🔅 Kenya's Currency Strategy: Pay Later, Pay Less?
Plus: Uganda’s Proposed Anti-Homosexuality Law — You Can’t Even Identify As LGBTQ, Kenya Cracks Down on Milk Powder Imports from the East African Community, And much more... ☕
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Standard Bank's Profits: South Africa’s Standard Bank Group is celebrating a 33% increase in its full-year profits, thanks to higher interest rates, credit card payment, and insurance transactions. It’s not all sunshine and rainbows, though. Standard Bank’s CEO Sim Tshabalala warns that there are risks this year in the form of sovereign debt defaults, a prolonged Ukraine war, and a hawkish US Federal Reserve. It’s RoE (return on equity) is at 16.4%, up from 13.5% last year, but Tshabalala declined to comment on whether it will be better than pre-COVID levels.
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ECONOMY
Kenya's Currency Strategy: Pay Later, Pay Less?
Kenya is trying to get ahead of its foreign exchange shortage problem by trying a new strategy for oil imports.
The government is making government-to-government oil supply contracts, with the aim of cutting pressure on its foreign exchange rate by switching to 180-day credit from settlement on delivery.
OK, but how does that help?
By doing that, the government alleviates pressure from the demand for dollars in the market. Oil importers account for one-third of the monthly demand for hard currency, and the move means they'll be able to pay only every six months.
So what's the catch?
The plan was not likely to work since it amounted to just postponing the demand, according to a foreign exchange trader.
Still, the government is targeting Gulf-based oil exporters like Saudi Arabia's Aramco.
Kenya's usable foreign exchange reserves have shrunk to less than enough to cover four months of imports of all kinds, which is a statutory requirement.
Oil prices account for a significant part of this pressure, since the international benchmark Brent is above $80 a barrel.
Will this strategy work?
Only time will tell. But if it does, it could be a game-changer for the country's foreign exchange reserves and its battle with rising oil prices.
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OTHER HEADLINES
Across the Continent
🇺🇬 Uganda's Proposed Law: Not Even to Identify As LGBTQ | In Uganda, same-sex relations are already illegal and punishable by up to life in prison, but the country’s lawmakers are looking to up the ante with a new bill that would criminalise even identifying as LGBTQ. This would make Uganda the first country to pass such a law. Activists are concerned about the implications for the safety and well-being of LGBTQ citizens. The proposed law was introduced as a private lawmaker’s bill, and aims to protect the “traditional, heterosexual family”. It punishes those who “hold out” as any non-binary gender identity with up to 10 years in prison. It also criminalises the “promotion” of homosexuality and “abetting” and “conspiring” to engage in same-sex relations. The Speaker of the House, Anita Among, has sent the bill to a committee for scrutiny, and urged members of parliament to reject intimidation—notably, threats by some Western countries to impose travel bans against those involved in passing the law. “This business of intimidating that ‘you will not go to America’, what is America?” she said.
🇧🇼 Minergy Asks Botswana for a Bailout | After Masama coal mine’s mining contractor, Jarcon Open Cast Mining, downed tools due to overdue payments, Minergy (MIN.BT) is reaching out to Botswana’s government for a financial bailout. The company’s CEO, Morné Du Plessis, said they’re talking to the Mineral Development Company of Botswana and the Botswana Development Corporation to help them settle the debt. It’s not clear how much they’re asking for, but the company’s latest annual report shows that it owed the mining contractor 79 million pula (almost 6 million dollars) and the two Botswana state agencies a combined 420 million pula. Masama has the capacity to produce 1.5 million tonnes of coal per year, and with Europe’s demand for coal skyrocketing due to the fallout from Russia's invasion of Ukraine, Minergy’s exports had gone up 53% in the half-year to Dec.31, giving the company a much-needed boost. Unfortunately, weak coal prices and logistical issues have been a roadblock to the company’s success, which is why they’re asking the Botswana government for help.
🇨🇩 36 Killed in Eastern Congo Attack | On Wednesday night, 36 civilians were killed by the Allied Democratic Forces (ADF) – a rebel militia with links to the Islamic State group – in Mukondi village in North Kivu province. According to witnesses, the attack began around 7 p.m., with the rebels storming the village, shooting and hacking people to death. Some people blame the incident on the Congo army’s lack of presence in the area. Sadly, this isn’t a new phenomenon – the ADF has been active in the region for decades and it looks like it won’t be going away anytime soon. The US has even offered a reward of up to $5 million for information that could lead to the capture of the group’s leader.
🇰🇪 Kenya Cracks Down on Milk Powder Imports | Kenyans are about to feel the pinch of their government’s new policy. Kenya has imposed an indefinite ban on milk powder imports, which could have major implications for the price of the commodity. The ban is meant to protect local farmers and processors from surplus production and low prices as they await the long rains, which are expected to eventually boost local milk production. That’s good news for Kenyan farmers, but bad news for all milk consumers, as the ban could lead to higher prices. This decision is also at odds with East African Community free-trade agreements, as Uganda and Rwanda are two of the leading countries from which Kenya imports dairy products.
FOOD FOR THOUGHT
Proverb of the Day
“Do not call to a dog with a whip in your hand.”
— Zulu Proverb.