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World Bank approves $750 million budgetary support for Kenya

For the first time in years, the World Bank is putting cash straight into the Treasury to be used at the government’s discretion.

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World Bank approves $750 million budgetary support for Kenya

The World Bank has approved a $750 million loan to Kenya focusing mainly on support for agriculture and housing, the bank announced in a statement. 

For the first time in years, the World Bank is putting cash straight into the Treasury to be used at the government’s discretion.

Kenya has multiple development funding programs, worth billions of dollars with the Washington-based lender, but for years, the funding bypassed the Treasury and is usually channelled directly into the projects. 

“Measures supported by this are expected to benefit ordinary Kenyans through better targeting of agricultural subsidies to reach low income farmers, and increasing availability of affordable housing,” Felipe Jaramillo, World Bank Country Director for Kenya, said. 

According to the bank, some of the funds will also go towards helping the creation of a digital national identification system. 

The loan, which comes under the bank’s Development Policy Operations, is designed to support the government’s policy and institutional reforms and help make economic growth more inclusive. 

“We expect that this operation will help to reduce bid rigging in government procurement thereby, leading to fiscal savings and more resources for developmental purposes,” the World Bank said. 

Kenya raised $2.1 billion in a sovereign bond this month, but some critics have expressed concerns over the country’s growing debt burden. 

There has been a rise in government borrowing since President Uhuru Kenyatta came into power in 2013 – a jump that some politicians and economists say is saddling future generations with too much debt. 

Kenya’s public debt as a percentage of gross domestic product (GDP) has increased to 55% from 42% when Kenyatta took over. The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways. 

Typically, World Bank concessional loans have zero or very low interest rates and have repayments periods of 25 to 40 years, with a five- or 10-year grace period.

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International partners set to boost northern Nigeria’s leather industry

The partners will develop a leather tannery aimed at improving the production capacity of indigenous entity, Sokoto Shoe

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International partners set to boost northern Nigeria’s leather industry

In a bid to revitalise the region’s traditional leather sector, Sokoto state, in northern Nigeria has attracted international partnership towards the development of a leather tannery aimed at improving the production capacity of indigenous entity, Sokoto Shoe.

The latest firms to seek business opportunities are UK-based Pan African Enterprises and Asia-based Simple Factory Group, a footwear producer- a marriage of convenience credited to the state government’s Sokoto Investment Company Limited.

With a target of 2000 shoes per day, the output increase and further boost in quality could position Sokoto Shoe as a leading player in the leather goods industry increasing the continent’s export potential.

Nigeria’s leather industry is a network of production clusters with a concentration in a number of its cities such as Kano, Aba, Lagos, Sokoto and Onitsha. Leather produced from these centres are fashioned into footwear, bags, belts, and houseware by local workers.

While Nigeria exports a lot of its finished products, (estimates place its annual revenue at $100 million), the country imports about 5 times this value, leading local producers to compete with foreign manufacturers.

The country’s capacity to take up a large share of the global leather industry is, however, immense with its huge cattle population and age-long leather working tradition.

The partnership inches closer to accessing manufacturing and supply-chain advantages in the footwear sector to develop northern Nigeria’s productive capacity. Operations are expected to begin next year.

PAE’s chief executive, Dawn Spetale says “Simple is a natural partner for us to develop our vision in Nigeria with Sokoto Shoe”

“Teaming up with such a well-established producer allows us to leverage its networks, experience and marketing know-how from the past 30 years.

We’re excited that some of our staff will get training in Asia through Simple, as this will greatly enhance our production capacity and quality control from the outset,” Spetale adds.

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World’s biggest marine diamond mining vessel to be financed by African banks

Nedbank Namibia, RMB Namibia, Standard Bank, ABSA and Bank Windhoek agreed to provide 80% of the funding for the ship

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African banks to finance World’s biggest marine diamond mining vessel
(File photo)

Five African commercial banks have partnered in a $375 million financing deal to build a new diamond mining vessel for a subsidiary of Anglo American’s diamond unit, De Beers. 

Nedbank Namibia, RMB Namibia, Standard Bank, ABSA and Bank Windhoek agreed to provide 80% of the funding for the ship, which will be the world’s largest of its type. 

Debmarine Namibia – a 50-50 joint venture company between De Beers and the government of Namibia – will provide the balance of $94 million. 

The ship, to be known as the AMV3, will be the seventh in the Debmarine Namibia joint venture’s fleet, which mines high-quality diamonds from the ocean floor using hi-tech surveying equipment. 

The AMV3 has the capacity to add 500,000 carats of annual production from 2022, and is expected to contribute 2 billion Namibian dollars ($137.64 million) a year in taxes and royalties to the Namibian treasury in its first five years of production.

“The highest quality diamonds in the world are found in our ocean,” Debmarine Namibia Chief Executive Otto Shikongo said in a statement. 

“With this investment, we will be able to optimize new technology to find and recover diamonds more efficiently and meet growing consumer demand”.

Nedbank Namibia, which facilitated the arrangement, will contribute 40% of the financing and will also provide currency hedging for the deal, according to Karl-Stefan Altmann, an executive at Nedbank Corporate and Investment Banking and Treasury.

Mining, of which uranium and diamonds are a major part, contributed 14% of Namibia’s gross domestic product in 2018, according to the latest annual report of Namibia’s Chamber of Mines. 

Diamonds also accounted for 14% of Anglo American’s core profit in 2018.

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Zimbabwe’s inflation soars, stocks hit record high

Stocks are rising because local investors are desperate to hedge against inflation

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Zimbabwe's inflation soars, stocks hit record high | News Central TV
(File photo)

Zimbabwe’s stock market has hit a record high, for all the wrong reasons as the country’s Industrial Index rose 5.6 per cent on Monday to extend its gain this quarter to 80 per cent.

Stocks are rising because local investors are desperate to hedge against inflation, which accelerated to 98 per cent in May. Prices are rocketing amid a scarcity of foreign exchange, which is causing shortages of fuel, medicine, and other imported goods.

In Zimbabwe, investors’ fears about inflation are heightened by a plunging currency.

The RTGS$, which the government de-linked from the U.S. dollar in February, has sunk about 57 per cent since March on the black market.

On the streets of Harare, the capital, it trades at 9.7 against the greenback. That compares with the central bank’s official and much stronger rate of 6.08.

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