AFRICA BULLETINJULY 2020

MADAGASCAR

Launch of 5G Network Set to Enable New Commercial Opportunities and Applications Telecoms operator Telma Madagascar has switched on its 5G commercial network to offer subscribers high-speed services. The 5G network now operates in multiple cities in Madagascar, powered by Ericsson. Two major 5G use cases are enhanced mobile broadband and Fixed Wireless Access for Madagascar market. According to a statement by Telma Madagascar, the 5G technology will bring high speed, ultra-low latency and highly secure connectivity to a massive number of devices and is a technology that will unlock a vast array of new use cases through Telma’s next-generation network. The 5G network launch is being considered by industry commentators as a new step ahead for Madagascar as one of the leading ICT countries in the Indian Ocean and Africa.

In October 2019, Telma selected Ericsson to upgrade its core and radio network in Madagascar building on the existing 5G partnership between the two companies.

SIGNIFICANCEThe 5G technology is set to accelerate digital transformation in Madagascar, given its potential to transform how the country uses and adopts technology as well as its impact on businesses and society. The network will power new experiences; from IoT and business applications to entertainment services, enabling new opportunities and applications in areas such as healthcare, education, energy services and agriculture whilst supporting Madagascar’s connectivity development plans.

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TABLE OF CONTENTSALGERIA 4

New Economic Reforms Aim to Save USD 20 billion

EGYPT 4

EBRD Supports Private Businesses in Egypt with USD 200 Million

ETHIOPIA 5

Ethiopia to Set Up Regulator for First Stock Exchange

KENYA 5

Central Bank of Kenya Moves to Regulate Digital Borrowing Platforms

MAURITIUS 6

Bank of Mauritius Joins the Network of Central Banks and Supervisors for Greening the Financial System

MOZAMBIQUE 6

AFDB Signs USD 400 Million to Finance Mozambique LNG

NIGERIA 7

20 Kilometre Domestic Gas Pipeline Expansion Project Complete

RWANDA 7

Made-in-Rwanda 2020-21 Initiative Receives Promotion Funds Boost

TANZANIA 8

Government Eyes Lake Tanganyika Zone as Prospect Economic Hub

UGANDA 8

Uganda Coffee Sales Rise Despite Pandemic

ZAMBIA 9

State Investment Arm to Operate Mines in The Future

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MANAGING COVID-19RELATED LEGAL RISKS AND IMPACT ON DOING BUSINESS

In light of the Covid-19 pandemic, our legal experts have developed the ALN Covid Hub, where you can find real-time Africa-wide information to keep our clients, organisations and the general public informed on how to mitigate its impact as well as arising legal issues in an effort to increase preparedness.

Get practical answers to some of the most Frequently Asked Questions from our clients, as well as useful facts and figures, relevant links to vetted sources and government updates related to Covid-19.

To learn more, visit: https://www.africalegalnetwork.com/covidhub

For clarifications and enquiries, email: covidInsights@africalegalnetwork.com or alnInfo@africalegalnetwork.com

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ALGERIA

New Economic Reforms Aim to Save USD 20 billion Algerian authorities have proposed an economic plan that could save USD 20 billion this year through reforms and by lowering its imports bill. The Government plans to reform the banking system and reducing the cost of imports by using the national fleet to import goods. The new economic and social revival plan was discussed at a meeting chaired by President Abdelmadjid Tebboune and attended by the prime minister as well as energy, finance, mines, agriculture and trade ministers, the presidency said in a statement.

The North African country also plans to speed up a plan to launch an Islamic finance sector in an effort to provide a new funding source for the economy.

Algeria spends an estimated USD 5 billion annually on imports of goods including food because the domestic output is insufficient to meet growing demand from the country’s 44 million people.

SIGNIFICANCEThe OPEC member is under pressure to ease the detrimental impact of a drop in oil and gas earnings, brought about in part due to the global financial crisis due to the coronavirus pandemic. Algeria cut public spending and postponed investment projects for 2020 in a number of sectors, including energy, and the economic plan hopes to ease the impact of financial losses as the country responds to the impact of the COVID-19 -related restrictions on production, travel and trade.

EGYPT

EBRD Supports Private Businesses in Egypt with USD 200 Million The European Bank for Reconstruction and Development (EBRD) has provided financial support of USD 200 million to Banque Misr for trade and for on-lending to small and medium-sized enterprises (SMEs) and private businesses – a key segment of the local economy - impacted by the coronavirus pandemic in Egypt.

It clarified that under this facility, the EBRD will provide a USD 100 million loan to enable Banque Misr to provide short-term financing to private SMEs and corporates facing liquidity strains due to a decrease in their activities and turnover caused by COVID-19. In addition, the EBRD is increasing an existing trade finance limit to Banque Misr by USD 100 million under the EBRD’s Trade Facilitation Programme, in order to help meet the increased demand for import and export transactions.

Egypt is a founding member of the EBRD. Since the start of its operations in 2012, the EBRD has invested close to EUR 7 billion in 120 projects in Egypt.

SIGNIFICANCEAccording to the EBRD, this financing package is under its coronavirus Solidarity Package, established to meet immediate short-term financing needs to private businesses through existing partner banks.

 

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ETHIOPIA

Ethiopia to Set Up Regulator for First Stock Exchange Ethiopia has drafted a bill to create a stock market authority that will come into effect before the end of the year, according to the Ministry of Finance. Ethiopia is among the biggest five economies in sub-Saharan Africa and the second-largest by population but doesn’t have a stock market. Since Prime Minister Abiy Ahmed came to power in 2018, the country has pursued economic reforms, including opening up formerly closed-off sectors such as telecommunications.

The issue of establishing the first Addis Ababa Stock Exchange market in Ethiopia by 2020 has been one of the top agendas of the country since technical studies for its establishment were done by Ernst and Young 20 years ago. The plan is expected to enhance the application of modern technology in relation to financial transactions, establishing a system that enables e-commerce, introducing digital financing technologies and commencing capital market.

SIGNIFICANCEEthiopia is at a stage where a vibrant private sector is starting to emerge with about 50 to 70 companies having the potential to be listed in the stock exchange. As such the country can be said to be on a good track to commence the implementation, stimulating the need to have stock brokerage firms, investment banks, stock traders and the local accounting and auditing firms having to build their capacity. According to the Ministry of Finance, plans are already underway to building the infrastructure and human skills needed to introduce a stock market.

KENYA

Central Bank of Kenya Moves to Regulate Digital Borrowing Platforms The Central Bank of Kenya (Amendment) Bill, 2020 was published on 19 June 2020 (the Bill), with the principal objective of amending the Central Bank of Kenya Act (the CBK Act) to allow the Central Bank of Kenya (the CBK) to supervise and regulate digital financial products and services. Given that is no legal framework governing digital borrowing platforms in Kenya, digital and mobile lenders have so far operated freely and digital borrowing platforms that are not classified as financial institutions under the Banking Act or the Microfinance Act operate without regulatory oversight. This has led to multiple micro-lenders investing in Kenya’s credit market in response to the growth in demand for quick loans. Claims of excessive interest rates and allegations that many of these lenders fail to provide full information to borrowers on pricing terms and consequences of defaults have led to concerns that the digital lending market needs regulation.

SIGNIFICANCEThe Bill proposes that the CBK act as the regulator of digital financial products and services in Kenya, so as to ensure a fair and non-discriminatory marketplace for access to credit. Under the Bill, the CBK would have the mandate to regulate and supervise: the conduct of providers of digital financial products and services; the conduct of digital credit providers and digital credit service providers; the conduct of providers of financial products and services; and the conduct of financial services. To what extent the CBK will seek to exercise its mandate remains to be seen as the CBK will need to publish subsidiary legislation to provide for the actual regulation of digital financial products and services if the Bill is passed.

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MAURITIUS

Bank of Mauritius Joins the Network of Central Banks and Supervisors for Greening the Financial SystemThe Bank of Mauritius has become a member of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), with the request for membership being unanimously approved by all NGFS members.

The NGFS is a platform that promotes the sharing of experience and best practices among central banks and supervisors to address climate risk management. The Network also enables its members to work together for a green and sustainable financial system. Comprising 66 members and 13 observers, the NGFS has been instrumental in strengthening the role of central banks across the world to manage climate-related risks and to mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development.

SIGNIFICANCEFor the Bank of Mauritius, this membership translates its focus on sustainable development and on embedding the concept of a greener banking sector in Mauritius. In line with the United Nations Sustainable Development Goals and the Paris agreement, the Bank of Mauritius is committed to further integrating the climate agenda into its banking sector transformation strategy. 

MOZAMBIQUE

AFDB Signs USD 400 Million to Finance Mozambique LNG The African Development Bank has signed a senior loan of USD 400 million to co-finance the construction of Mozambique’s integrated Liquefied Natural Gas (LNG) project, which is ranked Africa’s single largest foreign direct investment to date estimated to cost over USD 20 billion. The project comprises of a global team of energy operators and developers led by ONGC Videsh Limited, Total alongside Mitsui, Bharat Petroleum, PTT Exploration, Oil India and ENH, Mozambique’s national oil and gas company.

The project includes both offshore and onshore components which will be covered by a combination of over USD 14 billion in senior debt facilities, equity and pre-completion cash flows. The senior debt facility consists of a mix of commercial bank loans, African development bank loan and Export Credit Agency direct loans. Its financial close is expected later this year with its funding coming from a global syndicate of commercial banks, development finance institutions and export credit agencies.

SIGNIFICANCESigning the Mozambique LNG agreement heralds a new age of industrialisation for Mozambique, given that it will be the first liquefied natural gas development in the country and will consist of two LNG trains with a total capacity of around 13 million tons per annum. Through the availability of domestic gas, the project stands to facilitate the development of gas-fired electricity in Mozambique. This will play a key role in providing reliable and affordable energy for the country and the wider region whilst presenting an opportunity for Mozambique to secure stable production and supply of LNG over the long term, significantly contributing to the country’s economic growth.

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NIGERIA

20 Kilometre Domestic Gas Pipeline Expansion Project Complete Shell Nigeria Gas (SNG) has completed the final phase of its 20-kilometre domestic gas pipeline expansion project in Abia State, connecting Agbor Hill, Osisioma and Araria industrial zones.

The project has also enabled the supply of pipeline gas to Ariaria Market Energy Solutions, the Independent Power Project consortium that provides electricity to the popular Ariaria market in Abia State. Ariaria International Market is one of the largest leather shoe-making and open stall markets in West Africa, with over 37,000 shops and an estimated one million traders.

SNG together with its partners and local stakeholders has agreements to build infrastructure and deliver natural gas to over 150 industrial and commercial customers, mostly in Ogun, Abia, Rivers, Bayelsa and Lagos States.

SIGNIFICANCEThis domestic gas infrastructure investment allows the industries in Abia to have a more reliable, cheaper and cleaner source of energy. According to the Manufacturers Association of Nigeria, the gas supply to the Ariaria Market IPP would strengthen micro, small and medium enterprises in the Abia State and enhance the operating environment for manufacturing to thrive. This milestone is set to open up the state for an influx of investors thereby creating an enabling environment that will drive industrialisation, provide employment for the skilled and unskilled local population in addition to directly improving internally generated revenues in these states. 

RWANDA

Made-in-Rwanda 2020-21 Initiative Receives Promotion Funds Boost The Rwandan government announced an investment of USD 7 million to promote locally manufactured products over the period 2020-21 with the Made-in-Rwanda initiative. The spending is mentioned in the 2020-21 state budget presented to the parliament last June 23.

As part of this project, the government wants to support the local production sector and help businesses to guarantee the security standards of their products. The new budget line will enable some 20 Rwandan factories to adopt the latest generation technologies to create new products for both the local and international markets. Six exporting companies, in particular, will benefit from the support of the Export Growth Fund, making them more competitive in the markets.

SIGNIFICANCEIn recent years, Rwanda has deployed several measures to strengthen its production sector with the view of becoming self-sufficient in the local market and gain more on the export market. In January this year, the Ministry of Trade and Industry announced that particular focus will be on six agribusiness segments over the coming years. These include sugar, vegetable oil, rice, fertilizers, corn, and aquaculture by-products. According to authorities, the promotion of Made-in-Rwanda products is expected to reduce the trade gap, which increased by 17 percent in 2019. The Made-in-Rwanda initiative aims at improving access to inputs, increasing local production of raw materials as well as domestic value chains, and plugging into regional and global value chains.

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TANZANIA

Government Eyes Lake Tanganyika Zone as Prospect Economic Hub Uganda Prime Minister Kassim Majaliwa has reiterated the fifth-phase of the Government’s plans to open up the Lake Tanganyika Zone as an economic hub, by expanding and building four ports in Rukwa and Katavi regions at the cost of over TZS 65.3 billion (approx. USD 28 million). New dry ports will be built in Rukwa and Katavi regions at Karema, Kabwe, and Kasanga ports as well as in Mpanda Town, which will handle cargo destined to neighbouring Democratic Republic of Congo, Zambia, Rwanda and Burundi.

Equally, Majaliwa revealed that the government is planning to carry out major rehabilitation on the oldest ship on Lake Tanganyika, MV Liemba, which has been plying on Lake Tanganyika for more than 100 years. In addition, the Government will build MV Sangara and a big ship with the capacity to accommodate 5,000 tonnes. The three marine vessels will ply on Lake Tanganyika, ferrying cargo and passengers to and from Zambia, DRC and Burundi.

SIGNIFICANCEThe expansion and construction of new ports in the Lake Tanganyika Zone will open up the zone as an important economic gateway that will boost trade and help improve the per capita income of people in the area by stimulating additional infrastructure construction in linkage roads and business centres. The project is further envisioned to ease the movement of goods, services and people between Tanzania and its three neighbouring countries, in addition to providing employment opportunities. 

UGANDA

Uganda Coffee Sales Rise Despite Pandemic Uganda’s coffee exports have continued to surge despite the coronavirus pandemic with figures showing growth compared with a year ago. The Uganda Coffee Development Authority (UCDA) said in a report released in April that Uganda coffee exports were 359,973 60 kilogramme bags worth USD 36.93 million compared with the 305,643 bags exported in April 2019 valued at USD 30,048,530 million. This was an increase of 18 percent and 23 percent in quantity and value respectively, compared with the same period last year.

In a statement by the UCDA, coffee exports for the first 10 months of the financial year 2019/20 amounted to 4.24 million worth USD 413.53 million compared with 3.48 million bags worth USD 350.26 million the previous year. This represents 21.89 percent and 18.06 percent increase in both quantity and value respectively. Cumulatively in 12 months, (May 2019-April 2020), a total of 4.93 million bags worth USD 478.47 million were exported. Annually, Uganda’s average coffee earnings top USD 450 million making it one of the top foreign exchange earners.

SIGNIFICANCEFor the coffee authority, the increase in exports has been attributed to higher production on account of the fruition of the newly planted coffee. Apart from an increase in harvest, exporters also drew down on their stocks due to the lockdown caused by the COVID-19 pandemic. According to the National Union of Coffee Agribusiness and Farm Enterprises, the COVID-19 surge in March forced many coffee buying companies to stock up because the coffee destination countries had closed. Major coffee importers like Germany, Italy and Spain are cited to have pushed those volumes to April.

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ZAMBIA

State Investment Arm to Operate Mines in The Future Zambia’s state-owned investment arm will run mines as an operator rather than a minority investor in future investments, as the Government seeks a more active role in mining assets it holds. The ZCCM-Investment Holding (ZCCM-IH), which is controlled by the Industrial Development Corporation (IDC), is a mining investment arm of Africa’s second-largest copper producer.

According to a statement by the IDC, ZCCM-IH has been tasked to seek its own mines, do explorations and develop mining operations with the objective of having higher stakes in future mining ventures. ZCCM-IH has minority shares in mines, including First Quantum Mines’ Kansanshi Mine and Glencore’s Mopani Copper Mines with the highest stake in Konkola Copper Mines where it has 20.6 percent and Vedanta Resources 79.4 percent.

Mining, which contributes more than 10 percent to Zambia’s economy, is also the nation’s largest foreign exchange earner.

SIGNIFICANCELately, ZCCM-IH has ramped up its exploration efforts and has commissioned new mines in gold and manganese. According to the IDC, most of the partnerships that ZCCM-IH has right now are not balanced because the stakes are very small minorities. While IDC not averse to the firm getting into partnerships, it is expected that the firm will be seen taking stronger positions in copper mining and many other minerals in the country, having already done so in gold and manganese mines.

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The information contained in this Bulletin is accredited to the named sources and does not necessarily represent the views of ALN. ALN accepts no responsibility whatsoever for any loss, direct, indirect or consequential, arising from information made available and actions resulting therefrom.

SOURCES

https://www.power-technology.com

http://english.ahram.org

https://www.theeastafrican.co.ke

https://www.coindesk.com

https://www.ericsson.com

https://www.wsj.com

https://oilprice.com

https://www.businessdailyafrica.com

https://www.vanguardngr.com

https://www.pipeline-journal.net

https://venturesafrica.com

https://africanminingmarket.com

https://www.esi-africa.com

https://www.reuters.com

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