The South African government has pledged to carry out urgent reforms to improve economic performance following the country’s credit rating downgrade from stable to negative.
“The government is fully aware that short- and medium-term reforms are urgently required to improve economic performance over the next several years”, the country’s Treasury said in a statement after international rating agency Moody’s on Friday night downgraded South Africa’s credit rating from “stable” to “negative.”
South Africa’s credit ratings by Moody’s remain investment grade (one notch above non-investment grade but the latest downgrade is seen as the final step before Moody’s strips South Africa of its “investment grade” Baa3 long-term foreign-currency and local-currency issuer rating, which will leave it at “junk.”
Two other major international rating agencies – S&P Global Ratings and Fitch – have placed South Africa’s credit-worthiness to sub-investment grade (commonly known as junk status).
The government also notes the decision by Moody’s to affirm South Africa’s long term foreign and local currency debt ratings at ‘Baa3’ and also revise the outlook to negative from stable.
Tanzania to accelerate industrialization with access to more gas supply
Tanzania is on the verge of being connected with more gas supplies regions. This plan to boost electricity generation was announced by the country’s Deputy Minister for Energy, Subaira Mgalu. The regions involved include Arusha, Dodoma, Tanga, Kilimanjaro and Morogoro.
According to Mgalu, the Tanzania Petroleum Development Corporation (TPDC) has already embarked on a grand infrastructural project to connect natural gas for domestic and industrial use in the Dar es Salaam, Coast, Lindi and Mtwara regions.
“The plan is to reduce dependence of electricity as the only source of power for production by the industries,” he says.
Tanzania is in the process of implementing a mega hydropower at Stiegler’s Gorge along the Rufiji River in the Selous Game Reserve that will produce 2,100 megawatts
The country, with a population of approximately 55 million, has just 1,500MW of installed grid capacity.
Earlier, the Tanzanian President John Magufuli, promised to turn the country into a middle income industrial economy by 2025.
Kenya seeks $1 billion World Bank loan
In a bid to cut debt from overseas capital markets after a borrowing binge in recent years,Kenya is in advanced talks with the World Bank for “a fairly priced” loan of up to 100 billion shillings ($991.57 million), nearly half of its required external funding this fiscal year.
The World Bank, which has multiple development funding programmes with Kenya worth billions of dollars, is seen as one of the viable alternatives to commercial debt.
The Washington D.C.-based financier lent money to the Kenyan ministry of finance for the first time last year, changing past practice where it channelled cash straight to the projects, bypassing the Treasury.
The loan size will be determined by how much its funders can put together, says Julius Muia, principal secretary in the Kenyan Finance ministry.
“We are thinking something between 50-100 billion (shillings) depending on what kind of interest there will be”. The loan will be cheaper than commercial debt, in line with the government’s policy of cutting its funding costs, Muia adds.
Kenya became a middle-income country in 2014 after it rebased the economy, meaning it cannot secure funds from the World Bank at the concessional rates offered to low-income states.
The finance ministry has set a budget deficit of 6.3% of GDP for this financial year to the end of June with about 213 billion shillings expected from external sources.
The balance will be raised through Kenya’s first sovereign green bond, with the country taking advantage of next week’s UK-Africa investment summit in London to gauge investor demand for the potential issue.
“It is taking shape as we go,” Muia says.
The Treasury projects that the budget deficit will shrink to 5.7% of GDP in 2020/21. The gap, which peaked at 9.1% of GDP in 2016/17 financial year, is expected to narrow further to the desired level of 3.3% in 2023/24
Egypt, Ethiopia, Sudan to finalize Blue Nile dam agreement
Ministers from Egypt, Ethiopia and Sudan agreed on Wednesday, to reconvene in Washington later this month to finalise an agreement on the giant hydropower dam on the Blue Nile that sparked a diplomatic crisis between Cairo and Addis Ababa.
The ministers met in Washington this week and agreed to fill the $4 billion Grand Ethiopian Renaissance Dam in stages during the wet season, taking into account, the impact on downstream reservoirs.
Initial filling of the dam, due to begin in July, will aim for a level of 595 metres above sea level and early electricity generation, while providing appropriate mitigation measures for Egypt and Sudan during severe droughts.
Cairo fears the dam, announced in 2011 and under construction on the Blue Nile near Ethiopia’s border with Sudan, will restrict supplies of already scarce Nile waters on which its population of more than 100 million people is almost entirely dependent.
Addis Ababa denies the dam will undermine Egypt’s access to water and says the project is crucial to its economic development, as it aims to become Africa’s biggest power exporter with a projected capacity of more than 6,000 megawatts.
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