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US Terminates COVID-19 Cash Transfer To Vulnerable Ugandans

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The US Agency for International Development (USAID) has terminated its Covid-19 cash transfer programme in Uganda.

The US embassy there said the decision followed the Ugandan government’s indefinite suspension of GiveDirectly, a non-profit organisation that was conducting the programme.

“In light of this indefinite suspension, it is now unlikely that the programme will meet its original objective, which was to prevent Covid-19 related economic backsliding of the most vulnerable Ugandans,” the embassy said in a statement.

“Therefore, we are obligated contractually to terminate the program permanently.”

The programme was to benefit 120,000 Ugandans who lost livelihoods because of the coronavirus pandemic. Each beneficiary was to receive 100,000 Ugandan shillings ($26; £20) every month for three months.

The embassy regretted that those identified to benefit from the programme will not be able to receive the cash transfers.

Uganda has so far confirmed over 12,700 coronavirus cases with 112 deaths.

The statement read, “Since the outbreak of the global COVID-19 pandemic, the United States has provided technical assistance and more than $47 million to help Uganda meet urgent needs in its COVID-19 response.

“The United States’ COVID-related assistance includes approximately $10 million for a direct cash transfer program launched by the U.S. Agency for International Development (USAID) in August in partnership with the Ministry of Local Government and the Ministry of Kampala through the international non-profit, GiveDirectly. The goal of this program was to follow international precedent for economic stimulus by providing cash directly to individuals and families who need it most. Specifically, the program intended to support Ugandans who lost livelihoods as a result of COVID-19, who were at risk of food insecurity and faced serious reductions in household nutrition. The cash transfers were designed to support local markets by providing 120,000 Ugandans across six cities 100,000 UGX each month for three months. By September, 47,128 Ugandans were enrolled in the program.

“USAID and GiveDirectly worked closely with government counterparts to successfully vet the program through the Cabinet and ultimately to launch the program publicly as part of the Lira City celebration in August. Despite the thorough assessment and approval by Cabinet, in September the NGO Bureau announced an additional review of GiveDirectly’s activities in Uganda, resulting in the program’s suspension.

“GiveDirectly addressed the NGO Bureau’s questions, and no irregularities in the cash transfer program or GiveDirectly’s operations were identified. The program has still not been authorized to resume, and no assurances have been provided that authorization by the government is forthcoming. In light of this indefinite suspension, it is now unlikely that the program will meet its original objective, which was to prevent COVID related economic backsliding of the most vulnerable Ugandans. Therefore, we are obligated contractually to terminate the program permanently.

“We are mindful that ordinary Ugandans continue to suffer from the socio-economic impacts of the COVID-19 pandemic and that they could greatly benefit from this emergency cash assistance, which has been proven both internationally and within Uganda as a powerful development tool to transfer stabilizing economic relief to recipient communities. We deeply regret that the 120,000 Ugandans identified to participate in this program, along with their surrounding communities, will now not have the opportunity to benefit from it.

“The United States is a strong and longstanding partner of Uganda and the country’s single largest donor of development and humanitarian assistance. While deeply disappointed by the reluctance of some elements within the government to support this highly effective cash transfer program, the United States remains committed to supporting the Ugandan people through this challenging time.”

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Kenya Terminates Covid-19 Tax Relief Amid Debt Default Risk

Kenya’s National Treasury Cabinet Secretary Ukur Yatani on Friday issued a statement saying the corporate tax rate also reverts to 30 percent from 25 percent while the value added tax (VAT) reverts to 16 percent from 14 per cent.

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In a desperate move to save an ailing economy closing in on a Ksh9 trillion ($90 billion) debt ceiling, with the risk of debt distress rising to ‘high’ from ‘moderate,’ Kenya has terminated part of the tax relief measures extended to cushion households and businesses from the adverse impact of the Covid-19 global pandemic.

Kenya’s National Treasury Cabinet Secretary Ukur Yatani on Friday issued a statement saying the corporate tax rate also reverts to 30 percent from 25 percent while the value added tax (VAT) reverts to 16 percent from 14 per cent.

The treasury clarified that “these are not new tax rates but just a return to the prevailing tax rate before the pandemic.”

However, the government will continue to cushion low-income earners by retaining 100 percent tax exemption/relief for those earning monthly incomes of Ksh24,000 ($240) and below.

The announcement comes as it emerged that Kenya’s risk of debt distress increased from moderate to high as the government’s debt accumulation closes in on the Ksh9 trillion ($90 billion) ceiling, breaching several debt sustainability indicators and narrowing the space for additional borrowing.

Read also: Kenya’s debt repayment to India and China is piling up

With close to half of the total revenue collections going towards debt repayment, Yatani faces a difficult task in financing government operations and infrastructure development projects.

Kenya’s apex bank says the country’s risk of debt distress has been exacerbated by the impact of the pandemic.

“The rapid pace of debt accumulation has resulted in increased interest and principal repayments in the past six years. However, revenues and export earnings have not increased in tandem with debt service. As a result, the ratio of debt service to exports and debt service to total revenue increased, signalling potential debt distress,” according to the Central Bank of Kenya in its Financial Stability Report (2019) released last week.

Also, data from Kenya’s Treasury shows that as at August this year, the country’s stock of public debt stood at Ksh7.06 trillion ($70.6 billion), accounting for 69.2 per cent of the gross domestic product, compared to the East African Community convergence criteria of 50 percent.

This $70.6 billion, together with committed undisbursed debt of Ksh1.35 billion ($13.5 million) translates to a stock of public debt of Ksh8.41 trillion ($84.1 billion) against a ceiling of Ksh9 trillion ($90 billion) implying limited space for additional borrowing, according to the National Treasury’s Post-Covid-19 Economic Recovery Strategy (2020-2022).

Kenya has already breached the solvency indicator; present value of the external debt-to-exports ratio and the liquidity indicator; external debt service-to-exports ratio, which are already above the thresholds, according to the NationalTreasury’s Quarterly Economic and Budgetary Review report.

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African Development Fund Approves $71.5m Loan for Roads in Uganda

The Fund explains that the central element of the project is to upgrade and pave 34km of the Kabale-Lake Bunyonyi-Kabeho circuit and the Kisoro-Mgahinga Park Gates road, as well as construct two roadside markets, farm produce holding facilities, and four ferry landing sites on Lake Bunyonyi.

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The African Development Fund, which is a part of the African Development Bank Group has approved a $71.5 million loan for the improvement of roads in one of Uganda’s high-end tourist destinations in the south-western districts of Kabale and Kisoro.

The African Development Fund (ADF) Board said in a statement that the loan was approved on December 3, to pave sections of two roads which will improve road transport in the area as well as boost

The money will finance the upgrading of roads and ease movement and connectivity to the popular tourist destinations Lake Bunyonyi and Mgahinga National Park.

Lake Bunyonyi is the second deepest lake in Africa, and also known for luxury island holiday resorts, while Mgahinga Park is famous for mountain gorillas and golden monkeys.

Related: AfDB approves $1 million grant to help Uganda fight Ebola

The Fund explains that the central element of the project is to upgrade and pave 34km of the Kabale-Lake Bunyonyi-Kabeho circuit and the Kisoro-Mgahinga Park Gates road, as well as construct two roadside markets, farm produce holding facilities, and four ferry landing sites on Lake Bunyonyi.

AfDB’s Bank Director of Infrastructure and Urban Development Amadou Oumarou said “This innovative and integrated infrastructure development project is poised to increase market development, widen business opportunities and scale up food productivity, enhancing income levels in South-western Uganda.”

The financing will be sourced under ADF-15, the most recent replenishment of the Fund, which is the concessional lending window of the African Development Bank Group.

The loan represents roughly 86 percent of the project’s total costs and the government of Uganda will fund the remaining $11.9 million.

Read also: Uganda Safeguards Financial Stability Amid COVID-19

The funds will also underwrite the provision of two ferries with navigational aids and the provision of technical assistance to the government to strengthen road safety regulations and support implementation of inland water transport aspects of the project.

The project also makes provision for relocation and compensation of those affected.

Through this approach, blending investment in road renewal with investment in farming and other infrastructure, ADF aims to increase market access for farm produce, increase productivity in a rural part of the country, and strengthen social welfare.

Expected outcomes include improved tourism earnings, higher farm gate prices for commodities, increased school enrolment, and stronger hospital attendance in the project area.

The loan aligns with the government of Uganda’s third National Development Plan 2020/21-2024/25 under its Vision 2040. It is also consistent with the AfDB Group’s 10-year strategy 2013-22, Pillar I of ADF-15 strategic priorities as well as two of the High-5s operational priorities, namely, feed Africa and improve the quality of life for the people of continent.

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US Withdraws Troops From Somalia

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Donald Trump, the United States President, has ordered the withdrawal of majority of American troops in Somalia.

The US Department of Defence, which revealed this in a statement at weekend, said the move was only a “change in force posture” but not a change in U.S. policy in Africa.

About 700 American troops in Somalia focused on assisting the country’s military to defeat al Shabaab, an al Qaeda-linked insurgency group.

According to reports, the mission has received little attention in the U.S., but is critical to the Pentagon’s global efforts to combat al Qaeda.

Reuters quoted unnamed experts as warning that such a withdrawal could worsen the security situation in Somalia.

The statement said: “The U.S. is not withdrawing or disengaging from Africa. We remain committed to our African partners and enduring support through a whole-of-government approach.

“The U.S. will retain the capability to conduct targeted counterterrorism operations in Somalia, and collect early warnings and indicators regarding threats to the homeland.

“We will continue to degrade violent extremist organizations that could threaten our homeland while ensuring we maintain our strategic advantage in great power competition.”

The Somalia move is said to be part of plans by Trump to reduce U.S. troops serving abroad before leaving office next month.

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