VenturesNow

Turkish company chosen by Uganda for Malaba-Kampala SGR

Published

2 months ago

August 2, 2024

Before the year ends, work is expected to start on the much anticipated multibillion-dollar Standard Gauge Railway (SGR), which would run from the Kenyan-Ugandan border at Malaba to Kampala.

The project coordinator, Mr Perez Wamburu, announced that M/s Yapi Merkezi, a Turkish contractor, will now be building the Malaba-Kampala (eastern route).

The amount of money that the Turkish corporation is investing in the project is unknown. After eight years of non-delivery, Kampala terminated the deal early last year, despite the Chinese having agreed to invest over $2.2 billion.

“We are at the tail end of the procurement of Yapi Merkezi. We have discussed the costs and we are at the bottom line of agreeing that we shall have the contract after it has been approved by the Attorney-General. We hope to start before the end of this year,” Mr Wamburu told the media during a briefing at Uganda Media Centre in Kampala. “We have done due diligence on this company and we have seen what they have done in Tanzania.”

This development occurs nine years after the project’s inception in Tanzania, Uganda, Kenya, South Sudan, Rwanda, and other partner states of the East African Community. The project’s goal is to lower the high transportation expenses brought on by cargo delays.

According to Mr. Wamburu, the initiative would soon be submitted for review by the Ministry of Finance.

Speaking at the same function, Mr. Godfrey Kabyanga, the Minister of State for ICT and National Guidance, disclosed the reasons behind the first Chinese contractor’s failure, citing unfavourable circumstances.

To finance the building of the Malaba-Kampala SGR line, Uganda first approached China Exim Bank.

“Their conditions were not favourable to us but we’ve gone with the Turkish firm. They are more favourable and we are going to work with them,” Mr Kabyanga said. “The development of the SGR is on and work will commence as soon as the financing arrangements are sorted so Ugandans should not be sceptical,” he added.

Kenya and Uganda set out to design an SGR system that would connect Mombasa, Nairobi, and Kisumu to Kampala.

According to Mr. Kabyanga, the Ministry of Works submitted a report on the status of the SGR project in Uganda to the Cabinet during its Monday meeting.

The 1,500-kilometer railway project also aims to create a modern, high-capacity network that will speed up transit, make it easier for people and goods to move around, and encourage economic growth by establishing seamless connectivity between Uganda and its neighbouring nations.

To connect the member states and increase trade in the more than 300 million-person region, the presidents of South Sudan, Rwanda, Kenya, Tanzania, and Uganda started building the SGR in 2013.

Only Tanzania and Kenya have seen notable advancements in their national construction lines thus far. The planned 332-kilometer Malaba-Kampala stretch will be constructed.

VenturesNow

Nigeria’s central bank issues fresh guidelines for ‘Ways and Means’ to govt

Published

11 hours ago

September 18, 2024

Ifeoluwa Dada

The Central Bank of Nigeria (CBN) has issued new guidelines on Ways and Means which limit Ways and Means Advances to the federal government to 5% of the previous year’s revenue collection.

The apex bank made the position known in its fiscal year 2024-2025 monetary, credit, international trade, and exchange policy guidelines.

“Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue. Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted,” it said.

The Treasury Single Consideration (TSA) system requires these advances to take into consideration Ministries, Departments, and Agencies (MDAs) sub-accounts, which are linked to the Consolidated Revenue Fund.

The federal government’s consolidated cash situation will be more precisely reported, improving public financial management openness and resource availability. The CBN also stated that Ways and Means Advances must be repaid by the end of the fiscal year they were awarded, encouraging short-term borrowing.

In the Nigerian context, “ways and means” refers to the Federal Government’s ability to borrow money from the Central Bank of Nigeria (CBN). This means that the government may use “ways and means” to meet short-term needs or emergencies, which is why the CBN is referred to as the “lender of last resort.”

Over the past seven years, the facility had grown 2,900% to an extraordinary N23.7 trillion by 2023. This fast surge, which exceeded legal restrictions, increased inflation and Nigeria’s debt.

The CBN Act allows the bank to grant temporary advances to the federal government for budget revenue deficits at a rate deemed appropriate, but the total amount of such advances “shall not at any time exceed 5% of the previous year’s actual revenue of the Federal Government.”

In addition, it stipulates that “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”

The Senate and House recently enacted a bill to increase the CBN’s federal Ways and Means borrowing ceiling. The upper chamber of Nigeria’s legislature boosted the central bank’s loan capacity to the federal government from 5% to 10% of annual income.

Yemi Cardoso, CBN governor, announced earlier this year that the bank would stop making Ways and Means advances to the federal government until existing loans were returned. He said this is one of the bank’s key strategies to handle the country’s economic issues.

VenturesNow

Kenya, IMF discuss economic and fiscal issues

Published

17 hours ago

September 18, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) said on Tuesday that it had had productive discussions with Kenya’s government on its economic and fiscal goals after widespread protests prompted it to shelve tax rises.

In June, President William Ruto abandoned this year’s finance bill, leaving the deeply indebted government with a larger budget deficit, unpaid payments, and a delay in IMF funding.

“We remain fully committed to supporting the authorities in their efforts to identify a set of policies that could support the completion of the reviews under the ongoing program as soon as feasible,” the IMF said in a statement.

Kenya signed a four-year IMF loan in 2021 and another for climate change measures in May 2023, totalling $3.6 billion. The country secured a staff-level agreement with the IMF on its seventh review in June, but the protest and finance bill withdrawal delayed the executive board’s sign-off and payout.

Public debt helps development. Governments utilise it to fund spending, protect and invest in their citizens, and improve their futures. However, too quick governmental debt growth can be a burden. The developing world which Africa forms core is experiencing this.

Kenya’s government debt was 70.10% of GDP in 2023. Kenya’s government debt to GDP averaged 56.36% from 1998 to 2023, peaking at 78.30% in 2000 and falling to 38.20% in 2012.