Category: News

Interview: “There has been a problem in the way we look at agriculture [in Africa].” says Akinwumi Adesina – AfDB president

Last year, the President of the African Development Bank (AfDB),  Akinwumi Adesina won the World Food Prize. His philosophy is not only that Africa has a true comparative advantage in this field but that agriculture should be viewed as a business opportunity as opposed to development. The agricultural sector, he points out, has made more billionaires than most industries. African Businesscaught up with him to find out more about his views on agriculture, one of the five priorities of the AfDB.

The Chinese and Indian agricultural landscapes were very similar to Africa at independence. Both these countries managed to bring about their green revolution. Do you feel this is going to happen in Africa?

There has been a problem in the way we look at agriculture. We have looked at agriculture as the sector for managing poverty, as a development sector. But in fact, agriculture is not a development activity, nor a social sector, but a business.

And I think it’s that approach – the opportunity in agriculture for business – that will allow us to transform that industry. It’s a business that allows you to transform rural economies and free millions from poverty.

It’s a business that allows you to earn foreign exchange and reduce your level of dependency on food imports. African leaders are beginning to get it that agriculture is centred on how they are going to get their economies to work. And that is what leads me to believe that the agricultural transformation we’re talking about is really going to happen.

The other thing is the importance of technologies. Today, we have rice varieties that allow people to produce about four or five times what farmers are currently getting.

We have cassava varieties that give you 80 tonnes per hectare compared to roughly about 20 tonnes per hectare. So, four times what farmers are currently getting. There are drought tolerant maize that allow you to get yields of 100% despite the presence of drought. We have all the technologies and what we’ve got to do now is take them to scale.

So, now at the AfDB, my focus is to make sure that we deploy technologies of scale to reach millions of farmers. Africa shouldn’t be thinking of feeding itself in 30 years, or 40 years – it should be thinking of feeding itself in 10 years.

We are putting $24bn, that’s a lot of money, behind agriculture in the next 10 years. It just tells you how seriously we consider this, because I think Africa must not only feed itself, but it must feed itself with pride.

You were at the Africa Fertiliser Summit back in 2006. Fertilisers destroy the natural habitat and damage the land and the water systems. What is the middle way that works for the African farmer?

The 2006 Africa Fertiliser Summit was a landmark event. One of the things that we agreed was that we had to build a network of agro-dealers and agro-input shops that will take fertilisers and seeds directly to the doorstep of farmers.

Today in Africa you literally have tens of thousands of them that we have created. The distance that farmers now travel to find seeds and fertilisers has declined tremendously, because of these rural input shops.

When I was at the Alliance for a Green Revolution in Africa, and then when I became Minister of Agriculture in Nigeria, we set up risk sharing facilities that supported banks to lend to the agricultural sector, including fertiliser companies, seed companies and agro-dealers. Right now at the AfDB, we are helping to replicate this in 30 African countries.

We’ve already started a lot of this in many countries, but we are going to reach 30 African countries in a very short period of time. When it comes to the issue of supporting local manufacturing of fertiliser, I am thrilled by the developments in Africa since the Fertiliser Summit.

For example, Aliko Dangote is putting $5.6bn into what would be the largest urea plants in Africa, one of the largest in the world, in Nigeria. Remember he was only in cement, now he is into agriculture. In Morocco, they have expanded rapidly into fertiliser production and now Morocco and Nigeria are trading fertiliser phosphates massively.

And when it comes to the whole issue of regional procurement of fertilisers, we are working with a group called the Africa Fertiliser Partnership, which is helping countries to put together their own plans to be able to procure fertilisers jointly, so they can reduce the cost of importing fertilisers.

Without the African Fertiliser Summit and the agreement to have a green revolution, I don’t think that we would have done any of these things, because for 30 years before that time, everybody said that fertilisers were useless. But I don’t think that’s the case, I think the main problem we have in Africa is not the overuse of fertiliser. The problem in Africa is the lack of use of fertilisers. Africa has the lowest use of fertilisers in the world.

Despite employing 70% of the workforce, the industry is still small as a percentage of GDP and it is dominated by smallholder farmers. Will the structure need to change to contribute to the green revolution?

Part of the reason why African agriculture has been slow in developing is because the African smallholding farmers are not organised and so they don’t form big political pressure groups. Therefore, it’s easy for them to be forgotten by leaders. Leaders court their votes before elections, and afterwards they forgot them.

But look at France – if you forget the farmers in France, what do you get? You get trucks on the street. No president of France will ever toy with farmers. So, good organisation by farmers is very important for their voices to be heard. African farmers need to really, really, organise to be able to push their way.

Source: African Business Magazine

It may be a year of electioneering, but steady growth is expected for Nigerian economy in 2018

In a year likely to be dominated by electioneering, as the country gears up to the 2019 polls, the Nigerian economy is nonetheless expected to see growth of 2–5% – writes Rafiq Raji

In Nigeria, the 2019 elections will be the big issue over the coming year. The campaigns have started in earnest, and it is beginning to look like the duel will be between Muhammadu Buhari, the incumbent president, and Atiku Abubakar, a former vice-president. President Buhari’s ill health made almost everyone assume he would not seek re-election. But having started to recover, he has begun to give signals he will ask for peoples’ votes.

With a veteran politician like Abubakar expected to put up a good fight in a system likely to be fairer because of a less overbearing incumbent, it will fall to the president’s underlings to take him on in the trenches, where almost anything goes.

They are probably doing so already. In September, the authorities terminated a lucrative logistics contract Abubakar’s firm had with the ports authority. They asserted the terms violated the Nigerian constitution. More challenges are likely to follow for the former vicepresident. It would not be totally out of the question if a corruption probe were suddenly launched. That way, President Buhari would not need to contend with him at the polls.

As an informal agreement between the major political parties dictates that the presidency will go to a politician from the north in 2019, potential candidates from the region are already battling one corruption case or the other. Abubakar had been left unperturbed, but that was while he was still a member of the ruling All Progressives Congress (APC) party. This changed in December, when he moved to the leading opposition People’s Democratic Party (PDP).

In the event that oil prices remain above $50 per barrel and structural reforms are implemented, growth could improve to about 5%.

Will the expected mudslinging and schemings put the largely optimistic 2018 Nigerian economic outlook at risk? Not necessarily. The prospects of politically induced violence are minimal. It could actually be a positive that the political cycle is gathering steam much earlier than usual. The Buhari government is already beginning to be more responsive to the needs of the people. After only the slightest outcry, action is taken. When Nigerians complained about the misdemeanours of an elite police unit in December, the head of police quickly ordered a reorganisation. In the past, such protests would have gone unheeded.

Stimulus needed

While it is unduly sensitive to the Brent crude oil price, the technically diversified Nigerian economy should be boosted by an expected pick-up in agriculture, lower inflation and interest rates and increased public spending. The International Monetary Fund (IMF), which expects 0.8% GDP growth in 2017 and almost 2% in 2018, could revise its forecasts upward when it next publishes its economic outlook report.

Some economists urge caution amid the optimism. Ayomide Mejabi, an economist at Stanbic IBTC Bank, says: “The economy continues to show signs of weakness, especially if one focuses on the non-oil economy.” And he urges the Central Bank of Nigeria (CBN) to ease monetary policy if the recent economic recovery is to be sustained.

His advice will probably be heeded if the inflation outlook is anything to go by. Still high but slowing consumer inflation of about 16% in the second half of 2017 was primarily due to high food prices, driven largely by domestic factors. Informal exports of food to neighbouring countries and the increasing reliance on domestic inputs by local manufacturers have been pressuring prices. The situation may improve in 2018.

“We are very optimistic that food prices will come down, and as they come down it will help to complement the reduction in core inflation,” commented CBN governor Godwin Emefiele. Base effects would help, in any case, with annual consumer inflation likely slowing to the high single digits by mid-2018. “We are hoping that by the middle of next year we should begin to approach the high single digits,” said Emefiele. This may be indicative of the timing of a much-anticipated easing of monetary policy by the CBN.

Otherwise, Emefiele has been noncommittal on the timing of a potential rate cut if his inflation expectation is vindicated: “I would like to see low interest rates and I would like to see low inflation and I would be happy to see it as quickly as possible. When? I cannot categorically say,” he told the media in London.

But would commercial bank interest rates fall in tandem? Not necessarily. Banks are forced to charge a high interest rate premium due to the tough business operating environment. For example, their ATMs are run on standby generators. Consequently, Nigerian banks must transfer some of the costs.

Possible interventions in the foreign exchange markets by mid-2018 – when capital reversals on fears about the 2019 elections may begin to gain pace – should not be a problem.

Recovery is still fragile In the medium to long term, structural reforms must be implemented regardless. Power supply remains erratic and logistics are a nightmare for firms, despite reforms, although it is improved. The authorities’ Economic Recovery and Growth Plan (ERGP) uses the right buzz words but does not inspire much confidence among market participants. Not all of it is being implemented. The foreign exchange ban on some 41 imported items remains in place.

The plan also assumes the Buhari government will be in place after 2019. Even so, it represents “the best attempt at a structural reform plan in many years” according to Stanbic IBTC’s Mejabi.

Fears about a relapse into recession are related to the oil price. Nigeria’s economic trajectory has been moving in sync with the oil markets. When prices fell, the economy went into a five-quarter recession. When oil prices recovered, positive growth returned.

And because crude oil prices are not expected to rise to the heady levels of $100 a barrel and more of some years back, the 7% GDP growth target of the authorities by 2020 may be elusive.

“In order for the economy to continue growing at a steady pace, private sector credit needs to grow once more,” says Mejabi, who assumes a base case growth forecast for 2018 of around 2%. In the event that oil prices remain above $50 per barrel and structural reforms are implemented, growth could improve to about 5%.

Analysts are doubtful the CBN would abandon its multiple exchange rate system, even though the special foreign exchange window for investors and exporters, where the rates are set by buyers and sellers, is proving quite buoyant.

With crude oil prices also expected to remain above $50 in 2018, foreign exchange reserves are expected to rise above $40bn in the year, from about $35bn in November.

Possible interventions in the foreign exchange markets by mid-2018 – when capital reversals on fears about the 2019 elections may begin to gain pace – should not be a problem.

However, it would be better still to let go of the lever and save more foreign exchange for the next rainy day, which will surely come.

Source: African Business Magazine

Tanzania: China to Establish U.S.$62 Million Transport University in Tanzania

Dar es Salaam — China will build a university that will specifically cater for transport needs in the country, State House said yesterday.

A statement, released after President John Magufuli met with the new Chinese ambassador to Tanzania, Ms Wang Ke, said the Asian economic powerhouse would provide $62 million (about Sh138.3 billion) to finance the project.

According to the statement, Ms Wang Ke, who also delivered a message to President Magufuli from Chinese President Xi Jinping, said the grant was part of China's assistance to Tanzania as the two countries fostered their bilateral ties.

"President Magufuli asked Ms Wang Ke to deliver his word of thanks to the President of China for the message and the assistance, saying it will help in improving transport in the country," the statement said.

A transport university will greatly help Tanzania to increase the number of professionals in aviation, especially at this time when the government is purchasing planes to as parts of efforts to revive Air Tanzania Company Limited (ATCL).

Data produced by the Tanzania Air Operators Association (Taoa) shows that as of November 2012 there were 183 local pilots in the country against a demand of 456.

Meanwhile, President Magufuli received a report on the future of Tanzania Telecommunications Company Limited (TTCL) in the wake of its recent change of mandate from a company to a corporation.

President Magufuli reappointed former Cabinet minister Omar Nundu as TTCL board chairman and Mr Waziri Kindamba as the corporation's director general.

Source: The Citizen Reporter, allafrica.com

Economists say Uganda, Kenya prospects assuring

Activity in Kenya’s manufacturing sector grew for the first time in two years in January this year, on the back of improving business conditions, according to the latest Stanbic Bank Purchasing Managers’ Index.

Uganda recorded a slight drop of 2.3 points to 52 points, reflecting notable growth in construction activity and rising employment levels across various sectors, except the services segment. It is also a reflection of resilience under difficult economic conditions.
This index offers a regular assessment of business confidence levels within key sectors, including manufacturing, construction, services and agriculture, while the survey data is collected from a sample of firms, Stanbic Bank executives said.
The latest study shows that Kenya’s private sector activity slid 52.9 points in January from 53 points in December.
“Output rose to its highest level since January 2016, a trend likely to persist over the coming year. Notably, the contraction we saw in the agriculture sector in the first half of 2017 is likely to be reversed in the half of 2018, which should subsequently provide tailwinds for other sectors to flourish, said Jibran Qureishi, regional economist East Africa at Stanbic Bank.
“Horticulture and floriculture should also perform well in the coming months largely underpinned by the ongoing recovery in the eurozone as well as the recent appreciation of the euro. We retain our GDP estimate for 2017 at 4.8 per cent, but we see a recovery to 5.6 per cent in 2018,” said Mr Qureishi.
According to Stanbic, Kenya’s growth was underpinned by increase in output, with the upturn in new orders remaining strong.
“The business operating conditions across the Kenyan private sector improved at a solid rate. Although the latest index reading was slightly lower than the previous month, it was nonetheless the second-highest figure in just over a year,” said Mr Qureishi.
In Uganda, the increased purchase orders registered in January stimulated a rise in employment levels as companies responded to the growing demand from customers. But delivery times for raw materials declined.
Spillover effect
Consequently, input prices for various items procured in wholesale and retail, agriculture, construction, industry and services sectors rose last month, coupled with increased staff costs, triggering higher selling prices charged by various local firms.
Despite the fairly upbeat movements noticed in the PMI since late 2017, the spillover effect of increased economic activity is yet to be felt by many ordinary consumers.
“Private sector output expanded, driven mainly by an increase in expenditure within the construction sector. New orders continued to rise, brought about by stronger domestic and global demand. Greater purchasing activity also enabled further growth in operating capacity.
“Suppliers also coped with higher volumes of new orders, with delivery times shortening in January,” said Stanbic Bank Uganda’s fixed income manager Benoni Okwenje.
Robust PMI trends documented since last year have spurred optimism among government economists, with some hinting on upward revisions of growth forecasts for this financial year.
“The Stanbic PMI seems to reflect our own findings on the state of the economy. Most of the key economic indicators, including inflation have improved while the Kenyan political risk factor has also become subdued.

“Weather conditions though, remain a lingering source of worry. Nevertheless, we are hopeful about economic growth projections this financial year and we feel it is time to upgrade our growth forecasts,” said Dr Albert Musisi, commissioner for macroeconomic policy at Uganda’s Ministry of Finance, Planning and Economic Development.

Source:  Bernard Busuulwa and Allan Olingo, The EastAfrican

Tanzania: Railway Under Construction in Tanzania Probably Africa’s Best

RELI Assets Holding Company (RAHCO) is confident that Tanzania's Standard Gauge Railway (SGR) which is currently under construction, is expected to be the best railway in Africa upon completion.

The first phase of construction of 300 kilometers from Dar es Salaam to Morogoro is currently being undertaken by the Turkish company Yapi Merkezi, in partnership with a Portuguese firm, Mota-Engil Africa. According to RAHCO Project Manager Maizo Mgedzi, the construction of the first phase has been completed by 20 per cent so far, since construction activities began in May last year.

The phase is expected to be completed in November 2019. Tanzania's SGR is of higher quality compared to those already built in some countries in Africa. Mr Mgedzi mentioned Ethiopia, South Africa, Kenya and Morocco as among African countries that have built modern railways; but pointed out that the SGR built in those countries had a speed capacity of 120Km/h compared to 160 Km/h of Tanzania's SGR.

"The SGR we are building will be electrified compared to the SGR built in some African countries which use diesel trains. For example, Ethiopia is now building an electrical SGR and a small part of Johannesburg SGR in South Africa which is also electrified," he said, adding: "We are also building a railway line capable of allowing 2km long trains to exchange routes at stations while the ones in other countries are less than one kilometer long; so the quality of the railway we are building in Tanzania is of higher quality compared to those in otherAfrican countries."

By considering the quality and durability of the railway, the government has decided to build the concrete standard gauge railway which is more durable compared to the Meter Gauge railway that is currently in operation.

On the advantages of using concrete sleepers on SGR, the project manager said that it would enable trains to carry heavy weight load of up to 35 tonnes per excel whereas the existing Meter Gauge railway cannot exceed 14 tonnes of cargo per excel. He explained further that, concrete sleepers were also able to withstand a speed of 160km per hour passenger train and 120 Km per hour cargo train while the currently operating train cannot exceed 70Km/h.

In addition, the modern railway line will have a 1,435 mm width (equal to 1.435 meters) while the current railway has only 1,000 mm, width which is equal to one meter. "The bigger width of the railway we are building will enable the train to be stable, faster and more secure. So the width of the railway we are constructing is 435 mm more compared to the current meter gauge railway; and when we say 'gauge' it means the width of the railway.

Railways have two legs, namely the left and the right legs which are fastened with sleepers, so the width between one rail and the other is called 'gauge'," Mr Mgedzi elaborated.

On the quality and standards, the railway constructed in the country will be able to transport between 17 to 25 million tonnes of cargo per year compared to the meter gauge whose capacity is to transport only 5 million tonnes of cargo per year. Regarding the passengers' train, the RAHCO project manager said that due to the length of exchange routes at stations, the railway can transport a higher number of passengers, but initially, it will transport not less than 1.2 million passengers a year.

The completion of the first phase of the project will facilitate the existence of three passenger trains as the starting point. The trains will be undertaking daily round trips between Dar es Salaam and Morogoro. Mr Mgedzi told the 'Daily News' that one passenger train can operate three to four trips per day between Dar es Salaam and Morogoro , thus making it possible to have a total of nine to 12 trips per day, but the number can be increased as passengers increase.

"When you start with something new, the first step you have is to attract customers by offering them reliable, fast and timely service and above all by avoiding wastage of time along the route; these are important criteria for winning the confidence of customers," said Mr Mgedzi.

According to the project manager, the modern railway from Dar es Salaam to Morogoro would have a total of six stations Dar es Salaam, Pugu, Soga, Ruvu, Ngerengere and Morogoro.

Describing the lifespan of the envisaged railway, Mr Mgedzi said that its bridges had been designed to survive for 100 years, while the rail itself can survive for 40 years before major repairs. On electrical and communication systems, he said that it depended on the type of plant and cables that would be used, adding that the designs were still underway and that information about its lifespan would be released later

Source: Matern Kayera, allafrica.com

Acacia Mining slumps into losses as export ban hits on earnings

Gold producer Acacia Mining has registered net loss of $707 million for the year ending December 31, 2017, on the back of a hefty charge on the value of its main assets in Tanzania.

As a result, Acacia has scrapped its 2017 dividend and announced that it will slash its gold production in 2018 up to 43 per cent as its Buzwagi mine transitions to processing stockpiles while Bulyanhulu, whose operations have been scaled down, solely re-processes tailings.
The company, which is majority owned by Barrick Gold, said its financial performance was significantly impacted by the post-tax non-cash impairment charge of $644 million, resulting from uncertainty in the operating environment and the ban on exporting concentrates.
The goldminer’s revenue fell by 29 per cent to $752 million over the period, as the Tanzania’s ban on export of mineral concentrates introduced in March last year hit the firm’s earnings.
Acacia said the export ban, which forced it to reduce operations at its flagship Bulyanhulu mine, resulted in about $264 million in lost revenue and a cash burn of $237 million in 2017.
“We delivered resilient operational performance during a challenging 2017, with full year gold production of 767,883 ounces at all-in sustaining costs (AISC) of $875 per ounce,” said Peter Geleta, the interim CEO of Acacia Mining.
“While Acacia Mining was impacted by events beyond our control, we took decisive action to stabilise our business and believe our operations are now well placed to deliver in 2018.”
Acacia is embroiled in a long-standing tax dispute with Tanzanian president John Magufuli’s government which accuses it of evading taxes stretching years back.

In July, Tanzania slapped Acacia with a $190 billion tax bill saying that the company owed the country $40 billion in unpaid taxes which result from under-declaring exports and $150 billion in penalties and interest.

Source: VICTOR KIPROP, The East African

Nigeria: Britain to Add Naira to List of Accepted Trade Currencies

Britain's Export Finance Agency will add the Naira to its list of "pre-approved currencies", allowing it to provide financing for transactions with Nigerian businesses denominated in the local currency.

The Naira will become one of three West African currencies that UK Export Finance has pre-approved for its programme of funding transactions that promote trade with Britain, it said.

Britain voted to leave the European Union in 2016, which has forced London to rethink its trade ties with the rest of the world. It has said it would start preliminary talks with India about an eventual bilateral trade deal.

The United Kingdom and the EU struck an agreement in December that opened the way for talks on future trade ties.

"This is a clear indication of how much value the UK places on its relationship with Nigeria. It will provide a firm foundation for a significant increase in trade and investment between both countries," Reuters quoted the British High Commissioner to Nigeria, Paul Arkwright, to have said in the UK's credit agency statement. The statement said the UK would provide up to 85 per cent of funding for projects containing a minimum of 20 per cent British content.

"The Naira financing will follow the same structure as someone buying in sterling, except that Nigerian firms taking out a loan in local currency can benefit from a UK government-backed guarantee.

"This can enable businesses to manage foreign exchange risks and, many times, to negotiate better terms with local banks."

Meanwhile, the Central Bank of Nigeria (CBN) once more intervened in the Retail Secondary Market Intervention Sales (SMIS) yesterday to the tune of $325.64 million.

Figures obtained from the bank indicated that the amount released was for requests in the agricultural, airlines, petroleum products and raw materials and machinery sectors.

The figures were confirmed by the bank's Acting Director in charge of Corporate Communications, Mr. Isaac Okorafor, who noted that the continued intervention were in line with the assurances made by the CBN Governor, Godwin Emefiele, to sustain market liquidity in order to boost production and trade.

According to Okorafor, the feedback from the wholesale and retail segments of the Nigerian Forex markets showed that customers were satisfied with their level of access to foreign exchange.

He said the degree of optimism displayed by all players underscored the fact that everyone was happy with the level of transparency in the market. Speaking further, Okorafor assured that, with the recession now over and foreign reserves now standing at $42 billion, the CBN had enough in its arsenal to maintain the international value of the Naira as well as guarantee access to forex by those requiring it to meet genuine needs.

He also reiterated that the desire of the bank to ensure that all, particularly low end users, had access to foreign exchange to meet genuine needs prompted the Bankers' Committee, in its first meeting of 2018, to agree to sell United States dollars to those requiring it for invisibles at the rate of N360/$1, without any commission whatsoever.

It will be recalled that the CBN in its last SMIS, in January 2018, injected the sum of $304.4 million in the inter-bank Foreign Exchange Market.

From a chaotic foreign exchange system in the first half of 2017, due to the activities of speculators, currency traffickers among others, which saw the naira dropping to as low as N525 to a dollar, the naira has since stabilised at N360 to a dollar across various segments of the forex market.

The stability was majorly driven by a raft of forex policies that were introduced by the Central Bank which included the I & E window.

The surge in activities at the window had been attributed to offshore investor interest in treasury bills and the primary market auctions (PMA) by the CBN, with the resulting inflows leading to a convergence between the parallel market exchange rate and the Nigerian Autonomous Foreign Exchange Market (NAFEX) rate, also known as the I&E Forex window.

Most activities now occur on the I&E window, with Fitch Ratings recently acknowledging that the rate on the I&E "should now be considered the relevant exchange rate".

Soiurce: Obinna Chima, allafrica.com

Kenya to stage US roadshow in drive for $3b Eurobond

Kenya will stage a roadshow in the US this week as it looks to issue a Eurobond of up to $3 billion, to pay debts and invest in infrastructure.

Treasury Cabinet Secretary Henry Rotich was cagey on the details of the issue but people involved in the matter said the pitching would target investment banks in Boston, Los Angeles, New York and Washington DC.
“This is not an issue for publicity,” Mr Rotich said when asked to confirm reports that four banks had been picked to act as bookmakers – salesmen – of the debt placed.
The stopovers were confirmed by a dealmaker who is involved in the exercise.
The money is expected to help offset nearly $1.6 billion from the Eurobond Issue of 2014 ($750 million) and a syndicated loan of $800 million picked two years ago.
Central Bank Governor Patrick Njoroge said during the World Economic Forum in Davos, Switzerland two weeks ago that roadshows were planned around this time.
“There will be a roadshow in mid-February, which would likely be held in the US and Britain,” Dr Njoroge said on the sidelines of the World Economic Forum.
Quoting undisclosed sources, Bloomberg News reported that the National Treasury had chosen Standard Chartered, Citigroup, Standard Bank and JPMorgan Chase to manage the sale.
“The Treasury will seek to raise $1.5 billion to $3 billion in bonds, with a tenor of up 15 years,” the agency reported.
The range tallies with the $2 billion that Kenya said last November it was seeking to raise through a Eurobond in the first quarter of this year for spending purposes only.
Debt structure
It asked banks to propose how to structure the debt over a period of either 5-10 years or 12-15 years, with interest being paid in the final three years. It is understood the government has settled on a 15-year paper in a bid to lengthen the maturity profile of debt.
Kenya’s debut in the Eurobond market was in 2014 when it raised $2.75 billion whose usage drew a lot of questions from the auditor general and the opposition. Its issue will buck the trend of African governments opting for syndicated loans as poor sovereign ratings undermined investor appetite.
In June, Tanzania received a syndicated loan from London-based Credit Suisse Bank worth more than $300 million just five months after announcing it would tap the Eurobond market.
Ethiopia, Ghana and Rwanda are yet to effect plans to issue Eurobonds as economic growth slowdown affects investor sentiment and ratings.
Kenya is hoping to ride on a rally in emerging market assets which saw the yield on its running Eurobond due in 2024 reach a low of 5.45 per cent last month. Senegal and Ivory Coast which share Kenya’s B+ rating were at around 4.5 per cent about two percentage points above the equivalent US debt.
“This is the tightest yield premium over US debt on record that African issuers have seen. There has never been a better time to issue a Eurobond,” said an analyst.
Kenya borrowed more than $4.2 billion in the first four months of this financial year through loans, with a huge chunk of it going into development project financing in energy, water and education sectors. Treasury documents showed $300 million of the loans were from the domestic market.
The largest debt facility was a $750 million loan from Eastern and Southern Africa Trade and Development Bank (TDB) picked up in November last year. Part of its proceeds were used to pay off one of the previous syndicated loan arrangers.
The TDB loan is an eight-year contingent facility lapsing in 2023, but comes with a high interest rate of 6.7 per cent above the prevailing six-month London Interbank Offer Rate (Libor).
The $800 million syndicated loan of February 2017 attracted 5.7 per cent interest above the six month Libor. The Libor was at 1.6 per cent last week.
Domestic debt
Data from the Treasury’s Quarterly Economic and Budgetary Review for the first quarter of the 2017/18 financial year shows that the stock of gross domestic debt increased to $20.19 billion in September last year, from $17.6 billion in September 2016.
On the other hand, the external public debt stock increased by $4.2 billion to $22.37 billion, from from $18.15 billion in September 2016.
In its December 2017 Kenya economic update, World Bank cautioned the country to put in place serious fiscal consolidation measures to slow down the debt accumulation that has seen the debt to GDP ratio rise to 57 per cent from 54 per cent in June 2016.

“The expansionary fiscal stance and underperformance in revenue generation has led to a continued rise in the stock of debt. The overall surge was attributed to increase in both external and domestic debt, as government borrowed to finance the fiscal deficit,” the bank said.

Source: By ALLAN OLINGO, The East African

Changing climate pushes producers to alternative energy

Climate change is pushing governments and players in the energy sector to innovate and diversify their sources of power.

Power producers are now lighting homes, businesses and public buildings using off-grid innovations. For farmers who rely on rain-fed agriculture, off-grid solar solutions have enabled irrigation, a breakthrough that will help beat the effects of harsh weather conditions ravaging the continent.
The Uganda Solar Energy Association (Usea), the apex body for solar companies, last week hosted the Africa Energy Forum, an exhibition in Kampala, with support from USAid through its Power Africa initiative.
More than 40 local and international solar companies gathered to showcase off-grid solutions, which, according to Usea chairman Emmy Kimbowa, will catalyse economic growth.
Uganda’s electricity generation capacity is 870MW, with peak demand at 550MW. Demand is increasing by 10 per cent every year so electricity shortfalls are expected until more power generation facilities are brought onto the grid.
With the bulk of grid electricity generated through large hydro sources (about 85 per cent), Uganda’s power supply is susceptible to drought, intermittent rainfall, and reduced river flows — factors that are expected to become more acute with climate change.
In addition to the 600MW Karuma and 183MW Isimba hydropower projects set to come onstream later this year, Uganda is also pursuing a more diversified energy mix in order to meet its target of increasing installed capacity to 2,500MW by 2020. The country is making greater use of other renewable sources including medium and small-scale hydropower, biomass, solar, and geothermal.
Uganda’s per capita electricity consumption of 157 kilowatt hours (kWh) is considerably lower than the sub-Saharan Africa average of 552 kWh and the global average of 2,472 kWh.
At the Forum in Kampala, US ambassador to Uganda Deborah Malac, UK High Commissioner Peter West and Uganda’s Energy Minister Irene Muloni launched the Power Africa Uganda Electricity Supply Accelerator (Pauesa) project.
Power Africa is a US government-led initiative launched in 2013 to expand electricity access and generation capacity in sub-Saharan Africa by adding more than 30,000MW and 60 million new home and business connections.
Energy Africa, a UK government-led initiative, has been working with other development partners and the Ugandan government to support growth of the off-grid solar market.
The Pauesa — also referred to as “the accelerator” — is a project aligned both with Uganda’s objectives and the Power Africa roadmap of increasing regional generation capacity by 30,000MW and increasing connections by 60 million.

The accelerator project also manages a catalytic support fund, which, according to USAid’s Power Africa, disperses resources to local and regional entities. The project aims to add 1000MW in installed capacity as well as one million new connections.

Source: By JULIUS BARIGABA, The East African

Gambia: The Gambia Rejoins Commonwealth

The Gambia will on Thursday at 11 a.m., rejoin the Commonwealth family, almost five years after leaving the 53-member organisation.

The Gambia's readmission would be confirmed by 12. 01 a.m. on Thursday after which the Secretariat would announce that The Gambia is rejoining the Commonwealth.

A flag-raising ceremony, at the gardens of Marlborough House, the London headquarters of the Commonwealth Secretariat, would mark its return, said Barnie Choudhury, Director, Media and Public Relations, Commonwealth Secretariat.

Commonwealth Secretary-General, Patricia Scotland; Chair, Executive Committee of the Board of Governors, Norman Hamilton; members of the Committee; and The Gambian High Commissioner-to be, Francis Blain, would attend the ceremony.

The decision to begin the process of applying for readmission was made in February 2017 by President Adama Barrow, who came to power following elections in December 2016.

In December 2017, the parliament of The Gambia unanimously affirmed the country's desire to rejoin the Commonwealth, thereby fulfilling one of the final steps in the organisation's membership process.

Its application was unanimously supported by the current 52-member states and The Gambia would now be invited to attend the Commonwealth Heads of Government Meeting (CHOGM) in April in London.

The secretary-general said when The Gambia left in 2013, the heads of government expressed their regret in its leaving the Commonwealth family.

Scotland said: "We've looked forward to The Gambia's return and were delighted when, after his election victory last year, President Barrow pledged to return.

"The Gambia's application to rejoin has been unanimously accepted by all 52-member states, who welcome back their brothers and sisters to again play their full part in the Commonwealth family."

Blain, the High Commissioner-to be, also expressed joy that his country was rejoining the Commonwealth.

"I am thrilled to represent my country as it formally rejoins the Commonwealth after an absence of several years - and to become High Commissioner rather than Ambassador.

"The Gambia looks forward to being able both to contribute to and benefit from the collective wisdom of the Commonwealth family of countries.

"And to playing an active role in supporting the work of the Commonwealth Secretariat and the many other organisations and initiatives that flourish as expressions of Commonwealth connection.

"The Government and people of The Gambia will also draw on all that the Commonwealth collectively has to offer, assisting in practical ways to address a wide range of pressing issues.

"These include protecting the environment and tackling climate change, and the empowerment of women and young people," Blain said.

The Gambia first became a member of the Commonwealth in 1965, when it gained independence from Britain.

There are now 53 members of The Commonwealth, representing more than 2.4 billion people.

The ceremony takes place just two months before the CHOGM.

CHOGM is taking place in London for the first time since 1986, and for the first time in the United Kingdom since the 1997 Edinburgh summit. (NAN)

Source: allafrica.com