, dropping from 6.4 percent last year, but is expected to accelerate to 5.6 percent next year, highlighting a better performance than the rest of the world.

Harder economic times

But despite this, economists and financial analysts say citizens will need to brace for harder economic times next year as the looming recession could result in mass job losses, pay cuts, and a general slump in economic activity disrupting livelihoods.

“Most of the global economies are rapidly headed towards recession and Kenya is no exception,” said Rufas Kamau, the lead markets analyst at Nairobi-based financial markets broker FXPesa.

According to Mr Kamau, Kenyans should take necessary actions to save the most they can right now to be able to stay financially stable in the event of pay cuts, and improve their work efficiency to reduce their chances of retrenchment.

“With October inflation hitting 9.59 percent and the CBK raising policy rates to 8.75 percent, the environment for economic growth becomes tougher for Kenyans as the cost of loans becomes more expensive and consumer budgets continue being suppressed by inflation,” Kamau told The EastAfrican.

“Access to credit is still tough for the SMEs as banks prefer investing in government bonds since they bear less risk and the highest returns of any asset class in the country.”

Hold on to cash

American billionaires Jeff Bezos and Elon Musk have also been very vocal lately of the looming recession, similarly advising people to hold on to their cash instead of spending on luxuries such as cars, television sets or refrigerators.

Ken Gichinga, the chief economist at Kenyan analytics firm Mentoria Economics, agrees that Nairobi and the rest of East Africa might slump into recession next year, but the effect won’t be as fast nor as vast as it will be in the more developed markets.

“The effect will be immediate in the more developed western countries which have a wider credit market, meaning that rising interest rates will impact more people and entities almost instantly,” Mr Gichinga told The EastAfrican.

“In East Africa, the dynamics are a little different. Many people won’t feel the pain of rising interest rates immediately because they don’t rely on credit and the impact won’t be immediate.”

The rising interest and inflation rates and job losses resulting from the recession in the west, Gichinga said, will eventually trickle down to the region ultimately causing “what will feel like a recession.”

Tread carefully

According to both Kamau and Gichinga, while there is no certainty that East Africa’s economy will fall into a recession next year, people should tread carefully with their finances as there isn’t a guarantee the economy will evade the coming global recession either.

Eyes are now on policymakers to employ the best tools to stabilise economies to minimise the impact pf the looming recession and help save jobs and livelihoods as the coming recession sparks fear.

Kristalina Georgieva, the IMF managing director said countries should try to get the right mix of monetary and fiscal policy measures to overcome the threats posed by the global financial conditions.

“With monetary policy stepping on the brakes, fiscal policy should not step on the accelerator,” Ms Georgieva said last week while speaking at the Asia-Pacific Economic Cooperation leaders’ summit. “We should be in a mode of alert, not alarm, and develop policies to address these risks.”

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Road toll charges remain a hurdle to EAC cross-border trade

Road tolls have again emerged as hurdles to smooth trade between East African Community member countries as each government charges its own fees on trucks moving into its territory.

The region’s business stakeholders are however optimistic that trade in the bloc will increase by 11 percent in 2022-2023 if toll fees and domestic taxes are harmonised to prevent distortion and create a level playing field for businesses.

“We are proposing that EAC partner states charge a uniform fee of $10 per 100km on all trucks the way Uganda does,” said John Kalisa, chief executive of the East African Business Council.

“Once collected, the amount should be used for the purpose for which it was intended — that is to repair and maintain the same roads,” he added. Tolls are usually implemented to help recoup the cost of road construction and maintenance, as well as finance other infrastructure projects.

The $10 charge that the EABC has proposed translates to close to $144 for the region, down from $500.

Flat rate

he anticipated $144 levy is the flat rate across the Common Market for Eastern and Southern Africa (Comesa).

EABC is reacting to complaints by importers who have highlighted the rising cost of doing business in the region occasioned by the varying charges in each member country even as normal cross border trade returns free of pandemic restrictions.

The reopening of the Katuna-Gatuna One Stop Border Post on January 31, 2022, for instance, has seen some 160 trucks cleared daily to cross between Uganda and Rwanda, paying at least Ush470 million ($125,735) in tax collections to Uganda per month. At least 1,000 people cross here daily too.

However, the two countries are charging different road tolls.

“Rwanda charges a fixed rate of $76 for small trucks and $152 for large trucks, while Uganda charges $10 per every 100km,” said Kalisa.

“Tanzania is charging more than $156 per truck, which is very expensive,” he added.

The same applies at the Mutukula border crossing between Tanzania and Rwanda where trucks are also charged different road tolls.

“As the business community in the region we are advocating for a common standardised fee because any variation distorts trade,” Kalisa said.

Most affected

He identified Uganda, Tanzania and Rwanda as some of the most affected EAC partner states where different toll fees are distorting intra-regional trade, which is still below 15 percent.

Tanzania — which serves as a gateway to the sea for its landlocked neighbours Uganda, Burundi, Rwanda, the Democratic Republic of Congo, Zambia and Malawi — is charging Ugandan cargo trucks $500 as fees for road repairs and maintenance.

Rwanda has also threatened to levy a similar amount on Tanzanian trucks coming through the Mutukula border crossing. The two countries are in discussion over the same.

“There is a need to harmonise road tolls across the region and we are glad that the EAC Secretariat and respective ministries have been tasked to hasten harmonisation of road toll fees in the region,” said Pascal Bizimana, commissioner general Rwanda Revenue Authority, when he held talks with the EABC last week.

Mid this year, Tanzania announced plans to cut road toll by about 71 percent on Uganda-bound cargo trucks, as part of an agreement reached at bilateral talks between Presidents Samia Suluhu Hassan and Yoweri Museveni.

However, the plans are yet to be effected.

Reduce costs

The harmonisation of the toll fee is expected to reduce the cost of doing business.

Transport and logistical barriers to regional trade are estimated to cost East African economies between 1.7 percent and 2.8 percent of gross domestic product every year.

Trade liberalisation and improvements to infrastructure will help reduce these costs, creating ease in doing business across the region and in turn benefitting consumers through lower prices.

The EAC has been tasked with harmonisation of toll fee on the Northern Corridor (1,700 km long) that begins at the Port of Mombasa and serves Kenya, Uganda, Rwanda, Burundi and Eastern DRC.

The Central Corridor (1,300 km long) begins at the Port of Dar es Salaam and serves Tanzania, Zambia, Rwanda, Burundi, Uganda and Eastern DRC.

The improved infrastructure is expected to have a large knockoff effect in poverty reduction in the region through trade-induced changes in prices while reduction in border delays and costs will cut the overall cost of investment for businesses.

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Road tolls have again emerged as hurdles to smooth trade between East African Community member countries as each government charges its own fees on trucks moving into its territory. The […]

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Kenya Airways targets corporate travel in new Ghana-Senegal flights

Kenyan flag carrier Kenya Airways has announced a new service linking the capitals of Ghana and Senegal starting this December 11. This is the first sign that African governments are serious in implementing the Single African Air Transport Market (SAATM).

The twice weekly service that complements the airlines’ existing schedule to the two destinations will increase options between Nairobi and Accra to nine flights a week and four to Dakar.

This comes hot on the heels of a new Nairobi-Mombasa-Dubai service, also to be launched this December, reflecting KQ’s push to get its growth plans off the ground following the two-year Covid-19 pandemic disruption.

The ease with which the Kenyan carrier will be able to pick intermediate traffic between Accra and Dakar without a reciprocal service by a Ghanaian airline to Kenya signals the beginning of a long-awaited era of open skies in Africa.

Pilot scheme

Kenya and Ghana were among the 15 African states that last week in Dakar signed up to pilot a scheme to test operation of air services under SAATM. Under existing restrictions such flights would operate under fifth-freedom rights on terms agreed on in a bilateral air services agreement.

According to Julius Thairu, Kenya Airways chief commercial and customer officer, the new connection “will offer our guests more travel and connectivity options within West Africa. Strategically, the bigger picture is to support the Single African Air Transport Market and the African Continental Free Trade Area, which are key pillars for Africa’s growth, by growing and deepening our network connections within the continent.”

KQ hopes to tap into existing demand from corporate travellers, traders as well as leisure travellers between Ghana and Senegal to support the service, which will be the first direct connection between the two west African capitals.

The proposed flights will be available twice a week. The outbound leg (KQ514) will originate in Nairobi at 21.30 local time on Tuesdays and Sundays, arriving in Accra at 12.10 local time. The leg to Dakar will commence 01.10 arriving at 04.15. The return flight KQ 515 will depart Dakar at 05.15 local time, and make one-hour a stop in Accra.

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Kenyan flag carrier Kenya Airways has announced a new service linking the capitals of Ghana and Senegal starting this December 11. This is the first sign that African governments are […]

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Kenyan court quashes law allowing home buying with pension savings

The Kenyan government’s plan to accelerate its affordable housing agenda has suffered a setback in court after a judge quashed a law that allows members of retirement schemes to use a portion of their savings to purchase residential houses.

The court also stopped the implementation or enforcement of the amendments introduced to the Retirement Benefits Act No. 3 of 1997, which allowed the retirement benefits industry to help fill the housing gap.

Justice Anthony Ndung’u found that the amendment to the law was achieved through an irregular and flawed parliamentary process because MPs failed to allow public participation in the enactment process.

The amendment was introduced through the Tax Laws Amendment Act 2020, which came into effect on April 25, 2020, and the objective was to cure the large housing gap.

Boost home ownership

The Kenyan government’s aim in amending the law was to boost home ownership and lift the sluggish property market by enabling members of retirement schemes to purchase and own homes using their savings.

Changes to pension laws were also meant to make it easier for individuals to buy their first homes given that most Kenyan households are unable to raise the minimum house purchase deposit or afford the typical monthly mortgage payments.

To bring the amended law into force, former Treasury Cabinet Secretary Ukur Yatani published the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 showing the rules and limits for accessing pension savings for home purchase. The regulations were published on September 14, 2020.

Pensioners were allowed to use up to Sh7 million ($57,000) or a maximum of 40 percent of their retirement savings to buy a home from an institution or real estate investors.

An institution was defined in the regulations to include banks, mortgage or financial institutions, building societies, microfinance institutions, the National Housing Corporation, institutions approved by the Retirement Benefits Authority or any other entity offering a residential house for sale.

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Uganda seeks Kenya partnership in deal to boost tourist numbers

Uganda’s tourism players are reaching out to Kenya in a controversial bid to help bridge market access challenges for Kampala’s hospitality offers.

The players in Kampala see Kenya’s coastal exposure to the world as a starting point where tourists arriving in Kenya can go on to visit Uganda on the same visa while using Uganda Airlines as a connecting carrier.

But that could bring new threats to Kenya’s own local sites, as well as affect market share for Kenya Airways, which has for years dominated the Kenya-Uganda route.

Mutual benefit

But if this plan works, the proponents argue, Kenya and Uganda will mutually benefit, with Uganda profiting from Kenya’s networks to attract visitors. Kenya in the meanwhile will have its tourists visit Ugandan sites at a discounted price, which stakeholders say could break monotony for repeat clients who have explored Kenya.

Alex Tunoi, the regional manager in charge of domestic and Africa tourism at the Kenya Tourism Board (KTB), said they are aware of the proposed deal, but downplayed its potential to eat Kenya’s lunch.

“East Africa market has great tourism potential for Kenya; with a population of over 200 million, a growing middle class, improved infrastructure and relaxation of travel restrictions. KTB is focused on growing arrivals from the region,” he told The EastAfrican.

“Investment in these markets is bearing fruit with both Uganda and Tanzania emerging among top 10 key sources markets for the destination.”

Lucrative packages

According to the Uganda Tourism Board (UTB) Kampala will offer lucrative packages to tourists arriving at Kenya’s coastal sites to explore its natural, adventure, leisure, business and cultural attractions.

Uganda intends to balance trade with Kenya by working with coastal tourism stakeholders to tap into Kenya’s booming beach tourism.

The first package is set to go online later this year after deliberations from a conference between Uganda and Kenyan on November 17.

“The partnership will ensure thousands of tourists visiting either Kenya or Uganda move freely between the two countries. The tourists can have breakfast at the beach and lunch in a safari in Uganda,” said Paul Mukumbya, Uganda’s Consul-General in Mombasa.

“The November conference in Mombasa will explore Uganda, ‘the Pearl of Africa,’ to give overview of the tourism attractions as well as specifying the investment opportunities in the tourism sector in Uganda and Kenya,” he said.

Eased travel requirements

The two countries are banking on eased regional travel requirements for EAC citizens to improve the balance of trade by jointly promoting beaches and parks in the region.

Citizens of the two countries can use their national identity cards to cross borders while international tourists will use the East Africa single visa to tour the two destinations.

Besides, both countries belong to the one-tourism visa programme that also includes Rwanda. Tourists arriving in one country can use the same tourist visa to cross to the other.

The challenge in the past has been the transportation connectivity.

The plan now is to use Uganda Airlines to connect tourists from Mombasa to Entebbe but once Kenya Airways starts direct flights from the coastal city, Kenya Coast Tourist Association chairman Victor Shitakha says people will have more options.

Packages for bus trips

Uganda Airlines flies between Mombasa and Entebbe three times a week. However, officials say other airlines will not be locked out and they will go as far as selling packages for bus trips.

“The move will create networks and synergies and we are not in competition but we complement each other, where we shall come up with packages marketed together [and] sell both safari and beaches as one package. We are working with Kenya Tourism Board to make it happen,” said Mr Shitakha.

Kenya remains Uganda’s biggest source market for tourists in the region, accounting for 29 per cent of total arrivals in 2018, the highest figure reported before the Covid-19 pandemic, according to figures by the Tourism Research Institute.

Rising numbers

At least 95,000 Kenyans visit Uganda every three months, according to the Ugandan Consulate in Mombasa. It expects this figure to rise.

Last year, Kenya received 870,465 tourists compared to 567,848 in 2020, with the US leading as the major tourist source with 136,981 arrivals, followed by Uganda (80,067), Tanzania (74,051), the UK (53,264) and India with 42,159 visitors.

Before the pandemic, Uganda received over 1.5 million tourists in 2019 and registered over 512,000 travellers in 2020. However, the country’s tourism industry is poised for recovery with renewed emphasis on intra-African travel market as a key marketing strategy.

In 2019, the Tourism sector contributed 7.7 per cent of Uganda’s gross domestic product and created over 667,000 jobs.

Tourism data from 2019 shows that its top three Africa source markets include Rwanda (32 per cent), Kenya (24 per cent) and Tanzania at six per cent.

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Uganda’s tourism players are reaching out to Kenya in a controversial bid to help bridge market access challenges for Kampala’s hospitality offers. The players in Kampala see Kenya’s coastal exposure […]

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Kenya’s central bank directs lenders to forego half of $246 million digital loans

At least 4.2 million Kenyans who failed to pay Ksh30 billion ($246 million) they borrowed from banks, microfinance and mortgage finance companies digitally have been handed relief, after the Central Bank of Kenya (CBK) rolled out a framework to slash the burden by half.

The CBK on Monday said the credit repair framework, to be undertaken by commercial and microfinance banks, and mortgage finance companies until the end of May 2023, will see the lenders forego at least Ksh15 billion ($123m) the borrowers owe them as they discount the loans by 50 percent.

“Through the framework, the institutions will provide a discount of at least 50 percent of the non-performing digital loans outstanding as at end of October 2022, and update the borrowers credit standing from non-performing to performing.

“The institution will then enter into a repayment plan with the borrowers for a period of up to May 31, 2023, for the balance of the loan. Upon expiry of the framework, the credit standing of the borrowers with respect to these loans will depend on their repayment performance during the six-month period,” the CBK stated.

The CBK said the objective of the framework is to improve the credit standing of mobile phones digital borrowers who had been reported to Credit Reference Bureaus (CRBs), for failing to service loans they borrowed using mobile phones.

It covers all loans with a repayment period of 30 days and below that were listed as non-performing by end of October 2022.

“It is anticipated that the framework will enable over 4.2 million mobile phone digital borrowers, adversely listed with CRBs, to repair their credit standing. The total value is approximately Ksh30 billion, equivalent to 0.8 percent of the gross banking sector loan portfolio of Ksh3.6 trillion ($29 billion) at end of October 2022,” the financial services sector regulator stated.

The CBK said most of the affected borrowers were individuals and small businesses that were heavily impacted by the Covid-19 pandemic, which increased their inability to pay after they lost jobs and businesses.

“The adverse effects of the pandemic continue to linger for the covered borrowers. Accordingly, the framework is expected to enable this segment of borrowers to access credit and other financial services as they rebuild their lives and livelihoods,” the CBK stated.

The framework will expire on May 31, 2023, and meanwhile, the lenders have been asked to contact the borrowers and provide them with further details of the framework.

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At least 4.2 million Kenyans who failed to pay Ksh30 billion ($246 million) they borrowed from banks, microfinance and mortgage finance companies digitally have been handed relief, after the Central […]

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KCB floats first Islamic bond worth $4.4 million in Tanzania

KCB Bank Tanzania has floated its first Islamic bond worth Tsh10 billion ($4.4 million) to fund its Sahl banking asset portfolio.

The Sharia-compliant paper was opened on November 9 and closes on December 5.

“KCB Fursa Sukuk provides opportunities for Tanzanian and non-Tanzanian individuals, retailers, corporations and institutions to invest in the capital markets for three years at an expected return of 8.75 per cent per annum, quarterly,” KCB Tanzania managing director Cosmas Kimaro said in a statement.

The minimum initiation investment is set at Tsh500,000 (about $218).

The bank will list the paper on the Dar es Salaam Stock Exchange after the ongoing initial public offer.

KCB joins NMB Bank and the National Bank of Commerce in offering bonds this year.

NMB floated its Tsh25 billion ($10.9 million) Jasiri bond to finance women-led businesses, with NBC’s Twiga bond targeting to raise Tsh300 billion ($131 million) for funding small and medium enterprises.

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KCB Bank Tanzania has floated its first Islamic bond worth Tsh10 billion ($4.4 million) to fund its Sahl banking asset portfolio. The Sharia-compliant paper was opened on November 9 and […]

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Kenyans’ visa-free stay in S. Africa comes with costs if one overstays

Kenyans planning to travel to South Africa will from January next year enjoy a visa-free stay of up to 90 days per calendar year, but those who overstay their welcome, or enter illegally will pay a huge penalty.

On Wednesday, Kenyan President William Ruto and his South African counterpart Cyril Ramaphosa witnessed an agreement that could end decades of complaints from Nairobi on immigration policies by South Africa.

It means that Kenyans will no longer need to apply for e-visas or regular visas before travelling to South Africa for business or tourism. The tradition has been that Kenyans apply for a ‘free’ visa from an agent of the South African High Commission who charges an ‘application fee’ to handle the paperwork. The visa often comes out after four working days.

With the new agreement, all Kenyans will need is an invitation and return ticket, as well as proof of vaccination for yellow fever and Covid-19; and proof of financial ability to stay in South Africa during the intended duration for tourists.

“This has been a challenge that has been with us for many years. Under the new dispensation, we can build a greater relationship,” said President William Ruto at a joint press conference in Nairobi. His South African counterpart said the deal could take business and tourism “to greater heights.”

Deportation costs

But there is a catch: Each country will bear the cost of deporting their nationals caught overstaying. This means that a Kenyan overstaying in South Africa or caught entering illegally will be returned at the cost of Nairobi. In essence, officials said this will mean the travel filters between the two countries will be stringent, sieving out illegal immigrants, criminal suspects and all those with no paperwork taking advantage of the system.

“People who abuse the system…don’t deserve to be in South Africa, and they don’t deserve to be in Kenya,” President Ruto added.

“This agreement will be implemented to ensure the bad elements that try to infiltrate our countries are dealt with firmly and decisively.”

Age-old complaint

South Africa, by easing the visa rules on Kenya, is merely responding to an age-old complaint. And President Ramaphosa’s predecessors often dodged the bullet, accusing Kenya of being a conduit for illegal migrants, mainly from Ethiopia and Somalia. But Ramaphosa’s regime has tried to ease things, including allowing those on student visas to renew their stays while still in south Africa and ending the need to travel back home for the same.

Ramaphosa also allowed Kenyans to transit through South African airports without a transit visa, but as long as they do not leave the airport. In the past, one needed a transit visa regardless of whether he or she would leave the airport or not. Until January next year, however, Kenyans will still need transit visas if heading to neighbouring countries via South Africa by land.

President Ramaphosa described the new ties as based on a “wonderful foundation that exists” between Nairobi and Pretoria.

Implemented fully

“We are committed to ensure that the agreements that we have signed now and in the past will be implemented fully,” he said before describing the visa issues as “thorny”.

“Our officials will speed up the processes to implement it. This dispensation will be available to Kenyans over a 90-day period in a given year, meaning that, yes, you can use the 90 days, ten days, 20 days or whatever. Kenyans will have a full 90 days to be able to visit south Africa and we would be able to review this and get reports from our ministers within a year and see how this is functioning,” he explained.

It means Kenyans must ensure their stay in South Africa does not exceed 90 days per year, cumulatively, to qualify for visa free stay.

“This will also be underpinned by other processes that we have agreed can take place: closer monitoring of the implementation process and also be able to have a return policy of those elements that would be undesirable to be able to be returned to Kenya.

“We are going to be monitoring this much more closely and we are setting in place various mechanisms to make sure that what we have agreed to is adhered to and that no one takes advantage of the agreement.”

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Kenyans planning to travel to South Africa will from January next year enjoy a visa-free stay of up to 90 days per calendar year, but those who overstay their welcome, […]

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Kenya defers $699m loan repayments as debt pressure high

Kenya failed to meet KSh84.6 billion ($695.4 million) debt repayment obligations in the year to June due to a cash crunch and instead carried over the payments to the current fiscal year.

The public debt rose to KSh8.6 trillion ($70.7 billion) adding more burden on service costs, with more than KSh945 billion ($7.8 billion) used to pay domestic and external lenders in the 2021/22 financial year.

In its latest review of the progress on implementing projects under its 38-month credit scheme, the International Monetary Fund (IMF) said Kenya failed to pay 0.7 per cent of the country’s GDP to external creditors.

The IMF did not make public the identity of the creditors.

“A constrained borrowing environment meant that planned external commercial financing did not materialise. Lack of funds contributed to 0.7 per cent of GDP in unpaid obligations that were carried over to the 2022/23 financial year,” IMF stated.

Kenya’s GDP was Sh12.0982 trillion by 2021, according to the Central Bank of Kenya.

Debt pressures high

The IMF said while Kenya grew its tax revenue and cut budget deficits, the country’s debt pressures remained high.

The lender added that a mix of factors, including huge amounts spent on subsidising fuel, high inflation and disruptions in global supply chains drained Kenya’s efforts on growing revenue and cutting the budget deficit.

“Significant unbudgeted spending in the early months of this fiscal year, much of it for fuel subsidies, posed an additional challenge. There has been progress on fiscal adjustment needed to address debt vulnerabilities though pressure remains elevated,” the lender said.

The government cut the budget deficit from 8.2 per cent of the GDP to 6.2 per cent, during the year, while Kenya Revenue Authority (KRA) grew taxes from 12.6 to 13.7 per cent of GDP, crossing the Sh2 trillion mark for the first time.

External financing needs

Announcing a planned release of KSh52.7 billion ($4.3 billion) in lending to Kenya under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) in the coming weeks, the IMF said nearly half of the money would be prioritised to cover external financing needs due to the ongoing drought.

“Upon completion of the Executive Board review, Kenya will have access to SDR 336.54 million (equivalent to about $433 million), bringing the total IMF financial support under these arrangements to about $1,548 million,” a statement by IMF heads of the delegation to Kenya Mary Goodman and Tobias Rasmussen read.

“This latter amount includes proposed augmentation of access of SDR162.84 million to cover external financing needs resulting from drought and challenging global financing conditions.”

The IMF says the new government must continue with measures to grow revenue further while controlling spending in a bid to cut budget deficits.

Structural, governance reforms

“It will also be important to move ahead with structural and governance reforms. This includes completing efforts to publish beneficial ownership information for awarded government contracts, which will be a major step towards greater transparency and accountability,” the statement said.

“Reform of financially-troubled state-owned enterprises – including Kenya Airways and Kenya Power – will also be key.”

President William Ruto’s initial measures to do away with fuel subsidies and reinstate variable cost adjustments in electricity prices led to a rise in fuel and power prices.

Kenya’s treasury in the quarter that ended June tapped KSh40.87 billion ($336 million) from the dollar reserves the CBK received from the IMF in form of special drawing rights in August last year.

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Kenya failed to meet KSh84.6 billion ($695.4 million) debt repayment obligations in the year to June due to a cash crunch and instead carried over the payments to the current […]

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Kenya Airways pilots call off strike after court order

The Kenya Airline Pilots Association has called off their strike notice following an earlier ruling Tuesday by the Employment and Labour Relations Court which ordered the pilots to resume work.

In a statement Tuesday night, Kalpa withdrew their strike notice and urged their members to resume duty on Wednesday, November 9, 2022, at 6 am.

“Members are also urged to report to the Executive Council any incident of victimisation or disciplinary action that may be taken contrary to the court’s orders,” Kalpa said.

The pilots association said they regretted the disruption and inconvenience to KQ guests and urged their members to immediately restore normalcy to operations.

Kalpa launched the strike at Nairobi’s Jomo Kenyatta International Airport on Saturday, defying a court order issued last week against the industrial action.

Return unconditionally

Labour Relations Court judge Anna Mwaure on Tuesday ordered “the Kenya Airways pilots to resume their duties as pilots by 6am on November 9, 2022, unconditionally”.

Kenya Airways later welcomed the court’s decision.

“We thank the court for the expeditious ruling that now allows KQ to resume its normal operations. We commit to complying with the court’s directions,” said a statement by Allan Kilavuka, the Group Managing Director and CEO of Kenya Airways.

Transport Cabinet Secretary Kipchumba Murkomen had also during the day also welcomed the court order.

He urged the airline not to victimise any pilot who took part in the strike.

“The past 4 days have been difficult for Kenya’s aviation industry due to the strike by the Kenya Airline Pilot Association (Kalpa). We convey our sincere apologies to travellers and cargo customers affected by the strike,” he said in a statement to newsrooms.

“I also urge the management of Kenya Airways to obey the court order barring the victimisation of any of the pilots who participated in the strike,” Mr Murkomen said.

He said a prolonged strike would have not only forced the closure of the airline which was losing over Sh300 million a day but also negatively impacted over 18,000 lives that depend on the airline.

“In the past 3 days, this strike has disrupted travel plans for over 12,000 customers across KQ network, forced the cancellation of over 300 flights and affected 3,500 other employees who were not part of it,” Murkomen said adding that the national government is committed to the well-being of the airline.

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The Kenya Airline Pilots Association has called off their strike notice following an earlier ruling Tuesday by the Employment and Labour Relations Court which ordered the pilots to resume work. In […]

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Kenya makes public SGR contract which gives China sweeping powers

The standard gauge railway (SGR) contract signed by Kenya gives sweeping powers to its Chinese lenders, including requiring arbitration of any dispute to be held in Beijing, documents released by the government after years of secrecy have shown.

In the contract, which helped retired President Uhuru Kenyatta build what was Kenya’s most expensive infrastructure project, Kenya was bound to keep the details of the deal under lock and key, the reason why authorities, including the former Head of State, refused to make the contract public even after a court order.

The contract was Sunday made public by Transport and Infrastructure Cabinet Secretary, Kipchumba Murkomen, ending years of speculation on what the country signed.

But while Mr Murkomen shared the contract, which he said will be tabled in Parliament, details of the collateral Kenya put up—reported by the media, led by the Nation, as being the Port of Mombasa and other assets of the Kenya Port Authority—were missing.

In the documents shared by Mr Murkomen, China was to lend Kenya $1.6 billion at 2 percent interest per annum, with a 0.25 percent commitment fee.

Taxpayers paid a management fee of $4 million 30 days after the signing of the contract.

The SGR deal, the contract shows, is a 20-year loan with a seven-year grace period. Kenya was to repay the amount in 156 months (13 years), and was to dedicate 42.06 per cent of the proceeds from the railway to repay the loan.

For the Nairobi -Naivasha route, Kenya inked a $1.2 billion in a 20-year loan facility.

Kenya was required to pay $137.59 million as insurance fees.

The contract also confirms fears that Kenya had been bound to seek resolution—in case of a dispute—only in China, which experts have said gives the Asian nation a big advantage.

“If no settlement is reached through friendly consultation, each party shall have a right to submit a dispute to the China International Economic and Trade Arbitration Committee for arbitration …” the contract states.

In the deal, Kenya was bound to establish an inland container depot in Nairobi “and its mandatory customs clearance” as well as a Railway Development Fund, that China had said should be established “to be applied in priority to make repayment of loans in relation to the project”.

The contract also demanded that Kenya first approaches China to purchase any goods from the proceeds of SGR, before going to any other market.

Also read: Samia’s basket of goodies from China

The deal, which was signed by former Treasury Cabinet Secretary Henry Rotich and Li Ruogu, the President of the Export and Import (Exim) Bank of China, also precludes Kenya from sharing its details.

“The Borrower shall keep all the terms and conditions hereunder in connections with this Agreement strictly confidential. Without the prior written consent of the Lender, the Borrower shall not disclose any information hereunder or in connection with this Agreement to any third party unless required by applicable law,” the deal reads.

During his vetting in Parliament, Mr Murkomen had promised to make the SGR contract public, saying Kenyans had the right to know what the government signed on their behalf.

‘Never seen’

“I have spoken to everybody whom I thought was a person of influence in government and privy to the SGR contract but they have said they have never seen the SGR agreement. I don’t want to name those I spoke to, but once I get into the office, I will look for it,” Mr Murkomen said.

Following exclusive reporting by the Nation on the SGR contract in 2020, especially on the collateral Kenya put up, the Chinese Foreign Ministry Spokesperson Hua Chunying said: “We have checked with the relevant Chinese financial institution and found that the allegation that Kenyan side used the Mombasa Port as a collateral in its payment agreement with the Chinese financial institution for the Mombasa-Nairobi Railway is not true.”

Since President Kenyatta promised on live television to make public the SGR contract in 2019, the government has been playing hide and seek with Kenyans on the matter, with the country left in the dark on just what it signed and what the Chinese were guaranteed in the process.

In January this year, the government, following a court order, cited a non-disclosure agreement with the Chinese lenders for its refusal to make the contract public. It argued that the contract contains non-disclosure clauses and its release would endanger national security and injure relations with China.

Also read: Hard times for Kenya SGR as port operations return to Mombasa

Then Transport Principal Secretary Dr Joseph Njoroge said in January 2022 court documents that agreements entered between Kenya and Chinese contractors over the construction of the SGR have non-disclosure clauses.

In the case, activists Khelef Khalifa and Ms Wanjiru Gikonyo sought to have all contracts, agreements and studies related to the construction and operations of the SGR made public. They argued that keeping the documents confidential violates the law and discourages transparency in governance.

In May, Justice John Mativo ruled that public officers have a constitutional duty to make information available to Kenyans saying that any restriction on access to information from the government must have a genuine purpose and demonstrable effect of protecting a legitimate national security interest.

“It is clear that the respondents’ attempt to hide behind the provisions of sections 3(6) & (7) of the Official Secrets Act flies in the face of Article 35, section 29 of the Access to Information Act and falls to be rejected,” ruled Justice Mativo.

The judge argued that there are no two systems of law regulating access to information held by public bodies.

Most expensive projects

Mr Khelefa and Ms Gikonyo had, in the case, argued that documents related to the SGR project and its financing have never been made public despite being one of the most expensive projects undertaken by the government.

“SGR is the largest capital-intensive infrastructure project ever constructed in the country, but despite this extraordinary expenditure of public funds, the project has been undertaken with controversy and secrecy from its inception,” they argued.

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The standard gauge railway (SGR) contract signed by Kenya gives sweeping powers to its Chinese lenders, including requiring arbitration of any dispute to be held in Beijing, documents released by […]

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RwandAir starts non-stop flights to London

Rwanda’s national flag carrier RwandAir has launched direct flights between Kigali and London, England, shortening the flight time for travellers between the two cities as the airline seeks to expand its service portfolio.

The new direct flight replaces the existing service between London and Kigali, launched in 2017, with one stop in Brussels, Belgium.

The inaugural flight left Kigali Sunday afternoon and landed in London Monday morning.

The carrier said there would be four direct flights weekly from Kigali to London – Sunday, Tuesday, Thursday and Saturday – with return flights on Monday, Wednesday, Friday and Sunday.

The direct flight will also help the carrier link travellers from London “via Kigali to a wealth of destinations in Africa, the Middle East, and Asia,” it said in a tweet just before the first flight left for London.

“The UK is an incredibly important market for us, and we know our customers will value the shorter flight times and increased connections that will be offered by the new service,” Yvonne Makolo, RwandAir’s chief executive, said last month while announcing the direct flights’ plan.

RwandAir is ranked among the best ten African airlines by British airline review and rating company Skytrax. It currently serves 28 routes across East, Central, and Southern Africa, the Middle East, Asia, and Europe, from Kigali International airport, its hub.

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Rwanda’s national flag carrier RwandAir has launched direct flights between Kigali and London, England, shortening the flight time for travellers between the two cities as the airline seeks to expand […]

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Death toll rises to 19 after Precision Air plane plunges into Lake Victoria in Tanzania

The death toll from Sunday’s plane crash in Tanzania has jumped to 19, Prime Minister Kassim Majaliwa said, after the Precision Air flight with dozens of passengers aboard plunged into Lake Victoria while approaching the northwestern city of Bukoba.

“All Tanzanians are with you in mourning the 19 people who lost lives during this accident,” Majaliwa told a crowd after arriving at Bukoba airport, where the flight had been scheduled to land from financial capital Dar es Salaam.

Regional authorities earlier said that 26 survivors out of the 43 people on board flight PW 494 had been pulled to safety and taken to hospital in the lakeside city.

But Precision Air, a publicly-listed company which is Tanzania’s largest private carrier, said in a statement that 24 people had survived the accident, with an airline official telling AFP that the other two hospitalised patients were not aboard the plane to begin with.

“There are two people who were injured during rescue efforts who have been counted as survivors but they were not passengers,” he said on condition of anonymity.

The airline said it had dispatched rescuers and investigators to the scene and expressed its “deepest sympathies” over the accident, which occurred at around 08:53 am (0553 GMT) on Sunday.

The company said the aircraft was an ATR 42-500, manufactured by Toulouse-based Franco-Italian firm ATR, and had 39 passengers — including an infant — and four crew members on board.

Video footage broadcast on local media showed the plane largely submerged as rescuers, including fishermen, waded through water to bring people to safety.

Emergency workers attempted to lift the aircraft out of the water using ropes, assisted by cranes as residents also sought to help.

President Samia Suluhu Hassan expressed her condolences to those affected by the accident, saying: “We pray to god to help us.”

The disaster ranks among the deadliest plane crashes in the East African nation’s history.

Condolences

The US embassy in Dar es Salaam released a statement, paying tribute to “the heroic efforts of first responders, especially ordinary citizens who helped rescue victims.”

The African Union Commission chair Moussa Faki Mahamat also shared his condolences, as did the secretary general of the regional East African Community bloc, Peter Mathuki.

“Our hearts and prayers go to the families of passengers on-board a plane that crashed into Lake Victoria, with our full solidarity to the Government & people of #Tanzania,” Faki wrote on Twitter.

“The East African Community joins and sends our condolences to Mama Samia Suluhu Hassan, families and friends of all those who were affected by the Precision Air plane accident,” Mathuki said, also on Twitter.

Precision Air, which is partly owned by Kenya Airways, was founded in 1993 and operates domestic and regional flights as well as private charters to popular tourist destinations such as Serengeti National Park and the Zanzibar archipelago.

The accident comes five years after 11 people died when a plane belonging to safari company Coastal Aviation crashed in northern Tanzania.

In March 2019, an Ethiopian Airlines flight from Addis Ababa to Nairobi plunged six minutes after take-off into a field southeast of the Ethiopian capital, killing all 157 people on board.

The disaster, five months after a similar crash in Indonesia, triggered the global grounding of the Boeing 737 MAX model of jet for 20 months, before it returned to service in late 2020.

In 2007, a Kenya Airways flight from the Ivory Coast city of Abidjan to Kenya’s capital Nairobi crashed into a swamp after take-off, killing all 114 passengers.

In 2000, another Kenya Airways flight from Abidjan to Nairobi crashed into the Atlantic Ocean minutes after take-off, killing 169 people while 10 survived.

A year earlier, a dozen people, including 10 US tourists, died in a plane crash in northern Tanzania while flying between Serengeti National Park and the Kilimanjaro airport.

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The death toll from Sunday’s plane crash in Tanzania has jumped to 19, Prime Minister Kassim Majaliwa said, after the Precision Air flight with dozens of passengers aboard plunged into […]

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Pilots strike clouds Kenya Airways plans to raise flight frequency

Troubled Kenya Airways is facing an operational crisis as pilots down tools protesting poor working conditions. This is amid plans by the airline to raise frequency of flights and return to old routes over the festive season to take advantage of rising traveller numbers.

The Kenya Airline Pilots Association (Kalpa) said effective 6am November 5, there would be no Kenya Airways aircraft flown by its members departing from the Jomo Kenyatta International Airport.

The association is protesting a decision to suspend contributions to the provident fund, which they claim is a contractual agreement between the airline and all employees. The pilots said KQ has unilaterally stopped both the employees’ and the employers’ contribution since 2020 and has failed to resume the retirement benefits scheme.

Pre-Covid numbers

The strike now stands in the way of KQ’s plan to recover by 2023 its pre-Covid numbers of over five million passengers, recorded in 2019, through more flights and new routes.

This week, Kenya Airways increased the number of flights for the London route throughout winter, seeking to recoup numbers lost during the Covid-19 restrictions. It now flies to London 11 times a week up from five times.

“The increased flight frequencies will cater to this route’s increased demand and provide KQ customers with increased flight options in the upcoming winter season,” the airline said.

KQ also introduced direct Mombasa-Dubai flights during the festive season, targeting to reap from the traditional high demand.

“KQ will operate daily flights with two on Wednesday, Thursday, Saturday and Sunday (morning and evening). Flights are open for booking via KQ’s website, travel agents and online travel agents.”

Left with no option

But Kalpa, which represents about 400 pilots, said the Kenya Airways management had left them with no option but to withdraw labour over unresolved grievances.

“We hoped that the management of the airline would soften its hard stance and engage in a negotiation on the issues raised. However … Kenya Airways management has not made any meaningful attempt to engage,” Kalpa’s General Secretary and Chief Executive Captain Murithi Nyaga said in a statement on Friday.

Kalpa had issued a 14-day strike notice on October 19.

Board decision

Now the carrier’s management will need to first handle the strike by its pilots.

KQ management issued a statement on Friday night saying the strike will cost the airline $2.47 million a day, terming the move by the pilots as unfortunate.

KQ Chairman Michael Joseph said the airline has been working with the Ministry of Labour and the Central Organisation of Trade Unions (Cotu) to resolve grievances raised by Kalpa.

“The board has unanimously come to the opinion that none of the grievances advanced by Kalpa merits an industrial strike and firmly holds that all CBAs (collective bargaining agreements) must align with the need to restructure the airline’s operations towards profitability and efficiency,” said Joseph, suggesting KQ’s financial situation comes first when it negotiates with pilots or staff.

‘Action is unnecessary’

“We wish to reiterate that industrial action is unnecessary at this point as it will delay and disrupt the financial and operational recovery and cause reputational damage to Kenya Airways.

“The board underlines its full support and confidence in [CEO] Mr [Allan] Kilavuka and the management in handling the matters at hand and the company.”

On Wednesday, a Kenyan Labour Court had suspended the strike notice issued earlier, even though pilots insisted they would down tools if their grievances were unmet.

The national carrier has been struggling with losses over the years.

Recently it defaulted on its aircraft purchase loans worth $841.6 million from the American Exim Bank.

The Kenyan government had guaranteed $525 million and has since offered to pay the amount. KQ disputed the figure this week, even though the National Treasury had listed it in its report.

Loan default

The airline has been focused on restructuring its fleet, including selling aircrafts and sub-leasing to other airlines in an attempt to return to profitability.

Data from the airline shows that the national carrier’s fleet size reduced in the last nine months to 41 aircrafts from 43 in December 31, 2021.

Hoteliers have lauded the decision to begin flying from the Moi International Airport to Dubai during the tourism high peak period , saying it will boost the sector.

The hoteliers have been calling for an open-skies policy to allow international airlines to land at the Coast region’s largest airport.

“The announcement of KQ’s direct flights from Mombasa to Dubai from 1 December 2022 is a welcome change and brings us a step closer to the open skies policy that all tourism stakeholders are strongly advocating for,” said Kenya Tourism Board director Bobby Kamani.

“The tourism fraternity looks forward to the resumption of flights to Mombasa by Turkish Airlines, Lufthansa and the introduction of FlyDubai, to continue the momentum,” Kamani added saying their would be value from the open-skies policy.

“It is not just for tourism by way of lower air fares but for the economy as a whole with lower freight costs and an increased interest by international investors to invest in Kenya as they see the country being more accessible than ever before.”

Mohammed Hersi, the chairman of the Diani Hospitality Owners Association, lauded Kenya Airways for resuming the Mombasa-Dubai direct flights.

“The Dubai-Mombasa four times a week flight is progressive,” Hersi said.

“We can’t wait for the following – London-Mombasa even three times a week is good enough, Amsterdam-Mombasa, Milan-Mombasa to serve Malindi and Watamu and Paris-Mombasa flights.”

Players want the airline to also begin direct flights between Mombasa and Mumbai in India and Mombasa and Johannesburg.

KQ is yet to launch to the Italian cities of Milan and Rome, previously planned for June this year, due to reduced passenger demand as a result of slower than expected recovery from the pandemic.

Tourist boom

Some airlines that have asked for licences to fly directly to Mombasa include KLM, Qatar, Turkish, Fly Dubai and Emirates. Ethiopian and Uganda Airlines already fly into Mombasa directly

“If these airlines fly to Mombasa, we will have traffic to fill our beds and further create employment,” said Kenya Coast Tourism Association chairman Victor Shitakha.

In 2021, KLM announced direct flights from Amsterdam to Mombasa. But the plans were ‘halted’ after the airline failed to get rights to fly directly to the destination.

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Troubled Kenya Airways is facing an operational crisis as pilots down tools protesting poor working conditions. This is amid plans by the airline to raise frequency of flights and return […]

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Africa has least default rate on infrastructure projects, say leaders

African leaders have said the continent’s investment risk has been exaggerated, making investors hesitant to put their money in its development projects.

Quoting a Moody’s Analytics report on defaults on infrastructure investments, African Development Bank (AfDB) president, Dr Akinwumi Adesina, noted that Africa has the lowest default rate on infrastructure projects in the world, at 5.5 per cent.

“Africa is not as risky as you think. Perception is not the same as reality,” Dr Adesina said at the opening of the Africa Investment Forum in Abidjan, Cote d’Ivoire, on November 2.

The biggest defaulter, according the Moody’s report, is Latin America at 12.9 per cent, followed by Asia at 8.8 per cent, Eastern Europe (8.6 per cent), North America (7.6 per cent), and Western Europe (5.9 per cent).

Recovery from Covid pandemic

“Africa has shown resilient recovery from the Covid-19 pandemic. Foreign direct investment (FDI) declined from $47 billion in 2019 to $40 billion in 2020 because of Covid. Africa recovered in 2021, as FDI rose to $83 billion, doubling the flows in 2020,” he said.

Heads of state attending the forum amplified Dr Adesina’s sentiments. They included Ghana’s Nana Akufo-Addo, Zimbabwe’s Emmerson Mnangagwa, Ethiopia’s Sahle-Work Zewde and Ivorian Vice-President Tiemoko Koné.

The leaders said that having one of the world’s largest young populations, natural resources and renewable energy potential, the continent is the investment frontier in the world.

President Akufo-Addo said the African premium risk has become a huge obstacle to development as it hampers investment. Noting that the global investment environment is difficult, he said Africa has excellent returns on investment and urged businesses to take advantage of the continent’s demographic dividend to foster growth.

Electric cars

Dr Adesina said the future of electric cars in the world depends on Africa because it has the largest sources of cobalt in the world, with massive sources of lithium in Zimbabwe, Namibia, Ghana, Mali, and Democratic Republic of Congo.

“The African Continental Free Trade Area is the largest free-trade zone in the world, connecting economies worth $3.3 trillion,” he said.

The Africa Investment Forum — Africa’s premier investment marketplace now in its fourth year — helps to connect investors to Africa. The African Development Bank, the Africa Import-Export Bank, the Trade and Development Bank, the Africa Finance Corporation, the Development Bank of South Africa, the European Investment Bank, the Islamic Development Bank and Africa50 support it.

It is aimed at mobilising investments for Africa, and showcase the continent’s bankability to the world.

Investment interests

In four years, it has helped to mobilise $110 billion in investment interests to Africa, said Dr Adesina.

“The $600 million securitised finance to support the cocoa board of Ghana has helped Ghana to grow its cocoa production by one million tonnes, with infrastructure for warehousing and cocoa processing. The landmark $24 billion liquefied natural gas project of Mozambique, which was structured and closed at the Africa Investment Forum, is the largest-ever foreign direct investment in Africa. It will turn Mozambique into the third-largest exporter of natural gas in the world and add $66 billion to its economy,” he said.

The leaders have curated investment projects in renewable energy, hydropower, gas, railways, roads, and water transport, agriculture, health, mining, fertiliser manufacturing, port infrastructure and urban green transport to woo investors.

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African leaders have said the continent’s investment risk has been exaggerated, making investors hesitant to put their money in its development projects. Quoting a Moody’s Analytics report on defaults on […]

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Don’t mortgage countries for loans, development banks tell Africa

Development finance institutions in Africa have cautioned governments against using countries’ natural resources to back infrastructure loans, as it amounts to mortgaging their future to creditors. Instead, they want states to explore public-private partnerships to finance their development projects.

While addressing a press conference in Abidjan, Côte d’Ivoire during the African Investment Forum, executives of eight multilateral finance institutions in Africa said most states in the continent had become heavily indebted and the volatility of the global economy was making their debt situation worse, hence the need to go slow on borrowing to explore cheaper ways of financing development.

The multilateral development banks are working with wealth funds to have them finance infrastructure development.

Repaying infrastructure loans well

Led by the African Development Bank (AfDB), the organiser of the African Investment Forum, they vouched for the continent’s creditworthiness, noting that Africa has done well in repaying its infrastructure loans.

Dr Akinwumi Adesina, the AfDB president, noted that Africa has the lowest default rate on infrastructure loans in the world, at 5.5 per cent. The biggest defaulter, according Moody’s Analytics, is Latin America at 12.9 per cent, followed by Asia at 8.8 per cent, Eastern Europe (8.6 per cent), North America (7.6 per cent), and Western Europe (5.9 per cent).

“We must begin to see infrastructure as an asset to us. The issue of the risk of investment in Africa is exaggerated. The issue is not risk but the risk-adjusted return and how you manage risk,” Dr Adesina said.

“So, we must not be de-risking bias risk. In other words, perception risk is not what we should be de-risking. But we don’t want countries taking too much debt to do infrastructure, it will only make the debt situation worse for them. So they need to open up the space to the private sector and I believe strongly we must have, at the very minimum, public-private partnerships: allow the private sector in energy, transport, medical, infrastructure and so on. Let the private sector space be expanded for infrastructure.”

Build Africa’s capacity

The lenders have committed to collaborate with African governments to build the continent’s capacity for agriculture, renewable energy and manufacture of electric cars.

On agriculture, they are going to support special agro-industrial processing zones across Africa to turn agriculture into a wealth sector.

On electric cars, the banks are looking to fund value chains for the minerals making parts and batteries such as nickel, cobalt and lithium.

“We will put our resources together, technical resources in terms of technical assessment, our project development capacity here, our co-financing capacity here with others to be able to develop value chains for the batteries on the continent and attract investors to manufacture the cars,” Dr Adesina said.

Solar energy

On energy, the institutions plan to invest $20 billion to build 10,000 megawatts of solar across 11 countries, which will provide electricity for 250 million people.

“There is overconcentration of solar panel manufacturing in the world. So as Africa tries to maximise and optimise renewable energy — we have 11 terawatts of solar — so we decided collectively, that we will support designing, support and planning for the manufacturing of polysilicon and solar panels,” Dr Adesina said.

The institutions are AfDB, Africa50; Africa Finance Corporation, Africa Export-Import Bank, Development Bank of Southern Africa, European Investment Bank, Islamic Development Bank and Trade and Development Bank.

They are also pushing the International Monetary Fund (IMF) to channel the special drawing rights (SDRs) cash through them for use in infrastructure development.

“The world is going through all kinds of challenges right now. The big one, of course, is climate change, Covid-19, the war in Ukraine and what it has done in terms of energy costs, in terms of food prices, inflation… we have a big financing gap for infrastructure and there’s not a whole lot of money on the table to support developing countries. One of the ways to actually deal with this is the special drawing rights,” Dr Adesina said.

The IMF in 2021 issued $650 billion of special drawing rights, which is the highest it has ever issued. But Africa only got $33 billion out of that amount.

The multilateral lenders have been making a case for the SDRs to be given to them to fund growth and poverty reduction programmes on the continent.

“I commend the efforts of IMF for their resilient trust that they have, which is great. However, the SDR transactions will be one-to-one while multilateral development banks like ourselves can actually invest the SDR money. Now, for us, $1 of SDR will become $4 for the country. So, if you got $10 billion, that becomes $40 billion; $20 billion becomes $80 billion. So that’s the leveraging impact. That is very important for the SDR to complement the efforts of the IMF.

“And I think that this is important because as we look at global challenges, we have to ask ourselves: What is the best way to optimise the global financial architecture starting from the IMF down to multilateral financial institutions? If we leverage the SDR four times, that is money we can use to recapitalise and support the Development Bank of South Africa, the Africa Finance Corporation, Africa50, Trade Development Bank, Islamic Development Bank and others.”

But they called for transparency and accountability in the expenditure of infrastructure finance.

“It’s not just how much money you’re putting into infrastructure; it’s the efficiency of that expenditure.”

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Development finance institutions in Africa have cautioned governments against using countries’ natural resources to back infrastructure loans, as it amounts to mortgaging their future to creditors. Instead, they want states […]

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Tanzania exports cashew nuts to US as focus shifts to value addition

A consignment of processed cashew nuts from Tanzania to the United States left the country on Monday as the East African nation seeks to move away from exporting raw nuts to value-added ones.

The eight-tonne cargo of processed cashew nuts was dispatched to New Orleans, Louisiana via the Julius Nyerere International Airport in Dar es Salaam.

In October this year, a 20-foot container carrying 7.5 metric tonnes of branded consumer packaged cashew nuts left Mtwara for the US.

The exporter is Ward Holdings Tanzania Limited (WTH), a subsidiary of Ward Holdings International, a Michigan-based global market development and investment company.

While flagging off the cargo, Tanzania’s Deputy Minister for Agriculture Anthony Mavunde said WTH is supportive of the government’s plan to ensure that by 2025, 60 per cent of Tanzania’s cashew nuts are processed locally.

Currently, the country processes less than 10 per cent of its cashew nuts, with the remainder being exported raw.

More jobs for youth

“If our plan succeeds, it will mean increasing new industries and creating more jobs for our youth,” he said.

Mr Robert Adrian Raines, the American embassy representative, said the shipment represented the growing business relationship between Tanzania and the US. 

“This step will boost the wellbeing of cashew nut farmers and promote their crop,” he said.

WHT President Godfrey Simbeye described the occasion as a “historic moment of cashew nuts grown, harvested, and consumer-packaged in Tanzania being exported directly for the first time from farmers in Tanzania to the US marketplace”.

Mr Simbeye assured the gathering, which included business leaders, that Ward Holdings International is a reputed American market maker, which is “committed to the advancement of Tanzanian interests through industrialisation of its agriculture industry and high-value crops”.

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A consignment of processed cashew nuts from Tanzania to the United States left the country on Monday as the East African nation seeks to move away from exporting raw nuts […]

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Uganda’s HiPipo named among top digital innovation champions

The Global Business Leaders Magazine has named Uganda’s financial technology company HiPipo among this year’s world’s top 20 companies accelerating innovation in the digital financial services market.

Hipipo, which was the only African company on this American magazine’s list, was specifically applauded for championing digital innovation and financial inclusion across Africa under their ongoing Include Everyone programme.

“With a keen interest in women empowerment, HiPipo’s events help reduce the barriers perpetuating the gender gap by providing women with technical and business skills in digital financial services. It enables sustainable and inclusive growth and drives financial inclusion by advocating for reducing widespread interoperability issues leading to the exclusion of poor and vulnerable groups in the financial system,” the magazine noted.

Retail payment systems

Through the implementation of various initiatives, the company supports the creation of domestic and cross-border instant retail payment systems that enable wide economic growth.

The firm is also facilitating the delivery of affordable and innovative financial products to poor and vulnerable groups by advocating for use of digital financial services to support the establishment of sustainable and inclusive growth. It is also supporting fintechs and their collaborators to make it easier and cheaper for customers to engage with the formal financial inclusion ecosystem.

Other companies on the world’s top 20 list include Naborforce, Helpware, Proximity Space, Gulf Data Hub, SMT Energy and Motus Inc. The rankings looked at companies at the forefront of digital innovations across the world, with special emphasis on inclusion.

Championing inclusion

HiPipo CEO Innocent Kawooya said that appearing on such a list was a testament to the company’s 18-year journey of championing inclusion for everyone.

“It is always refreshing to see our work appreciated by reputable organisations such as the Global Business Leaders Magazine. These are indeed fruits of a dedicated team determined to change lives of people especially (those) found at the bottom of the pyramid,” Kawooya said.

Founded in 2005, HiPipo was started by a team of young enterprising minds who came together with the desire to change and excitement about billboard charts and people awards.

Promoting local music

It began by promoting local music using digital means and awards. The firm eventually started the HiPipo Music Awards in 2012.

Through their Include Everyone programme, the company first organised the Digital Impact Awards Africa in 2013, which eventually led to initiation of other programmes focused on low-income digital users, special interest groups such as women, PWDs, rural organisations and small formal and informal businesses.

Headquartered in Kamwokya, a Kampala suburb, HiPipo has conceptualised and actualised several sector-changing initiatives to put Africa’s digital innovators on the required pedestal, helping them solve problems.

These include the 40-Days-40-FinTechs and FinTech Landscape Exhibition, the Women-In-FinTech Hackathon, Summit and Incubator and one of the continent’s most distinguished awards for digital innovation – the Digital Impact Awards Africa.

Main innovations’ beneficiaries

Mr Kawooya said that these initiatives and their related activities, publications and implementations have put HiPipo among the most important conveners of the various players in the fintech and digital financial services space, with its actions and advocacy geared towards having the unbanked and the marginalised as the main beneficiaries of these innovations.

As a result, the company has attracted partners and top funders like the Bill and Melinda Gates Foundation.

“In future, we strive to continue doing our best. We are planning to implement and scale initiatives on the continent that increase the number of African women in leadership positions through efforts such as the Women-In-FinTech Hackathon, Summit, and Incubator. With financial exclusion persisting in Africa due to various reasons, HiPipo is aiming to accelerate its advocacy for the demand of creating instant and inclusive payment systems across Africa,” Mr Kawooya said.

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The Global Business Leaders Magazine has named Uganda’s financial technology company HiPipo among this year’s world’s top 20 companies accelerating innovation in the digital financial services market. Hipipo, which was the only […]

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Africa’s cryptocurrency market marches to its own beat

Majority of Africans in the crypto scene use cryptocurrencies for economic and commercial purposes, deviating from the trend observed in developed markets, where crypto assets are mainly used to diversify portfolios.

Trends indicate that many African youths that are unemployed or lacking economic opportunities are turning to cryptocurrencies to build and preserve wealth, while in other countries, such digital assets are used only to multiply existing wealth.

This trend reflects in the volume and nature of transactions recorded in Africa, which significantly deviates from the rest of the world, according to cryptocurrency research firm, Chainalysis’s latest Geography of Cryptocurrencies report, released last week.

In sub-Saharan Africa, small transactions, less than $1,000, accounted for 80 per cent of all transfers recorded on crypto exchanges and wallets in the past year, which is greater than any other region globally, the report reveals.

Trading ‘to make ends meet’

According to Adedeji Owonibi, founder of Convexity, a Nigeria-based blockchain consultancy, these ‘small-scale’ crypto traders are actually trading “to make ends meet.”

“We don’t have big, institutional-level traders in sub-Saharan Africa. The people driving the market here are retail,” he said in an interview, adding that cryptoasset have come to the rescue of many ‘highly educated’ Africans that cannot find jobs in the market.

“It’s a way to feed their family and meet daily financial needs.”

P2P transactions

The dramatic surge in peer-to-peer (P2P) transactions – which allow crypto users to trade directly with one another – also distinguishes the African market from the rest of the world and points to the prominence of small transactions in the continent.

P2P exchanges made up six percent of all cryptocurrency transactions in Africa, while in the next closest region, central and southern Asia, which also consists mostly of emerging markets, the share was only 3.1 percent.

Paxful, one of the continent’s leading P2P platforms, has registered a dramatic surge in transactions over the last year. In Kenya, it recorded a 140 percent rise, according to Ray Youssef, the platform’s chief executive.

According to the Chainalysis report, P2P transactions could be much more than estimated, as there are also informal dealings through group chats, for instance, that have been reported in countries like Kenya and Nigeria.

At the same time, the use of cryptocurrencies in commercial activities and remittance is also taking shape in Africa, powering crypto adoption, occasioned by dwindling local currencies and expensive transaction costs among established money transfer platforms.

Drop in rank

In the aftermath of the Ukraine crisis and other economic shocks, the report shows, many businesses that rely on international suppliers turned to crypto as a means of payment, as rapidly depreciating currencies put the dollar out of reach for several small and medium-sized enterprises.

High costs of cross-border transactions, which are sometimes as high as 20 per cent of the transaction value, is also incentivising the use of cryptocurrencies for remittance to African countries over conventional methods.

With remittances to Africa projected to grow 4.2 percent this year, according to the World Bank, the use of cryptocurrencies for that purpose is expected to grow as long as the underlying challenges persist.

“We expect cryptocurrency usage in sub-Saharan Africa to continue growing as long as residents face issues crypto has proven it can solve such as preserving savings through economic volatility and enabling cross-border transactions in places with strict capital controls,” Chainalysis said in the report.

Despite the rising number of ‘small-scale’ crypto activity, sub-Saharan Africa accounts for only 1.7 per cent of the total value of cryptocurrency received globally in the last year, with many countries in the continent dropping in rank in the crypto adoption index.

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Majority of Africans in the crypto scene use cryptocurrencies for economic and commercial purposes, deviating from the trend observed in developed markets, where crypto assets are mainly used to diversify […]

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