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Nigeria Could Have Prevented Recession – Economist

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Nigeria has been plunged into its second recession in four years and the government has blamed the coronavirus pandemic.

Contrary to the position of the Nigerian government, economist and Faculty member of the Pan Atlantic University, Nigeria, Dr. Austin Nweze says the recession was preventable.

Dr. Nweze, who appeared as a guest on Village Square Africa on News Central TV said the failure of the Nigerian government to save could be partly attributed to what led to the recession.

“It (recession) could have been preventable if we were serious with reserves or savings,” he said.

“Recall that some years ago, when the Sovereign Wealth Fund was set up with about $1bn or $2bn, some governors protested, saying they needed to do some projects. They said they need to take care of today rather than saving for tomorrow. It’s something countries like Norway, Saudi Arabia and other countries that were smart enough to save for the rainy day do.”

While the economist agreed that the COVID-19 pandemic had its bearing on the global economy, he said Nigerian policymakers should be blamed for their poor decisions and inactions.

The second guest on the show, Churchill Ogutu, the Head of Research at Genghis Capital, Nairobi, Kenya said the pandemic has had a towering effect on Africa’s economy.

He said economies like Seychelles’ and Mauritania’s that are largely dependent on tourism are expected to contract by more than 17% according to the projections of the International Monetary Fund (IMF). Another sector facing a cash crunch is the aviation sector, due to the reduction in the number of travellers.

Mr Ogutu described the pandemic as a shock to the economy of African countries and said policies and good recovery plans will help the continent out of the situation.

Messrs Ogutu and Nweze said that Africa’s economy needs to look inwards to drive recovery and see opportunities in its realities. Massive unemployment and underemployment were also blamed for the present condition of the continent.

Mr Nweze in his contribution further added that Nigeria can reverse the trend if there’s a strong political will and commitment in policymaking. He called for the reduction of the interest rate which the Central Bank of Nigeria has maintained at 11.50%.

On his part, Mr Ogutu said African governments need to be driven by data, as it presents factual information for better analyses.

Recall that the IMF projected that Sub-Saharan Africa will face its first recession in 25 years, with an expected GDP contraction of -3.3%.

The major drivers of the economy in the region are facing harsh challenges, with Nigeria and South Africa battling recessions and Ethiopia facing political upheavals. Many other countries in the region are also currently facing security tension.

Mr Nweze said he’s optimistic that Nigeria can set a good example for the rest of the continent if policymakers take better decisions.

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Kenyan Banks Restructure 54.2% of the Banking Sector Loan Book

By the end of 2020, personal and household loans amounting to KSh 333 billion had their repayment period extended. Banks also restructured loans amounting to KSh 1.29 trillion issued to sectors like trade, manufacturing, agriculture, and real estate.

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The Central Bank of Kenya have announced that Kenyan banks have restructured loans amounting to KSh1.63 trillion, equivalent to 54.2% of the total banking sector loan book by the end of December 2020.

In March last year, the Central Bank introduced emergency measures in the banking system in order to offer relief to borrowers affected by the pandemic.

By the end of 2020, personal and household loans amounting to KSh 333 billion had their repayment period extended. Banks also restructured loans amounting to KSh 1.29 trillion issued to sectors like trade, manufacturing, agriculture, and real estate.

Read Also:

Kenya’s central bank will maintain its main lending rate at 9%

Kenyans in Diaspora Make Sh329.41 billion Remittances Despite Pandemic

Kenyan Start-up Pula Raises $6 Million in Series A Funding

The percent of gross non-performing loans to gross loans increased to 14.1% in December 2020 from 12% in December 2019. The percent of gross non-performing loans to gross loans measures the health of the banking system and a high percent shows that banks are struggling to recover issued loans and interest on the loans.

The pandemic adversely affected businesses in Kenya and limited their ability to repay loans. According to the Central Bank, Kenyan banks registered an increase in non-performing loans in the transport and communication sector, agriculture sector, and the real estate sector in 2020.

Despite the sharp increase in non-performing loans in the past year, the Central Bank of Kenya says Kenya’s banking sector “remains stable and resilient, with strong liquidity and capital adequacy ratios.”

 

 

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Somalia Lifts Ban on Importation of Miraa from Kenya

Somalia had stopped the importation of miraa last year when international flights were suspended due to fear of the spread of Covid-19 pandemic, but when international air travels resumed, miraa importation from Kenya was still restricted while a different variety from Ethiopia was allowed into the country.

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The Federal Government of Somalia has lifted the one-year-long ban on miraa imports from Kenya.

Somalia had stopped the importation of miraa last year when international flights were suspended due to fear of the spread of Covid-19 pandemic, but when international air travels resumed, miraa importation from Kenya was still restricted while a different variety from Ethiopia was allowed into the country.

However, Somalia has imposed certain conditions for the commodity to be admitted in the country which includes traders obtaining import licenses from the government as well as paying the appropriate duties.

Keep Reading:

Somalia Threatens to Exit Regional Bloc Following Verdict on Dispute with Kenya

AU Calls for Dialogue Over Kenya-Somalia Border Tension

Somalia Severs Diplomatic Ties with Kenya

Somalia Suspends Visa-on-Arrival for Kenyans from 13th Dec

Other demands Somalia gave Kenya ahead of lifting the blockade of miraa import includes:

*Kenya treating them as an equal

*Kenya desisting from interfering with their internal affairs

*Kenya to apologize for airspace violation

*Kenya to allow in goods including fish, rice, sugar, honey, meat and milk.

*Kenya must stop forcing flights from Somalia to make a detour to Wajir for inspection.

However, Kenya’s efforts to look for an alternative market in Djibouti are yet to bear fruits.

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IFC Lends KSh1.1 Billion to East Africa’s Largest Glass-Bottle Manufacturer

The company which mainly supplies glass bottles to beverages companies has been adversely affected by the closure of bars and restaurants in some East African countries as well as the restrictions on public gatherings.

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The private investment arm of the world bank, the International Finance Corporation (IFC), has loaned a KSh1.1 billion to Kioo Limited to help the company mitigate the challenges created by the Covid-19 pandemic.

Kioo limited is based in Tanzania and is the largest producer of glass bottles in East Africa. The company which mainly supplies glass bottles to beverages companies has been adversely affected by the closure of bars and restaurants in some East African countries as well as the restrictions on public gatherings.

The IFC loan will provide the company with much-needed capital to continue operating even in a challenging environment.

Read Also: KCB Lending Capacity Receives $150 Million Boost For SMEs, Climate Finance

Kioo limited will use the funds to pay employees and invest in energy-efficient machinery to reduce its carbon emissions.

Kioo limited supplies glass bottles to more than 12 African countries including some island nations in the Indian Ocean. The company is also keen to protect the environment and aims to install energy-efficient machinery in its Dar es Salaam factory in order to cut down on carbon emissions.

IFC has been supporting Small and Medium Enterprises in East African through loans and equity investments.

In addition, the financial organization has over $5 billion invested in African businesses and financial institutions.

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