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Corruption, payment delays stifle Kenyan manufacturers2 minutes read

Kenyan Manufacturers are operating below capacity and their economic growth prospects are not bright.

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A recent report by the Kenya Association of Manufacturers indicates that members are largely operating below capacity and their economic growth prospects are not bright due to lack of funds, drought, and corruption. The survey, called the Manufacturing Barometer was carried in the first quarter of this year.

According to the findings, 47 percent of those surveyed operated at about half capacity, 33 percent operated at 75 percent of installed capacity and a fifth operated near full capacity. Probably why, President Uhuru Kenyatta says the sector was one of his top four priorities when he commenced his second term in 2017, due to its potential to create jobs. The government, however, has struggled to boost the sector due to high electricity tariffs and illicit imports of goods such as sugar and cigarettes.

According to Stanbic Bank Kenya’s Purchasing Managers’ Index (PMI) survey, it showed that activity in Kenya’s private sector contracted for the first time in 17 months in April, hurt by drought and strained cash flows. In 2018, the manufacturing sector grew by 4.2 percent from official data-  contributing 7.7 percent of the country’s annual economic output of about 80 billion U.S. dollar, down from a share of 8 percent in the previous year.

The sector’s contribution to Kenya’s gross domestic product (GDP) however, has dipped gradually since 2014, when it stood at 10 percent. President Kenyatta’s government says it aims to raise the contribution of manufacturing to 15 percent of GDP by 2022. But till then, the forecast for the sector this year could worsen because of the continuous dry weather, the association captured in the report.

Private sector credit growth has slumped since the government capped commercial lending rates in September 2016 to lower the cost of credit. Delays by the Kenya Revenue Authority in processing tax refunds likely to hurt manufacturers’ cash flow, the report said. Some survey respondents say delays in clearing cargoes at the Mombasa port is also leading to loss in sales and setback due to higher charges. The survey also found 76 percent of respondents planned to freeze hiring of new full-time employees, or reduce their numbers. The manufacturing sector covers a wide range of businesses, including food and beverage production, metal products fabrication, pharmaceuticals and cement production.

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Ethiopia to divest 40% of Ethio Telecom

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The Ethiopian government is finalizing plans to sell a 40 percent stake in Ethio Telecom- the country’s sole telecommunication provider . The plan was announced by Ethiopia’s State Minister of Finance, Eyob Tekalign Tolina.

Ethiopia’s telecommunication industry is considered one of the last closed markets. It has been one of the government’s plans to liberalize the country’s economy launched by Prime Minister Abiy Ahmed. Ethio Telecom has a large market serving a population of around 110 million.

The government will retain ownership of the remaining 60 percent.

Foreign firms in the telecom sector will be invited to bid and a percentage of the minority stake will be sold to Ethiopian citizens. South Africa’s MTN and Kenya’s Safaricom have shown interest in expanding into Ethiopia in the past.

Ethiopia’s communications regulator says the country would proceed with the privatisation of the telecommunications sector despite the novel coronavirus outbreak.

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Zambia’s Zesco, Chinese firm enter $548 man deal

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Zesco Limited, Zambia’s state-owned electricity company, has signed contracts worth $548 million with Power China to develop three solar power plants that will add 600 megawatts (MW) to the national grid.

The three contracts are a step towards diversifying renewable energy for the country, which relies heavily on hydropower and has faced electricity shortages partly due to droughts.

“The three-grid solar PV projects will have a capacity of 200 MW each,” Zesco Managing Director, Victor Mundende said in the statement, adding that the power plants will boost access to electricity and enhance industrial development. A generating date is yet to be disclosed.

Zambia’s power supply deficit has grown by nearly 20% since September, State power utility, Zesco announced in March, despite hefty price hikes and the government’s fast-tracking of support for green energy projects. 

Zesco’s Director of Corporate Services Patrick Mwila said in March the electricity deficit had grown to 810 megawatts (MW) from a 690 MW gap in September last year. E

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Algeria to invest $3 billion in solar power, free up gas export

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The Coronavirus pandemic is proving to be the motivator for more economic diversification. An example of this, is Algeria’s plan to invest further in renewable energy and generate more electricity. The country intends to invest at least $3 billion dollars in this endeavor.

These new photovoltaic solar plants will generate a combined production capacity of 4000 mega watts (MW). The electricity will be consumed locally and excesses sold. The move will enable more gas to be sold externally.

Recently, Algeria lost its main gas supply destination due to cheaper alternatives with more supplies.

Currently, gas is used in generating about 98% of total electricity production in Algeria. But recent development has been encouraging Algiers to increase its exports of gas and crude oil, which are the main sources of Algeria’s revenue. Solar generated electricity makes up the remaining 2%.

Algeria’s Prime Minister, Abdelaziz Djerrad’s office announced the development on its website following a meeting of the government.

“In addition to meeting national demand for energy and preserving our fossil resources, this project will allow us to position ourselves on the international market,” it said in a statement.

It gave no details on where the electricity might be sold abroad or how much the proposed plants would contribute to domestic supply.

The COVID-19 pandemic and subsequent global movement restriction has influenced the drastic drop in crude oil and gas sales affecting countries like Algeria. The past two weeks has seen a gradual rise in price but Algeria like many other OPEC members have announced plans to seek foreign loans in 2020 for the first time in years to fund what they called “strategic projects”.

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