Kenya has received a $750 million loan from the World Bank to support its budget and help the East African economy recover from the effects of the COVID-19 pandemic, the multilateral lender said on Friday.
The Kenyan government has been pushing hard to secure foreign funding to fill a wide budget deficit before its financial year closes at the end of this month.
The $750 million disbursement is part of World Bank’s Development Policy Operations (DPO), which lends cash for budget support instead of financing specific projects.
The bank said some of the funds would go towards setting up an electronic procurement system for government goods and services to improve transparency.
The World Bank said the concessional loan will have a 3.1% annual interest rate. Typically, World Bank loans have zero or very low interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.
On Thursday, Finance Minister Ukur Yatani presented to parliament the 2021/22 budget, with a deficit of 7.5% of gross domestic product, reduced from 8.7% for the current fiscal year ending this month.
The finance ministry forecasts a economic growth of 6.6% this year, recovering from 0.6% in 2020 when sectors like tourism and related services collapsed due to restrictions imposed to curb the spread of COVID-19.
The World Bank forecasts Kenya’s economy will grow 4.5% this year, and 4.7% in 2022.
President Uhuru Kenyatta, who took the helm in 2013, has overseen a jump in public borrowing. Total debt stands at 70% of GDP, up from about 45% when he took over – a surge that some politicians and economists say is saddling future generations with too much debt.
The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.
FG Spends N612.7 Billion on Domestic Debt Servicing in Q1 2021
The latest report from the Debt Management Office (DMO) has revealed that the Federal Government spent a total sum of N612.71 billion on domestic debt servicing in the first quarter (Q1) of 2021.
In the report released on Wednesday, the DMO said the Federal Government paid holders of mature Nigerian Treasury Bills (NTB) N17.23 billion in January, N12.3 billion in February and N5.49 billion in March 2021. Indicating that the Federal Government paid a combined sum of N35.03 billion to NTB holders in Q1 2021.
Similarly, the Federal Government paid N537.783 billion to holders of Federal Government of Nigeria bonds in three instalments of N201.95 billion in January, N79.26 billion in February and N256.58 billion in March 2021.
The Federal Government also paid N308.38 million in three tranches to subscribers of mature FGN Savings Bond. FG paid N111.65 million in January, N97.074 million in February and N99.65 million in March 2021.
Another N8.16 billion was used to settle FGN Sukuk Rentals in March 2021. No payment was made in January and February 2021.
The Federal Government released N31.44 billion as principal repayment “in respect of promissory notes during the quarter under review.
A monthly breakdown revealed that a total sum of N219.29 billion was released to service domestic debts in January, N123.09 billion in February and N270.33 billion in March. Therefore, bringing the total amount spent on domestic debt servicing in the first quarter of 2021 to N612.71 billion.
Nigeria’s total debt rose to N33.1 trillion in the first quarter of 2021, according to the report released by the DMO.
Togo, Niger, Others to Acquire Nigeria’s Idle Electricity
Four West African nations are collaborating to acquire unutilised power produced in Nigeria, stated Sule Abdulaziz, the Chairman of the Executive Board of the West African Power Pool (WAPP).
Abdulaziz, who doubled as the acting Managing Director of the Transmission Company of Nigeria, listed the four West African nations as Niger, Togo, Benin and Burkina Faso.
He said the nations were collaborating to make the purchase via the Northcore Power Transmission Line presently under construction.
Abdulaziz disclosed this at the WAPP meeting held on Wednesday in Abuja.
He said, “The power we will be selling is the power that is not needed in Nigeria.
“The electricity generators that are going to supply power to this transmission line are going to generate that power specifically for this project. So, it is unutilised power.”
The WAPP chairman said the country was expecting new generators to take part in the energy export for the 875km 330KV Northcore transmission line from Nigeria through Niger, Togo, Benin to Burkina Faso.
Abdulaziz said, “In addition, there are some communities that are under the line route, about 611 of them, which will be getting power so that there won’t be just a transmission line passing without impact.”
He further stated that the project, financed by the World Bank, French Development Council and the African Development Bank, had recorded progress, saying that the energy ministers would be addressing security issues for the project at another meeting in Abuja.
He added that “Nigeria has the greatest advantage among these countries because the electricity is going to be exported from Nigerian Gencos (generation companies).”
New Focus Report Highlights Value-Added Potential of West African Textiles and Garments
Africa, June 2021: A new focus report produced by Oxford Business Group (OBG), examines the potential that the West African textile and garment industry holds to become a driver of sustainable growth and major employer across ECOWAS.
Titled “West Africa Textiles and Garments”, the report provides in-depth analysis of the industry’s history and prospects for development, together with the challenges it faces, in an easy-to-navigate and accessible format, featuring key data and infographics.
The report notes that with only 2% of the raw cotton grown in West Africa processed locally, the scope for strengthening the textile value chain is huge.
It also highlights the importance of attracting investors for private-public partnerships (PPPs) to facilitate the development of essential infrastructure, logistics and industrial zones for the industry.
Here, subscribers will find case studies of countries where PPPs are already delivering results, including the recently inaugurated Plateforme Industrielle d’Adetikopé and its Textile Park in Togo, which is a collaborative venture between Arise and the government, and is flying the flag for sustainable industrial development in West Africa.
In addition, the report considers the contribution that sustainable, value-added economic activities amongst local communities could make to Africa’s efforts to reduce carbon emissions and tackle climate change at a time when environmental, social and governance (ESG) issues have become a top priority.
Bernardo Bruzzone, Africa Regional Editor for Oxford Business Group said: “While West Africa is the world’s sixth-largest cotton grower, 90% of the raw product is exported to Asia to be made into finished goods. In a moment where supply chains have been disrupted by the Covid-19 pandemic, highlighting an increasing need to reduce global transports and companies’ carbon footprints, and with the entry into force of the African Continental Free Trade Area , this is a key moment to invest in the West African textile sector”, he said.
Karine Loehman, OBG’s Managing Director for Africa, said that although textile manufacturing in West African countries remained largely focused on the export of raw cotton, a gradual shift towards producing finished items was taking shape.
“With its access to an abundance of raw material (CMIA Certified), competitive wages & strategic location, West Africa is well placed to develop its textile industry,” she said. “Introducing value-added steps into the supply chain, such as spinning, weaving, dyeing, printing, finishing & garmenting, will provide local economies with a significant boost, while also helping to reduce imports from the Asian markets.”
The focus report on Africa forms part of a series of tailored reports that OBG is currently producing, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.
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