Browsing: Bank of Tanzania (BoT)

East African Trends: The storm that is in the equities market

The onset of Covid-19 brought numerous economic challenges to the region. Significantly affected are the barometers of the economy which are mainly the securities markets as well as money markets. The manner in which these two react clearly depicts where the economy is headed. When Covid-19 descended on the region, the regional markets were the first ones to show, responding to the decline of global shares in known markets like New York Stock Exchange, London Stock Exchange and similar markets in Europe, Asia and Africa. 

In East Africa, the main markets are Nairobi Securities Exchange (NSE), Dar es Salaam Stock Exchange (DSE), Uganda Stock Exchange (USE) and Rwanda Stock Exchange (RSE). The NSE and DSE are both automated while the USE and RSE are still manual using the open-outcry trading system. Unlike the other three Partner States, Uganda also has an over-the-c

The falling price of crude oil spells good favour for importers in Africa. The price of crude has been on a steady drop despite attempts by producers to cut output. As a result, many African countries are taking advantage of the situation and stock piling their reserves.

Take for instance the case of East Africa, crude oil represents more than 20 percent of Tanzania’s annual imports. So a drop in price of crude means the country can afford to buy more and reserve for future use. However no official report has been issued as to the government policy on the matter.

The issue that arises here is the matter of crude versus refined oil. Africa, Tanzania included, imports refined oil which is more costly than crude but with falling prices of crude then follows that  even the price of refined oil has taken a dive

As such, the country is …

East Africans should brace themselves for an increase in the cost of living as households and businesses pay more for goods and services.

Regional currencies are facing increased pressure against the dollar as increasing debt levels and increased servicing obligations threaten to wear down foreign exchange reserves, market data shows.

The projected drop of regional currencies is mainly attributed to the growing debt servicing obligations for foreign currency-denominated debts. To pay off external creditors, it requires a drawdown of the country’s foreign reserves.

According to analysts at AIB Capital, as a pick-up in consumer demand increases imports, the Kenya shilling is expected to further depreciate against the dollar. The country’s exports are likely to remain relatively uncompetitive therefore, this will lead to an increase in the current account deficit.

“We expect the shilling to gradually depreciate against the dollar but remain relatively unchanged against the euro and pound,” said AIB.…

Tanzania’s Central bank, the Bank of Tanzania (BoT) has pledged 500m/-  in soft loans to the country’s artisanal gold miners.

The loans will be extended via the 13-year-old artisanal miners’ empowerment scheme dubbed the Small and Medium Enterprises Credit Guarantee Scheme (SME-CGS).

Under the scheme, the artisanal miners are guaranteed working capital from commercial banks in their respective areas of operation. The way it works is that the central bank guarantees the commercial bank up to 50% of the loan amount that the miner applies for. On the other hand,  the recipient is then responsible to cover the remaining 50%.

This scheme was passed into law by the Act of 2006 which stipulates that when the loan is passed then the responsible financial institutions pays one per cent of the guaranteed loans to the central banks.

To secure these soft loans requires a business plan complete with financial plans detailing …