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Kenya considering privatization of 35 state companies

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As plans continue towards revitalizing his country’s economy, Kenyan President, William Ruto has revealed that his administration is keen on privatizing 35 state companies.

Ruto also revealed that he was considering other 100 firms for privatization following the enactment of a law last month to cut down on bureaucracy.

Kenya last sold a portion of its state-owned company through an initial public offering (IPO) in 2008, when it bought 25% of the telecom company, Safaricom. A list of 26 companies, including banks, the Kenya Pipeline Company, and the Kenya Electricity Generating Company was approved by the cabinet in 2009, but no action has been taken as of yet.

“We have identified the first 35 companies that we are going to offer to investors,” Ruto told a meeting of African stock market officials in the capital, Nairobi.

Kenya’s public finances are under pressure due to the COVID-19 pandemic’s aftermath and the country’s frequent droughts brought on by climate change. The country is currently grappling with severe liquidity issues brought on by doubts about its capacity to obtain capital from financial markets prior to the $2 billion Eurobond maturing in June of next year.

Kenya is one of the African nations that is having financial troubles. The nation is presently going through financial difficulties, mostly as a result of having to pay off debt with almost half of its income.

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Nigeria targets 1,268MW from new power plants

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Eight brown and green field hydropower projects built through public-private partnerships are expected to yield 1,268 megawatts of electricity, according to the Nigerian government.

It was learned that the Federal Executive Council had authorised the concession of one of the power projects, while three other power projects had already been awarded to concessionaires.

According to a February 2024 document that our correspondent was able to receive from the Federal Ministry of Water Resources and Sanitation in Abuja on Friday, three of the hydroelectric projects had already been finished, while the remaining five were in varying states of completion.

Prof. Joseph Utsev, Minister of Water Resources and Sanitation, delivered the document to the National Council on Water Resources and Sanitation during its thirty-first regular meeting.

With a population of more than 200 million, the nation has struggled with inadequate power generation and supply, with energy companies producing and distributing between 3,000MW and 4,000MW.

With a combined production of 1,338 megawatts, the Kainji and Jebba hydroelectric dams, operated by Mainstream Energy, provide approximately 33% of Nigeria’s current electricity generation of 4,000 megawatts.

The government has been investing in hydropower plants, which are powered by water turbines instead of gas, to help alleviate the situation. Since January of this year, the appalling state of the electricity supply has gotten worse as gas suppliers to gas-fired thermal power plants have stopped supplying the product to the plants because of the $1.3 billion in debt that the electricity producing facilities owe.

In a recent ministry presentation, the minister of water resources said that significant advancements in brown and green field hydropower production through public-private partnerships had been made.

“We have conclusively concessioned some projects while still developing others through various PPP models itemised as follows: concession of the 40MW Dadinkowa Hydropower Project in Gombe State. We have attained financial closure, and the plant is operational, thereby, stabilising the transmission voltage of the North-East of Nigeria.

“Concession of the 30MW Gurara Hydropower Plant in Kaduna State up to financial closure and the plant, which is under rehabilitation, will commence commercial operation in the third quarter of the year 2024.

“Concession of the 40MW Kashimbila Hydropower Plant in Taraba State. The Federal Executive Council approval has been secured, the concession agreement executed and the commencement fee paid by the concessionaire to the special concession account as approved by the Federal Ministry of Finance Budget and National Planning,” Utsev said.

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Tanzania begins fresh round of Treasury bond auctions

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In an effort to reduce national debt and increase the amount of money in circulation in the face of a lack of foreign currency, the Bank of Tanzania (BoT) has started a fresh round of Treasury bond auctions.

Prior to the conclusion of the 2023–2024 fiscal year, the central bank announced plans to reopen 10-year, 15–year, 20–year, and 25–year Treasury bonds. The first event of this plan will be a tender auction for a 20-year bond on February 21 at an interest rate of 15.49 percent.

The bond with the highest interest rate, a 25-year bond, will be reissued on March 6.

According to the BoT’s official auction calendar, at least eight more bond tenders in the four maturity categories will be floated before the end of June, with interest rates starting at 11.44 percent for the 10-year coupon.

Tanzania’s domestic debt was at Tsh30.67 trillion ($12.03 billion) by the end of December 2023, a Tsh485.4 billion ($190.35 million) rise from November, according to the BoT’s monthly review report for January, which was released this week.

According to the report, 75.5 percent or more of the domestic debt stock was made up of Treasury bonds.

Since its debut in April 2021 on the Dar es Salaam Stock Exchange, the 25-year bond has gained significant traction on the DSE, greatly surpassing the popularity of shorter-term options.

According to the report, the most recent auction in December brought in a total of Tsh493.1 billion ($193.37 million) in offers, with Tsh420.7 billion ($164.98 million) coming from winning bids.

The bond will support government initiatives to expand the financial markets in the nation, stretch the maturity profile of domestic debt, and generate money to close budget deficit gaps. It will also act as an anchor for other market instruments, including corporate bonds and mortgage financing.

Its set coupon rate of 15.95%, exemption from withholding tax, and semi-annual interest payment are its main draws.

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