OPINIONBy Joseph S. Kitamirike

On April 5, the Governor, Bank of Uganda published a statement inviting commercial banks to open central securities depository (CSD) accounts at Bank of Uganda for their clients, issue and accept bid submission forms on their behalf, settle clients’ successful bids and buy and sell securities for their clients.

This may have passed as a positive development for the banking sector, but it is a huge setback for the securities industry.

If this is alarming, you will notice that the announcement did not disclose the law covering these BoU activities. And because all securities activities in Uganda are governed by laws, this article invites you to examine the role of BoU as delimited by the Constitution, banking, securities and public finance laws.

Articles 161 and 162 of the Constitution defines the role of BoU and sets boundaries for it. The framers must have wanted to provide that BoU operates free of external influence, while preventing the Bank from interfering with activities outside its mandate.

First, the Constitution stipulates that activities the Bank engages in must be prescribed in law, so BoU cannot lawfully undertake activities that are not explicitly assigned as its responsibility in the law. Second, the Constitution provides that the Bank cannot be directed by any authority or person, so BoU operates independently.

Now, since regulation always results in regulated entities receiving direction from other authorities, this means that BoU cannot be regulated and, by implication, cannot undertake activities regulated by others under various laws.

In keeping with the BoU Act and the Financial Institutions Act, BoU is the regulator of banking, is the banker and adviser to government. The BoU Act prescribes its role in securities as that of an investor in government-issued instruments and an issuer of securities in its own name.

Additional provisions in the Treasury Bill Act and the Public Finance Management Act prescribe BoU as an agent for the government in issuing securities in the primary market. To my knowledge, these roles are the only ones prescribed for BoU in securities issuing and trading.

When you turn to securities law, the Capital Markets Act (as amended) and the Securities Central Depositories Act are the laws that govern activities in the securities market.

Under these laws, there are regulations and rules designed to operationalise, inter alia, the creation of securities, their delivery to the public and management of securities trading.

Among the securities, that are supposed to be managed under these laws are those issued by the government.

Securities law does not provide a role for BoU, whose presence in the securities market is now comparable to Capital Markets Authority opening and operating a commercial bank.

To my knowledge, there are no other laws under which activity in treasury securities can be regulated and managed.

BoU’s announcement, in spite of the constraints in these laws, has the makings of an unregulated single asset-type securities market parallel to the regulated securities market.

It has been argued in some fora that since BoU issues securities, and it is a constitutionally independent body, its securities activities cannot be brought under the regulation of securities law.

This argument is flawed. The only BoU activities provided for are those that can be carried out by it acting as an agent of government, which itself does not operate independent of securities regulation.

Therefore, it is defective to argue that BoU’s role as an agent of government does exempt government-issued securities from regulation. It can, however, be argued that by circumventing securities law as it is doing now, BoU exposes its principal, the government, to charges of breach of securities law.

Most who have examined this challenge feel the need for corrective action. One school of thought favours the view that BoU should exit those activities, especially those relating to the secondary market, and leave them for the duly licensed parties.

Another school favours amendment of the Constitution to give BoU leeway to legalise its currently contentious securities market activities.

Yet another school advocates for deeper reforms which, if necessary, may result in the clarification of the roles.

However, in order not to advocate for reform of a legal environment where we have not yet fully complied, the change we need is first to ensure compliance with existing law.

Only then can we evaluate intentions of the framers of the Constitution and Parliament in enacting laws excluding BoU from trading and custody of government-issued securities. When we come into compliance, it will be clear that BoU is a regulator, a potential investor with latitude to invest in government-issued securities and a potential issuer with freedom to issue securities in its own name.

A body playing these roles cannot legally and without conflict operate securities market infrastructure or manage securities market activity.

NEW evidence against Oil giant Shell show that its top bosses were aware of bribes paid for the acquisition of Nigerian oil field OPL 245 in 2011.

New evidence has reportedly emerged during the corruption probe into Shell’s acquisition of the OPL 245 oil field off the coast of Nigeria, indicating that top executives were prepared to press ahead with the deal despite knowing that most of the money could end up as political bribes.

The BBC reported it has seen documents that show top Shell executives were aware that more than a billion of the $1.3bn (£1bn) paid to the Nigerian government would be passed on to former petroleum minister, Dan Etete, who was convicted for money laundering in a separate case.

Shell said in a statement that it did not believe that any current or former employees had acted illegally.

A company controlled by Etete – Malabu Oil and Gas – had purchased the rights to OPL 245 for a minor sum of $2m while he was Nigeria’s oil minister between 1995 and 1998.

Shell and the Italian oil company ENI acquired OPL 245 in 2011 and the government allegedly paid about $1bn of the total deal amount to Malabu.

The emails, seen by the BBC, were obtained by anti-corruption charities Global Witness and Finance Uncovered. They show Shell executives were negotiating with Etete for a year before the finalisation of the deal, the BBC said.

The BBC said ENI did not respond to its request for comment but had previously stated it did not believe that the company, or its ENI personnel, had been involved in any wrongdoing.

An email dated March 2010 from a former MI6 officer employed by Shell shows that the companyknew Etete would benefit from the deal despite him being convicted in 2007 for money laundering in France.

“Etete can smell the money. If, at 70 years old, he does turn his nose up at 1.2 bill he is completely certifiable and we should then probably just hold out until nature takes its course with him,” read the email, which was forwarded to the then Shell chief executive Peter Voser.

Representatives of Voser reportedly declined to comment.

Another email dated July 2010 showed that Shell executives believed the deal payment would also end up in the pockets of Nigerian politicians as political bribes, including former president Goodluck Jonathan.

Etete’s negotiating strategy is “clearly an attempt to deliver significant revenues to GLJ [Goodluck Jonathan] as part of any transaction”, the email noted. Jonathan is the former president of Nigeria. A spokesperson for Jonathan termed the allegations as a “false narrative” and told the broadcaster that no charges or indictments have been brought or secured against the former president in connection with the OPL 245 deal.

Luanda — At least three tons of gold are illegally exploited and exported per year from Angola to regions such as Tanzania, Emirates Arab United and other countries.

This was said to the press by the CEO of the Gold Regulatory Agency, Moisés David, on the fringes of roundtable on Gold Market Operation.

He said the situation of the gold is worrying and strategies are been outlined in order to get more data and the respective regions mostly hit by this illegal activity.

He also explained that the illegal gold activities are currently taking place with most frequency in the province of Cabinda, despite reports of the existence of illegal exploitation practices in Cuanza Norte, Huíla and other regions of the country.

The government has invited investors to invest in mineral value addition for the country to benefit more from variety of mineral resources.

According to a statement from the Ministry of Energy and Minerals the invitation comes after the government has last month announced total ban on export of ores and concentrates of metallic minerals to enable all mineral value addition activities including processing, smelting and refining to be carried out within the country.

“The government is inviting capable stakeholders to invest in mineral processing, smelting and refining industries in Tanzania,” the Ministry said, as the government is implementing the Mineral Policy, 2009 and the Mining Act, 2010.

In the Mineral Policy of 2009, the government emphasizes the need to promote and facilitate value addition activities to be carried out within the country to increase revenue from the mineral sector, create jobs and acquire new technology hence to realise maximum benefits from the mineral sector.

According to the statement, the interested persons or firms are required to have the proper technology to ensure that pure metals are produced and exported outside Tanzania.

Also, such companies to have reputable experience in processing, smelting and refining of metallic ores and concentrates as well as sound financial capacity and workable investment plan.

Some of the critics of the domestic smelting however argue that to operate the smelting plant economically, a feedstock of 150,000 tonnes of mineral sand, almost three times the amount produced in Tanzania, are required annually.

Tanzania is endowed with variety of mineral resources from metallic minerals to gemstones and most of the minerals produced are exported in raw or semi processed form.

ANALYSISBy Dorothy Nakaweesi

Kampala — For close to 15 years, Crane Shoes facility located along 6th Street in Kampala have been producing footwear which ranges from safety shoes, military boots, school shoes, polio boots, casual shoes, classic shoes, and many others. But due to a small market the company has been forced to produce below capacity.

Mr Tom Mukiibi, the executive manager of the company, told Prosper Magazine: “We produce more than 1,000 pairs of footwear monthly.”

Mr Mukiibi shares that their biggest challenge is the limited market. This, he says, discourages them to produce more, adding they have the skills and manpower to make more than 1,000 pairs a day.

Crane Shoes, and many other Ugandan manufacturers, have grappled with this market challenge because government, the biggest buyer always resorts to importing products and sourcing contractors from outside the country.

Basic facts

In the last five years alone the Ugandan government has committed more than Shs16 trillion to at least 30 contracts. Out of these contracts, Shs12.3 trillion was borrowed money and the remaining Shs3.6 trillion was generated from taxpayers.

Experts say that at least 91 per cent of the contracts were awarded to Chinese companies. This means that 60 per cent of the Shs16 trillion went to Chinese companies and the rest was distributed to companies from, majorly, India and Turkey. No contract was awarded to the local contractors or producers.

Analysists say if Uganda was not donating all this money to foreign economies, the country would have attained the middle income status years ago.

With this happening, the country’s Current Account deficit has worsened. Uganda continues to import more than what it exports, with the import bill standing at more than $5 billion (Shs18 trillion) against exports valued at $2.5 billion (Shs9 trillion).

Efforts in place

However, the issue of market challenge may soon be a thing of the past following several government initiatives such as the Buy Uganda Build Uganda (BUBU) 2014 policy launched in February. It is a policy providing for the need to support locally manufactured products, knowledge transfer, and human capital development.

To further the campaign, Kasanda North Member of Parliament, Mr Patrick Nsamba Oshabe, presented a Private Members’ Bill dubbed ‘Local Content Bill 2017’ and was given leave to consult the public. If passed into a law, it will support local producers in many ways.

In an interview with Prosper Magazine, Mr Nsamba said: “Every time you miss out on involving the local companies you miss out on capacity. And it will be a far-fetched wish for local manufacturers if they are not supported by government through giving them contracts to grow.”

He further said it is high time for government to think about technological transfer to Ugandans. “It will be ideal after the construction of one express highway for the next highways to be done by Ugandans. But we keep going back to the same country (China),” he said.

He shares that in order to help the local companies government has to change the procurement method to bend it towards building local capacity. To get this, he said, the law has to be in place to support the BUBU policy.

“Policies are very good but you cannot enforce compliance without a law. We must oblige everybody to buy Ugandan products and services,” he emphasised.

New guidelines

Government issued new guidelines to promote Local Content in Public Procurement in accordance with Sections 50 (2) of the PPDA Act, 2003 and Regulation 53 of the Local Governments (PPDA) Regulations, 2006.

This will also facilitate the implementation of the National Development Plan II (NDP II) 2015/16-2019/2020; and the Buy Uganda Build Uganda Policy, 2014.

In this campaign government has identified a list of goods it will start with and these include textiles, cement, iron and steel and leather products.

With the law in offing and BUBU policy and strategy in place, the big question economic experts are asking: How are the local manufacturers prepared to take advantage of these initiatives to prosper?

Manufacturers speak

In an interview with Prosper Magazine, Mr Oliver Lalani, the executive director of Roofings Group, one of the companies dealing in the production of steel products in the country, said the policy is a positive development but it needs to be implemented.

“BUBU is rosy on paper but implementation is something which is lacking. If this is done, we as Roofings, will be ready to take advantage of the benefits it comes with,” he shared.

On how their company is prepared to take on the challenge given the opportunity to supply, Mr Lalani said: “Our company has got a 65 per cent annual utilisation capacity, which is about 375,000 tonnes of steel.”

He said right now the company is producing 190,000 tonnes of steel annually, which is about 52 per cent. He shares that given the opportunity they will be able to supply.

In another interaction with Mr Jas Bedi, the director of Fine Spinners Uganda Limited, a textile company which took over Tri-Star and Phenix Logistics, says that this initiative is great because it will help local industries grow and expand their operations to cater for an expanded market thereby creating jobs.

Good work

Mr Jedi said: “The challenge for the local manufacturers is to build capacity for this market expansion and if the market is guaranteed investments will follow. It’s like the ‘horse before the cart’ which operates in unison.”

According to the chairman of Uganda Manufacturers Association (UMA), Mr Amos Nzeyi, manufacturers have been selling a small proportion of their products. “We are not fully utilising our industries. The capacity utilisation of our industries is 63 per cent. If it was 100 per cent, that would mean a lot of jobs created. If we can buy our products, we can go up to 80 or 90 per cent,” he notes.

Mr Nzeyi applauds the government on launching the policy. “This gives us some leverage in doing business since our goods can be bought. This means we will be building the economy and creating jobs for our youths,” he says.

Question of capacity

With such efforts one wonders whether Ugandans are ready or have the capacity to handle the contracts given the opportunity.

Trade minister and the force behind BUBU policy and strategy launch, Ms Amelia Kyambadde, said: “We want to assure you that this is real and we are (already) implementing it in some areas. We have pushed for the supplies of cement and steel for companies like Roofings and Hima to supply the big government projects.”

“Some companies don’t want to tell us the right or actual capabilities. Getting facts of the output has been a nightmare,” Ms Kyambadde noted.

She said it is only the sugar companies which have been providing quarterly data on production supplies. Going forward, Ms Kyambadde appealed to all other companies that have not been doing so to comply because this is for their own good.

“If we are lobbying for you to get a particular tender to supply or to link you up to some of the companies which want to work with you to buy your products, we need this data because it will give us a basis on where to start,” she added.

And to the acting executive director of UMA, Mr Richard Mubiru, the issue of thresholds should be informed by built capacities. He added that as UMA members they have built a lot of capacities.

“We are coming up with an intervention by doing capacity studies annually in conjunction with Uganda Bureau of Statistics. And going forward information will be available and this will help us know what we can provide,” Mr Mubiru noted.

Consumer’s voice

Mr Brian Ssenoga, a producer of honey under the brand name MiHoney, thinks the BUBU initiative is good but he is not certain on whether government is going to implement it.

He says: “In my area of speciality, we Ugandans produce very good and organic natural honey which we supply to supermarkets all over the country. But our fellow Ugandans from the elite class, including government people will go for honey branded or which comes from other neighbouring countries.”

Mr Ssenoga adds: “Surprisingly they don’t know that it’s this same honey which is imported from Uganda but adulterated, packaged and brought back here in our supermarkets.”

He advises that in order to change the mindset of the Ugandan consumer who thinks that anything Ugandan is inferior or of low quality, Ugandan producers need to certify their products, brand them and pack them well.

Will govt walk the talk?

Mr Henry Kimera, the executive secretary at Consumer Education Trust – Uganda, says that on the onset BUBU is one of the best policies Uganda would have if well implemented through meaningful investment.

“It is a good rural and urban economies transformation policy. That said, the successful BUBU policy is with the Uganda government as the biggest consumer in the country,” he noted.

He said through walking the talk, government will lead us all through practical examples by buying Uganda to make the policy a success. In that the threshold of qualifying as Ugandan good or service should be 90 per cent and supplying company Ugandan or joint venture Ugandan as majority.

“Consumers being the largest economic power, with quality products, they will have quality of service and experience, which is vital and sustainable to any public-private initiative like BUBU,” he added.

By Zephania Ubwani

Arusha — At least eleven Tanzanian nationals have landed in plum jobs at the East African Community after last week’s appointments which saw several positions filled following the recent mass exit of professionals.

The former CEO of the Tanzania Telecommunications Limited (TTCL) Kamugisha Kazaura was appointed the director of infrastructure, one of the senior positions in the secretariat.

Notable promotions include those of Ms Ruth Mtoi Simba, until last week the principal human resources officer, who becomes the organisation’s director of Human Resources and Administration. Ugandan national Kenneth A. Bagamuhunda landed in the prestigious post of director general of Customs and Trade until recently held by Peter Kiguta from Kenya who has retired from the service of the Community.

Mr Bagamuhunda has for many years served as the director of Customs at the secretariat. The Directorate of Customs and Trade is a key unit in the EAC responsible for trade and allied matters.

The 42 appointments were made last week by the EAC Council of Ministers, which is the policy organ of the Community, after interviews which were conducted by the EAC Ad Hoc Service Commission which was set up last year.

The positions filled were those of the professional staff who retired upon attaining the mandatory retirement age of 60 years or expiry of their fixed term contracts.

Other Tanzanians appointed include Ms Suma W. Mwakyusa, who becomes the principal international relations officer, Fahari G. Marwa, the principal agricultural economist and Ms Monica Mihigo who becomes the principal trade officer.

Others include Suleiman Ahmed Athumani (materials pavement officer), Anthony Minja (customs officer), Alusaria D. Swai (accountant) and Ally Dotto (accountant with the East African Legislative Assembly).

Fabian Mashauri was appointed a principal health officer with the recently-established East African Health Research Commission, an institution of the EAC to be based in Bujumbura, Burundi. The appointments, the highest in number since a major recruitment drive for the EAC in 2007/08, saw Tanzania having the highest slots (eleven), ahead of Uganda (10), Rwanda (eight), Kenya (seven) and Burundi five.

Thirty one of the appointments went to the Secretariat, which is the executive arm of the EAC and others to Eala and institutions under the Community, among them the Lake Victoria Basin Commission, the East African Science and Technology Commission and EAHRC.

None has been appointed from South Sudan as the new entrant into the bloc has not been fully integrated into the activities of the Community.

The Council further directed the EAC secretariat to ensure that an induction programme is conducted before the appointed staff assume office.

Early this year, the EAC secretary general Liberat Mfumukeko announced the imminent retirement of 52 senior and middle cadre officials between February and end of the year, the first time a large number of staff to exit the Community.

The exact number of employees working at the EAC, its organs and institutions directly getting annual budget from the EAC is believed to be between 200 and 300.

By June 2014 the secretariat alone had 231 employees, of whom six were executive staff, 69 professionals, 46 general service staff, 84 project staff and 16 temporary employees. Eala and EACJ had 24 staff members respectively.

OPINIONBy Christopher Charamba

On Wednesday evening, yet another tragedy struck the country. A South African-bound bus was sideswiped by a haulage truck along the Harare-Beitbridge Highway and caught fire at Nyamatikiti River near Chaka Shopping Centre in the Midlands Province.

At least 30 passengers were feared dead in the crash with most of the victims burnt beyond recognition.

The bus, reportedly, had over 60 passengers on board, while the truck was transporting tyres.

This is not the first accident to occur on the Harare-Beitbridge Highway.

Among the several accidents recorded along the highway, 19 people died in July 2014 after a road accident involving a commuter omnibus and a truck.

Police spokesperson Chief Superintendent Paul Nyathi said at that time they were “concerned with the narrowness of the Masvingo-Beitbridge Road and appeal to drivers to exercise caution on this road.”

Last year in March 2016, three people perished on the spot while 29 others were injured, after a South Africa-bound bus veered off the road and overturned along the Masvingo-Beitbridge Road.

The following month, 12 people were killed, while 45 others were injured when an MB Transport bus collided head-on with a haulage truck 45km outside Beitbridge.

After the accident, Transport and Infrastructural Development Minister Joram Gumbo appealed to drivers, especially those of public service vehicles, and other road users to exercise caution when travelling during the night and early hours of the morning.

Last month, 14 people who were on their way to a funeral died in a road traffic accident where a haulage truck collided with the commuter omnibus they were travelling on.

In her statement, national politice spokesperson Senior Assistant Commissioner Charity Charamba said: “Due to the state of our roads, the ZRP is appealing to motorists to avoid travelling at night and observe speed limits to preserve life.”

She added: “As police, we are quite saddened by the unnecessary loss of lives in situations which we could be avoided. Let’s all preserve the sanctity of human life.”

The state of Zimbabwean roads has been a major talking point where road accidents are concerned.

Police and Government officials have urged road users to exercise caution.

However, more work needs to be done to improve the quality of national roads, particularly, major highways that have a heavy flow of traffic.

The dualisation of the Harare-Masvingo-Beitbridge Highway is one project that would go a long way in improving the quality of that busy traffic artery.

However, the project which has been on the cards since 2002 is yet to take off though Government has insisted that its launch is imminent.

The project initially stagnated for 12 years between 2002 and 2014 because ZimHighways, awarded the tender in 2002, allegedly struggled to secure funding.

Things have since changed as Government awarded the tender for the dualisation project to Geiger International in association with the China Habour Engineering Company Limited.

An inter-ministerial committee also met with the financiers of the project to finalise implementation modalities.

Minister Gumbo, told a parliamentary portfolio committee in February that an independent contractor would supervise the project to avoid the country being short-changed by poor workmanship, like what happened on the Plumtree-Harare-Mutare Road rehabilitation project.

“We are hoping that His Excellency is going to do the ground-breaking ceremony, which will trigger commencement of construction of this road,” said Dr Gumbo.

“The spot where the ground-breaking ceremony is going to take place has already been identified. The engineers from Geiger International and their contracted company, some of them are already in the country.

“Things are moving. Before you go for Independence, work will have started. That is the timeline that I can give you.”

The importance of this highway project cannot be overstated as it will ensure smoother flow of traffic and reduce the risk of accidents.

Potholes, poorly lit roads with no clear marking as well as stray animals all pose a major risk to motorists particularly those travelling long distances and at night.

Government should therefore expedite the dualisation of the Harare – Beitbridge highway.

This road is a major corridor for the transportation of goods and people and has significant economic status to country.

It is, therefore, imperative that the safety of motorists and passengers be of the utmost importance and constructing a better road will help to achieve this.

In its construction, the contractors should also look at fencing the side of the roads, particularly, in areas where animals are found as they too pose a risk to motorists.

Further delays in beginning this project will has a negative effect to the lives that are lost when accidents occur.

While work on the highway needs to take place immediately, motorists, particularly those who ferry passengers should exercise extreme caution because of the poor state roads.

The loss of life can be avoided in many instances if those in control of the vehicles prepare themselves for the risks and drive responsibly. Motorists should avoid speeding and avoid travelling late at night.

In relation to road traffic accidents, there is also need for a comprehensive Road Accident Fund to assist victims of such tragic events.

Government, last year, stated efforts to introduce such a fund were taking shape as they engaged regional teams to carefully work on policies aimed at assisting victims of road carnage.

Minister Gumbo, said in-depth research was a necessity before the introduction of the accident fund.

“We are working on structures towards the achievement of the fund and so far we have been relying on regional feedback through case studies and visits so that we come up with something that is well researched and well organised,” he said.

“We are working towards coming up with a policy that would have been properly researched to avoid any shortfalls. I agree that we may be legging behind on the process, but we can assure the nation that the fund will soon be finalised.”

Minister Gumbo added third party insurance was one avenue to compensate road accident victims, but had not helped matters as it was exacerbated by the proliferation of fake insurance policies.

He said third party insurance was being administered privately by insurance companies hence his ministry could not comment substantively on the actual amount being collected periodically.

“In other countries, third party insurance was administered by Government, but in Zimbabwe’s case, there had been reliance on insurance companies as agents since the colonial era.”

In Zimbabwe, the Road Traffic Act in Section 38B (1) compels drivers of passenger public vehicles to get a policy of insurance providing a benefit to every person who suffers a loss or injury in an accident.

Section 38 (1) (a) of the same Act provides for $2 000 compensation in case of death of or permanent injury of the victim.

The Act, in sub-section (1) (a) further provides for the payment of $350 for medical and funeral expenses in case of injuries or death respectively.

The law also provides, in Section 38C, which limits liability in respect of children and small claims, for $200 compensation for death or permanent disability for a child of six years or below and $300 for a 14-year-old or below.

The child who gets $300 should however be older than six years.

A driver found in the above is liable to imprisonment of at least one or a fine which would be determined by the courts.

The Road Traffic Act in Section 38D requires a driver of a passenger service vehicle to ensure that proof of insurance is displayed on the windscreen and failure to display it would be fined or jailed for up to three months.

Power generation is one of the most significant challenges facing Sub-Saharan Africa and the shortage of essential electrical infrastructure often means that social and economic development can be negatively affected.

The repercussions of an inadequate power supply are felt by many in the region and particularly by business owners and farmers such as Agrocamin Cameroon, which is a leading poultry hatchery in the central African region.

Given the nature of poultry hatcheries, even a 30-minute power outage can cripple a business as all the eggs in the incubators would perish due to improper storage temperature control. Agrocam, located in Douala, previously used a diesel generator as a backup to ensure the smooth running of its hatchery, but this proved costly given the prolonged outages.

The company has now purchased a GE Jenbacher J316 gas engine from Clarke Energy, GE’s distributor of Jenbacher gas engines in Cameroon. According to the International Energy Agency, natural gas will be the fastest growing fuel in use for power generation in Africa.

“GE’s natural gas-fired Jenbacher engine will produce a nominal electrical output to power the hatchery and egg tray production facility, providing a highly  efficient, economical solution to meet our needs and to realise substantial  annual savings,” said Philippe Noutchogouin, Agrocam managing  director.

The Jenbacher J316 gas engine will produce 813Kw of power for Agrocam. Heat will be recovered from the generator’s exhaust gases in the form of hot air and will be injected into the ovens of the egg tray production machines for  drying. This will save the cost of fuel currently being used for this process and will therefore increase efficiency, and allow for the optimum use of the  gas generator.

“More  than ever before, Agrocam believes that a stable, reliable and cost-effective source of power is crucial to revive the poultry business in Cameroon, which suffered a big hit from the 2016 avian influenza [or bird flu] outbreak that paralysed poultry farmers in  Douala and the surrounding areas. Energy currently represents 50% of our operational costs,” said Jean Samuel Noutchogouin, Agrocam board chairman.

GE’s Jenbacher Type 3 gas engines offer proven savings on service and fuel consumption as well as excellent efficiency. They are also suitable for a range of applicable gas types including natural gas, associated petroleum gas, propane, biogas, sewage gas, landfill gas, coal mine gas and other special gases such as coke, wood and pyrolysis gases. “The  technical maturity and high degree of reliability of GE’s Jenbacher Type 3 gas engines make them a leader in their range. Long service intervals, a maintenance-friendly engine design and low fuel consumption ensure a high  operating efficiency, while enhanced components prolong service life,” said  Ali Hjaiej, Clarke Energy Africa business development director.

Africa is home to many of the  fastest growing economies in the world and while this growth is being hindered by unreliable power generation, there are companies such as GE, which are offering solutions to these problems with a range of power products and services.

The naira on Wednesday, weakened against the dollar at the parallel market, the News Agency of Nigeria reports.

The Nigerian currency lost 8 points to exchange at N398, weaker than N390 recorded on Tuesday, while the Pound Sterling and the Euro closed at N485 and N415.

At the Bureau de Change, BDC, window, the dollar was sold at N362 to the dollar, while the Pound Sterling and the Euro closed at N483 and N430.

Trading at the interbank window saw the Naira close at N306.2 to the dollar.

Traders at the market said that they expected the Naira to appreciate by Thursday as BDCs gets additional dollar allocation from CBN.

Meanwhile, Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria, said that the additional injection of $10,000 by the CBN to BDCs would help to checkmate speculation.

Mr. Gwadabe said that CBN’s action justified its determination to continue to strengthen the Naira and get it out of the grips of speculators and hoarders.

The CBN, last week, stated that it had increased the volume of dollar sold to BDCs from 8,000 to 10,000 dollars bi-weekly.

The apex bank hoped to stabilise the Naira exchange rate through its interventions at the foreign exchange market.

(NAN)

PRESS RELEASE

Fitch Ratings has downgraded South Africa’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘BB+’ from ‘BBB-‘. The Outlooks are Stable.

The issue ratings on South Africa’s senior unsecured foreign- and local-currency bonds have been downgraded to ‘BB+’ from ‘BBB-‘. The rating on the sukuk trust certificates issued by RSA Sukuk No. 1 Trust has also been downgraded to ‘BB+’ from ‘BBB-‘, in line with South Africa’s Long-Term Foreign-Currency IDR.

The Short-Term Foreign-and Local-Currency IDRs and the rating on the short-term local-currency securities have been downgraded to ‘B’ from ‘F3’. The Country Ceiling has been revised down to ‘BBB-‘ from ‘BBB’.

KEY RATING DRIVERS
The downgrade of South Africa’s Long-Term IDRs reflects Fitch’s view that recent political events, including a major cabinet reshuffle, will weaken standards of governance and public finances.

In Fitch’s view, the cabinet reshuffle, which involved the replacement of the finance minister, Pravin Gordhan, and the deputy finance minister, Mcebisi Jonas, is likely to result in a change in the direction of economic policy. The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises (SOEs). The reshuffle is likely to undermine, if not reverse, progress in SOE governance, raising the risk that SOE debt could migrate onto the government’s balance sheet.

Differences over the country’s expensive nuclear programme preceded the dismissal of a previous finance minister, Nhlanhla Nene, in December 2015 and in Fitch’s view may have also contributed to the decision for the recent reshuffle. Under the new cabinet, including a new energy minister, the programme is likely to move relatively quickly. The state-owned electricity company, Eskom, has already issued a request for information for nuclear suppliers and is expected to issue a request for proposals for nuclear power stations later this year. The treasury under its previous leadership had said that Eskom could not absorb the nuclear programme with its current approved guarantees, so the treasury will likely have to substantially increase guarantees to Eskom.

This would increase contingent liabilities, which are already sizeable. According to the 2017/18 budget, the government’s guarantee exposure to public institutions was ZAR308.3 billion at end-March 2017, up from ZAR255.8 billion a year earlier. The main SOEs had additional liabilities of ZAR463 billion in 2016 with no explicit guarantee but with a significant probability that the government would step in should SOEs be unable to service the debt. The government has repeatedly needed to support SOEs, including Eskom, which is responsible for a large share of liabilities.

The new finance minister has stated that he does not intend to change fiscal policy and remains committed to expenditure ceilings that have been a pillar of fiscal consolidation. However, Fitch believes that following the government reshuffle, fiscal consolidation will be less of a priority given the president’s focus on “radical socioeconomic transformation”. This means that renewed shortfalls in revenues, for example as a result of lower than expected GDP growth, are less likely to be compensated by expenditure and revenue measures. This could put upward pressure on general government debt, which at an estimated 53% of GDP at end-March 2017 was already slightly above the ‘BB’ category median of 51%.

The tensions within the ANC will mean that political energy will be absorbed by efforts to maintain party unity and fend off leadership challenges and to placate rising social pressures for addressing inequality, poverty and weak public service delivery. The Treasury’s ability to withstand departmental demands for increased spending may also weaken.

Political uncertainty was already an important factor behind weak growth last year, as in Fitch’s assessment it has affected the willingness of companies to invest. The agency believes that the cabinet reshuffle will further undermine the investment climate. Fitch forecasts GDP growth of 1.2% in 2017 and 2.1% in 2018, but the reshuffle has raised downside risks.

South Africa’s ratings also reflect the following key rating drivers:

The current account deficit narrowed to 3.3% of GDP in 2016 from 4.4% in 2015, on the back of import compression reflecting weak domestic demand, low oil prices and increasing investment income from abroad. This improvement, together with the flexible exchange rate, will contain pressures should external financing dry up. The government’s low reliance on foreign-currency financing, which accounted for just 11.3% of debt at end-March 2017, is also helping to contain external pressures.

Most indicators of economic development are in line with ‘BB’ category medians. GDP per capita at market prices is estimated at USD5,207 for 2016, compared with a median of USD5,007. The World Bank’s governance indicator, at the 59th percentile, is well above the ‘BB’ median and more in line with the ‘BBB’ median. However, this may not adequately reflect governance issues that were highlighted in the recent state of capture report by the public prosecutor and governance may deteriorate as a result of the reshuffle. The rating is supported by a sound banking sector, which has a Fitch Bank Systemic Risk Indicator of ‘bbb’.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch’s proprietary SRM assigns South Africa a score equivalent to a rating of ‘BBB’ on the Long-Term FC IDR scale.

Fitch’s sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to rated peers, as follows:
– Macroeconomic Performance, Policies and Prospect: -1 notch, to reflect South Africa’s weak growth prospects relative to the ‘BBB’ category median, with important repercussions for public finances.
– Structural Features: -1 notch, to reflect the expected deterioration in governance standards, particularly related to SOEs.

Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

RATING SENSITIVITIES
The following risk factors could, individually or collectively, result in negative rating action:
– A failure to stabilise the government debt/GDP ratio or an increase in contingent liabilities.
– Failure of GDP growth to recover sustainably, for example, due to sustained uncertainty about economic policy.
– Rising net external debt to levels that raise the potential for serious financing strains.

The following risk factors could, individually or collectively, result in positive rating action:
– An improvement in governance standards that is supportive of a stronger business and investment climate and a sustained upturn in economic growth.
– A marked narrowing in the budget deficit and a reduction in the government debt/GDP ratio.
– An improvement in the country’s net external debt/GDP ratio.

KEY ASSUMPTIONS
Fitch expects global economic trends and commodity prices to develop as outlined in Fitch’s March Global Economic Outlook.