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World Bank approves $750 million loan for Kenya’s COVID-19 recovery

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The World Bank, in an effort to accelerate Kenya’s ongoing inclusive and resilient recovery from the COVID-19 crisis, on Thursday approved a $750 million loan for the East African country.

The fund is under the Development Policy Operation (DPO) programme of the World Bank. It is expected to strengthen fiscal sustainability through reforms that contribute to greater transparency and the fight against corruption.

According to the World Bank, its finance policy provides rapidly-disbursing financing to help a borrower address actual or anticipated development financing requirements.

DPF supports borrowers in achieving sustainable, shared growth and poverty reduction through a program of policy and institutional actions aimed at, for example, strengthening public financial management, improving the investment climate, addressing bottlenecks to improve service delivery, and diversifying the economy”.

The Washington-based lender said the loan is on concessional terms at an interest rate of about 3%, and will help the East African nation enhance the performance of its domestic debt market, reform the electricity industry and improve governance,

“The government’s reforms supported by the DPO help reduce fiscal pressures by making public spending more efficient and transparent, and by reducing the fiscal costs and risks from key state-owned entities,” Alex Sienaert, senior economist for the World Bank in Kenya, said in the statement.

It’s the fourth time in three years that Kenya has tapped the DPO facility, bringing cumulative borrowing to $3.25bn. East Africa’s biggest economy received $750m in June last year, $1bn in May 2020, and $750m in 2019. Requests for DPOs are presented to the World Bank’s board after the implementation of agreed reforms.

Critics of the World Bank argue that its loans are a mechanism of forcing free-market economics on countries through coercion. Countries with a debt crisis, whatever their other characteristics, agree to the bank’s package of legal and economic reforms, and the bank agrees to lend them money. Argentina, Ecuador, and India have all either weakened their labour legislation or amended their land laws to qualify for an adjustment loan. India is reported to have changed 20 pieces of major legislation.

Kenya consented to a raft of measures to secure the funding, including shifting government procurement to a new electronic platform to make transactions more transparent and reduce opportunities for corruption, the lender said. By the end of 2023, the programme aims to have five strategically selected ministries, departments, and agencies procuring goods and services through the electronic platform, it said.

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As inflation slows down, Angolan central bank maintains stable interest rate

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The central bank of Angola maintained its main interest rate at 19.5% on Friday, noting a possible short-term improvement in the supply of necessities and a possible decrease in inflation.

To contain growing inflation, which has reached 30%, the Bank of Angola hiked its main rate by 50 basis points at its most recent monetary policy meeting in May after raising it by 100 basis points in March.

The annual inflation rate increased last month, from 30.16% in May to 31.00%, although at a slower rate than in prior months.

“The decision (on Friday) was motivated by the prospect of a slowdown in the rate of price growth and an improvement in the supply of essential goods,” said Central Bank Governor Manuel Tiago Dias.

“If current conditions prevail from August onwards, we predict a slowdown in year-on-year inflation,” Tiago Dias added.

Since the middle of last year, inflation has been increasing in the nation that produces oil in Africa.

By September, the central bank will make its next move on monetary policy.

 

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Bean disease affects 81% of major cocoa region in Ghana

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The International Cocoa Organisation (ICCO) reports that 81% of a significant cocoa-producing region in Ghana, the second-largest cocoa grower in the world, is affected by swollen shoot disease.

Due to unfavourable weather and disease in leading cocoa-producing countries, Ghana and Ivory Coast, prices for the ingredient used in chocolate have nearly doubled this year.

However, expectations are growing for better production the following season. About 60% of the cocoa produced worldwide is produced by the two nations combined.

 

The data on bean disease in Ghana’s Western North, the country’s third-largest cocoa-producing region by output, cast doubt on hopes for a production rebound partly because they show how severe the outbreak is still.

Usually, within a few years, the swollen shoot virus first lowers yields before killing trees. Cocoa cannot be replanted until the sick trees are removed and the soil is treated.

The ICCO reports that 330,456 hectares of Ghana’s 410,229-hectare Western North region are contaminated. The intergovernmental agency was using information from Ghana’s cocoa sector regulator, Cocobod, through its Cocoa Health and Extension Division (CHED).

 

At an industry gathering in April, Joseph Aidoo, the chief executive of that industry regulator, said Reuters that 500,000 hectares nationwide—or 25.7% of Ghana’s 1.94 million hectares of cocoa-growing land—were afflicted.

He claimed that an additional 100,000 hectares are unproductive because of old trees and that the nation has already treated an additional 100,000 hectares, opening a new tab for swollen shoot. Replanted trees require two to four years to reach maturity and yield beans following rehabilitation.

 

“Swollen shoot is a serious problem that’s not improved in the last 12 months and is not going away,” said Steve Wateridge, a veteran world expert on cocoa and head of research at Tropical Research Services by Expana.

The Ivory Coast’s authorities have been more cautious about disclosing the full scope of the outbreak to the public, but the ICCO said that swollen shoot is also spreading there. Wateridge previously informed Reuters that the infection probably affected up to 30% of Ivorian cocoa plants.

Ghana usually produces more than 800,000 tons of cocoa annually, but due to smuggling, disease, aged trees, illegal gold mining, and climate change, it is predicted to produce just over half that amount this season.

 

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