Powered by Asoko Insight

See all the latest news from the Business Council for Africa and from around the continent. 


January 2017

26 January 2017

Uganda’s economy to grow by 6% – IMF boss

By Njirani Muchra | Daily Monitor, Uganda

What brings you to Uganda and what is your message to the country?

Let me start by thanking you for this interview with Daily Monitor. This is my first visit to Uganda and I welcome the opportunity to see firsthand the progress that Uganda is making and to focus on the challenges ahead.

I look forward to engaging with President Yoweri Museveni, your policymakers, business leaders, legislators, women leaders, and representatives of civil society. I want to share the IMF’s views, but first and foremost, I am here to listen.

There are several important issues I wish to discuss during my visit. What is Uganda’s growth strategy? How can it address domestic issues such as poverty and inequality?

There is also the challenge of having to carefully balance spending on infrastructure and on social areas, such as health and education.
These are issues that are also faced by other countries in the region and, indeed, globally.

IMF Relations with Uganda

Uganda has had Policy Support Instrument (PSI) programmes with the IMF since 2006.

These programmes aim to support low-income countries that do not need IMF financing, but want close engagement with us via monitoring and policy support.

Uganda has made significant progress in a number of areas under the current programme.

For example, the tax-to-GDP ratio has increased by 2 per cent of GDP over the last three years along with improvements in the collection and administration of taxes.

This helps pay for the increased investment in infrastructure and will contribute to keeping public debt at a manageable level.

Moreover, the programme has helped to provide a framework for economic policies and reforms that can boost medium-term growth.

The PSI also integrates IMF capacity development and training in support of these efforts.

This includes visits by teams from IMF headquarters and our Africa Regional Technical Assistance Centre in Dar es Salaam (East AFRITAC), as well as participation by Ugandan officials in training courses in Washington and at our Africa Training Institute in Mauritius.

Some of the areas in which we have provided this type of support include public finance management and inflation targeting to help guide monetary policy.

IMF’s Growth Outlook for Uganda

Uganda is a vibrant and diverse economy. It has experienced impressive growth and poverty reduction over the last three decades.

Robust and finely balanced macroeconomic policies have enhanced the collection of more domestic revenue, kept inflation in check, and facilitated more spending on key sectors such as energy and transport.

We forecast growth will be about 5 per cent in 2017, broadly similar to the last few years.

Over the medium term, we expect growth to accelerate to over 6 per cent, as the ongoing infrastructure developments bear fruit, investments in the oil sector pick up, and integration in the East African Community creates new opportunities.

It is essential that there be sufficient money allocated for high-quality social spending so that Uganda can make further progress on reducing poverty, raising living standards for all its citizens, and creating more jobs for its young people. This will be crucial in the country’s efforts to achieving the Sustainable Development Goals.

Uganda’s Infrastructure Spending

Based on the fiscal framework that the government outlined in December, our assessment is that Uganda remains at low risk of debt distress. This means that Uganda’s debt is projected to remain at manageable levels, even in the case of shocks.

Over the next few years, Uganda’s debt-to-GDP ratio will continue to rise as the government carries out large infrastructure investment projects. But once these projects are completed and contribute to growth, exports, and fiscal revenues, the debt level is projected to decline again.

Uganda needs to borrow to raise funds for key projects and can afford to do so as long as this external financing is at low interest rates, and preferably on concessional terms (low interest rates and long maturities).

The financing available domestically is not sufficient for the government and the private sector to carry out the necessary investments in a reasonable timeframe.

External borrowing thus allows for higher rates of investment than otherwise possible. It is important that the investment projects that are being financed are implemented in a cost-effective manner, and chosen to generate the biggest possible return in terms of higher growth while keeping debt at manageable levels.

Lastly, how can we ensure that recently-found oil resources benefit all Ugandans?

The oil price movements over the last few years underscore how important it is to have a sound fiscal framework for managing oil revenues.

An effective framework should allow the sustainable use of oil revenues without exposing the government to the risk of having to adjust spending dramatically from year to year, depending on whether prices are up or down.

Strong institutions are critical, and along with prioritisation in the budget process, can help ensure that oil resources, just like all other resources available to the government, benefit all Ugandans, including future generations. The IMF stands ready to work with the government in this area.

Source: https://asokoinsight.com/news/ugandas-economy-to-grow-by-6-imf-boss


January 2017

23 January 2017

EABL puts up ex-Mombasa brewery for sale at $7 million (Kenya)

By Brian Ngugi | Business Daily, Kenya

Beer maker East African Breweries Limited (EABL) has signalled its intention to continue with the sale of prime assets, with the invitation of bids for a disused brewery and a prime piece of land in Mombasa.

The property, which sits on a six-acre piece of land in Mombasa’s Shimanzi Industrial Area, is on sale for a base price of Sh700 million.

“We have been instructed to seek offers in the region of Sh700 million, exclusive of value added tax,” property manager Knight Frank says in the sale documents.

This is the fifth year in a row that EABL is selling assets to help shore up its bottom-line.

The brewer is selling the Mombasa property as it moves to exit a leasehold agreement it has had with the Kenya Railways Corporation (KRC) for more than 60 years.

EABL, which is 50.02 per cent owned by UK’s Diageo, has recently sold several parcels of land, go-downs, its glass-making subsidiary as well as its Nairobi head office building in lucrative transactions that have helped spice up shareholder earnings.

The Mombasa facility, which was commissioned by colonial governor of Kenya Sir Evelyn Baring in February 1952, was one of two breweries (alongside the Kisumu plant) that EABL operated outside Nairobi.

The two factories were closed down to centralise production and distribution operations at the company’s Ruaraka headquarters in Nairobi.

Knight Frank described the Mombasa property as ideal for mixed-use development consisting of offices, retail outlets and logistics centre, manufacturing plant or roadside retail centre.

The property is located on Mombasa’s Makande Road – 1.5km from the Kilindini Port. Key facilities in the same locality include the National Cereals and Produce Board (NCPB) depot, Grain Bulk Handlers and other depots belonging to oil marketing companies.

Knight Frank says in the sale notice that the property is developed with an office block, a former brewing complex, bottling halls, workshops, warehouses and gate houses all measuring approximately 160,000 square feet.

“The property is currently vacant save for two base stations located within its precincts, one for Safaricom and the other for Airtel,” says the sale notice.

The property is currently held under a leasehold title from the KRC for a term of 72 years from January 1, 1977, meaning that there are 33 years left. EABL pays the railway firm Sh10 million in rent annually.

EABL management declined to comment on the transaction, insisting that the sale plan had entered a “closed period” pending release of half-year financial results later this week.

Source: https://asokoinsight.com/news/eabl-puts-up-ex-mombasa-brewery-for-sale-a...

23 January 2017

Treasury reopens 2007 bond seeking $289 million to plug budget deficit (Kenya)

By Charles Mwaniki | Business Daily, Kenya

The government has set the target for its first bond issue of 2017 at Sh30 billion as it moves to plug a gaping budget deficit amid huge debt maturities in quarter one of this year.

The Treasury has opted to reopen a 15-year bond initially issued in 2007, meaning it effectively has a five-year tenor (its maturity is in 2022).

It is earmarked for budgetary support, with the government still needing to plug a deficit of Sh516 billion for the 2016/17 fiscal year.

The paper is offering a fixed coupon rate of 13.5 per cent, similar to the average rate on offer for five-year bonds in the past two years.

An investor will therefore earn 6.75 per cent every six months when the interest income is normally calculated and paid.

“We opine that the CBK settled on the bond, which has a five-year tenor, on account of the shilling’s weak outlook in the near term causing most investors to employ a short term duration strategy. The five-year yield on the curve has averaged 13.49 per cent within the last two years,” Genghis analyst Churchill Ogutu said in a fixed income note.

It is on sale at a time when liquidity in the market has tightened due to a CBK mop-up in partial support of the volatile shilling.

Indicative of the tight market, the interbank rate has climbed to nine per cent, its highest level in six months with banks transacting Sh217 billion on the platform since the beginning of the year.

The Treasury has so far kept off borrowing from the international market despite a Sh287 billion target for external debt.

It is, however, facing heavy maturities in February (Sh106 billion) and March (Sh91.5 billion) that will need to be rolled over through new borrowing, possibly straining the domestic market and putting pressure on yields.

At the same time, the government has been rejecting expensive bids in recent issues, given that it is ahead of the pro-rated target for domestic borrowing for the fiscal year.

Source: https://asokoinsight.com/news/treasury-reopens-2007-bond-seeking-289-mil...

23 January 2017

MTN states current conditions not ‘conducive’ for NSE-listing (Nigeria)

By Chacha Wabara | Nairametrics

Indications are emerging that the MTN Group Ltd may not embark on the listing of the shares of the Nigerian unit until 2018, a year after the previously touted 2017 date. News of this delay was further fueled by the comments of the MTN Chairman and Acting Chief Executive Officer Phuthuma Nhleko said at the annual meeting of the World Economic Forum in Davos, Switzerland.

“It’s a work in progress and hopefully within the 12 to 18-month period we will be able to do it. Regulatory issues need to be resolved, and the macro conditions need to have improved.” Nhleko said.

Although the company earlier agreed to list its shares on the Nigerian Stock Exchange in 2017 as part of the settlement of a 330 billion naira ($1 billion) fine imposed by the government for missing a deadline to disconnect unregistered subscribers, the emergence of other allegations, especially as related to the illegal movement of $14 billion out of the country has threatened to delay the process.

Added to that is the woeful performance of the Nigerian Stock Exchange All Share Index, which lost 41 percent in dollar terms, making it the worst performer last year among 94 indexes tracked by Bloomberg.

“We’ve always intended to list — we have reaffirmed that with the government. “Clearly, we can only list when the conditions are conducive.” said Nhleko, indicating that current market conditions and the performance of the All Share Index are key reasons for the increasingly real postponement date.

Source: https://asokoinsight.com/news/mtn-states-current-conditions-not-conduciv...

23 January 2017

Ethiopia and Côte d’Ivoire economies expected to grow the most in Africa this year

By Staff | Capital Ethiopia

Ethiopia and Côte d’Ivoire are both expected to grow at or above 8 percent this year, according to a new report by the World Bank. The Global Economic Prospect report shows that large infrastructure investment programs will continue to support robust growth among agriculture exporters. This is the main reason that the projected growth rate of the two countries is expected to increase.

Ethiopia is expected to grow at 8.6 percent both in 2018 and 2019.

For countries like Burundi and The Gambia, political fragility is expected to exert a drag on growth while commodity imports are expected to help Cabo Verde grow at a 3.3 percent, Mauritius is to rise moderately to 3.5 percent, and Seychelles should slow to a 3.5 percent clip as uncertainty in Europe weighs on tourism, investment, and trade flows.

Looking at the just past year, growth in the Sub-Saharan Africa region is estimated to have slowed to a 1.5 percent rate in 2016, the weakest pace in over two decades, as commodity exporting economies adjusted to low prices. On a per capita basis, regional GDP contracted by an estimated 1.1 percent. South Africa and oil exporters, which contribute two-thirds of regional output, accounted for most of the slowdown, while activity in non-resource intensive economies generally remained robust.

In South Africa, growth slowed to 0.4 percent in 2016, reflecting the effects of low commodity prices and heightened governance concerns. The region’s two largest oil exporters, Angola, where growth slowed to a 0.4 percent rate, and Nigeria, which contracted by 1.7 percent – faced severe economic and financial strains. Other oil exporters were also hit hard by low oil prices, with Chad contracting by 3.5 percent and Equatorial Guinea shrinking by 5.7 percent.

Looking into the possible risks globally, the report states that heightened policy uncertainty in the United States and Europe could lead to financial market volatility and higher borrowing costs or cut off capital flows to emerging and frontier markets. A reversal of flows to the region would hit heavily traded currencies, like the South African Rand, hard.

A sharper-than-expected slowdown in China could weigh on demand for export commodities and undermine prices. Continued weakness in commodity prices would strain fiscal and current account balances, forcing spending cuts that could weaken recovery and investment.

Source: https://asokoinsight.com/news/ethiopia-and-cote-divoire-economies-expect...

23 January 2017

African tech startups funding rises by 17%

By Staff Writer | IT News Africa

A report released today by Disrupt Africa, Disrupt African Tech Start Up Funding Report, showed that 146 startups from across the African content raised $ 129,133,200 in funding over the course of 2016. This is coupled with a 16.8% rise from 2015 in the number of African tech startups who secured funding this was is spite of the overall amount of funding declining from 2015.

“2016 was another great year for African tech startups and investors. Our ecosystem progressed in leaps and bounds over the course of the year, which is evidenced by strong growth in the number of startups raising funding, and an encouraging expansion of ecosystem activity across the continent. We’re excited to present the Disrupt Africa Tech Startups Funding Report 2016, and hope it helps chart the rise of Africa’s entrepreneurs,” said Gabriella Mulligan, co-founder of Disrupt Africa.

The Numbers

The report analyzed nine sectors with the fintech sector receiving the most backing in 2016 with 24% of the total, raising a combined $31.4 million. This highlighted the massive emphasis placed on technological advancements in the finance sector in Africa.

The three most popular investment destinations are South Africa, Kenya and Nigeria, between the three nations they account for 80.3% of funds secured. The fourth most popular country is Egypt who saw their growth raise an impressive 100%.

Full article available here.

Source: https://asokoinsight.com/news/african-tech-startups-funding-rises-by-17

23 January 2017

Zimbabwe considers scrapping royalties on gold mining

By Staff Writer | The Source Zimbabwe

Zimbabwe is considering scrapping royalties levied on gold producers in order to boost output, the minister of mines, Walter Chidhakwa has said.

Gold miners currently pay three percent royalties after Finance Minister Patrick Chinamasa lowered the fees to 5 percent from 7 percent in 2015 and to the current level in 2016.

According to the Zimbabwe Revenue Authority (ZIMRA) mining royalties contributed $62,9 million to revenue in 2016. Zimbabwe earned $914 million from 21 tonnes of gold in 2015. Bullion output in the southern African nation has risen annually since 2008 when it produced three tonnes, its lowest ever to 22 tonnes last year although it is still well below the peak output of 30.2 tonnes achieved in 1999.

Small-scale miners have contributed nearly 40 percent of total output since 2015 when government decriminalized artisanal mining and embarked on an aggressive collection strategy, which saw the country’s sole buyer of gold Fidelity Printers set up buying depots across the country.

Mines and minerals development minister Walter Chidhakwa on Friday evening told a gold producers awards gala that government was considering to removing royalties on gold earnings.

“Government can not whip miners to force them to sell their gold to Fidelity …..but we can offer an incentive,” said Chidhakwa.

“We have been in discussions with the Minister of Finance to see how we can further incentivize miners and we are of the idea that we do away with royalties. Government does not even get much from royalties anyway but as a tax they stifle the miner.”

Gold is Zimbabwe’s main export and, along with tobacco and platinum, accounts for the bulk of the country’s foreign currency earnings.

Source: https://asokoinsight.com/news/zimbabwe-considers-scrapping-royalties-on-...


January 2017

20 January 2017

Nakumatt appoints ex-Tesco executive ahead of 25pc stake sale (Kenya)

By Brian Ngugi | The East African

Regional supermarkets chain Nakumatt has appointed a former executive of British retail giant Tesco to run its marketing activities.

The appointment comes at a crucial time for the retailer as it prepares to complete a transaction offloading a 25 per cent stake to a deep pocketed investor who is expected to pull it out of a debt crisis.

In the management shakeup that introduces three new operational positions, Nakumatt said on Thursday, it has appointed Mr Andrew Dixon – who once served as an executive director at Tesco – for the position of chief marketing officer.

“Nakumatt Holdings is happy to announce the appointment of Mr Andrew Dixon, Mr Manoj Warrier and Mr James Gakumo as the new chief marketing officer, chief information officer and chief risk officer respectively,” Nakumatt managing director Atul Shah said in a statement.

Mr Shah said that Nakumatt, Kenya’s biggest retail chain with 61 stores across East Africa, will be seeking to tap the three executives’ vast experience in retail operations gained from their previous local and international postings.

“The new executives will be charged with the responsibility of reinvigorating the key dockets as the retailer seeks to scale new heights,” said Mr Shah.

The privately-owned retailer added the appointments are also geared at enhancing Nakumatt’s corporate governance standards in line “with the ongoing organisational restructuring demands.”

“The new appointees will join an existing team of experienced executives led by Managing Director Atul Shah and long serving regional operations and strategy director Mr Thiagarajan Ramamurthy and chief business development officer Neel Shah among others on the firm’s C-suite,” it said.
New shareholder

Analysts speculated the management changes could be tied to share sale conditions ahead of the 25 per cent stake sale to the new shareholder.

The retailer on Wednesday revealed that it was in the final stages of the deal in what insiders have said is part of a plan to retire the supermarket chain’s heavy debt load.

The retailer has set the cost of the 25 per cent stake at $75 million, potentially valuing the entire business at about $300 million.

The retailer is also seeking approval to sell a 51 per cent stake in its Tanzanian unit to Ascent Investment Ltd.

Source: https://asokoinsight.com/news/nakumatt-appoints-ex-tesco-executive-ahead...

20 January 2017

East African economies growth could falter on drought, election jitters

By Njirani Muchra | The East African

The ability of East African economies to maintain their growth trajectory amid the slump in other parts of the continent could face a serious test in 2017.

In recent years, the region has been considered the bright spot in sub-Saharan Africa, recording an average economic growth of 4.9 per cent against a continental average of 1.5 per cent last year.

The impressive growth in East Africa is projected to be maintained, with the World Bank’s Global Economic Prospects 2017 report showing that Tanzania will post 7.1 per cent growth, Kenya and Rwanda 6 per cent, Uganda 5.6 per cent and Burundi 2.5 per cent.

But the economies are facing serious threats from the effects of drought, volatile elections, low commodity prices, pressure on trade, dwindling tax collections, weakening currencies and worries over a slump in foreign direct investment and cuts in development aid.

According to analysts, the prolonged economic growth that East African countries, with the exception of Burundi, have enjoyed will slow down unless governments find ways of navigating the strong headwinds.

Ken Gichinga, chief economist at Mentoria Consulting, said Kenya will have to contend with deteriorating financing conditions due to interest rate capping; Tanzania will need to overcome historical challenges of low revenue collection; and Uganda will need to stimulate the economy to counter the effects of dwindling agricultural production.

In addition to putting some 8 million people at risk of starvation, the prolonged drought is causing a surge in food prices, increasing inflationary pressures.

“A prolonged drought over the past year resulted in a surge in food prices, especially in East and Southern Africa. Higher food prices will be a significant driver of inflation in 2017,” states the Economic Insight: Africa report by the Institute of Chartered Accountants in England and Wales (ICAEW).

Investors on Hold

Elections in Kenya and Rwanda in August are expected to affect the entire region.

The often volatile elections in Kenya portend domestic risks that could moderate growth prospects. These include the possibility that investors could defer decisions until after the elections, while election-related expenditure could result in cutbacks in infrastructure spending.

“Economic growth in Kenya has historically been lower in election years owing to firms maintaining a more cautious stance. Similar events could transpire in 2017 attributable to election anxiety,” said Stanbic Bank regional economist Jibran Qureishi.

A cautious approach among investors could impact FDI flows in the region. Although East Africa recorded the highest share of FDI across Africa, achieving 26.3 per cent of total projects in 2016, this was still 2 per cent less than in 2015.

Although flows into East Africa have since rebounded, with forecasts showing an increase in net FDI of 9 per cent in 2016 and a further 10 per cent in 2017, much of this is going into the extractive sectors.

Aid Cuts

There is also concern that an anticipated cut in aid, particularly by the US government under the Donald Trump presidency, could further hamper efforts to sustain growth.

The ICAEW report says that the US is sub-Saharan Africa’s principal benefactor in terms of bilateral official development aid.

However, initial signs point to an expansionary fiscal stance under the Trump administration, and some spending cuts may be necessary to accommodate increased infrastructure expenditure.

“This raises the risk that the world’s largest economy could rein in development aid, adversely affecting dependent countries such as Ethiopia, Kenya, Tanzania, Nigeria and the Democratic Republic of Congo,” states the report.

Other concerns for East Africa’s economies are from pressures on trade and revenue collection.

As global trade continues to weaken, East Africa is also feeling the effects after containerised trade volumes decreased by 3 per cent in the first three quarters of 2016, according to the Maersk Group.

Source: https://asokoinsight.com/news/east-african-economies-growth-could-falter...

20 January 2017

Fifteen best countries for business in Africa

By Staff Writer | IT News Africa

The African continent is buzzing with potential. Rich in natural resources, a hardworking population, and huge gaps and opportunities for anyone who wants to succeed in business.

Yes there are challenges, but there is also huge potential for growth in almost any sector.

Based no Forbes‘ list, we have compiled Africa’s top countries for business. The list was compiled by rating 139 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.

Drawing from the list from Forbes, this list highlights the 15 Best Countries For Business in Africa:

Kenya is the economic and transport hub of East Africa, seeing them placed 105th overall. Although poor infrastructure continues to hamper Kenya’s potential for economic growth, the country ranks highly in Innovation, 36th, and Investor Protection, 80th, this places them 15th on this list.

Northeast African country Egypt, 103rd in the overall list, has been characterized by a uncertain political, policy and security since 2011. Egypt performs favorably in the ranks of Red tape, 34th, and Market performance, 2nd, which sees them sit in 14th spot on this list.

13) Liberia:
West African coastal country Liberia is ranked 96th on the overall list. Liberia is a low income nation that relies heavily on foreign assistance. It is blessed with the climate for agriculture and is rich in mineral resources. With rankings 33rd in Red Tape and a Tax Burden rating of 66th, Liberia is 13th on this list.

12) Ghana:
Ghana is a West African country which is ranked 90th in the overall list. Ghana has a market based based economy with relativity few policy barrier to trade and investment. Ghana is blessed with an abundance of natural resources and with ratings of 36th Personal Freedom and 53rd in Property Rights, Ghana is the 12th best country for business in Africa.

Completely landlocked by South Africa, Lesotho is ranked 88th in the overall list. Although Lesotho has a heavy reliance on South Africa, their ratings of 47th in Trade Freedom and 59th in Corruption sees them placed 11th in this list.

10) Tunisia:
Ranked 87th overall, North African country Tunisia has long be hailed as an African success story due to its diversified market-orientated economy. With rankings such as Market Performance, 39th, and Personal Freedom, 42nd, Tunisia is ranked the 10th best country for business in Africa.

9) Zambia:
Southern African country Zambia, ranked 86th overall, has had one of the fastest growing economies over the last 10 years. In spite of Zambia’s lack of diversification and over reliance on copper trading their rankings of 51st in Tax Burden and 66th in Innovation, sees them place in at 9th in this list.

8) Senegal:
Senegal is a West African country that is placed 81st in the overall list. The economy of this country is driven by mining, construction, tourism, fisheries and agriculture. Although the country has a heavy reliance on direct foreign investment, donor assistance and remittances, their rankings in Personal Freedom, 42nd, and Innovation, 50th, sees Senegal ranked as the 8th best country for business in Africa.

7) Rwanda:
East African country Rwanda is placed 78th in the overall list. It is a rural country where 90% of its population is involved in sustenance agriculture and minerals. Rwanda’s main sources of foreign exchange are tourism, minerals, coffee and tea. With rankings such as 33rd in Property Rights and 47th in Innovation, Rwanda are the 7th best country for business in Africa.

6) Cape Verde:
An Island off the northwest coast of Africa, Cape Verde is number 70 in the overall list. The economy is service-oriented with commerce, transport, tourism, and public services. Although the country suffers with a poor natural resource base, they are ranked 1st for Personal Freedom and 14th in Monetary freedom, which sees them placed as Africa’s 6th best country for business.

5) Botswana:
This Southern African country, ranked 68th overall, fueled by diamond mining has maintained one of the worlds highest economic growth rates since 1996. A downturn in the global diamond market as well as water and power shortages have seen Botswana growth slow slightly but with rankings such as 28th in Corruption and 44th in Property Rights, Botswana is Africa’s 5th best country for business.

4) Namibia:
The Southern African country is ranked 63rd on the overall list. Namibia is the worlds 5th largest producer of Uranium and has an economy that is heavily dependent on the extraction and processing of natural mineral resources for export. Namibia is ranked 5th in Market Performance and 55th in Trade Freedom, this sees them ranked 4th in this list.

Full article available here.