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Ivory Coast intensifies support for cocoa exporters

Published

4 weeks ago

August 24, 2024

According to two government sources on Friday, the government of Ivory Coast would provide extra assistance to small local cocoa exporters to enable them to more than quadruple their yearly purchasing volumes.

Ivorian exporters must contend with financially stable foreign competitors, as they have been unable to obtain funding from local banks due to financial issues.

The world’s largest producer of cocoa, Ivory Coast, produced 2.2 million tonnes of beans on average over the previous three years, with large multinational corporations handling about 80% of imports and exports.

The government will provide small exporters with subsidies of 10 billion CFA francs ($16.75 million) annually for the next four years, starting in October, when the new cocoa season begins. This will enable them to boost their purchases to 500,000 metric tonnes.

In the past, the government awarded about 3 billion CFA francs annually. This quantity made it possible for cooperatives and exporters to purchase and sell cocoa beans, enabling them to export between 150,000 and 200,000 tonnes annually.

“Our aim is to have national champions in the cocoa sector in order to increase their purchasing volumes, which represent less than 10% of our annual production,” said one of the sources, who works in the prime minister’s office.

According to the second source, a Ministry of Agriculture official, banks should be more inclined to lend money to small exporters because of this funding because they will be more stable financially.

Additionally, it must offer additional assistance as the European Union is ready to impose new rules on the import of goods connected to deforestation, which would intensify rivalry among exporters.

Although the subsidy was a kind gesture, the government needs to do more to make Ivorian businesses competitive with other exporters, according to Yves Brahima Kone, managing director of the Ivory Coast Coffee and Cocoa Council, the country’s regulatory body, who spoke with Reuters.

“If the government wants to achieve this goal, it will need to provide greater, more substantial and sustainable financial support. It’s possible, but it will require a larger subsidy,” Kone said.

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

Published

12 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.

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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.