Latest News May 16, 2017
May 16, 2017
news From All Africa
- High-Ranking German Presence at Lutheran World Federation Assembly
From 10 till 11 May 2017, Hon. Bodo Ramelow, Minister-President (Governor) of the Free State of Thuringia, visited Namibia. He attended the Twelfth Lutheran World Federation Assembly and had meetings with H.E. Dr. Hage Geingob, President of the Republic of Namibia, H.E. Dr. Zed Ngavirue, Special Envoy of the President of the Republic of Namibia, and Hon. Sophia Shaningwa, Minister of Rural and Urban Development of the Republic of Namibia. He also visited a low-cost residential building by the Thuringian company Polycare. Hon. Ramelow also attended the reception hosted by H.E. the President of the Republic on the occasion of the Opening of the Twelfth Lutheran World Federation Assembly where 32 musicians from Germany where performing.Thuringia is the location of many places which played an important role during the Christian Reformation spearheaded by Dr. Martin Luther, including Wartburg Castle where Dr. Luther translated the Bible into German. The Lutheran World Federation Assembly also celebrated the 500th anniversary of the Lutheran Reformation.
Distributed by APO on behalf of The Embassy of the Federal Republic of Germany – Windhoek.
- Uganda: Staff Concluding Statement of the 2017 Article IV Consultation Mission and Discussions for the 8th Review under the Policy Support Instrument
- A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.
- The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.
- Macroeconomic policy implementation under the Policy Support Instrument (PSI) has been broadly satisfactory, despite some slippages. The authorities have made progress on structural reforms, though more is needed in several areas.
- Infrastructure and oil sector investment are envisaged to lead to a recovery of growth to 6−6 ½ percent over the medium-term. Social spending can help make growth more inclusive.
- The government’s overall fiscal strategy remains appropriate. It requires strengthening public investment management and steady progress on domestic revenue mobilization. Monetary policy has successfully maintained core inflation on target.
- Ongoing efforts to enhance financial sector stability and development should lay the basis for a recovery of credit to the private sector.
1. Growth has slowed further, but is expected to gradually recover.  FY16/17 growth is projected at 3½ to 4 percent. The drought held back activity in the first part of the year. Private sector credit is an additional drag. Lastly, the slow execution of externally-financed public investment also contributes. With weather conditions improving and a recovery in credit, growth could accelerate to 5 percent in FY17/18.
2. The banking sector is well-capitalized, but credit growth is subdued. Most banks meet or exceed Basel III capital requirements and conform with the liquidity coverage ratio. With elevated NPLs, profitability in the sector has declined, and NPLs may rise further in the near-term. Banks have tightened lending standards, and credit growth has slowed.
3. Inflation has edged up, mainly reflecting the effects of the drought. Food price inflation rose from 5 percent year-on-year in September 2016 to 22 percent in April 2017. With this, headline inflation recorded 6.8 in April 2017. Core inflation stood at 4.9 percent, in line with the Bank of Uganda’s (BoU’s) 5 percent target.
4. The FY16/17 fiscal deficit is likely to be lower than anticipated, reflecting shortfalls in foreign financed development spending. Revenue collection should reach 14 percent of GDP, making welcome progress on domestic revenue mobilization. Domestically financed development spending is on track, but foreign financed development spending and construction of the two hydropower dams is expected to fall significantly short of earlier expectations. The supplementary budget brings current expenditures ahead of program projections, and the government should issue domestic securities to meet the resulting financing needs rather than rely again on BoU advances.
Performance under the PSI program
5. The authorities met all end-December quantitative assessment criteria and the majority of indicative targets through March 2017. Despite a minor underperformance on revenue collection, the overall deficit was lower than programmed at end-December 2016. However, the government issued US$26 million in guarantees for Uganda Development Bank which had not been anticipated at the time of the 7th review. The BoU achieved its inflation target and exceeded the target for reserves accumulation.
6. The authorities have made some progress on structural reforms. Two structural benchmarks have been met on time, three with delay, and the remaining five are pending. Most notably, the authorities moved forward the legislative agenda that will support Uganda’s exit from the Financial Action Task Force “grey” list—the laws now await President Museveni’s assent. The Ministry of Finance, Planning, and Economic Development published reconciled reports on the stock of outstanding arrears at end-June 2016 (3.2 percent of GDP). Pending reforms include sending the BoU Act Amendments to Parliament, publishing the report on end-December unpaid bills, and sending to cabinet a policy for regulating mobile money.
7. The FY17/18 budget accommodates infrastructure investment needs, but implies a very tight current expenditure envelope. The government aims to increase tax collection by another ½ percentage point, though specific measures still need to be firmed up. Capital spending is envisaged to increase over FY16/17, but this will require improved project implementation. The envelope for current spending is tight, and allocations for social spending are broadly unchanged relative to FY16/17 in Shilling-terms. Strong expenditure control is, therefore, needed to avoid a recurrence of arrears or the need for a supplementary budget. The overall deficit of 3.7 percent of GDP is financed through a mix of concessional and non-concessional external financing as well as domestic borrowing, and keeps public debt well on a sustainable path.
8. The BoU’s inflation targeting framework has served Uganda well. The BoU has appropriately reduced its policy rate by 600 bps since April 2016 to 11 percent. Headline inflation is projected to increase over the next few months, while core inflation would remain within the band of +/- 2 percentage points around the 5 percent target. Remaining on hold for a while would allow the BoU to confirm that effects from food price inflation remain limited.
9. Growth should recover over the medium-term, but risks are tilted to the downside. Infrastructure and oil sector investments could yield growth of 6 to 6½ percent over the next three to four years. However, weak implementation of public investment and regional developments (conflicts, possible disruptions during upcoming elections), could undermine growth, as could a slowing of global trade. Uncertainty persists over when oil production will commence and the phasing of investment in the sector. The agricultural sector remains exposed to climate conditions and pest infestations. Tightening global financing conditions could hold back portfolio inflows. Lastly, cuts in aid flows would undermine the sustainability of spending, in particular in social sectors.
10. The government’s medium-term fiscal framework is anchored by the Charter of Fiscal Responsibility. With the scaling up of infrastructure investment, government debt would continue to rise and peak at 41 percent of GDP in FY19/20. Safeguarding debt sustainability requires continued domestic revenue mobilization and sound project implementation to realize the envisaged growth dividend. The recommendations from a recent IMF Technical Assistance report lay out a comprehensive strategy to strengthen public investment management. Adopting the projected debt trajectory as the fiscal anchor would guide fiscal policy to adjust to shocks and other unexpected developments. Local content requirements for government procurement are understandable, but need to be carefully designed to ensure quality and cost effectiveness.
11. Efforts to further strengthen financial sector stability are underway. Supervision needs to become more intrusive, scrutinizing banks’ reporting, and the BoU is appropriately focusing on banks’ risk management frameworks. Credit bureaus should look beyond loan repayments to other payment obligations to derive credit scores. We welcome the BoU’s work on developing several indicators to better monitor financial sector stability, and to potentially introduce counter-cyclical provisioning. The regulator could also consider widening the applicability of maximum loan-to-value ratios from mortgages denominated in foreign exchange to those denominated in Ugandan shillings.
12. The BoU is enhancing the financial market architecture. We welcome the introduction of a deposit facility to expand the BoU’s liquidity management toolkit. Work on a master repo agreement is under way that would facilitate banks’ liquidity management via the interbank market. The authorities should consider introducing a marginal lending and deposit facility to clearly separate liquidity management and emergency liquidity assistance.
13. Uganda’s external position is broadly consistent with fundamentals and desirable policies in 2016. The current account deficit is projected to temporarily increase over the next 5 years as infrastructure and oil sector investment ramp up further. Achieving the envisaged growth dividend of these investments is essential to maintaining external stability—just as for public debt sustainability. International reserves at end-December 2016 stood at US$3 billion (5¼ months of next year’s imports), above the adequacy level suggested by the IMF’s metric for credit-constrained economies. Going forward, the BoU can purchase reserves opportunistically and would meet the EAC convergence criterion of 4½ months of imports. The flexible exchange rate regime is serving Uganda well.
14. The authorities’ growth strategy focuses on large infrastructure projects. These are appropriately intended to tackle binding constraints, mostly in electricity and transportation. Diversification to boost growth remains a challenge that will become more complex with oil. EAC integration should further expand Uganda’s market access, stimulate foreign investment, and support business and job creation. Improving the business environment would allow the private sector to better leverage these opportunities. In addition, IMF studies show that income and gender equality are important drivers of sustainable growth. High-quality social spending as well as strengthening the social safety net can tackle poverty and support growth. In this regard, proposals under discussion to widen access to health insurance and retirement savings schemes are welcome. Emphasis on empowering women to be economically active is equally important. This includes, e.g., addressing obstacles to women accessing land or inheriting assets.
The mission met with State Minister of Finance for Planning Bahati, Permanent Secretary and Secretary to the Treasury Muhakanizi, Governor Tumusiime-Mutebile, Deputy Governor Kasekende, senior government officials, financial sector regulators, representatives of civil society, the private sector, academia, and development partners. The mission is grateful to the authorities for their warm hospitality, excellent cooperation, and open and constructive discussions.
 The fiscal year runs July to June.
Distributed by APO on behalf of International Monetary Fund (IMF).
- Security Council Press Statement on Attacks against MINUSCA and civilians in the CAR
The members of the Security Council condemned in the strongest terms the violence by anti-Balaka elements in Bangassou (Mbomou) which intensified on 13 and 14 May 2017, and targeted a Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA) field office, civilian populations from particular communities, as well as humanitarian personnel.These attacks resulted in one Moroccan peacekeeper killed and one Moroccan peacekeeper injured, as well as civilian casualties and significant population displacement.The members of the Security Council expressed their deepest condolences and sympathy to the family of the peacekeeper killed, and their deepest sympathy to the family of the peacekeeper injured, as well as to the Kingdom of Morocco, and to MINUSCA. They wished the injured a speedy recovery.The members of the Security Council condemned in the strongest terms all attacks and provocations against civilian populations, MINUSCA and humanitarian personnel by armed groups.They reiterated that attacks against peacekeepers may constitute war crimes and reminded all parties of their obligations under international humanitarian law.The members of the Security Council called on the Government of the Central African Republic to swiftly investigate this attack and bring the perpetrators to justice.The members of the Security Council reiterated their full support for MINUSCA and expressed their deep appreciation to MINUSCA's troop- and police-contributing countries.They reiterated their strong support for the Special Representative of the Secretary-General for the Central African Republic, Parfait Onanga-Anyanga, and for MINUSCA to assist the Central African Republic authorities and the people of the Central African Republic in their efforts to bring lasting peace and stability to their country, as mandated by the Security Council in resolution 2301 (2016).
Distributed by APO on behalf of United Nations – Office of the Spokesperson for the Secretary-General.
- MONUSCO continues to support and protect Dr Mukwege
Following the statement made at its press conference on 10 May regarding the protection of Dr Mukwege, MONUSCO wishes to clarify that it does not provide 24H protection to Panzi hospital and that this task is carried out by the Police Nationale Congolaise (PNC). MONUSCO withdrew its permanent uniformed personnel from Panzi in September 2015 as the security level was assessed to be within the capacity of the combined 24H presence of Police Nationale Congolaise (PNC), the deployment of well-trained security guards, the provision of escorts to Dr Mukwege during his movements in South Kivu, and the deployment of periodic patrols in the vicinity of Panzi hospital.
MONUSCO has continued to provide its support because it believes that there is a credible threat to Dr Mukwege. Clearly, MONUSCO’s tweet on 10 May was mistaken.
Based on concerns expressed by the Panzi foundation, MONUSCO will conduct a thorough security assessment to determine the adequate level of protection in the near future. On 15 May, MONUSCO preemptively deployed uniformed personnel to Panzi hospital for a 24h protection and will increase the number of patrols in the area until the security assessment is completed.
MONUSCO takes the security of Dr Mukwege and Panzi hospital’ staff very seriously. In addition to the above measures, MONUSCO will continue securing the confidential records of Panzi hospital.
Distributed by APO on behalf of Mission de l’Organisation des Nations unies en République démocratique du Congo (MONUSCO).
- ICD organized the ICD Clients Day during IsDB 42nd annual meeting
During the IsDB 42nd Annual Meeting, the Islamic Corporation for the Development of the Private Sector (ICD) (www.ICD-PS.org), organized a side event entitled “ICD Clients Day” at Hilton Hotel (Al Qasr A) Jeddah – Saudi Arabia.
During the event, ICD seized the opportunity to meet with potential clients and stakeholders from private sector to discuss the opportunities and challenges they are facing while seeking business partnership with ICD. In addition, ICD presented its achievements, highlighted some figures of its financial performance of year 1438H/2016G and awarded its Best Clients for 2016, namely Coris Bank International, Vitamed Medical Diagnostic Center and AlQadi Specialty Hospital.
Mr. Khaled Al-Aboodi the CEO and General Manager of ICD opened the session welcoming all the participants and delivered an opening statement saying: “…Our impact on private sector development stretched over a wide range of sectors reflecting our responsiveness to the needs of the market, as well as the corporation’s strategic priorities and goals”.
He added: “Today, ICD is witnessing much stronger financial and political support from all member countries as evidence of recognition for its imperative role in the private sector development.”
Thomson Reuters presented the last edition of the Islamic Finance Development report. Afterword, the ICD best clients presented their companies and projects.
The event was a chance to share knowledge about major changes and economic developments in the member countries, to assess business, investment and projects opportunities, and to network with the decision-makers, industry leaders and experts.
Distributed by APO on behalf of Islamic Corporation for the Development of the Private Sector (ICD).
Mr. Nabil El Alami
Fax: +966 12 6444427
Tel: +966 12 6468192
About The Islamic Corporation for the Development of the Private Sector “ICD”:
ICD (www.ICD-PS.org) is a multilateral organization and a member of the Islamic Development Bank (IDB) Group. The mandate of ICD is to support economic development and promote the development of the private sector in its member countries through providing financing facilities and/or investments which are in accordance with the principles of Shari’ah. ICD also provides advice to governments and private organizations to encourage the establishment, expansion and modernization of private enterprises. ICD is rated AA/F1+ by Fitch and Aa3/P1 by Moody’s. For more information visit www.ICD-PS.org.
- Radical economic transformation receives a boost with more than R20m industrial park in Mthatha
Government’s radical economic transformation received a boost with the launch of the Vulindlela Heights Industrial Park in Mthatha, Eastern Cape.
Speaking at the launch, the Deputy Director-General of Special Economic Zones and Economic Transformation at Department of Trade and Industry (the dti), Mr Sipho Zikode said radical economic transformation starts when government provides infrastructure that will enable business to thrive and the more than R20 million revitalisation of the park speaks exactly to that.
“While government is providing the infrastructure, businesspeople must stand up, roll up their sleeves and work hard,” said Zikode.
He added that the revitalisation of the Vulindlela Industrial Park was part of efforts to decentralise the country's industrialisation in order to deepen and strengthen the industrial base of the South African economy.
According to Zikode, the revitalisation programme is rolled-out in phases with the first phase focussing on the upgrading of the infrastructure and the purpose of the programme.
“The upgrading is part of the dti's Revitalisation of the Industrial Parks Programme. The purpose of the programme is to upgrade the country's state-owned industrial parks in order for them to contribute in growing the country’s economy and creating jobs,” said Zikode.
Vulindlela is the second industrial park to be launched in the Eastern Cape. In November last year, Minister Davies launched the revitalised Komani Industrial Park in Queenstown. The two are amongst the six that the dti upgraded in various provinces last year at a cost of R189 million.
The park is an Industrial area that comprises of a mixed tenants of manufacturers, services and suppliers of various products for the local market. The park currently employs 866 people on a full time basis. It is envisaged that the revitalisation of the park will enhance its contribution towards transformation and will effectively contribute to the greater developmental goals of the district.
The Chief Executive Office of the Eastern Cape Development Corporation (ECDC), Mr Buhle Dlulane said the launch of the park brings hope to the community as it will attract investors in the region.
“The park currently has 87% occupancy and the more occupants it will attract the more jobs it will create and the tax base will increase. It is important to broaden the scope to attract investors, diversify the economy that will be able to carry us even when times are tough. This create jobs and address the high level of poverty and inequality in the region”, added Dlulane.
Distributed by APO on behalf of The Department of Trade and Industry, South Africa.
- Head of the African Union Commission to address Parliament
Moussa Faki Mahamat, Chairperson of the African Union Commission will address MEPs at 12.00 on Tuesday in the Strasbourg Chamber.
A joint press point by EP President Antonio Tajani and Mr Faki Mahamat will take place afterwards.
Migration, sustainable development, economic diplomacy as well as youth and cooperation issues to do with peace and security on the continent should be among the issues to be raised by Chad’s former foreign minister Mr Faki Mahamat.
Earlier this month, the EU proposed a reinforced partnership with Africa on peace and security, and job creation for youth in the two continents. The fifth EU-Africa Summit will take place in Abidjan, Ivory Coast, in November 2017, with youth as the key theme. The summit will be a critical opportunity for African and European leaders to reshape and deepen their relationship.
Distributed by APO on behalf of European Parliament.
- IMF Staff Completes 2017 Article IV Visit to Zimbabwe
- The economy is facing difficulties as a severe drought and slow reform momentum have led to high expenditure levels since late 2015, despite subdued revenues.
- Spending pressures stem from high employment costs, government transfers to support specific economic sectors, and elevated discretionary expenditure.
- The team recommends taking action to unleash the potential of the private sector and ensure that growth benefits the most vulnerable segments of the population.
An International Monetary Fund (IMF) team led by Ana Lucía Coronel visited Zimbabwe from May 2 to 13, 2017, to hold discussions with the national authorities, private sector representatives, and civil society in the context of the 2017 Article IV Consultations. The discussions covered recent economic developments, the outlook and risks, as well as policies that could restore economic stability.
At the conclusion of the visit, Ms. Coronel issued the following statement:
“The economy is facing difficulties. A severe drought and slow reform momentum have led to high expenditure levels since late 2015, despite subdued revenues. With a difficult external environment limiting access to foreign inflows, the ensuing large fiscal imbalances are being financed by domestic borrowing. The expansionary fiscal stance and curtailed net capital flows have resulted in cash shortages, hampering economic activities.
“The recovery in agriculture and mining will drive growth this year. However, maintaining the growth momentum will require action to expedite the authorities’ plans to reduce the deficit to a sustainable level. Excessive government spending, if continued, could exacerbate the cash scarcity, further jeopardize the health of the external and financial sectors, and, ultimately, fuel inflation.
“Spending pressures stem from high employment costs, government transfers to support specific economic sectors, and elevated discretionary expenditure. Action on these three fronts, while safeguarding social outlays, is therefore crucial. Reducing the wage bill could involve reviewing allowances and benefits and evaluating the size of the civil service with a view to eliminating non-essential posts. Government interventions to support agriculture, while understandable, could be redesigned with the aim of maximizing the benefits on production while minimizing the risks to the public-sector balance sheet. Reinforcing the government’s efforts to curtail non-priority spending is also pressing.
“Restoration of confidence is essential for attracting the necessary dollar inflows to the economy. Refraining from central bank financing of the deficit and containing the issuance of debt and quasi-currency instruments is vital. Furthermore, the financial sector should restore its role of intermediating resources in the economy by channeling deposits to productive credit rather than financing fiscal operations.
“The team recommends taking action to unleash the potential of the private sector and ensure that growth benefits the most vulnerable segments of the population. Building on the progress already achieved, the government is encouraged to demonstrate that Zimbabwe is open for business. This will include enhancing efforts to tackle corruption, encouraging private sector investment, allowing the market to determine prices, promoting labor flexibility, and creating a stable legal and regulatory framework to reduce policy uncertainty. Moreover, there is room for enhancing domestic revenue mobilization, boosting transparency in the mining sector, and improving governance in public enterprises to strengthen the country’s fiscal position.
“The team stands ready to continue to work with the Zimbabwean authorities to address their policy challenges. The Executive Board of the IMF is expected to consider the staff report for Zimbabwe’s 2017 Article IV Consultations in early July. The team wishes to thank the authorities for their hospitality and constructive cooperation.”
Distributed by APO on behalf of International Monetary Fund (IMF).
- The International Islamic Trade Finance Corporation (ITFC) Signs US$ 450 Million Socioeconomics Development Framework Agreement with the Government of Burkina Faso
On the side-lines of the Islamic Development (IDB) Group 42nd Annual Meeting of the Board of Governors held in Jeddah during the period from 14th to 18th of November 2017, the International Islamic Trade Finance Corporation (ITFC) (www.ITFC-idb.org) has signed a three -Years US$ 450 million socioeconomic development framework agreement with the Government of Burkina Faso. The agreement has been signed by Eng. Hani Salem Sonbol, CEO of ITFC and H.E Mrs Hadizatou Rosine Coulibaly, Minister of Economy, Finance and Development and Islamic Development Bank Governor for Burkina Faso.
The framework agreement aims at financing and supporting Burkina Faso’s export of agricultural commodities, especially cotton, import of energy commodities such as crude oil and refined petroleum products, import of agricultural inputs and food stuff and extend lines of financing to local banks to support small and medium-sized enterprises.
On this occasion, Eng. Salem Sonbol commented that: “This agreement comes within the framework of ITFC’s keenness to support & promote trade and trade cooperation between the member countries. Eng. Salem Sonbol has also commended on the two parties’ assiduity to support and promote the close cooperative spirit prevailing between them in line with ITFC’s pledge to support Burkina Faso’s 2016/2020 National Program for Economic and Social Development (PNDES).”
On her part, H.E Mrs Hadizatou Coulibaly has welcomed the support provided by ITFC to promote the socioeconomics in Burkina Faso saying: “This agreement will enable our government to continue on supporting the target sectors and enhancing its investment program that aims at improving the lives of individuals and advancing our country’s national economy”. She added: “This agreement comes within the framework of the plan set by the government of Burkina Faso for correcting the economic situations in the different fields”.
It is worth to mention that ITFC has provided over US$ 770 million since inception in 2008, in favour of Burkina Faso.
Distributed by APO on behalf of International Islamic Trade Finance Corporation (ITFC).
The International Islamic Trade Finance Corporation (www.ITFC-idb.org) is an autonomous entity within the Islamic Development Bank Group. It was created with the purpose of advancing trade, which would ultimately contribute to the overarching goal of improving socioeconomic condition of the people across the Islamic world. ITFC has since consolidated all the trade finance businesses that used to be handled by various windows within IDB Group. It commenced operations in Muharram 1429H (January 2008G). The consolidation of IDB Group’s trade finance activities under a single umbrella enhanced the Corporation’s efficiency in service delivery by responding swiftly to customer needs in a market-driven business environment.
As a leader in Sharia-compliant trade finance, ITFC deploys its expertise and funds to businesses and governments in its Member Countries. Its primary focus is to encourage more intra-trade among OIC Member Countries. As a member of IDB Group, ITFC has unique access to Member Countries’ governments and it works as a facilitator to mobilize private and public resources towards achieving its objectives of fostering economic development through trade. The Corporation helps entities in Member Countries gain better access to trade finance and provides them with the necessary trade-related capacity building tools in order to help them compete successfully in the global market. www.ITFC-idb.org
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