Sunday, July 21

Regional Markets

Comesa programme targets horticulture production in East Africa
  • Under a new COMESA programme, farmers in the five East African countries are expected to access quality seeds, and training on how to improve production and distribution.
  • The five-year programme is expected to help the countries cut post-harvest losses in horticulture to 40 per cent or lower, from highs of 60 per cent, for instance in Kenya. 
  • Agriculture is estimated to contribute on average 27% of the gross domestic product (GDP) in the EAC and accounts for the highest share of employment not only in the region but across Africa.

Agriculture is the backbone of nearly all East Africa region’s economies and the main economic activity for more than 70 per cent of the population. It is estimated to contribute on average 27 per cent of the gross domestic product (GDP) in the EAC and accounts for the highest share of employment not only in the region, but the African.…

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East Africa's economic growth
  • East Africa’s economic growth is projected to grow at 5.3 and 5.8 per cent in 2024 and 2025-26, respectively. 
  • The World Bank projects African economies to grow by 3.4 per cent in 2024.
  • However, faster and more equitable growth is needed to reduce poverty.

East Africa’s economic growth to lead the continent

Economies in East Africa are expected to spearhead growth in Sub-Saharan Africa this year amid increased private consumption and declining inflation, which are supporting an economic rebound in the region.

The World Bank’s latest Africa’s Pulse report indicates the East African Community is projected to grow at the fastest pace at 5.3 and 5.8 per cent in 2024 and 2025–2026, respectively, thanks to robust growth in the Democratic Republic of Congo, Kenya, Rwanda, and Uganda.

This is higher than the compounded growth for Sub-Sahara Africa, which, albeit rebounding from a low of 2.6 per cent in 2023, is …

petroleum exports
  • Kenya is keen on extending its pipeline to Malaba (Kenya-Uganda border), with Uganda expected to construct a link line to Kampala.
  • According to the Shippers Council of Eastern Africa (SCEA), Mombasa used to command up to 70% of transit business, but this has decreased to 60 per cent.
  • Uganda imports an average of 2.5 billion litres of petroleum annually, valued at about $2 billion, with KPC handling at least 90 per cent of the volumes.

Kenya is courting Uganda in a fresh bid to retain and possibly increase petroleum exports amid increased competition from neighbouring Tanzania. In recent months, East Africa’s economic powerhouse has come under pressure from Tanzania, which is eyeing to tap more transit markets for imports and exports into the hinterland through the Dar es Salaam Port.

In the latest developments, Tanzania has offered to license Uganda National Oil Company (UNOC) to import petroleum products through Dar …

Port of Mombasa

Kenya’s Mombasa port has for years remained the leading harbour in East Africa, serving traders in the country and neighbouring landlocked states. Uganda is the biggest destination for transit cargo through the Port of Mombasa, accounting for about 83.2 per cent of transit cargo through the Kenyan port. South Sudan takes up 9.9 per cent while DR Congo, Tanzania and Rwanda account for 7.2 per cent, 3.2 per cent and 2.4 per cent, respectively.…

Carbon credits snapped up by Saudi firms in a Nairobi auction.

The demand for carbon offsets is rapidly growing in Africa, unlocking billions for the climate finance needs of economies. Kenya recently hosted a carbon credits auction. The auction is the world’s largest sale, where firms from Saudi Arabia bought more than 2.2 million tonnes of certified carbon credits.…

Zimbabwe’s stock market saw huge gains over the last week, investors flock to the stock market in search of a safe haven amidst the rapid depreciation of the Zimbabwean dollar. www.theexchange.africa

The Zimbabwe Stock Exchange (ZSE) on June 7 announced a halt in trading for two consecutive days. This comes amid investors flocking to the stock market as an escape from the rapid depreciation of the Zimbabwean dollar. The ZSE All Share index surpassed the 10 per cent threshold on the upside. Consequently, the ZSE exchange had to take immediate action.…

President William Ruto
  • With tightening monetary policies globally, many African economies are struggling with falling forex reserves.
  • Low reserves have sent governments back to the drawing board strategising on how to survive future trends while balancing trade.
  • With this, leaders and policymakers in Africa are engaging in the de-dollarisation conversation.

Kenya has sent a strong message to economies in Africa on the need to accelerate dedollarisation of cross-border trade, further amplifying the global conversation on reducing reliance on the US dollar as the main mode of payment.

For over a decade, China and Russia have sought to drastically lower their usage of the US Dollar in what is commonly referred as “dedollarisation”.

This is in a move intended at shielding their economies from possible trade-limiting US sanctions. The strategy also reduces their exposure to adverse effects of US economic and monetary policy, while also asserting global economic leadership.

China, Russia slowly cutting dollar

Kenya's remittance inflows
  • Weaker currencies make the fight to tackle inflation harder given Africa’s dependence on imports.
  • According to the IMF, the average depreciation for the region since January 2022 is about eight percent, but events vary by country.
  •  Ghana’s cedi and Sierra Leone’s leone depreciated by over 45 percent. An analysis by The Exchange Africa shows the Kenya shilling has shed about 18.4 per cent since May last year.

Most African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge, IMF now says. This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a fragile recovery.

According to the IMF, the average depreciation across Africa since January 2022 is about eight percent though events vary by country. Ghana’s cedi and Sierra Leone’s leone depreciated by more than 45 per cent.

An analysis by The Exchange …

Kenya National Treasury.
  • Kenya’s forex reserves dipped to $6.2 billion on May 19, an eight-year low, before a slight improvement to $6.4 billion on May 26.
  • At $6.4 billion, Kenya’s reserves are just 3.60 months of import cover, which is below the Central Bank of Kenya’s desired target.
  • What’s more, the reserves are below the East Africa Community preferred threshold of 4.5 months of import cover, hence exposing the country to high volatilities in the global market.

A dip in export earnings, coupled with reducing diaspora inflows at a time of huge debt repayments have left Kenya grappling with low forex reserves, raising concerns on the health of East Africa’s economic powerhouse.

The low forex reserves are further compounding the dollar shortage problem that has been gripping importers for months. Importers, mainly in the manufacturing and the energy sectors, have been struggling to secure the greenback to replenish their suppliers.

Kenya’s forex reserves

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