Browsing: International Monetary Fund

Central Bank of Egypt hikes key interest rates by two per cent. www.theexchange.africa

The CBE also announced in a statement that it will begin a process of phasing out Letters of credit (LCs) for import finance by December 2022.

Egyptian Prime Minister Mostafa Madbouly announced an exceptional bonus to public employees and pensioners of the state administrative apparatus and state-affiliated companies at a value of EGP 300 to meet the cost of living. The government also froze household electricity prices through June 2023.

The National bank of Egypt (NBE) issued new three-year-maturity saving certificates with an annual yield of 17.25 per cent.

Banque Misr also has raised the annual yield of the three-year saving certificates to 17.25 per cent.

Since he won the election last year, Zambian President Hakainde Hichilema has worked to repair relations with the IMF following tense times under his predecessor Edgar Lungu.

Under Lungu, who came to office in 2015, Zambia’s economy borrowed significantly to fund infrastructure projects. His unfriendly regulatory environment in the mining sector and a default on its Eurobonds in December 2020 shook investor confidence.

President Hichilema expressed his support for the agreement in a series of tweets, claiming that it helps to handle the nation’s debt load.

These foreign exchange controls and restrictions will pose challenges for international businesses and foreign investors in Tanzania.

When introducing approvals and making them necessary for just about every kind of transaction, foreign exchange restrictions add a level of complexity to investors’ business model and implementation strategy.

The Tanzania Foreign Exchange Regulations require authorisations and justifications for several areas including exporting, importing or simply where a non-resident is directly investing in Tanzania.

While there could be a problem with income being paid outside of Tanzania for activities that are taking place in Tanzania, putting foreign exchange controls rarely constitutes the answer to encourage investors to keep their funds in the country.

Consequently, China has carefully abandoned its strong preference for bilateral dealing with problem debtors. The Chinese state avoids being a rule-taker compared to the West on debt issues. Still, it increasingly appears to recognize that multilateral approaches – ideally on an ‘a la carte’ basis – can help contain both the pressures on its African partners and its challenges.

China, therefore cautiously supported the DSSI for some African nations when it came to effect in April 2020, and similarly, the Common Framework launched in 2021. However, the slow implementation of the Common Framework brings to light four specific challenges linked to China’s role.  

First is China’s discomfort with the independent and central role played by the IMF in controlling how much a country can afford to pay through its debt sustainability analysis (DSA). Second is the alarm of privates, and public sector lenders in the West over a lack of accountability in the total amount of debt China lent to African nations. 

A dollar is trading at 16.67 Kwacha and 13.35 Seychelles rupees as at December 31. Both countries were among the three worst performers in 2020.
This has fueled speculation from corporate participants and currency retail traders on when exactly to exit foreign currency risks for dollar hoarders or whether to buy the Kwacha as a safer haven store for value.
President Hichilema’s government is in the process of reworking as much as $17 billion in external public debt. He has submitted an endorsement request to the IMF as his administration advances talks with creditors from US$3 billion in Eurobond holders to US$5.8 billion owed to the Republic of China.

The National Treasury is projecting real GDP growth of 6.0 per cent and 5.8 per cent for 2021 and 2022 respectively and has used the same as the basis for its revenue projections. But this adds to the overall optimism being projected.

In September 2021, the Central Bank of Kenya Governor projected a 6.1 per cent growth rate for 2021 and 5.6 per cent in 2022.

The International Monetary Fund’s most recent forecast puts 2022 growth expectations at 6.0 per cent. The World Bank, on the other hand, projects growth to print at 4.5 per cent and 4.7 per cent in 2021 and 2022 respectively.

We really believe this optimism being projected around is largely irrational and the story of Kenya’s economic growth still remains a puzzle to us. 

The government of Kenya’s involvement has borne fruit. This Christmas week, KQ has increased the frequency of flights to the United States from two to four a week.

Bookings have picked up and the cost of a one-way ticket has risen from US$ 900 (KSh90,000) to US$10,00 (KSh101,305). This comes as a relief to the Kenya Airways Chairman, Michael Joseph, who had earlier said in an interview with a local station in Kenya last year that the pandemic would continue to affect demand for air travel for the next two to three years.

The airline said they had increased the number of direct flights to New York to enable families to reconnect and unite during this festive season.

For the five years since 2002, Kenya registered its golden period in terms of economic growth. This was during President Mwai Kibaki’s first five-year term which ended in 2007. The Kenyan economy blossomed with the growth noticeable in both industry and tourism as well as in improved livelihoods.
At this time, the growth attracted the attention of the International Monetary Fund (IMF) and the World Bank because Kibaki’s government was not keen on funding from the Bretton Woods institutions. The government largely financed its budget from the revenues it collected which was unheard of in the previous regime. President Daniel Moi, Kibaki’s predecessor had deeply entrenched corruption in the country which wrecked the economy to almost collapse.
But today, the economy is worse than it was under Moi with the Jubilee government overseeing the worst job cuts, company closures and distressed livelihoods due to corruption. While the Covid-19 pandemic has also contributed to the declining economic status, its effects could have been mitigated with prudent management of resources in the country.

Yet for SME and corporate lending, credit decisions remain an extended process as information is gathered manually and appraised over, sometimes, weeks, to establish the creditworthiness of the borrower.

The need to abandon such cumbersome processes has recently seen leading banks adopt technology, such as our CreditQuest, to automate credit origination, and manage credit workflow, appraisals, documents, customer ratings and credit decisions.

This kind of technology draws all current and historical credit data onto a unified platform, giving the bank’s analysts a true single customer view of credits and collaterals.

Africa’s financial potential has become an interesting prospect for emerging market investors. Three decades ago a proposal to invest in Africa would have been considered ridiculous, but this is no longer the case. In fact, between 2006 and 2011, the continent was registering the highest returns on FDI at 11.4 percent, even higher than Asia at 9.1 percent, while the global average was 7.1 percent. To add to that according to the World Economic Forum, since 2000 “half of the world’s fastest-growing economies have been in Africa. As western markets mature and foreign investments saturate in Asia, Latin America, Central and Eastern Europe, and India, Africa is fast becoming the most lucrative investment destination. The inefficient African markets are an excellent source of excess returns, given the level of perceived risks.