IGIHE

Category: Economy

  • Nigeria’s EFCC ‘finds $43m in Lagos flat’

    {More than $43m (£34m) has been seized from a flat in Nigeria’s main city, Lagos, the anti-corruption agency says.}

    Officials raided the flat after a tip-off about a “haggard-looking” woman in “dirty clothes” taking bags in and out of it, the agency added.

    The money was believed to be from unlawful activity, but no arrests have as yet been made, the agency added.

    This is the latest in a series of raids which uncovered bundles of cash in Nigeria, Africa’s biggest economy.

    In March, the agency said it had found “crispy” banknotes worth $155,000 (£130,000) at the airport in northern Kaduna city.

    Apart from US notes worth $43.4m, investigators found nearly £27,800 and some 23m naira ($75,000) at the four-bedroom flat in Lagos’s affluent Ikoyi area, the Economic and Financial Crimes Commission (EFCC) said in a statement.

    The “neatly arranged” cash was stashed in “sealed wrappers” in wardrobes and cabinets in the seventh-floor flat, the EFCC added.

    Guards told investigators that no-one lived in the flat, but a source reported that a “woman usually appeared on different occasions with Ghana Must Go bags”, the EFCC said.

    “She comes looking haggard, with dirty clothes but her skin didn’t quite match her outward appearance, perhaps a disguise,” it quoted a source as saying.

    The money was neatly arranged and hidden in wardrobes, investigators say

    Source:BBC

  • East Africa leads the pack in economic growth

    {East Africa last year registered the fastest economic growth on the continent — 5.5 per cent — compared with the other regions, according to a new report by the Economic Commission for Africa.}

    The report, Urbanisation and Industrialisation for Africa’s Transformation, forecasts that the region’s growth will increase to 6.0 per cent in 2017 and 6.3 per cent in 2018, backed by a robust performance in Kenya, Rwanda and Tanzania.

    In Kenya, investments in infrastructure and a high household consumption rate drove growth, amid a decline in tourism due to security concerns. In Rwanda, agriculture and services were key growth sectors, although low commodity prices, especially for coffee and tea, and poor infrastructure continued to hurt its growth potential.

    In Tanzania, a robust domestic demand for the growing services and manufacturing sectors were the main drivers of economy in 2016.

    According to the report, Central Africa will see growth rise to between 3.4 per cent and 4.2 per cent, driven by investment in energy and infrastructure and the services sector.

    {{Fiscal deficits}}

    In East Africa, the fiscal deficit widened from 4.0 per cent to 4.6 per cent in 2016. Kenya is building a new railway line and the government has increased salaries for its employees and budgetary allocation to county government.

    Uganda, on the other hand has initiated hydropower projects. Oil exporting countries in Africa saw widening of fiscal deficits from 6.2 per cent in 2015 to 6.5 per cent of GDP due to low global prices. In contrast, oil importers registered an improved deficit margin of 5.5 per cent, from 5.6 per cent previous year.

    The deficit in mineral-rich countries declined from 6.5 per cent of GDP in 2015 to 6.1 per cent slightly in 2016.

    Inflation on the continent climbed to an average of 10 per cent from 7.5 per cent, blamed on drought, rising electricity prices and falling currencies.

    It is expected to remain at that rate in 2017. Inflation rose in all sub-regions except Central Africa and East Africa, where, respectively, it declined to 2.3 per cent in 2016 from 2.8 per cent and to 5.3 per cent from 5.9 per cent, the latter largely due to downward trends in Ethiopia, Kenya and Tanzania.

    A standard gauge railway overpass under construction at Taru next to the Nairobi-Mombasa Highway. The SGR to be launched in June is expected to spur Kenya's growth.

    Source:The East African

  • South Africa’s credit rating has been cut to junk status

    {South Africa’s credit rating has been cut to junk status by the ratings agency S&P Global.}

    The agency said that political upheaval, including the recent sacking of finance minister Pravin Gordhan, was endangering the economy.

    S&P also expressed concern over government debt, and in particular the expense of supporting the state energy firm Eskom.

    The news put more pressure on the rand, which was down 2% against the dollar.

    The sacking of Mr Gordhan, seen as a safe pair of hands and with a reputation for financial prudence, led to a 4% fall in the rand on Friday and prompted strong criticism.

    His replacement as finance minister by Malusi Gigaba was part of a cabinet reshuffle by President Jacob Zuma.

    However the country’s deputy president, Cyril Ramaphosa, called Mr Gordhan’s sacking “totally, totally unacceptable” and the Gwede Mantashe, secretary-general of the ruling African National Congress (ANC), also opposed it.

    The financial downgrading is likely to make it more expensive for South Africa to borrow money on the international markets, as lending to the country would be seen as riskier.

    {{‘Trust eroded’}}

    S&P explained its decision, stating that: “Internal government and party divisions could, we believe, delay fiscal and structural reforms, and potentially erode the trust that had been established between business leaders and labour representatives (including in the critical mining sector).”

    “An additional risk is that businesses may now choose to withhold investment decisions that would otherwise have supported economic growth,” S&P added.

    The agency also raised concern about the level of borrowing by state energy firm Eskom.

    The government guarantees 350bn rand ($25bn) of its debt, which is equivalent to about 7% of the nation’s economic output.

    For his part, Mr Gigaba spoke at the weekend of plans to “radically transform” the country’s economy.

    While he has a track record of policymaking, most recently as home affairs minister, he lacks a background in economics.

    That prompted criticism that Mr Gigaba was too inexperienced for the job.

    In 2014, the ANC adopted “radical economic transformation” policies to boost the economic position of the black majority in the post-apartheid nation.

    But many in the ruling party believe the process has been “too slow and in many instances superficial”, said Mr Gigaba on Saturday.

    “The ownership of wealth and assets remains concentrated in the hands of a small part of the population,” he said.

    But Mr Gigaba added that he did not “seek to implement a reckless lurch in a particular direction”.

    “We will stay the course in terms of the fiscal policy stance approved by government,” the new minister said.

    South Africa’s economy expanded by 0.3% in 2016, compared with 1.3% in the previous year.

    {{Junk status}}

    S&P lowered its credit rating on South African government debt from BBB- to BB+, which makes the debt “non-investment grade” or “speculative”, or in the shorthand term, “junk”.

    If another ratings agency follows suit, many international investment funds, under their owns rules, will be unable to lend to the South African government by buying its bonds, which are glorified IOUs.

    On Monday, Moody’s Investors Service placed South African government debt on review for a possible downgrade.

    Like S&P it expressed concern over the political upheaval: “Moody’s could downgrade South Africa’s issuer rating if the rating agency were to conclude that recent events signalled a deterioration in the effectiveness of government or in the credibility of its policy-making.”

    New finance minister Malusi Gigaba says economic change has been too slow

    Source:BBC

  • Region to adopt new tax rules to protect it from cheap imports

    {New measures to protect local industries and farmers from cheap imports will be known in June once the East African Community partner states agree on taxation rates.}

    The region’s finance ministers will meet next month meet to agree on a new Common External Tariff (CET) on products like sugar, maize, wheat and rice, as well as customs-related taxation measures designed to protect local industries from cheap imports and unfair competition.

    Kenya’s Cabinet Secretary for the National Treasury Henry Rotich said taxation measures that will be agreed on by the EAC ministers for finance will be communicated through the EAC Gazette Notice and implemented from July 1.

    “On matters relating to Customs, we have evaluated various proposals from stakeholders for consideration by the EAC ministers for finance during the pre-budget consultations meeting to be held in May this year,” Mr Rotich told lawmakers in Nairobi while presenting the country’s 2017/2018 budget.

    The current CET is based on three bands of 25 per cent for finished goods, 10 per cent for intermediate goods and zero per cent for raw materials and capital goods, with a limited number of products under the sensitive list, which attract rates above the maximum rate of 25 per cent.

    The three-band tariff has been blamed for killing competitiveness of local companies and obstructing intra-regional trade by forcing them to pay duty at the rate of 25 per cent on some imported inputs, which should have ordinarily attracted zero per cent or 10 per cent duty. The EAC CET was last reviewed in 2010 but the three-band rate was retained.

    Hard hit sectors include soap, detergent, cement and manufacturing, which are paying a higher duty of 25 per cent for some finished products that end up being used as inputs qualifying for a lower duty of either zero or 10 per cent.

    Clinker, which is used in the manufacture of cement, is imported as a finished product, attracting a 25 per cent duty but ends up being used as an intermediate input, which should be subject to a 10 per cent duty.

    Palm oil, which is used to manufacture soap, is imported as a finished product and subjected to a duty of 25 per cent yet the product qualifies for a zero per cent duty.

    Mr Rotich said the Customs-related taxation proposals seek to promote industrialisation, protect local industries from cheap imports and unfair competition and create incentives in the agricultural and manufacturing sectors.

    “The EAC Common External Tariff, which sets the rates of duty applicable on imported goods, is undergoing a comprehensive review and the outcome will be released once adopted by the EAC Council of Ministers,” he said.

    A group of 25 experts from Kenya, Uganda, Tanzania, Rwanda and Burundi has been tasked with the mandate of revising the CET and fine-tuning the existing rules of origin to enhance intra-EAC trade and attract new investments in the bloc.

    The experts will consider the list of sensitive goods and the rates applicable on them and agree on the best method of classifying such goods as maize, wheat, sugar, textile and rice whose industries require protection from imports.

    The proposed review of the EAC three-band tariff could see excessive protection given to sensitive goods such as maize, rice, wheat, textiles, sugar, milk and dairy products scrapped. A uniform duty would be applied on the products to eradicate the frequent applications for preferential treatment by some member states.

    The region’s finance ministers will meet next month meet to agree on a new Common External Tariff (CET) on products like sugar, maize, wheat and rice.

    Source:The East African

  • New South Africa finance minister Gigaba calls for radical reform

    {South Africa needs to “radically transform” its economy, the country’s new finance minister has said.}

    The treasury has been seen for too long as belonging to “big business, powerful interests and international investors,” Malusi Gigaba said.

    “This is a people’s government,” he told his first news conference since President Jacob Zuma fired his respected predecessor, Pravin Gordhan.

    Thursday night’s sacking shook markets and divided the ruling party.

    Mr Gordhan’s sudden dismissal, part of a reshuffle affecting nine ministers, led to a 5% plunge in the value of the currency, the rand.

    The ruling African National Congress’ deputy president, Cyril Ramaphosa, called it “totally, totally unacceptable” and ANC Secretary General Gwede Mantashe also opposed it.

    {{What does ‘radical transformation’ mean?}}

    In 2014, the ANC adopted “radical economic transformation” policies to boost the economic position of the black majority in the post-apartheid nation.

    But many in the ruling party believe the process has been “too slow and in many instances superficial”, said Mr Gigaba, who was previously home affairs minister.
    “The ownership of wealth and assets remains concentrated in the hands of a small part of the population,” he said.

    But he added that he did not “seek to implement a reckless lurch in a particular direction”.

    “We will stay the course in terms of the fiscal policy stance approved by government,” the new minister said.

    {{Why has this caused such a fuss?}}

    Pravin Gordhan was seen by many as a safe pair of hands when it came to managing the economy.

    He was seen as a bulwark against corruption in an administration that is facing growing criticism.

    He resisted calls from the president to increase government expenditure.
    Malusi Gigaba, however, is widely seen as an ally of Mr Zuma and does not have a background in finance.

    {{Why was Mr Gordhan sacked?}}

    Opposition parties say it is because he was obstructing President Zuma and his allies – whom they accused of corruption – from gaining access to state funds.

    Mr Zuma, who rejects the allegations, said the move was about a “radical socio-economic transformation”.

    Local media point to an alleged intelligence report accusing Mr Gordhan of working with foreigners to undermine Mr Zuma’s administration.

    Last October, Mr Gordhan was charged with fraud but the charges were later dropped. He has described the allegations as politically motivated.

    Mr Gigaba: "Wealth... remains concentrated in the hands of a small part of the population"

    Source:BBC

  • Banking sector makes Rwf 60 billion in profit 2016

    {The National Bank of Rwanda (BNR) has unveiled that Rwanda’s banks earned Rwf 60 billion in profit in 2016 before taxes up from Rwf 57 billion in 2015. }

    The BNR Governor, John Rwangombwa revealed this yesterday during a meeting of monetary policy and financial stability committee members where he noted that Rwanda’s economy grew in 2016 amidst international crisis adding that there is hope that it will keep improving in 2017.

    The financial stability committee explained that the financial sector grew by 11.5%.

    BNR explained that interest from insurance companies rose from Rwf 21.9 billion in 2015 to Rwf 24.6 billion in 2016.

    The BNR Governor, John Rwangombwa.

  • Low return on capital in Rwanda deters Kenyan lenders

    {The low rates of return on capital in the Rwanda’s banking sector make it an unlikely destination for Kenyan lenders seeking growth opportunities in the wake of interest rate capping in that country, industry sources say.}

    Last August, Kenya capped lending rates to four per cent above the central bank’s base-lending rate, settling the lowest borrowing rate to 14 per cent. While this unsettled investors, alternatives are not yet attractive enough to pull them elsewhere in the region.

    KCB Rwanda chief executive Maurice Toroitich said that Rwanda’s banking sector needs to find a way of generating a higher return on capital to attract any surplus Kenyan capital.

    “Movement of capital is not dependant on interest rates, it depends on return on capital, there is still a big gap between returns in Kenya and returns in other regional countries, they are not yet attractive enough” said Mr Toroitich. “Banks in Kenya still make a decent return on capital, it’s around 20 per cent sector-wide, Rwanda’s banking sector stands at 9.2 per cent, which is still low.”

    It has been reported that KCB Group’s pre-tax profit is likely to fall by two per cent this year as a result of the caps, while 11 listed Kenyan banks have plunged to an average of 14 per cent, with further stock falls expected in the coming months.

    Although it is not yet determined who is going to move money, when or to which country, analysts have said it is possible that the banks which already have subsidiaries in other regional countries could rely on their existing footprint in those markets, however they will have to do this with caution and in a way that will not lead to dilution of capital.

    Right from the time the Kenyan parliament passed the cap, it was received with misgivings.

    For the past 20 years, Kenyan banks enjoyed interest rate averaging 11.4 per cent, way above the world average of 6.6 per cent. While acknowledging they were high, experts including Central Bank of Kenya Governor Patrick Njoroge did not support an interest rate peg warning it would bring rigidity in the financial system.

    Data shows that private sector credit growth in Kenya had stagnated at 4.3 per cent as at December 2016, the lowest in 16 months. The IMF recently warned Kenya on the adverse effects of the interest rate caps saying it would hinder economic growth.

    A KCB banking hall. The low rates of return on capital in the Rwanda's banking sector make it an unlikely destination for Kenyan lenders .

    Source:The East African

  • East Africa: Burundi failed to give its contribution to 2016 EAC financial budget

    {The East African Legislative Assembly (EALA), deeply concerned by the poor financial situation of the East African Community, has passed a resolution urging the Council of Ministers to immediately convene under matters of urgency to solve the financial crisis in the community. Sanctions should be imposed on the partner states which do not accomplish their duties.}

    The East African Legislative Assembly wants Council of Ministers to invoke provisions of the Treaty (Article 14 and Article 143) to warn the partner states that are defaulting in meeting their obligations. “EALA has moved to establish a select committee to investigate the matter of financial paralysis and to report back to the House”, said EALA MP Nancy Abisai when she moved on a motion on the situation of the EAC budget at the end of the EALA session held in Kigali, this 17 March.

    Unlike other EAC member states, Burundi has not contributed any amount to the community’s financial year budget (0.00%) leaving an outstanding of US$ 8,378,108 (100%) excluding arrears for the previous year amounting to US$ 771,037.

    For fiscal year 2016/17 remittances from Uganda were the highest with 91.53 percent ($7,668,419), followed by Kenya at 52.4 percent ($4,395,707), Rwanda at 48.07 percent ($4,027,316) and Tanzania at 30.47 percent with $2.553.203. Each of the five EAC member states is required to make a contribution of $8,378,108 per financial year and before 31st December.

    The Burundian Minster in Charge of EAC affairs, Léontine Nzeyimana said Burundi is preparing to pay the first part of the allowances. She also said EALA has no right to impose sanctions on any member state. This was said when the EALA stated that Burundi could be sent to the regional court due to the failure to pay its financial contribution to the EAC.

    Over the past few days, five Burundian MPs boycotted the 5th EALA session fearing for their safety. Daniel Kidega, Speaker of the EALA threatened to punish five Burundian lawmakers who boycotted the Kigali session.

    Léonce Ndarubagiye, 75, and one of the 5 MPs who had boycotted the session before, joined it on 9 March.

    Phillippe Nzobonariba, Spokesperson for the Government said the Burundi EALA MP who attended the session had nothing to worry about. “He is too old. None would dare to kill him”.

    Nzobonariba said that the government cannot prevent people from traveling to Rwanda being aware that some of their fellow Burundians have been killed in that country. “Burundi should not stop people who sacrifice themselves”, he said.

    Source:Iwacu

  • World Bank Group Announces Record $57 Billion for Sub-Saharan Africa

    {Following a meeting with G20 finance ministers and central bank governors, World Bank Group President Jim Yong Kim today announced a record $57 billion in financing for Sub-Saharan African countries over the next three fiscal years. Kim then left on a trip to Rwanda and Tanzania to emphasize the Bank Group’s support for the entire region.}

    The bulk of the financing – $45 billion – will come from the International Development Association (IDA), the World Bank Group’s fund for the poorest countries.

    The financing for Sub-Saharan Africa also will include an estimated $8 billion in private sector investments from the International Finance Corporation (IFC), a private sector arm of the Bank Group, and $4 billion in financing from International Bank for Reconstruction and Development, its non-concessional public sector arm.

    In December, development partners agreed to a record $75 billion for IDA, a dramatic increase based on an innovative move to blend donor contributions to IDA with World Bank Group internal resources, and with funds raised through capital markets.

    Sixty percent of the IDA financing is expected to go to Sub-Saharan Africa, home to more than half of the countries eligible for IDA financing. This funding is available for the period known as IDA18, which runs from July 1, 2017, to June 30, 2020.

    “This represents an unprecedented opportunity to change the development trajectory of the countries in the region,” World Bank Group President Jim Yong Kim said. “With this commitment, we will work with our clients to substantially expand programs in education, basic health services, clean water and sanitation, agriculture, business climate, infrastructure, and institutional reform.”

    The IDA financing for operations in Africa will be critical to addressing roadblocks that prevent the region from reaching its potential. To support countries’ development priorities, scaled-up investments will focus on tackling conflict, fragility, and violence; building resilience to crises including forced displacement, climate change, and pandemics; and reducing gender inequality. Efforts will also promote governance and institution building, as well as jobs and economic transformation.

    “This financing will help African countries continue to grow, create opportunities for their citizens, and build resilience to shocks and crises,” Kim said.

    While much of the estimated $45 billion in IDA financing will be dedicated to country-specific programs, significant amounts will be available through special “windows” to finance regional initiatives and transformative projects, support refugees and their host communities, and help countries in the aftermath of crises.

    This will be complemented by a newly established Private Sector Window (PSW)—especially important in Africa, where many sound investments go untapped due to lack of capital and perceived risks. The Private Sector Window will supplement existing instruments of IFC and the Multilateral Investment Guarantee Agency (MIGA) – the Bank Group’s arm that offers political risk insurance and credit enhancement – to spur sound investments through de-risking, blended finance, and local currency lending.

    This World Bank Group financing will support transformational projects during the FY18-20 period. IBRD priorities will include health, education, and infrastructure projects such as expanding water distribution and access to power. The priorities for the private sector investment will include infrastructure, financial markets, and agribusiness. IFC also will deepen its engagement in fragile and conflict-affected states and increase climate-related investments.

    Expected IDA outcomes include essential health and nutrition services for up to 400 million people, access to improved water sources for up to 45 million, and 5 GW of additional generation capacity for renewable energy.

    The scaled-up IDA financing will build on a portfolio of 448 ongoing projects in Africa totaling about $50 billion. Of this, a $1.6 billion financing package is being developed to tackle the impending threat of famine in parts of Sub-Saharan Africa and other regions.

  • Thousands rally in Beirut against proposed tax hikes

    {The government says the increases are needed to avoid a $4bn budget deficit.}

    Thousands rallied in Lebanon’s capital on Sunday against proposed tax hikes that the government has said are needed to avoid a $4bn budget deficit this year.

    Protesters chanted “we will not pay” and blamed corrupt politicians as they gathered in central Beirut’s Riad el-Solh square.

    Addressing the crowd, Prime Minister Saad al-Hariri vowed to fight corruption.

    “The road will be long…and we will be by your side and will fight corruption,” Hariri said. Protesters responded by shouting “thief” and hurling empty water bottles at the prime minister.

    On Twitter, Hariri later urged the organisers of the protests to form a committee and “raise their demands and discuss them positively.”

    Police barricaded the entrance to the government headquarters and parliament building during Sunday’s demonstration, which followed three days of smaller protests in Beirut.

    Authorities are seeking to raise taxes to help pay for a deal on public sector pay increases, which is part of a wider effort led by Hariri to approve the country’s first state budget in 12 years.

    Lebanon faced years of political deadlock. A new government was formed in December of last year after more than two years without a president.

    Lawmakers approved several tax hikes last week, the most prominent being a one percentage point increase on the sales tax.

    Reporting from Beirut, Al Jazeera’s Imtiaz Tyab said there was a lot of anger and frustration among protesters.

    “When you consider the fact that many people in Lebanon really don’t have high wages and you consider the fact many have some of the highest rates of personal debt as well, any kind of increase is going to be felt in the pocket book,” he said.

    In the coming weeks, parliament will vote on a number of other increases, all of which must be signed off by the president before taking effect.

    In recent days, various civil society groups and some leading political parties have called for people to take to the streets in protest.

    The Christian Kataeb party and the Progressive Socialist Party, led by Druze politician Walid Jumblatt, have staunchly opposed the new taxes. The Iranian-backed Shia Hezbollah movement has also voiced reservations about the increases.

    Sunni leader Hariri became premier in October in a power-sharing deal that saw Michel Aoun, a staunch Hezbollah ally, elected president. Hariri, whose Saudi-backed coalition opposed Hezbollah for years, formed a unity cabinet that includes nearly all of Lebanon’s main parties.

    Aoun’s election ended a 29-month presidential vacuum in a country that had been crippled by political gridlock for years.

    “We had hopes for this new government, but unfortunately … these politicians are still exploiting resources for their profit,” said protester Mahmoud Fakih. “This is to refuse the taxes that are being imposed on poor people.”

    Signs and slogans accused parliament of theft and people chanted for lawmakers to step down. “Take your hands out of my pockets,” one placard read.

    Lebanon’s parliament has extended its own mandate twice since 2013, a move that critics including the European Union have condemned as unconstitutional. Current lawmakers were elected in 2009 for what was meant to be four-year terms.

    Anger at Lebanon’s government has fueled repeated protests in central Beirut over the last two years, particularly in the summer of 2015, when politicians failed to agree a solution to a trash disposal crisis.

    Piles of garbage festered in the streets, prompting massive protests that were unprecedented for having been mobilised independently of the big sectarian parties that dominate Lebanese politics.

    The government has said the tax hikes are needed to avoid a $4bn budget deficit

    Source:Al Jazeera