Global coal demand to reach an all-time high in 2022
Despite a slowing global economy, soaring natural gas prices following Russia’s invasion of Ukraine are propping up the world’s use of coal this year. The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according to an International Energy Agency (IEA) report. The Coal Market Update – July 2022 notes that significant uncertainty hangs over the outlook for coal as a result of slowing economic growth and energy market turbulence. Based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tonnes, assuming the Chinese economy recovers as expected in the second half of the year, the IEA’s Coal Market Update says. This global total would match the annual record set in 2013 and coal demand is likely to increase further next year to a new all-time high. The new report highlights the significant turmoil in coal markets in recent months, which has important implications for many countries where coal remains a key fuel for electricity generation and a range of industrial processes. At the same time, the world’s continued burning of large amounts of coal is heightening climate concerns, as coal is the largest single source of energy-related CO2 emissions.
Source: ESI Africa
IMF determines new currency amounts for the SDR valuation basket
On Friday, 29 July 2022, the International Monetary Fund (IMF) announced the new amounts for the five currencies that will determine the value of the Special Drawing Right (SDR) during the new valuation period that runs from 1 August 2022 until 31 July 2027. The executive board has decided that, effective from 1 August 2022, the value of the SDR will be the sum of the values of the following amounts of each currency: USD0.57813; EUR0.37379; CNY1.0993; JPY13.452; GBP0.080870. The board’s decision on the amount of each currency in the SDR valuation basket is the final step implementing the results of the latest review of the method of valuation of the SDR, concluded on 11 May 2022. At that review, the IMF determined that the composition of the SDR basket and the weights assigned to each currency in the basket will be 43.38% for the United States dollar, 29.31% for the euro, 12.28% for the Chinese renminbi, 7.59% for the Japanese yen, and 7.44% for the pound sterling.
Islamic banking to offer alternative financial solutions in Africa
Africa is emerging for Islamic finance and a new destination for Islamic financial institutions, something that analysts say will open up a new avenue for foreign direct investment. AlHuda Centre of Islamic Banking and Economics (CIBE), CEO Muhammad Mughal was speaking at the inaugural ceremony of African Islamic Banking and Takaful Summit saying that Tanzania’s Islamic banking and Takaful market is promising. He said that Islamic banking and finance is the ultimate financial solution due to its viability and sustainability. The system, he said, has multi-fold benefits which concentrate on balanced wealth distribution. He also shed light on the need for Islamic banking and financial services. “Several new Islamic financial institutions are ready to start their operations in the market. Various Islamic window operations are also going to start their operations for the development of the economy to strengthen the growth of the market and to uplift the living standards of the public in the region,” he said. According to him, a number of banks are also coming into the markets with stand-alone branches for Islamic banking operation.
Source: The Citizen
EABC optimistic business in EAC to rise by 11% in 2022/23
Business captains in the region are optimistic that business in the East African Community (EAC) bloc is set to increase by 11% in 2022/23, this was revealed by the East African Business Council (EABC) Barometer on Business and Investment in the EAC and Outlook 2022/2023. The EABC Barometer was commissioned by the EABC with support from GIZ and was officially launched during the webinar on Facilitation of Cross Border Investments organised jointly by the EAC and Africa Reform for Investment and Sustainable Economies Project supported by the European Union (EU). The EABC Barometer is an index that captures the sentiment of business stakeholders about how they see the business environment within the EAC during 2022 and 2023. The EABC Barometer shows the rate of investments, operation, and performance of businesses in the EAC bloc is recovering. Businesses in Burundi, Kenya, Rwanda and Uganda reported reduced cost of doing business while those in South Sudan and Tanzania felt that the costs increased during the COVID-19 pandemic and recovery relative to a year before the pandemic.
East Africa heads of state officially launch the Arusha bypass road
On Friday, 22 July 2022, heads of state of the East African Community (EAC) launched the Arusha Bypass Road, during the EAC Heads of State Summit, which took place in Arusha, Tanzania. The 42.4 km bypass seeks to decongest traffic in the towns of Arusha and Moshi and to promote intra-regional trade. It is a component of the multinational Arusha-Holili/Taveta-Voi Road project, funded by the African Development Bank Group (AfDB), and connects Tanzania and Kenya. The funding, from the African Development Fund, the AfDB’s concessional window, amounts to USD217-million, USD112-million for Tanzania and USD105-million for Kenya. Other factors of the project on the Tanzania side involve the dualling of the Sakina-Tengeru section (14.1 km) and construction of two roadside amenities at Tengeru, one on either side of the dual carriageway. On the Kenya side, the project involved upgrading the Mwatate-Taveta section (89 km), construction of the Taveta Bypass (12 km) and two roadside amenities at Bura and Maktau along the Mwatate-Taveta Road. Speaking during the event, President Kenyatta said the road would reduce traffic congestion and foster integration of the EAC.
170-ct pink diamond found in Angola
Diamond mining and exploration company, Lucapa Diamond Company, has recovered a 170 carat (ct) pink diamond, dubbed the Lulo Rose, from its Lulo Diamond Mine in Angola, representing one of the largest rough diamonds discovered globally and believed to be the largest pink diamond recovered in 300 years. “This record and spectacular pink diamond recovered from Lulo continues to showcase Angola as an important player on the world stage for diamond mining and demonstrates the potential and rewards for commitment and investment in our growing mining industry,” stated Angola’s Minister of Mineral Resources, Petroleum and Gas, Diamantino Azevedo. The Type IIa alluvial diamond – the fifth largest from the field – is the 27th diamond exceeding 100 ct recovered from Lucapa’s Lulo Concession, with the 404 ct February Stone, found in 2016, boasting the record as Angola’s largest recovered diamond. The diamond is expected to fetch a high price when it is sold via an international tender process, which will be conducted by Angola’s state diamond marketing company, Sodiam, with Lucapa’s managing director, Stephen Wetherall, indicating that its colour could give the Lulo Rose a higher premium.
Source: Energy Capital & Power
AfDB and Côte d’Ivoire start preliminary discussions for 2023-2027 strategy
The African Development Bank (AfDB) and the government of Côte d’Ivoire initiated a preliminary dialogue in Abidjan from 18-22 July 2022, to lay the foundations for the bank’s strategy in Côte d’Ivoire over the next five years. Led by the AfDB’s deputy managing director for west Africa, Joseph Ribeiro, the bank’s delegation held week-long discussions with various stakeholders and partners in Côte d’Ivoire, including senior government officials from the Prime Minister’s office, the Ministry of Planning and Development, the Ministry of Economy and Finance, and technical departments of the main ministries concerned with the bank’s work in Côte d’Ivoire. Technical and financial partners of Côte d’Ivoire also took part in the meetings, as did representatives of the Ivorian private sector and civil society. The discussions focused on the first version of the country diagnostic note, prepared by the bank for Côte d’Ivoire, and the completion report of AfDB’s 2018-2022 Country Strategy Paper for Côte d’Ivoire, which expires at the end of the year. The dialogue also included a performance review of the portfolio of projects financed by AfDB in Côte d’Ivoire during 2022.
IMF Executive Board concludes 2022 Article IV consultation with Equatorial Guinea
On Monday, 25 July 2022, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Equatorial Guinea. Equatorial Guinea’s oil-dependent economy is slowly emerging from the ravages of the COVID-19 pandemic and Bata explosions, but substantial challenges remain. The relaxation of pandemic containment measures and higher international oil prices are helping boost economic activity, government revenues, and export earnings. However, surging food prices and banking sector vulnerabilities cloud the short term, while real GDP and living standards are expected to decline over the medium term. Following a contraction of 3.2% in 2021, real GDP is projected to grow by 5.8% in 2022 supported by hydrocarbon production and Bata reconstruction. Starting in 2023, the economy is projected to contract through the medium term, reflecting a reduction in hydrocarbon output together with a stalled structural reform agenda. Inflation is projected to rise to 6% by the end of 2022.
The Gambia validates feed-in tariffs and net metering for renewables
June 2022 saw The Gambia take a regional lead in the energy transition with its new Minister of Petroleum and Energy, Abdoulie Jobe validating the country’s feed-in tariff (FiT) and net metering scheme. The scheme, which is approaching its 10th anniversary, was first introduced concurrently with The Gambia’s 2013 Renewable Energy Act, permitting independent renewable power producers to sell surplus electricity directly to the grid, additionally feeding power in for reclaim at any later date, bolstering steady supply. This move represents the latest in a string of promising early steps taken by The Gambia’s nascent ministry leadership. Now, thanks to ambitious leadership in transitional power development, The Gambia has recently crossed the 50% threshold for the share of renewable energy in its national grid, with low-carbon power sources comprising 52.4% of total fiscal energy consumption at last count.
Source: Energy Capital & Power
PPA renegotiations could eventually save Ghana more than USD13-billion
The government in Ghana is currently renegotiating some of its power purchase agreements (PPAs) and if successful, will save the country upwards of USD13-billion. The government says the savings would accrue over the lifespan of the renegotiated agreements, the Minister of Finance, Ken Ofori-Atta, told parliament. The Minister of Finance was delivering the mid-year budget review recently and indicated that the affected projects were Karpower, Cenpower, Early Power, Twin City Energy (formerly Amandi), AKSA Energy and Cenit. Ofori-Atta said the renegotiations and the savings were some of the strategies adopted by the government to reduce costs and improve the energy situation of the country. “The raft of sanctions imposed on Russia are tightening supply conditions for energy products. In response, the government is closely monitoring the stock of products at all depots. The timely intervention of the Bank of Ghana, through the Special Forex Auction mechanism, is also expected to sustain the continuous supply of petroleum products in Ghana,” he said.
Source: ESI Africa
Kenya / Ethiopia
Ethiopia to become Kenya Power’s second biggest source of electricity
Ethiopia will become Kenya’s second biggest source of hydropower from November under a deal by Kenya Power to buy 600 megawatts (MW) from East Africa’s most populous nation. This follows a recently-signed 27-year power purchase agreement, that will run until 2047 as Kenya turns towards cheaper sources of electricity. The new deal which is expected to edge out the expensive power from the national grid promises to increase the capacity charges – the money paid to thermal power generators when Kenya Power does not buy power from them. But the lower tariffs will help the state-owned utility further lower bills on households and businesses, helping ease the pain on the cost of living and boost Kenya’s attractiveness to manufacturers. “The agreed tariff is competitive and will see Kenyans enjoy power at a lower cost. [The] EEP will be the second largest power supplier to KPLC aside from the KenGen Hydros Eastern Cascade at 600 MW,” Kenya Power acting managing director Geoffrey Muli said.
Source: Business Daily
Mozambique / China
China to eliminate customs duties on imports from the country – Lusa
China’s Ministry of Finance has announced the elimination of customs duties for 98% of products imported from 16 developing countries, including Mozambique, from the start of September. According to a statement, the Customs Tariff Commission of the State Council has decided to “grant zero-tariff treatment on 98% of taxable items originating in 16 least-developed countries”. Most of the countries covered are located on the African continent. They include Togo, Eritrea, Central African Republic, Guinea, Rwanda, Sudan, Chad and Djibouti, where in 2017 China opened their first military base abroad. In Asia, the list includes Cambodia and Bangladesh, as well as Laos and Nepal, two countries with which China borders. The order, signed on 22 July, underlines that the ‘zero tariff’ statute covers 8 786 imported products. Effective from 1 September, the policy will help share market opportunities with those countries, push for common development, and promote the building of a community with a shared future for mankind, the statement said.
Source: Club of Mozambique
Mining, energy sectors fuel credit growth
Businesses in the energy, commercial and mining sectors have become the main contributors to corporate credit growth, as demand for overdrafts by both households and corporate companies has declined since the start of the year. This is according to data from the Bank of Namibia. According to a Simonis Storm analysis of the data, credit extended to the private sector increased by 3.4% year-on-year (y/y) in June 2022 compared to 4.5% y/y in May 2022. The analysis says net household debt increased by 2.0% y/y in June 2022 compared to 2.4% y/y in May 2022, whereas net corporate debt increased by 5.3% y/y in June 2022 compared to 7.4% y/y in May 2022. “The main contributors of household credit growth were other loans and advances, which rose to 5.8% y/y, and mortgage loans up to 1.5% y/y, while corporate debt was driven higher, mainly by instalment and leasing credit that shot up 18.1% y/y, other loans and advances rising 14.1% y/y and mortgage loans which went up 4.3% y/y,” said Simonis. Year-to-date, credit growth is trending above levels seen in 2021.
Source: The Namibian
Tourism share of GDP set to hit 20% in 2025
Tourism share in Tanzania’s GDP will reach as high as 19.5% in 2025/26. The fastest growing sector in the economy has been contributing 17.5% and 30% of forex earnings. Projections by the industry players show that tourism will register a 6.2% growth between now and 2025. “In that case, the tourism share in the GDP will reach as high as 19.5% in 2025/26,” said Dr Godwill Wanga, executive secretary of the Tanzania National Business Council (TNBC). He revealed this in Arusha during a recent public-private sector dialogue on policy reforms for the tourism industry. Dr Wanga said tourism would continue to remain the leading export sector in the economy, provided some challenges are addressed. Matters that should be sorted out include a string of taxes and levies and unnecessary red tape in investment registration. He outlined new investment frontiers such as the development of the permanent tented camps (PTC) in the protected areas. This, according to him, is an investment category whereby the tourism concession is given to an investor for PTC.
Source: The Citizen
Tanzania / Egypt
Latest review between Tanzania and Egypt to create flexibility in airline business
Tanzania has agreed to modernise its bilateral air services agreement (BASA) with Egypt to create more flexibility to airlines, The Citizen has learnt. Experts in the BASA negotiations, who met in Cairo, Egypt from 26-27 July agreed on five key issues that are meant to spur flexibility leading to rapid recovery of air transport services from turbulence caused by the outbreak of the COVID-19 pandemic from early 2020. The two countries agreed on allowing a new Egyptian airline (Air Cairo) to operate between Egypt and Tanzania. The designated airlines from the two countries are also entitled to scheduled flights, operating unlimited frequencies per week for passenger services without any restriction on the capacity and aircraft type. Previously, Tanzania Civil Aviation Authority (TCAA) only allowed seven frequencies. With the review of the accord, the airlines of both sides are also now entitled to operate three weekly all-cargo flights instead of only one previously, without any restriction on the capacity and aircraft type. The code-share arrangement was also reviewed to allow for two or more designated airlines from the same country to code share and operate into the other country.
Source: The Citizen
Uganda mulls revised borrowing model to manage debt
Uganda is considering changes to future borrowing in the light of rising debt, with Ministry of Finance officials saying such a move is meant to manage debt and reduce the burden of repayments. Maris Wanyera, director for Cash and Debt Policy at the Ministry of Finance, says one way will be to re-examine ratios of interest payments to tax revenues, as well as interest payments against export earnings, in addition to the debt-to-economic growth balances. “Future borrowing will be biased towards concessional loans and the domestic debt market for purposes of budget support, but we shall not acquire commercial loans for project implementation,” Ms Wanyera told The EastAfrican. Uganda’s debt-to-GDP ratio, usually measured as the level of indebtedness based on national wealth, rose to 54% in June from 49.1% by end of May based on cumulative debt statistics captured between July 2021 and June 2022. It means Uganda owes UGX73.5-trillion (USD19.2-billion), with external debt valued in excess of UGX40-trillion (USD10.5-billion), recent government data shows.
Source: The EastAfrican
Zambia exceeds energy target with 1 156 MW electricity generation surplus
Zambian utility ZESCO has announced that the country has achieved an electricity generation surplus of 1 156 megawatts (MW). This is following the successful commissioning of 4×150 MW capacity from the 750 MW Kafue Gorge Lower Power Station. ZESCO managing director Victor Mapani says currently the installed national electricity generation capacity stands at 3 456.8 MW against a peak national demand of approximately 2 300 MW. Mapani told a high-level panel discussion hosted by the Association of Power Utilities of Africa meeting in Dakar, Senegal that ZESCO was using internally generated resources to progress the 750 MW project, being constructed at a cost of approximately USD2.3-billion. “Currently four out of five units are already commissioned and running. We expect to commission the last 150 MW machine, unit 5, by November this year. With this development, and factoring in independent power producers, we currently stand at a national generation installed capacity of 3 456.8 MW, against a peak national demand of approximately 2 300 MW. We thus have a surplus of 1 156.8 MW that is available for trade within the interconnected Southern African Power Pool (SAPP) network,” Mapani said.
Source: ESI Africa
Zambia to cancel over USD2-billion in loans to address debt woes
Zambia has engaged lenders to facilitate the formal cancellation of over USD2-billion in undisbursed loans as part of measures to address its debt challenges, the Ministry of Finance has said. The ministry said in a statement that it has taken measures to cancel some loan financed projects and to change the scope of a few critical projects. The creditors of undisbursed loans, which are being cancelled, include Exim Bank of China, Jiangxi Bank, Intesa Sanpaolo bank and Israel Discount Bank, the statement said. The Ministry of Finance also said that a number of continuing projects, which were initially financed through commercial loans, will now be financed through government revenues over the medium term. In 2020, Zambia became the first African country in the COVID-19 pandemic era to default on its debts, struggling with external debts that reached over USD17-billion at the end of last year, according to government data.