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2017

January 2017

10 January 2017

Afreximbank admits Chad as member

By Brian Ngugi | Business Daily, Kenya

Chad has ratified the agreement on the establishment of the African Export-Import Bank (Afreximbank) to become the newest member of the continental trade finance bank.

The ratification was done by Chadian President Idriss Deby.

“The ratification of the Agreement marks the full activation of Chad’s membership of Afreximbank and allows the Bank to fully deploy its programmes and facilities in the country to stimulate trade activities and develop value-added exports across its economic sectors.

It also opens up opportunities for the Bank to provide much-needed financing for the construction of trade-enabling infrastructure in the country,” said the multilateral lender in a statement.

Members of the bank numbered 43 as at May 2016. Current Afreximbank participating states include Angola, Benin, Botswana, Burkina Faso, Cameroon, Cape-Verde, Chad, Côte d’Ivoire, Democratic Republic of Congo, Egypt, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, and Lesotho.

Others are Liberia, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Republic Of Congo, Rwanda, Senegal, Seychelles, Sierra-Leone, Sudan, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.

The agreement on the establishment of Afreximbank concluded in 1993 in Abidjan requires countries that did not sign it before it came into force should first issue an instrument of acceptance and accession, and then formally ratify the agreement in order to fully activate membership as participating states.

Participating states become shareholders when they acquire shares in the bank. Afreximbank shareholders are a mix of public and private entities divided into four classes and consist of African governments, central banks, regional and sub-regional institutions.

Others are private investors and financial institutions, as well as non-African financial institutions, export credit agencies and private investors.

Class “A” shareholders are African states, African central banks and African public institutions, including the African Development Bank.

Source: https://asokoinsight.com/news/african-trade-finance-bank-admits-chad-as-...

2017

January 2017

06 January 2017

South Sudan plans to increase oil production

By Johnson Kamungire | Africa Review

South Sudan plans to increase its oil production in the coming days, authorities have revealed.

The move follows better global oil prices promised by The Organization of the Petroleum Exporting Countries (Opec).

Opec is the body that co-ordinates petroleum policies among member countries, in order to secure fair and stable prices for petroleum producers.

Mayom Alier, South Sudan’s deputy head of mission in United Arab Emirates confirmed the decision by Juba on Wednesday while addressing the media.

South Sudan heavily relies on oil revenue to fund its national projects since the country became independent in 2011.

“We are planning to increase oil production as oil prices go up to increase our revenue and expand the ways of oil industry.

“Rise in oil prices is good news for us South Sudanese,” Mr Alier said.

South Sudan oil production capacity has fallen below 130,000 barrels per day from more than 350,000 barrels per day before the 2013 political turmoil.

The country last year deployed more boots to guard the operational oil areas in Upper Nile region amid sporadic clashes between rebels and government forces that affected oil production.

Recently, the oil Minister in Juba, Ezekiel Gatkuoth announced that South Sudan currently has 3.5 billion barrels of oil reserves.

Source: https://asokoinsight.com/news/south-sudan-plans-to-increase-oil-production

06 January 2017

Chapel Hill Denham converts Equity Fund to Money Market Fund (Nigeria)

By Onome Ohwovoriole | Nairametrics

Chapel Hill Denham will hold an Extra Ordinary General Meeting (EGM) on Thursday 26th of January 2017.

The primary agenda will be the conversion of its equity fund Nigeria Global Investment Fund (NGIF) into a money market fund. Tough economic conditions have led to the federal government ramping up borrowing.

Thus leading to a jump in money market rates. Nigerian equity market been bearish for the second year running, closing 2016 at -6.17%. Year to date return is -2.47% as at yesterday. Chapel Hill Denham is a leading investment banking, securities trading and investment management firm.

The firm has handled various landmark transactions including consulting for the CBN as well as being involved in the setting up of Asset Company Of Nigeria (AMCON).

Source: https://asokoinsight.com/news/chapel-hill-denham-converts-equity-fund-to...

2017

January 2017

05 January 2017

At least one rival for Kagame in 2017 election (Rwanda)

By Staff | The East African

Rwandan opposition politician Frank Habineza has been week nominated by his Democratic Green Party of Rwanda (DGPR) to challenge President Paul Kagame for the presidency in the 2017 election.

By this action, the party has abandoned its earlier threat to boycott the election after its demands for electoral reforms were snubbed by the government.

Explaining the change of tact, the party said participation was more beneficial than a boycott.

The move hardly elicited political excitement in a country where the major opposition parties have cast their lot with the incumbent. This largely sets the tone for the poll slated for August 3-4, 2017.

Fall from Heaven

The Green Party became the first opposition party to name a presidential aspirant, and its contender became the second after President Kagame, who threw his hat into the ring in January, just after the constitutional amendment that allowed him to run for a third term.

“We want to bring democracy to this country. Democracy does not fall from heaven, it will not come from America or Europe, we are the ones who must fight for it,” Mr Habineza said in his acceptance speech.

The Green Party is the only one that opposed the reform of the Constitution, which was finally adopted in December 2015.

“After deliberations within the party’s political bureau we concluded that participating in the elections was more beneficial than boycotting despite the existing challenges,” said Mr Jean Claude Ntezimana, the party’s secretary-general in a statement.

The Greens, as the party is popularly known, had early this year petitioned the electoral commission and parliament, seeking amendments to the election law to embrace a combination of ballot and electronic voting to “guarantee more transparency and confidence in the Electoral Commission”.

They also wanted election observers to be allowed to be present at all the polling and tallying centres and the media to announce results after they have been declared at all the levels.

The party had also sought amendment of Article 28, which requires a party to garner at least 5 per cent of the votes cast to qualify for government funding, and Article 24, which bars parties from receiving foreign aid.

The party stressed that the clauses favour the strong parties.

Political Exposure

Mr Habineza and the Greens say they have greater chance of becoming the next tenants of “Urugwiro Village”.

“I think people are tired of having had the same president for 20 years. They want change and I have strong support within the army, the police and the people. So I think we have a great chance now,” he was quoted by the Swedish newspaper Dagen as saying.

The party is looking to win its first seats in parliament, and get political exposure as “side benefits”.

With a claimed membership of 200,000 in 18 of the country’s 30 districts, officials say funding will be met by contributions from members through fund raising campaigns.

“We want to put an end to the monotony in the Rwandan parliament and give Rwandans a vibrant opposition that will hold the government accountable,” said Mr Ntezimana.

Source: https://asokoinsight.com/news/at-least-one-rival-for-kagame-in-2017-elec...

2017

January 2017

04 January 2017

Volkswagen opens assembly plant in Kenya

By Antony Kiganda | Construction Review Online

German vehicle maker Volkswagen (VW) officially unveiled its assembly plant in Kenya as it strengthens its presence in emerging markets.

During the inauguration of the assembly plant VW showcased its first locally assembled passenger vehicle, dubbed Polo Vivo.

The plant is expected to produce cars for Kenya as well as the wider East African market. The company announced a return to Kenya after almost four decades out. The company’s last engagement with Kenya dates back to 1977.

The company’s CEO Herbert Diess said, “Today marks a milestone in relations between Kenya and German industry. The new Volkswagen production here in Thika stands for great jobs, leading technologies and strategic investment. But it is more than just a plant, this opening could be the start point of a bigger economic success story in Africa.”

Kenyan President Uhuru Kenyatta said the investment by the vehicle firm was in line with government’s policy to industrialize the country’s economy.

Meanwhile, the German vehicle firm has launched plans for a ride sharing service in Rwanda as it seeks to take advantage of surging car demand in the continent

Volkswagen expansion into East Africa is expected to create employment and help communities build capacity for the entire automotive sector.

Source: https://asokoinsight.com/news/volkswagen-opens-assembly-plant-in-kenya

04 January 2017

AfDB commits $74.9 million for Dar es Salaam-Maputo road network

By Antony Kiganda | Construction Review Online

African Development Bank Group (AfDB) has approved US$71.8mn grant and US$3.1mn loan to the Mozambique government for the construction of an asphalted 70km road section in Northern Mozambique, to improve the road network and connectivity with Tanzania.

The AfDB chief transport engineer, Aymen Osmani said the project is key for traders and road users, who transport goods between Tanzania and Mozambique.

“Following the completion, they will benefit from more direct and shorter journeys to the ports of Pemba in Mozambique and Mtwara in Tanzania, effectively enhancing regional trade,” he said. The new road will extend the paved road recently built in the Tanzanian side, financed by an AfDB project approved in 2012.

This phase concerns a 70km road section which starts at Negomano, located adjacent to the Ruvuma River, the natural frontier with Tanzania. The section ends in the locality of Roma.

The project will open up the isolated part of the country, contributing to the economic growth and the eradication of poverty, as well as foster cross border trade and reinforce regional integration. The road segment Mueda – Negomano represents a missing link on the transport corridor between Mozambique and Tanzania.

The Bank will finance the paving of the road for phase I.

The improvement of the road will reduce from three to one hour the time to travel between the two localities. That first phase will be complemented by a second one, planned to start in 2019, which will connect Roma to Mueda and includes the construction of a one stop border post.

“The Bank is well positioned to support such development of regional corridors and road infrastructure due to its ability to coordinate programmes and projects across countries,” he said.

The outcomes of the project will significantly contribute to attaining the goals of the Bank’s High Five (Hi-5s) in the regions concerned, contributing to ‘Integrate Africa’ explained Amadou Oumarou, director of transport and ICT department of the AfDB.

Source: https://asokoinsight.com/news/afdb-commits-74-9-million-for-dar-es-salaa...

2017

January 2017

03 January 2017

Nigerian Petroleum Development Company owes $3 billion in taxes and royalties

By Staff | This Day

The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC),owed the federation N68.2 billion and $3.3 billion in taxes and royalties from its oil and gas operations, respectively.

NEITI made this known in its 2014 annual audit report of activities in Nigeria’s oil and gas sector which was published on Friday in Abuja.

The report also stated that the NNPC was yet to reimburse the Petroleum Products Pricing Regulatory Agency (PPPRA) up to N3.9 billion it claimed for subsidy on importation of petrol in 2012, but which was eventually found to be an over-recovery by the corporation and expected to be repaid.

Covering activities in the sector for 2014, the report indicated that Nigeria earned $55.5 billion from the 797million barrels (mb) of oil, which it produced in the year under review, but noted that there were operational anomalies it discovered in the activities of the NPDC.

Besides, the NEITI report noted that, of the total volume of crude oil produced in the country for the period, NNPC lifted 350 million barrels (mb) for export and domestic utilisation on behalf of the federation, while the balance was lifted by various contractual arrangement producers.

Flagging off the NPDC’s activities it considered unwholesome and which it said resulted in revenue loses to the country, the report said, total outstanding balances of unremitted funds by the company (NPDC) were N68.2 billion and $3.3billion for taxes and royalties respectively.

This, it pointed out, comprised $451.4 million and $15.2 million royalty on oil and royalty on gas respectively. It also includes $991 million for PPT (petroleum profit tax), PAYE (pay as you earn) of N42 million, WHT (withholding tax) of N17.1 billion, education tax of N15.7 billion, VAT (value added tax) of N7.0 billion, NDDC (Niger Delta Development Commission) levy of N28.3 billion and $81.0 million.

The NEITI said while the failure of NPDC to remit these revenues amounted to short-changing the country especially in terms of funds for development, the NNPC, which is NPDC’s parent company did not respond to requests for further information on this by its auditors.

It also stated that the Department of Petroleum Resources has conducted a ‘Good and Valuable Consideration’ in respect of the four divested Oil Mining Leases (OMLs) 60, 61, 62 and 63, which was assigned to the NPDC in 2012 in the Nigeria Agip Oil Company (NAOC) joint venture, and placed their financial values at $2.225 billion, however, adding that the NNPC was contesting it.

“The Good and Valuable Consideration in respect of the divested OMLs 60, 61, 62 and 63 was received from DPR in the third quarter of 2016 valued at US$2.225 billion. NNPC has accordingly written to DPR requesting further engagement to ascertain the basis and assumptions that went into the valuation as to the reasonableness of the amount taking cognisance of all associated risks and assess its impact on the NNPC bottom line.

“While waiting for the determination of the Good and Value Consideration, NNPC has already remitted about US$1.3 billion straight to the Federation Account from the gas revenue derived from the assigned assets from January 2013 to date,” it noted.

On the fuel subsidy over-recovery by NNPC, the report stated: “N3.981 billion of debts as a result of over-recovery under Petroleum Support Fund Scheme (PSPF) in 2012 was outstanding. NNPC has been in contact with PPPRA on the issue and acknowledge the amount as being due for payment, it has remained outstanding due to challenges with the corporation’s liquidity. NNPC management has also informed the PPPRA of its commitment to settle the said amount.”

According to NEITI, publishing the annual report was in accordance with the global Extractive Industries Transparency Initiative (EITI) standards which encourage implementing countries to release their independent industry audit reports at most two years in arrears. Nigeria is signatory to the EITI ideals.

Source: https://asokoinsight.com/news/neiti-nigerian-petroleum-development-compa...

03 January 2017

Ethiopia plans industrial park for pharmaceuticals

By Dawit Endeshaw | Addis Fortune

Ethiopian officials have disclosed their plan to establish industrial parks dedicated to the pharmaceuticals industry during a closed meeting held at the Hilton Hotel last week with local pharmaceutical producers and importers. Officials from the Ethiopian Investment Commission and Ministry of Industry who were present at the meeting advocated the plans, which aims to complete the industrial parks and have them operational in the next two years.

Chaired by Fitsum Arega, the commissioner of EIC, and Mebrhato Meles (PhD), state minister for Industry, a draft document of an inception study conducted by the Prime Minister’s Office was presented to stakeholders. The rationale behind the establishment of the industrial parks is to transform the pharmaceuticals industry, which at the moment is highly dependent on imports. Out of the total demand for drugs, medicines and medical equipment in Ethiopia, 80pc to 85pc is imported.

Of the 15pc to 20pc locally produced pharmaceuticals get their inputs fully from imports.

Local manufacturers are capable of supplying only 90 of more than 380 products on the national essential medicines list.

During the last fiscal year, Ethiopia procured more than four billion Br worth of medical supplies and equipment and secured an additional 4.7 billion Br in kind from development partners. The document cited the experience of China, India, South Korea and Singapore as examples of how pharmaceutical industrial parks can be successfully established. It particularly emphasized the Chinese and Indian models as the two biggest providers of generic drugs to the global market.

Tax holidays were brought up in the document, again citing the experience of China and India.

Hopes are that the parks will attract multinational pharmaceuticals companies, as well as helping the local ones become more involved in large scale productions.

Possible tax incentives, support and assistance that will be provided for those who will be involved in the parks has yet to be detailed, although the document did state that support would be offered. “During the meeting, local producers raised their concerns about losing their position if the big multinational companies entered the local market,” said a pharmaceutical specialist who attended the meeting.

“This is not like agro-processing, textile or garment focused industrial parks,” a veteran importer said. “I don’t know how a sector that hasn’t always had a domestic value chain connection would be successful.”

For instance, agro-processing and textile industrial parks would be able to complement each other, according to the importer.

During the meeting, Qilinto, a place located in the southern outskirt of the capital was proposed for the establishment of the first pharma industrial park.

“It is too early to comment,” said Fitsum, the commissioner of the EIC.

Following the discussions with the respective stakeholders, the document along with the comments from the participants of the meeting comments will be submitted for approval in January 2017, according to a senior official from the Ministry of Industry.

Source: https://asokoinsight.com/news/ethiopia-plans-industrial-park-for-pharmac...

03 January 2017

East African Community’s positioning for 2017 and beyond

By Staff Writer | The Exchange

It recently emerged that, in February, a sub-committee of ministers responsible for East African Community affairs agreed on a confederation model instead of a political federation as the last stage of EAC integration.

As Judy Njeru, senior assistant director for political affairs in Kenya’s state department of EAC integration said recently, a confederation is a union of political units for common action in relation to other units.

Confederations tend to be established for dealing with critical issues such as defence and security, foreign affairs, a common currency, immigration and labour movement, infrastructure, and education, science and technology development.

Njeru said measures toward this form of cooperation, including harmonisation of education systems and curricula, cooperation in health, sports, defence, peace and security, trade and customs, standards and environment, are already taking place.

“Confederation allows for the transitional stages to be used as building blocks towards the achievement of a full political federation,” she said.

“The idea of a confederation as a transitional phase toward the political federation is desirable, particularly since partner states will retain their sovereignty and only transfer some capacity in identified areas.”

A political confederation, Njeru said, will have a major impact on the political structure, monetary and fiscal policies of the regional bloc. However, much depends on how partner states actually walk the talk in 2017 and beyond. More cooperation and lesser competition will also see the region’s integration agenda reinforced.

Enter South Sudan

In April, last year, when Presidents Salva Kiir of South Sudan, and John Magufuli of Tanzania as EAC Summit chairperson, signed the treaty of accession to the Community, they noted that South Sudan’s entry was for the benefit of the entire region.

When Juba deposited instruments of ratification on the accession of the EAC Treaty, five months later, it enlarged the bloc’s market size to nearly 166 million people, up from 155 million.

There are those who doubt South Sudan’s admission is one of the achievements for EAC given how the four year old tit-for-tat hostility in the world’s youngest state, among others, hit the economies of Uganda and Kenya.

The chronic conflict has claimed thousands of innocent lives, displaced others and is wrecking the nascent oil economy. To this day, peace remains elusive. Analysts therefore doubt whether this kind of South Sudan benefits the bloc.

The country is expected to commence full participation in EAC activities in June 2017 but, other factors constant, peace in Juba will be the best reward to this generous Community.

Institutions

What’s more, the adhoc EAC Service Commission established as part of recommendations emanating from the EAC institutional review process could be another key progress highlight of the past year.

The EAC faced diverse challenges; a situation not helped by Partner States’ increasing interest in recruitment procedures, with regard to staff recruitment in view of the Community’s expanded mandate, and the inadequate human resource capacity organs and institutions. The Commission, as expected, will oversee recruitment of staff.

Other new institutions, including the Kigali-based EAC regional centre of excellence for vaccines, immunisation, and health supply chain management, among others, commenced operations.

Besides creating a regional identity, the centre will train a cadre of health supply chain managers and continue to harness best practices beyond 2017.

Legislative Milestones

The current East African Legislative Assembly (EALA) has another six months to go before its tenure ends. After consolidating its position following a poor show earlier when former Speaker Margaret Zziwa was removed, the Third Assembly passed 15 Bills and approved more than 30 reports in the past 12 months.

These include the EAC Customs Management Act (Amendment) Bill, 2016; the EAC Supplementary Appropriation Bill, 2016; the EAC Anti-Trafficking Persons Bill, 2016; and the EAC People with Disabilities Bill, 2016.

Besides putting to account different EAC officials, including the secretary-general, lawmakers also achieved an important milestone by breathing life into the activity of sensitisation of the bloc’s citizens.

They also passed a resolution urging the Summit to amend the EAC Treaty to make Kiswahili a national language of the bloc.

Top Performer

In 2016, more effort was put in eliminating non-tariff barriers. Still, the new-fangled plan to phase out the US Dollar as a cross-border trade legal tender in favor of local notes and coins will be a game changer for small and medium size businesses.

Among other advantages, when east Africans, especially border communities, transact business without converting their respective currencies to the dollar and back to their own as is the case now partner states stand to save money lost through the time consuming exchange.

That aside, the UN Economic Commission for Africa (UNECA), in its Africa Regional Integration Index Report 2016, says EAC is the top performing regional economic community on integration. But this does not imply that partner states should rest on their laurels.

The report says EAC has higher than average scores across each dimension of regional integration, except for financial and macroeconomic integration.

Even with some of the progress highlights, and regional integration being deemed to be a development priority, the year saw unpleasant incidents. Once more, partner states’ remittances remained awfully poor and organs such as EALA at some point suspended some activities.

In a December 16, 2016 statement, EAC Secretary-General Liberat Mfumukeko is said to have instituted reforms to cut cost in EAC programmes.

He reportedly reduced travel expenditures by 28 per cent between May and November 2016, compared to 23 per cent between May and November 2015, saving nearly $2.75 million.

However, despite this, difficulties persist as EALA has moved to halt recruitment of more than 30 senior EAC Secretariat officials due to allegations of corruption.

In November, last year, chiefs of EAC revenue authorities, meeting in Kigali, admitted that the bloc is threatened by increased fraudulent practices. Richard Tusabe, Rwanda Revenue Authority commissioner-general, said they are consolidating anti-graft efforts.

Knowing that national approaches alone do not yield much and are not sustainable, regional tax authorities are looking to improve cooperation; share more information and jointly deploy resources to tackle the vices, Tusabe said.

Source: https://asokoinsight.com/news/east-african-communitys-positioning-for-20...

03 January 2017

Moody’s preaches oil and gas over diversification for Nigeria recovery

By Chacha Wabara | Nairametrics

Since the onset of the recession last year, the Federal Government (FG) has been proclaiming that the way out of the economic crisis remains diversification of the nation’s economy from its over-dependence on the oil and gas sector, which it said was partly responsible for the recession.

Despite all the cries for diversification of the economy, credit ratings agency, Moody’s, has affirmed that oil and gas remains Nigeria’s best hope of lifting its economy from the dredges it currently finds itself. The agency acknowledged the potency of the capital market as a reliable and captive source of liquidity and funding for the government but however, indicated that the oil and gas sector would play a significant role in getting Nigeria out of recession this year.

Giving its reasons for this assertion, it said: “Nigeria’s large hydrocarbons reserves remain a key credit support: it has an estimated 37 billion barrels of oil (about 28% of total African reserves) and nearly 34 billion of oil-equivalent in gas. Oil and gas exports tend to account for over 90 percent of goods exports and a significant share of fiscal revenue (60-70% prior to the current oil shock).

‘‘Our current oil price forecast are $45 per barrel in 2017 and $50 in 2018, compared to prices above $100 on average between 2010 and 2014”.

It stated further that two-thirds of 2017 real growth would come from the oil sector rebound alone, with a strong base effect expected in the second and third quarters.

The rating firm’s Vice President and Lead Analyst for Nigeria, Lucie Villa, went further to project that the Nigerian economy will experience a 2.5 percent growth in 2017 from its 1.5 percent contraction in 2016

Source: https://asokoinsight.com/news/moodys-preaches-oil-and-gas-over-diversifi...