Musings From Abroad

Rwanda indicates interest in EU-Kenya economic partnership deal

Published

4 months ago

August 20, 2024

As the first partner state of the East African Community (EAC), Rwanda has indicated interest in joining Kenya’s Economic Partnership Agreement (EPA) with the European Union (EU), according to a top official.

Rwanda has indicated its intention to join the agreement, according to a statement made on Tuesday by Ambassador Henriette Geiger, the head of the EU representation in Kenya.

With the EPA going into force last month, Kenyan products can now enter the EU’s 27 member states duty-free.

“It seems that Rwanda is now ready to join (the EPA). They have signalled their interest but we haven’t started negotiating it,” said Ms Geiger.

“The EPA was supposed to be an agreement of the EU with the entire East African Community. We will have to see whether others will join,” she said.

Speaking in Nairobi, Ms Geiger was paying Cabinet Secretary for Investments, Trade, and Industrialisation Salim Mvurya a courtesy call.

The only member of the EAC without duty-free or quota-free access to the EU is Kenya. As the other EAC nations are classified as least-developed nations, they have been granted duty-free access to the important economic union.

The EAC permitted Kenya to negotiate a bilateral deal with the EU, with the possibility of later membership by the other nations.

Several stakeholders expressed concern that the Kenya-EU EPA might harm certain industries by allowing the import of low-cost, EU-subsidized goods.

These worries have been relieved by Mr Mvurya, who says that agricultural items from the EU are on the list of goods from the bloc that won’t be able to enter the Kenyan market duty-free.

“The sensitive list of products which includes agricultural products is part of the exclusion,” he said.

Europe is the third-largest market for Kenyan commodities, after only Asia (25.8%) and Africa (43.2%). Fresh beans and peas, tea, coffee, flowers, and other agricultural products are the nation’s top exports to Europe.

Kenya will reduce tariffs on EU goods under the terms of the EPA beginning in 2031, the seventh year of the agreement’s implementation. Gradually, these limitations will be lifted until the EPA’s 25th anniversary.

“Both the business and investor communities must be fully informed about the stakes involved – not only for the private sector but also for public and government agencies,” said Mr Mvurya.

Kenya and the UK have an EPA that went into effect in March 2021. Kenya’s goods can continue to enter the UK market duty-free and quota-free after it leaves the EU thanks to the Kenya-UK EPA.

Related Topics:European Union Featured Rwanda

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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

5 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.