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After cutting its deficit, Kenya plans to lower local, foreign borrowing

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Policy reforms under the new administration of President William Ruto in Kenya has continued as the country plans to set a net external financing target of 198.6 billion shillings ($1.60 billion), or 1.2% of its gross domestic product, for its 2023/24 financial year ending in June.

The ministry of finance made the revelation in a draft budget policy statement on Wednesday, adding that
the government aims for a net domestic borrowing target of 496.6 billion shillings, or 3% of GDP, for the same period.

The policy statement further revealed that the new targets are lower than those set for the current financial year, which stood at 280 billion shillings from external sources and 581 billion shillings locally.

President William Ruto’s administration, which came into office last September, plans to slash the budget deficit to 4.3% of GDP in the 2023/24 financial year, from an estimated 5.8% in the current period, before cutting it further to 3.6% in the 2026/27 period.

The Kenyan economy as been on a positive trajectory lately. Inflation rate dipped to 9.1% year-on-year in December, down from 9.5% a month earlier.

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Nigeria’s FDI in manufacturing rises by $644m in 2023

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According to data from Nigeria’s National Bureau of Statistics (NBS), foreign investments into the industrial sector increased by $644 million in 2023 to $1.5 billion from $948 million the year before.

In its capital imports report, the NBS said that the manufacturing sector had the highest investment levels.

The industries comprising the top three investment magnates were banking and finance, which ranked distantly second and third, respectively.

Manufacturing investments of $1.5 billion in 2023 made up 39% of all capital imports that year ($3.8 billion). Compared to $5.4 billion in 2022, foreign investments in Nigeria decreased by $1.5 billion to $3.8 billion.

The total capital importation was primarily driven by foreign direct investments ($377.3 million) and portfolio investments ($1.1 billion), with other investments accounting for the largest share of the total at $2.37 billion.

With $2.5 billion, Lagos State was the most popular travel destination in 2023, followed by Abuja ($1.1 billion). $150 million and $6 million were recorded by Abia and Rivers States, respectively.

In the same year in review, investments were also drawn to Ogun, Ekiti, Abia, Akwa Ibom, Anambra, and Adamawa states. 29 states were unable to draw in any capital during that time.

Foreign investments in Nigeria have consistently decreased in recent years. The largest economy in Africa saw a $18.6 billion fall in foreign investment in just four years (2019–2022), according to NBS.

Eight states were unable to draw in any kind of foreign investment over the four years. Taraba, Yobe, Zamfara, Bayelsa, Ebonyi, Gombe, Jigawa, and Kebbi were the states that were impacted. The report indicates that $23.9 billion in foreign investments were made in Nigeria in 2019.

The amount fell to $9.6 billion by 2020, then to $6.7 billion the next year, and finally to $5.3 billion in 2022. This suggests a $18.6 billion drop in the following four years. Over the course of the four years, the world’s most populated black country earned roughly $46 billion.

With $35.4 billion in foreign investments, Lagos State topped the way, followed by Federal Capital Territory ($10 billion).

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Nigerian govt ‘may open border for importation of cement’

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The Nigerian government has issued a warning to cement producers, stating that if they continue to raise prices arbitrarily, it may decide to open the border to cement imports.

This warning was given by Arc Ahmed Dangiwa, Minister of Housing and Urban Development, during an urgent meeting with cement and building material manufacturers on Tuesday in Abuja.

The government last week called for an urgent meeting with cement manufacturers following a recent surge in the price of the product, which has seen a bag of cement jump from N5,000 to as high as N15,000 in less than two weeks.

However, during his speech to the manufacturers on Tuesday, Dangiwa urged them to be more patriotic, pointing out that domestic sources, such as limestone, clay, silica sand, and gypsum, are used to produce cement rather than imports, and as such, they shouldn’t be valued in terms of dollars.

Dangiwa, who stated that the price of cement has increased and is unreasonable, also rejected the makers’ claim that the price increase was caused by petrol and the high cost of importing equipment.

This was in reaction to Salako James, the Association’s Executive Secretary, who had said that the association just heard of the  pricing from the market like every other Nigerian and did not discuss or decide the rates of specific enterprises.

“The challenges you speak of, many countries are facing the same challenges and some even worse than that but as patriotic citizens, we have to rally around whenever there is a crisis to change the situation.

“The gas price you spoke of, we know that we produce gas in the country the only thing you can say is that maybe it is not enough.

“Even if you say about 50 percent of your production cost is spent on gas prices, we still produce gas in Nigeria it’s just that some of the manufacturers take advantage of the situation. As for the mining equipment that you mentioned, you buy equipment and it takes years and you are still using it.

“The time you bought it maybe it was at a lower price but because now the dollar is high you are using it as an excuse. Honestly, we have to sit down and look at this critically. The demand and supply should be good for you because the government stopped the importation of cement, they stopped the importation in order to empower you to produce more.

“Otherwise if the government opens the border for mass importation of cement, the price would crash but you would have no business to do and at the same time the employment generation would go down. So these are the kinds of things you have to look at, the efforts of government in ensuring things go well.”

Following the elimination of fuel subsidies, the depreciation of the national currency, and low agricultural output, Nigeria is currently facing its worst cost of living crisis. These factors have all contributed to Nigeria’s highest headline inflation rate of 27% year over year and food inflation of 32%. The massive housing shortage facing the nation seems to have a new facet as a result of the recent increase in cement prices.

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