Issue  No. 2
8 January 2019
This is an exclusive new report designed to give you an overview about Africa countries tackling Economic, Political, Stock Market and Company transactions issue. 


 
   



 
   

Economic Outlook

  • In Kenya, the governor Stephen Sang of Nandi county reported that dairy farmers in Nandi county can expect to reap higher returns after the devolved unit announced plans to set up a 300 MM KES (2.9 MM USD) milk processing factory. He added that this move will ensure farmers having a ready market for their production and help improve the region's economy which 135 MM KES (1.3 MM USD) would be invested in improving and expanding the dairy sector while 115 MM KES (1.128 MM USD) would go towards building the modern milk plant.
  • Kenya Foreign reserves shrunk further in the first week of 2019, pushing down the country's import cover and making pressure on the shilling. A lower import cover in the absence of International Monetary Fund (IMF) precautionary facility exposes the shilling to volatility and is likely to trigger an increase in commodity prices as importers pass the high import bill to consumers. On Friday 4th of January 2019, the shilling depreciated to 102.1 compared to 101.8 shilling on New Year eve. Central Bank of Kenya's weekly bulletin for the week ending January 4 shows the country's forex cover dropped to 805 BN KES (7.9 BN USD) or 5.2 months of import cover compared to 819 BN KES (8.03 BN USD) in November 2018.
  • Kenya cut its revenue target in 2018/2019 by 5.03% reaching 1.605 TR KES (15.7 BN USD), compared to what the Kenya Revenue Authority initially wanted in the beginning to raise 1.69 TR KES (16.5 BN USD) in 2018/2019. This is the second year in a row the East African nation is revising its tax goal downward. It collected 1.37 TR KES (13.4 BN USD) in 2017/2018, missing a twice-lowered target of 1.41 TR KES (13.8 BN USD).
  • Tanzania is currently issuing permits to traders to import sugar from Uganda due to its 290,000-tonne shortage. In June 2018, Tanzania stopped issuing new permits for importation of sugar from both Uganda and Kenya to protect local producers and traders. The sugar had been blocked on claims that both Uganda and Kenya were dumping cheap imports on the Tanzania market. Tanzania produces about 300,000 tons of raw sugar annually compared to demand volumes of 590,000 tons. The increasing demand for both industrial and domestic consumption has subsequently created a deficit of about 290,000 tons.
  • Rwanda is encouraging individuals and businesses to embrace e-Commerce as part of its wider strategy to digitize the economy. However, latest statistics show that only a small number of Small and Medium Enterprises (SMEs) in Rwanda have adopted online business practices as majority continue to struggle. While businesses in Rwanda are reported to have online access, which presents enormous opportunities for e-Commerce, customers in the country browse business websites to source for information but still make purchases the traditional way. These are some of the challenges that have attracted the attention of stakeholders in the ICT sector, prompting them to brainstorm on how Rwanda can accelerate its internet economy, mainly through e-commerce.
  • In Uganda, the Civil Society Budget Advocacy groups have reported that 34% of the 2019/2020 national budget will be spent on paying off the country's debt which is becoming unsustainable unless measures are taken to reduce borrowing. In 2019/2020 budget has increased reaching 34.3 TR UGX (9.2 BN USD) compared to 32.7 TR UGX (8.7 BN USD) in 2017/2018, with only 22.6 TR UGX (6.97 BN USD) is available for spending. Government will spend 12.7 TR UGX (3.4 BN USD) on development expenditure. Interest rate payments will take 2.9 TR UGX (779.3 MM USD) which is the second largest share of the budget resulting in 30% budget cuts from 7.7 TR UGX (2.06 BN USD) in 2018/2019 compared to 6.8 TR UGX (1.8 BN USD) for social sectors like education, health, social development, environment, agriculture and water and sanitation.
  • The Zambian Ministry of Finance Margaret Mwanakatwe released 4.3 BN ZMK (362.3 MM USD) for capital programs, agriculture development, public welfare, debt service, and general public service delivery operations in various Ministries Provinces and other Controlling Bodies in late December 2018. She added that from the total funding, 1.5 BN ZMK (126.4 MM USD) was allocated to service both domestic and external debt, 437 MM ZMK (36.8 MM USD) was spent on financing grant-aided-operations, and a further 1.1 BN ZMK (92.6 MM USD) went to various Government programs, projects and public service delivery.
  • The African Development Bank has given Zambia 500, 000 dollar to help fight Army Worms. Agriculture Minister Michael Katambo stated that the money will be used to procure chemicals for the spray of Army Worms and that the ministry is on alert and doing everything possible with the support of cooperating partners to fight pests in areas of the outbreak. The army worms have in the last few farming seasons ravaged maize fields in Zambia and other Southern African countries threatening maize yields.
  • In Zambia, 1 MM ZMK (84,267 dollar) has been spent to build the first girls' hostel by Child Fund in partnership with Mumbwa Child Development Agency at Mwembezhi Secondary school in Shibuyunji District. The 64-bed capacity hostel has been built to offer a safe environment for girls who struggle to find accommodation during school.
  • The International Finance Corporation (IFC), a member of the World Bank Group, has partnered with the National Bank of Ethiopia, the country's central bank, to expand trade and local currency financing. IFC plays a significantly larger role supporting development in Ethiopia by helping create new markets for private investors. An improved credit reporting system supported by IFC will facilitate access to finance for consumers, microenterprises, and small and medium businesses in Ethiopia.
  • Ethiopia Prime Minister, Abiy Ahmed, indicated that the strength of relations with China is a key element to progress towards the capitalization of technological development projects between both nations. The two countries are focusing on using new technologies as powerful tools for their people's well-being. Both nations have maintained stable cooperation since 1970, when they established diplomatic relations, and in 2003 created a comprehensive cooperative partnership to give priority to bilateral exchange.
  • South Africa ranking in 2018 Index of Economic Freedom has improved, as it was ranked the 4th in the Africa region and 77th out of 180 countries globally. These notable improvements for South Africa in 2018 was due a remarkable improvement in the area of investment freedom and judicial effectiveness. Investment freedom improved by 10 points y-o-y reaching 50 points in 2018, and judicial effectiveness improved from 59.7 in 2017 to 65.9 in 2018. Other improvements that boosted South Africa in the economic freedom rankings are advancements in the areas of property rights, which is up from 67.6 in 2017 to 67.7 in 2018, while fiscal health improved by 4.6 points to 75.3.
Political Events

  • Sudanese President Omar Al-Bashir has refused a request by Kenya national air carrier to fly over Sudan airspace on a direct route from Nairobi to the Israeli capital city of Tel Aviv. Al-Bashir rejected "any possibility of normalization with Israel." Bashir refusal came following an announcement in 2018 by the Israeli Prime Minister Benjamin Netanyahu that Sudan would permit his country national airliner to pass over its airspace while flying to South America.
  • In Zambia, the Centre for Trade Policy and Development (CTPD) has challenged Mining companies to stop using Mine workers as tools for bargaining in negotiations on the proposed tax changes. The CTPD Executive Director Isaac Mwaipopo stated this is manipulative and government should not ignore such cooperate behavior. Mr. Mwaipopo stressed on the matter that mining companies must never forget that the minerals they are extracting and exploiting belong to the Zambian people and Zambians have the right to participate and benefit from its natural resource endowment and employment is one of the ways through which this is archived.
  • In Tanzania, there have been a new transport crisis which left hundreds stranded in Dar es Salaam. Hundreds of travelers, destined for Morogoro and Dodoma, were stranded at the Ubungo Bus Terminal, following an increase in demand for transport services caused by a boost in the number of students and workers seeking to report to their various destinations. This also affected workers who were on holiday for Christmas and New Year in Dar es Salaam, who were traveling back to work from various regions.
  • To stop illicit gold trading in Uganda, the government new mining policy will streamline mining activities, enforce transparency and improve the safety records in mines. According to the government audit report in 2016/2017, the country lost over 16.95 MM USD in undeclared royalties in the exportation and importation of gold. A number of the companies including Africa Gold Refinery are under investigation on claims of money laundering, under-declaring, tax evasion and breaking registration.
Stock Market
Major Companies Transactions

  • Kenya-based French solar firm Alten Africa has picked compatriot renewable energy firm Voltalia to build its 40-megawatt (MW) solar plant in Eldoret. Alten Africa ratifies the choice of Voltalia to execute the EPC (engineering, procurement, construction) and O & M (operations, and plant maintenance) service for its new photovoltaic plant in Kenya. This solar project is to be built on a land area of 100 hectares and will have over 161,000 monocrystalline panels set into solar single-axis trackers.
  • Capital Markets Authority (CMA) has cautioned Kenyans investors against investing in crypto-asset markets. CMA notified the public against participating in any initial coin offering or trading in any coin exchange offered by Wiseman Talent Ventures. Noting that global trends in unregulated digital currencies demonstrates that the crypto-asset market is uncertain and has experienced accelerated boom and bust cycles, and that such platforms may expose investors to substantial losses.
  • In Kenya, Equity Bank Group has launched an online foreign exchange (forex) trading platform that gives customers real-time streaming of rates across multiple currency pairs as it aims to double its forex customers. The platform, named 'EazzyFX', eliminates the need for face-to-face or over-the-phone transactions, giving customers access to competitive prices on both emerging market and major traded currencies. EazzyFX will be hosted by Thomson Reuters Electronic Trading, which currently has over 100 banks across 56 countries. Equity will pay them monthly fee for offering automated prices.
  • The Kenya Tea Development Agency (KTDA) Holdings profit increased nearly 59% in 2017/2018 as it benefited from the increase in global commodity prices and higher sales by 13.4% reaching 26 BN KES (255.4 MM USD) even as global prices increased by a lower margin of 0.3% or one US cent. This helped push profit after tax to 1.84 BN KES (18 MM USD) in 2017/2018 compared to 1.16 BN KES (11.3 MM USD) in 2016/2017. The firm currently has eight subsidiaries enabling it to earn from other activities such as value addition and warehousing charges. Chai Trading, for example, specializes in warehousing tea and logistics of the auction and shipping of the commodity while Greenland Fedha gives cheap credit to farmers.
  • Creditors of fashion retailer Deacons East Africa are set to meet on January 22, 2019 to consider and vote for or against options to revive the Nairobi Securities Exchange-listed firm which is under the administration of PKF Consulting. Deacons is a leading fashion retailer in East Africa, with 37 department stores in Kenya, Uganda and Rwanda with total loans reaching 351.6 MM KES (3.45 MM USD) maturing in 2018.The fashion retailer's creditors include NIC Bank and UBA Kenya Bank Limited which it owed 524.8 MM KES (5.15 MM USD) and 98.3 MM KES (965,618 USD) respectively as of December 2017. One of the biggest losers in the company's collapse is private equity firm Aureos which had a 5.53% stake.
  • Dubai-based healthcare company Shalina has bought an undisclosed stake in a Kenyan-owned pharmaceutical manufacturing company, expanding its medicine production and distribution venture to the seven countries in Africa. Shalina Healthcare is a privately-owned company that has had a special focus on Africa for the past 30 years and runs its operations in Nigeria, Zambia, Democratic Republic of Congo, Angola, Ghana and Central Africa Republic. The firm deals largely in prescription and over-the-counter medicines that include anti-malarials, antibiotics, anti-inflammatory and nutrition. It has production facilities in India and China.
  • Amazon India is teasing the launch of Huawei Y9 (2019). This mid-range device was first launched in Kenya on October 2018 and is expected to reach the Indian shores in January 2019. It will be an Amazon exclusive product and would come in Midnight Black, Sapphire Blue and Aurora Purple color options. Prices are expected to be under the 20,000 INR (288 dollar) and will come with multiple RAM and internal memory variants.
  • The Minister of Science Technology and innovations Dr Elioda Tumwesigye has assured Ugandans that before the end of 2019, Uganda will be having its own made solar powered buses working on the roads of Kampala and Entebbe. In 2014, Uganda Investment Authority commissioned two companies- Kiira Motors Corporation owned by Makerere University College of Engineering, Design, Art and Technology and China Engineering Limited- to start Car production in the country by 2018 but it passed before Ugandans could see a locally made vehicle on the road.
  • Air Tanzania is the first customer to operate an Airbus A220 in any of its variants in the African continent, and the 5th operator worldwide of the former Bombardier CSeries. The airline is set to receive a second A220-300 and two Bombardier Q400 Turboprops, after signing a 200 MM USD deal in December 2016. The A220 unrivaled passenger comfort combined with its remarkable performance and economics will be an excellent asset to further develop Air Tanzania network.
  • In Nigeria, BUA Group has signed a contract with cement manufacturing company, (CBMI), for the construction of a new three million metric tons per annum Kalambaina Cement Line 2 in Sokoto State, North West Nigeria. This move is coming after the listing of shares from the almost 1 BN USD merger between BUA Kalambaina Cement Company, and Cement Company of Northern Nigeria (CCNN), where it also assumed majority stakes in the enlarged company.


 



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