Musings From Abroad

US removes Uganda, Gabon, 2 others from AGOA. Here’s why

Published

12 months ago

January 3, 2024

Uganda is no longer able to export specific goods to the United States duty-free after Washington formally revoked eligibility for the African Growth and Opportunity Act (AGOA) for Uganda and three other African nations.

President Joe Biden announced his decision to delist the four nations in a decree dated December 29, stating that he had “determined” that they “do not meet the requirements” necessary to allow them to continue benefiting from the trade deal.

“Accordingly, I have decided to terminate the designations of the Central African Republic, Gabon, Niger, and Uganda as beneficiary sub-Saharan African countries for purposes of Section 506A of the Trade Act, effective January 1, 2024,” read the statement by the US President.

Uganda has “engaged in gross violations of internationally recognised human rights,” according to Mr Biden, who stated his intention to remove the four nations from the list of Agoa beneficiaries in a letter dated October 20, 2023, to the US Congress speaker.

Experts have warned that Uganda’s removal from the agreement could result in the loss of thousands of jobs, a decline in foreign exchange earnings, and low local raw material utilisation. Uganda has greatly benefited from the Agoa legislation, which was established in 2000 and allows several African nations to export numerous commodities to the US duty-free.

According to data from the US Department of Commerce, Uganda’s exports under Agoa to the US in the 12 months leading up to June 2023 were $8.2 million, or roughly 11.5% of its total exports to the US during that time, which came to $70.7 million.

About 72% of Uganda’s workforce works in agriculture, which accounts for over 80% of the country’s exports under AGOA and suggests that the expulsion could have a major negative impact on employment.

Uganda has been in Western “bad books” since President Yoweri Museveni assented to the anti-gay law passed by the Ugandan lawmakers last year. For Gabon and Niger, their removal is tied to military juntas ousting their respective elected governments.

Musings From Abroad

World Bank doubts Ethiopia-IMF debt assessment

Published

1 day ago

December 24, 2024

Ifeoluwa Dada

Some officials of the World Bank have questioned if the study supporting Ethiopia’s debt restructuring may be “faulty” after criticising an evaluation of the country’s finances done with the International Monetary Fund (IMF).

World Bank consultant, Brian Pinto, and its head economist, Indermit Gill, evaluated the July Debt Sustainability Analysis (DSA), which was created by the IMF and employees of the International Development Association (IDA), the World Bank’s fund for the world’s poorest countries, in an internal document seen by Reuters.

According to the authors, Ethiopia is experiencing a short-term cash shortage rather than a long-term solvency problem, which is a source of conflict between the government and holders of its $1 billion international bond that is in default, based on the DSA.

“We found that the bondholders have interpreted the DSA correctly, but the DSA itself may be faulty,” Pinto and Gill wrote in the paper from earlier this month. “The disagreements about Ethiopia’s debt sustainability will be repeated as other countries become debt distressed.”

A World Bank representative responded to a question regarding the paper by saying, “We generally don’t comment on internal deliberations between the World Bank and the IMF or any of our partner institutions.”

As part of the most recent review of the Fund’s loan program, Ethiopian State Finance Minister Eyob Tekalign told Reuters that the DSA had just been reviewed by IMF and World Bank teams and that the status had not changed significantly.

Without providing further details, an IMF representative acknowledged that its officials travelled to Ethiopia in November for the second review of the Fund’s loan program and added that every review incorporates an update to the DSA. Regarding the memo, the spokeswoman remained silent.

A request for comment from Pinto and Gill was not answered. There has been a tense confrontation between Ethiopian officials and bondholders.

The main point of contention is whether, as bondholders contend, Ethiopia is experiencing a liquidity shortage that may be resolved by rescheduling debt or if it is experiencing longer-term financial issues that necessitate haircuts, or debt write-downs.

According to the DSA, certain statistics on exports indicated pressures on both liquidity and solvency.

It was reported in October that the DSA indicated a solvency problem and that writedowns were inevitable. Investors have criticised a government proposal that suggests an 18% haircut in addition to rejecting the evaluation.

Musings From Abroad

Swiss company Mercuria partners Zambia’s IDC in new metals trading firm

Published

4 days ago

December 21, 2024

Ifeoluwa Dada

According to a statement released by Swiss commodities trader, Mercuria, on Thursday, it has established a metals trading arm with Zambia, the second-largest producer of copper in Africa.

The trading unit is jointly owned by Mercuria and an arm of Zambia’s Industrial Development Company (IDC), and its purpose is to allow Zambia to engage directly in the minerals trading market.

The joint venture “envisages the establishment of a vehicle to market and trade Zambian copper by mutual leverage,” according to a statement from Cornwell Muleya, the CEO of IDC.

The southern African nation wants to increase copper output to roughly 3 million metric tonnes within the next ten years, and in 2023, it produced roughly 698,000 tonnes of copper, down from 763,000 metric tonnes the year before.

In June, the Zambian government announced that it would establish a minerals trading unit.

Investors including First Quantum Minerals and Barrick Gold are ramping up production, with output set to receive a further boost once Vedanta Resources’ Konkola Copper Mines restart activity.

“Our joint venture with IDC marks a significant milestone for Zambia as it positions itself more strategically in the global minerals market,” Kostas Bintas, Mercuria’s global head of metals and minerals, said in the statement.