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Kenya to utilize $500 million World Bank loan to pay off its bonds

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Kenya’s central bank governor announced on Thursday that the country intended to settle the about $500 million maturing Eurobond with a portion of a loan from the World Bank.

To finance the buyback of a significant chunk of the $2 billion bond that matures in June, the East African nation sold a $1.5 billion international bond in February at a steep cost. Before it, investors had expressed concern that Kenya’s tight public finances would prevent it from being able to repay the bond.

“We do expect some disbursements from the World Bank of about $1.2 billion related to the development policy operations. Part of that … will be used to settle the $500 million of the remaining Eurobond,” Central Bank of Kenya Governor Kamau Thugge told a news conference.

When asked about a World Bank report claiming that another buyback by the government was planned for later this year, Thugge replied that the bank was still in talks with the Treasury.

Despite recent flooding, he said the central bank was sticking to its 5.7% economic growth prediction for this year since the services sector was strong and agriculture was doing well.

Following 5.6% growth in 2023, Kenya’s GDP is predicted to have increased by 5.8% in the first quarter of this year.

The central bank maintained its benchmark lending rate at 13.0% on Wednesday, stating that the present policy would guarantee that inflation would be steady in the foreseeable future around the middle of its target range.

In answer to inquiries over the timing of rate reductions, Thugge stated that the bank would consider outside events before to determining the path its benchmark rate would take at the right moment.

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Zambia to establish unit for mineral trading, investing

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To increase its revenue from its natural resources, Zambia will establish a new company for investment and mineral trading, the cabinet announced on Wednesday following approval.

According to the statement, the government of Zambia, the second-largest copper producer in Africa, would create a Special Purpose Vehicle (SPV) for trading and investment purposes. Through ZCCM Investment Holdings, the government currently owns many mining assets.

The new entity would help Zambia “move away from the dividend payment model for mineral resources and adopt a production-based sharing mechanism to ensure benefits accrue to the people of Zambia beyond Statutory obligations,” the Cabinet said.

 

It further stated that the new business model will guarantee accurate disclosure of mineral consignments intended for export and internal consumption, permit the government to negotiate mineral prices, and share produced minerals.

10% to 20% of mines, including those controlled by Barrick Gold, Vedanta Resources, and First Quantum Minerals, are owned by ZCCM. It recently retained the remaining 51% of Mopani Copper Mines after selling the remaining portion to a division of United Arab Emirates International Holding Company.

Paul Kabuswe, Zambia’s minister of mines, told Reuters in February that Zambia intended to negotiate bigger stakes in new mining operations to increase revenue and encourage investment in social programs.

The nation aims to produce 3 million metric tons of copper annually within the next ten years as the demand for metal rises in the building and electricity sectors. In 2023, the nation produced 698,000 metric tons of copper, down from 763,000 metric tons the year before.

The production of copper decreased from 763,000 tons the year before to 698,000 tons the following year, according to the Zambia Chamber of Mines.

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Kenya’s govt authorizes sale of its stakes in 6 publicly traded firms

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According to President William Ruto’s office, the Kenyan cabinet has accepted a government proposal to sell shares it owns in six listed companies, including the nation’s stock exchange and a cement manufacturer.

The government will sell its holdings in battery manufacturer Eveready East Africa, Nairobi Securities Exchange, HF Group, Stanbic Holdings, Liberty Kenya Holdings, and East African Portland Cement, according to a statement released late on Tuesday by Ruto’s office.

 

The National Social Security Fund owns 27% of East African Portland, while the government owns a direct 25.3% share. The government holds 1.1% of Stanbic Holdings, 0.9% of Liberty Kenya Holdings, 2.41% of HF Group, 3.36% of Nairobi Securities Exchange, and 17.2% of Eveready.

This action is in line with government intentions to sell off stakes in further state-owned businesses. After passing a bill in October to provide guidelines for the process, Ruto said in November that the government intended to privatize 35 state-owned businesses.

 

But in December of last year, the opposition party filed a lawsuit to oppose the plan, arguing that some of the enterprises being sold had vital national interest and should only be sold with public approval. As a result, the plan encountered difficulties.

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