Major International Business Headlines Brief::: 14 April 2022

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Major International Business Headlines Brief::: 14 April 2022 

 


 

 


 <https://www.nedbank.co.zw/> 

 


 

 


ü  Beauty firm L'Occitane keeps Russian stores open

ü  Tesco vows to rein in prices as profits treble

ü  Soaring petrol costs drive UK inflation to 30-year high

ü  How the rising cost of living crisis is impacting Nepal

ü  Sri Lanka debt default has begun, says rating agency

ü  BA offers new cabin crew £1,000 'golden hello'

ü  Jersey court seizes $7bn of Roman Abramovich's assets

ü  Uganda's Regressive Tax System Contributing to Income, Gender Inequality - Report

ü  Tanzania: Shilling Remains Steady On Exports Flow

ü  Tanzania: Private Sector Credit Rises to 12pc

ü  Tanzania: Tic Touts Success of Investment Drive

ü  Tanzania: Big Boost for Agri Sector

ü  Uganda: Economy Stutters in March, Outlook Remains Positive

ü  Somalia Seeks to Kickstart Oil and Gas

 

 

 

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 

Beauty firm L'Occitane keeps Russian stores open

The French beauty brand L'Occitane says it will keep its shops in Russia open despite the invasion of Ukraine.

 

The firm told the BBC it had discussed closing its stores "at length" but said it had not because it wanted to protect staff from potential "retaliation".

 

It has stopped shipping to Russia but website sales still seem to be open.

 

Hundreds of international brands including L'Oreal and Estee Lauder have already closed shops and ceased online sales in Russia in protest at the war.

 

Some customers criticised L'Occitane for its decision and called for a boycott of the brand which is sold at more than 3,085 retail outlets worldwide and had sales of €1.5bn (£1.3bn) last year.

 

The cosmetics firm, which has spas and stores in Russian cities including Moscow and St Petersburg, said it could not take the "risk" of closing its shops.

 

"At this point we cannot guarantee that our 700 employees in Russia will not face retaliation if we cease to operate in the country," a spokeswoman told the BBC.

 

"We are particularly concerned for those of our employees who have relatives in Ukraine or who are of Ukrainian descent," she added.

 

"At the same time, we are firmly committed to our partners and their employees in Ukraine."

 

The firm said it strongly condemned Russia's "unjustified and unprovoked" invasion and had significantly scaled back its operations in Russia, suspending its investment plans and all shipments into the country.

 

It refused to comment on whether it had continued online sales in the country and what the impact of stopping shipments would have on its Russian shops.

 

Tweeting a picture of a L'Occitane product one customer said: "I've used this cream for years, never again. Even if they back out, they've showed their corporate integrity."

 

I'll never WANT another L'OCCITANE product while their stores remain open in Russia, That's a LOT of Christmas/Birthday presents!

 

L'Occitane is one of a number of firms listed as still operating in Russia by Professor Jeffrey Sonnenfeld at Yale University's School of Management.

 

Among them are the French energy giant EDF, the UAE's Emirates airline, and China's Lenovo computer brand. However, a much larger group of around 600 big firms have pulled out of Russia or suspended sales since it invaded, including Starbucks, Coca Cola, Levi's and Apple.

 

Other international outlets still open in Russia have said they are not able to shut stores due to complex franchise deals preventing them from withdrawing. Burger King and the hotel groups Marriott and Accor are among the firms restricted by these arrangements.

 

On Tuesday, some independent Nike stores were found to be operating in Russia over a week after the sportswear brand said it was temporarily closing all its shops in the country.

 

Professor Vanessa Burbano, from Columbia Business School in the US, said that consistency between claims and actions is important for brands with operations in Russia.

 

"Customers and employees do pay attention to which companies are first in making these kinds of commitments and which firms don't go as far," Prof Burbano said.

 

"The risk of companies making claims that may not be perceived as consistent with their actions is that they could be seen as a green-washing in the Ukraine context which would be bad for their reputation."-BBC

 

 

Tesco vows to rein in prices as profits treble

Tesco profits more than trebled last year amid rising sales and a fall in Covid-related costs.

 

The UK's largest supermarket chain reported pre-tax profits of £2.03bn, up from £636m the previous year.

 

Group sales, excluding fuel, rose by 2.5% to £54.8bn, while in the UK retail sales rose by 2.3% year on year.

 

However, Tesco warned of "significant uncertainties" and said performance would be affected by the the investment needed to keep prices down.

 

Chief executive Ken Murphy said: "Clearly, the external environment has become more challenging in recent months.

 

"Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check - working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs."

 

Mr Murphy added that Tesco was managing to keep the rise in the cost of living a "bit under the number for the overall market".

 

However, products that require a lot of energy to produce are experiencing the highest cost pressures. Tesco accepted a 20% cost price increase in milk from its suppliers less than two weeks ago. However, the UK's largest dairy Arla recently warned that with cost increases of some 36%, farmers faced tough cost challenges.

 

Mr Murphy said strong product availability had been maintained but added that products such as sunflower oil were a challenge due to the war in Ukraine.

 

It is also said customer behaviour is also returning to more normal patterns as shoppers rely less on supermarket trips as the UK emerges from the pandemic.

 

Commenting on Tesco profits, chief executive of Retail Economics, Richard Lim said the increases were "mightily impressive".

 

As the cost of living crisis continues, Mr Lim said many shoppers would be trading down to own-label brands, switching retailers and scaling back on premium purchases.

 

However, he said Tesco was "well-positioned", given the "competitive advantage" offered by its loyalty scheme and "meaningful negotiating power" it had with suppliers.

 

Tesco online business was lower as sales declined by 6.5% because some customers chose to return to shopping in stores as the pandemic eased.-BBC

 

 

 

Soaring petrol costs drive UK inflation to 30-year high

Prices are rising at their fastest rate for 30 years, driven by a sharp increase in petrol and diesel costs.

 

The UK inflation rate rose to 7% in the year to March, the highest rate since 1992 and up from 6.2% in February.

 

Prices are rising faster than wages and there is pressure on the government to do more to help those struggling.

 

The cost of living is expected to rise even further after the energy price cap was increased, driving up gas and electricity bills for millions.

 

Inflation is the rate at which prices rise. If a bottle of milk costs £1 and that rises by 5p, then milk inflation is 5%.

 

Fuel had the biggest impact on the inflation rate, with average petrol prices rising by 12.6p per litre between February and March, the largest monthly rise since records began in 1990, the Office for National Statistics (ONS) said.

 

This compares with a rise of 3.5p per litre between the same months of 2021.

 

Diesel prices also rose by 18.8p per litre this year, compared with a rise of 3.5p per litre a year ago.

 

The rise in the inflation rate was higher than the 6.7% expected by analysts and was also driven up by furniture, restaurant and food prices.

 

The figures for March do not yet reflect the average £700-a-year increase in energy bills that took place from 1 April when the energy price cap was raised.

 

Since late last year, prices have been rising fast as pandemic restrictions have been eased and firms face higher energy and shipping costs which they have passed on to consumers.

 

Russia's invasion of Ukraine is now adding to the pain, as the price of oil and other commodities climb higher.

 

Russia is one of the world's largest oil exporters and demand for oil from other producers has increased since the invasion, leading to higher prices.

 

Although the UK imports just 6% of its crude oil from Russia, it is still affected when global prices rise.

 

Ukraine and Russia are also the world's main suppliers of sunflower oil and the war has hit prices.

 

In the UK, the price of oils and fats for food increased by 7.2% in March, according to the ONS.

 

Andrew Selley, chief executive of wholesaler BidFood, which supplies 45,000 caterers and food service businesses across the UK, said increasing electricity, fuel and packaging costs were impacting the price of all its products.

 

But he told the BBC products affected by the war in Ukraine, such as wheat-based foods, sunflower oil, chicken and white fish, were particularly hard hit.

 

"I've been in the business for over 30 years. I've never seen a situation where everything seems to be going up [in price]," he said, adding that some of these costs would ultimately be passed on to consumers.

 

The firm had previously sourced a lot of its chicken from Poland but Ukrainian workers had returned to fight in the war and the country was keeping more of its chicken to feed refugees meaning it was now sourcing from other countries, driving prices up by a fifth.

 

Graph showing UK inflation rate rose to 7%

Sara Gerritsma, a student from Leicestershire with a partner and six year-old child, said she may have to give up her paramedic degree due to the rising cost of fuel.

 

The 32-year-old only started the three-year course in October but she has a 2.5 hour roundtrip each day to get to university in Northampton, and her petrol costs have shot up by about £120 a month.

 

"It would be really frustrating giving up my course. It was a big decision changing my career at 32," Sara told the BBC.

 

"But recently we have sat down and gone through everything and thought, can I afford to be a full-time student?"

 

The sharp rise in prices is also putting pressure on businesses.

 

Paul White, who owns the pizzeria 6/CUT in Eccles, Greater Manchester, said the increase in the minimum wage, the end of VAT relief, and rising fuel and food prices have all hit his company. The restaurant is also spending £500 more a week on its energy bills.

 

"We need to find an extra £1,400 a week to cover the costs of everything that's come on in the last few weeks," he told the BBC.

 

He says he will have to put up prices, and is looking to charge each customer about 50p to £1 extra to cover his rising overheads.

 

But he is also worried people might start eating out less as their budgets are squeezed.

 

This is no longer a cost of living squeeze, but a financial throttling for many people. Price rises are accelerating and their wages, benefits and pensions are failing to keep pace.

 

In the words of the ONS, there were "no large offsetting downward contributions" to the inflation rate. In other words, nothing is getting significantly cheaper.

 

So avoidance of price rises is impossible. Even if you do not have a car and are avoiding surging fuel costs, lots of other necessities are getting more expensive.

 

Experts say the only option is trying to budget as best we can, across every part of our lives. Most importantly, they also stress the importance of seeking early, and free, help before falling into unmanageable debt.

 

Research for the consultancy Retail Economics found the least affluent UK households saw discretionary income fall by 5.2% or £26 in March, compared with the same month last year. The Retail Economics-HyperJar Cost of Living Tracker said households on average incomes had £52 each less spare cash, a fall of £52.

 

Chief executive Richard Lim said it was a "real concern to see the least affluent families under this amount of pressure even before accounting for the energy price hikes".

 

"The most disadvantaged households will experience the brunt of the crisis," he added.

 

Jack Leslie, senior economist at the Resolution Foundation think tank, which focuses on those on lower incomes, warned the cost of living crisis would "continue to worsen before it starts to ease at some point next year".

 

He said with wages not keeping pace with rising prices, people were facing "the biggest squeeze since the mid-70s."

 

Chancellor Rishi Sunak said: "I know this is a worrying time for many families, which is why we are taking action to ease the burdens by providing support worth around £22bn in this financial year, including for the most vulnerable through our Household Support Fund."

 

But Labour criticised the government for increasing taxes when "the cost of living is hitting households hard".

 

Liberal Democrats leader Ed Davey called for "unfair tax hikes" to be immediately reversed and said people needed "urgent help" with energy bills.

 

And the SNP said the "cost of living crisis continues to spiral out of control with no sign of the UK government stepping up to the challenge to protect families and households".-BBC

 

 

 

How the rising cost of living crisis is impacting Nepal

"We are struggling to manage our expenses, as [the] cost of essentials is going up," says Pampha Khatri, a vegetable seller in Kathmandu, Nepal.

 

It is a familiar story in many parts of the world at the moment - ordinary people struggling to cope with the soaring cost of living.

 

Every day, Ms Khatri, a 37-year-old mother-of-two, lugs around a heavy basket of greens, selling them to her customers. Her load can easily weigh over 30kg.

 

She lives in Bhaktapur district nearby Kathmandu with her family. Her day starts at 03:00 when she goes out to buy salad greens and vegetables from nearby village farms, bringing them by public transport in to the city to sell.

 

Ms Khatri earns about $20 (£15.30) a day.

 

"My husband doesn't work. So, my family depends on my earnings and I have to pay for the school expenses of my two sons as well.

 

"Prices of basic items and transport are going up and life is increasingly getting tough," Ms Khatri says.

 

Nepal, with a population of around 29 million, is a nation landlocked between India and China. It relies heavily on its southern neighbour India for imports of almost all of its essential supplies, including fuel.

 

And what's really worrying Nepalis, like Ms Khatri, is how fast food prices have risen over the past two years, with no end in sight.

 

For example, the price of a litre of sunflower oil, used for cooking, has gone up from $1.32 (£1.00) per litre before the pandemic to $2.39 (£1.83).

 

Consumer organisations say prices for some basic food items have risen by at least 20% in the country.

 

The Himalayan nation's foreign exchange reserves dropped more than 16% to $9.59 billion (£7.36 billion) in the seven months to the middle of February because of the surging cost of imports - the supplies it ships-in from other countries.

 

The government must hang on to enough dollar reserves at the bank to import essential commodities, like food and fuel. In response, the government has just taken a radical step - to restrict imports of non-essential goods, including cars, cosmetics and gold.

 

Nepal is not alone, countries across the region, such as India and Pakistan, are also struggling with soaring inflation. And the war in Ukraine has recently added further pressure, pushing oil prices higher. Nepal's state-run oil corporation has already increased its fuel prices four times since the beginning of the year, to offset its losses.

 

Fuel prices are also rising and the government may bring in restrictions for private vehicles in large cities.

However, at the vegetable and general markets of Kathmandu business remains brisk. Traders are still selling their vegetables, meat and fish and other food items.

 

Although many shop owners complain that customers are now buying in more limited quantities and also bargaining very hard to reduce prices.

 

One shop owner adds that increasing fuel prices mean they are being asked to pay more for the trucks and vans transporting vegetables and other goods.

 

With hundreds of new vehicles being added to the country's roads every year the government is trying to reduce the increasing demand for fuel.

 

"We are now considering declaring a two-day weekend, instead of a Saturday-only weekend, as part of its measures to reduce the consumption of petroleum products," Gyanendra Bahadur Karki, the communication and information technology minister, tells BBC News.

 

The Nepali authorities may also introduce restrictions on private vehicles in cities - only allowing even and odd number plates access on alternate days, to reduce vehicles and save fuel.

 

But Subarna Prabha Guragain from the Consumer Rights Forum, warns that the less wealthy, the families of daily wage earners, like Ms Khatri, are suffering the most and tightening their belts to scrape together enough to pay for food.

 

"The food price increase is unprecedented. The situation is worse than the 2015 earthquake that devastated Nepal. There's lot of dissatisfaction among people," Ms Guragain says.

 

Nepal's biggest revenue earner is remittances - money sent home by around 3.5 million Nepalis working abroad, mostly working in the Middle East, South-east Asia and India.

 

Nepalis sent home around $8 billion (£6.14 billion) in 2020, more than a quarter of the country's gross domestic product (GDP).

 

Remittances are key to supporting families in rural Nepal, and this money helped some of them survive during the pandemic and political instability, says Dr Posh Raj Pandey, a Nepalese economist.

 

"Due to the pandemic-induced lockdowns, people lost their jobs and prices of essential commodities also went up. As a result, official figures show around 1.2 million people, additional people, fell below poverty line," he explains.

 

Dissatisfaction over rising food prices is not good news for the sitting government - the Nepal Congress-led governing coalition. Local elections are due soon and parliamentary polls are expected later this year.

 

Nepali government officials say they are paying close attention to what's happening in Sri Lanka where the government is struggling to pay for its imports due to its dwindling foreign exchange reserves.

 

With prices rising, and incomes stagnant, many in Nepal find themselves in a precarious situation. Sole breadwinners, like Ms Khatri, say they now have no option but to find more work to support their families.-BBC

 

 

 

Sri Lanka debt default has begun, says rating agency

Sri Lanka is about to default on its debts, two of the world's largest credit rating agencies have warned.

 

Fitch Ratings lowered its assessment of the South Asian nation, saying "a sovereign default process has begun".

 

S&P Global Ratings made a similar announcement and said that a default is now a "virtual certainty".

 

This week, Sri Lanka said it will temporarily default on its foreign debts as it faces its worst economic crisis in more than 70 years.

 

Meanwhile, faced with mass protests over major power cuts and the soaring cost of food and fuel, officials have urged Sri Lankans working abroad to send money home.

 

The new governor of the country's central bank appealed for donations in sterling, US dollars and euros on Wednesday.

 

He said the money "will be utilised only for the purpose of importation of essentials such as food, fuel and medicine".

 

On Monday, Sri Lanka is due to make $78m (£59.4m) of interest payments on its international sovereign bonds.

 

If the payment is not made within a 30-day grace period it would mark the country's first default on its foreign debt since independence from the UK in 1948.

 

Sri Lanka warns it will default on foreign debt

Fitch's latest rating puts Sri Lanka at "near default" and indicated that its "payment capacity is irrevocably impaired".

 

"We will downgrade the [rating] once a payment on an issuance is missed and the grace period has expired," the firm said in a statement on Wednesday.

 

S&P also downgraded Sri Lanka "to reflect the virtual certainty of a default on some affected obligations".

 

The ratings agency said it was waiting for more details on Sri Lanka's debt restructuring plan, or confirmation that its government had failed to pay its creditors.

 

"We expect the government to miss paying these coupons," S&P said in a note. A coupon is the interest payment due on a bond.

 

Credit ratings are intended to help investors understand the level of risk they face when buying a financial instrument, in this case a country's debt - or sovereign bond.

 

On Tuesday, the Sri Lankan government said it would temporarily default on $35.5bn in foreign debt.

 

Its finance ministry said the impact of the pandemic and the war in Ukraine made it "impossible" to pay its creditors.

 

The country is due to start talks with the International Monetary Fund (IMF) next week on a loan programme to get its economy back on track.

 

It steeply devalued its currency last month ahead of talks with the IMF over a bailout.-BBC

 

 

 

 

BA offers new cabin crew £1,000 'golden hello'

British Airways is offering new cabin crew a £1,000 "golden hello" as the airline battles to recruit workers.

 

The company says it will pay new employees £500 after three months and the rest after six months - but only if they can start before July.

 

Airlines and airports are struggling to find new staff after making steep cuts at the height of the pandemic.

 

BA and others have been forced to cancel flights due to resurging demand ahead of Easter and not enough staff.

 

One barrier to recruitment is that airline workers have to pass stringent security checks which can take several weeks or months to process.

 

BA says applicants must have an airside ID for either Heathrow or London Stansted Airport as well as having completed cabin crew safety training.

 

It also says that cabin crew who are not able to commence training prior to July this year if, for example, they have to work a long notice period, "may not be eligible for the welcome bonus".

 

Since the beginning of the year, BA has cancelled about 1,200 flights due to staff shortages and Covid-related absences.

 

Earlier in 2022, BA cancelled flights due to stormy weather, which also caused delays in unloading baggage from planes. Some flights were also affected by IT issues resulting in luggage piling up and passengers stuck on planes after they landed.

 

The airline cut around 10,000 staff due to the pandemic and the restrictions placed on the travel industry. However, last year it began rehiring staff.

 

The transport industry as a whole is facing a challenging Easter as many people prepare to travel for the first time since Covid hit in early 2020.

 

The AA motoring organisation estimates that around 27.6 million car journeys are expected to take place over the Bank Holiday weekend.

 

There will be disruption to train travel as some lines are closed for engineering work. People have also seen cross-Channel ferry services cancelled between Dover-Calais, which will continue over the weekend after a second P&O Ferries ship failed another safety check by the Maritime and Coastguard Agency.

 

There are also long queues of lorries on roads approaching the Port of Dover.

 

"All our polling suggests that Good Friday will be the busiest getaway day for Easter trips and staycations," said AA president Edmund King. "If some drivers can leave on Thursday or early Saturday, they may miss some of the jams."-BBC

 

 

Jersey court seizes $7bn of Roman Abramovich's assets

Russian billionaire Roman Abramovich has had $7bn (£5.4bn) of assets linked to him frozen by a Jersey court.

 

On Tuesday, Jersey Police searched premises suspected to be connected to Mr Abramovich's business activities on the island, Jersey Law Officers' Department said.

 

The billionaire is on the UK sanctions list over Russia's war in Ukraine.

 

Channel Island Jersey follows UK policy and imposes sanctions on the same people.

 

"The Royal Court also imposed a formal freezing order on 12 April, known as a saisie judiciaire, over assets understood to be valued in excess of US$7bn which are suspected to be connected to Mr Abramovich and which are either located in Jersey or owned by Jersey incorporated entities," the Jersey Law Officers' Department said.

 

Mr Abramovich was among several wealthy Russians added last month to the UK and European Union sanctions lists over Russia's invasion of Ukraine, and governments have since been taking action to seize yachts and other luxury assets from them.

 

 

The billionaire tried to sell Chelsea Football Club in March, but that process was taken out of his hands by the government after he was sanctioned.

 

Earlier this month, the Caribbean nation Antigua and Barbuda said it was willing to help the UK seize yachts owned by Abramovich.

 

Superyachts linked to the businessman, together worth an estimated $1.2bn, have also been docked in southwest Turkey, outside the jurisdiction of the EU and the UK.

 

The Jersey Royal Court has frozen a staggering $7bn of Roman Abramovich's assets in Jersey.

 

And one company in particular will be of interest to football fans.

 

Camberley International Investments, based in the Jersey capital St. Helier, has loaned £1.4bn to Fordstam Ltd, the company through which Roman Abramovich owns Chelsea FC, according to its latest accounts.

 

That's money which has helped to fund Chelsea's triumphs on the pitch.

 

Camberley International Investments is described in the accounts as a 'related party' - suggesting it could also be controlled by Mr Abramovich.

 

We don't know for sure if it is among the assets frozen by the Jersey court. But if it is - what will that mean for the ongoing sale of the Chelsea?

 

Mr Abramovich has previously said that he won't seek for the loan to be repaid. But if the company which made the loan were to be frozen, the decision may be out of his hands.

 

The Jersey Law Officers' department gave no detail on what would happen to specific assets.

 

It will come under a lot of pressure to fill in some of the blanks in coming days.-BBC

 

 

 

Uganda's Regressive Tax System Contributing to Income, Gender Inequality - Report

A report by Civil Society Organisations has indicated that Uganda's tax system has continued to be regressive and consequently contributing greatly to income and gender inequality in the country.

 

The Fair Tax Monitor report 2021 by Oxfam Uganda and SEATINI Uganda in collaboration Tax Justice Alliance Uganda, SOMO, FEMNET and Tax Justice Network Africa was launched under the Fiscal Justice for Women and Girls in Africa project co-funded by the European Union.

 

The report indicated that indirect taxes which contributed 64.42% of Uganda's total tax revenue in the financial year 2020/21 have a big effect on low-income earners, especially women.

"Tax laws are amended annually mainly to increase revenue but government does not ascertain the impact of tax amendments on women and marginalized groups. For example the financial year 2021/22 amendments like the rental income are likely to disproportionately benefit men, the additional shs100 per litre of fuel as excise duty is likely to increase the cost of transport whereas the 12% excise duty on internet data is to likely to increase the cost of internet," the report says.

 

The report also indicates that Uganda's dependence on indirect taxes makes the tax system regressive.

 

"Indirect taxes disproportionally affect low-income earners, especially women, because they spend a higher proportion of their income on consumer goods for their families."

According to the report, in some cases excise duties are regressive because they are usually flat rated, for example, a 0.5% levy on mobile money withdrawals.

 

"These tend to affect low-income earners more - especially women, who spend a higher portion of their income on these items," the report says.

 

It was also indicated that government doesn't publish the impact assessment studies of excise taxes on the on women and the poorest people in society.

 

"The excise duty charges or rates are informed by the need to generate revenue and minimizing negative externalities, rather that impact on people," the report says.

 

Presumptive taxes

 

The report indicates that the recent reform of the presumptive tax regime generally reduced tax payable across the different thresholds but also lowered the turnover threshold at which a person becomes taxable, in an attempt to widen the tax base.

"The reform of the presumptive tax regime made Uganda's presumptive tax regressive, because taxpayers with low annual turnover pay a higher proportion of their income in presumptive taxes than those with higher turnover," the report indicated.

 

It also says the country's presumptive tax regime is not based on flexible assessment because there is lack of clarity for taxpayers as to how 'record keeping' is defined.

 

The report also indicates that the presumptive tax rates do not differ across economic sectors since they are the same even for sectors predominantly composed of women workers, such as the service sector.

 

Challenges

 

The report further indicates that the tax administration system faces several challenges including low funding to URA, increase in taxpayer to staff ratio and costly tax and investment incentives which cost the country a lot of money.

 

The report says that on top of the prevailing tax system, the impact of the Covid pandemic led to a reduction in government revenues.

 

"Tax systems are, globally, seen as putting women at the margins, and not just in terms of the how taxes affect income, wealth, and behaviors directly. They are not designed in a way that gives sufficient attention to the net effect that tax and spending systems combined, both on paper and in practice, have on the immediate needs or strategic priorities that underpin gender inequalities," said Francis Odokorach, the Oxfam Uganda Country Director said about the report.

 

"Tax laws in Uganda are annually amended with the focus of increasing tax revenue and establishing an efficient mode of collecting taxes. However, apart from tracking the revenue growth, the government should ascertain the impact of tax amendments on gender and marginalized groups in respect to the widening inequality gap. We, therefore, call on policymakers, through the number of recommendations in this report to make tax fair."

 

The SEATINI Uganda Executive Director, Jane Nalunga said it is very possible for the status quo to be changed by government.

 

"Despite government efforts to increase women representation in fiscal policy formulation, public participation is still weak and low at 22%, according to the International Budget Project (IBP) 2019 Open Budget Survey. Therefore, an increase in public tax education remains vital as this empowers citizens to shape transparency and accountability in Uganda,"Nalunga said.

 

She added that this should not only be a civil society concern, but the responsibility of every citizen, to ensure equity and fairness through advocacy for a tax system that allows everyone to pay their fair share of tax.

 

"Transparent and gender-responsive spending will go a long way to enhance the quality of life of ordinary citizens in Uganda."

 

 

 

Tanzania: Shilling Remains Steady On Exports Flow

THE shilling continues to hold steady against the US dollar since the beginning of the year thanks largely to agricultural sector exports.

 

The local currency opened the year trading at 2,309/04 against the greenback but depreciated minutely to 2,310/11 yesterday.

 

The shilling, thus, dropped by merely 0.046 per cent in the last three and half months.

 

NMB Bank said in its Daily e-Markets report of Tuesday that the shilling was steady despite observing demand from manufacturers, oil marketing companies (OMCs) and SMEs which was cushioned by agri-inflows.

 

"We observed demand from manufacturing, OMCs and SMEs sector supported by dollar inflows as harvesting season continues and Agri commodities traders specifically pulses," NMB e-Markets report said.

However, on weekly basis, the shilling kept on weakening against the dollar dropping to 2,310/07 at the opening of this week up from 2,310/02 of the previous week.

 

The Orbit Securities projected on its weekly market synopsis report that the shilling is heading into rough seas ahead following a global prices crisis after the Eastern Europe war between Ukraine and Russia.

 

"With worsening trade terms due to the ongoing war while the country is a net importer, the pressure on the shilling is expected shortly," Orbit said in the report.

 

Tanzania is importing almost 900,000 tonnes of wheat from Ukraine and Russia--where the big chunk comes from Moscow. Tanzania produces only 100,000 a year.

 

The shilling also is facing a tough stance after global oil prices jumped northwards due to the war in Eastern Europe.

 

Globally, oil prices edged higher Wednesday after Moscow said that peace talks with Ukraine had hit a dead end, fuelling supply worries, while weak economic data from China and Japan kept a lid on gains.

 

Brent crude rose by 48 cents, or 0.5 per cent, to USD 105.12 a barrel by yester-morning while US West Texas Intermediate (WTI) crude futures gained 28 cents, or 0.3 per cent, to USD 100.88. Both benchmarks had surged by more than 6 per cent on Tuesday.

 

Nevertheless, the Bank of Tanzania's interbank cash market (IBCM) last week traded 43.5bn/-, about half of 110bn/-that was transacted the previous week.

 

"The trend on the IBCM suggests that the banking system has sufficient liquidity hence the competitive rates," Orbit said.

 

The interbank rate has slightly improved to 1.76 per cent from 1.5 per cent the previous week, albeit still one of the lowest rates to be recorded by the BoT in recent years.-Daily News.

 

 

 

Tanzania: Private Sector Credit Rises to 12pc

THE growth of private sector credit went up to 11.9 per cent in the year ending February compared with 2.5 per cent in February last year attributable to improving business conditions from adverse effects of Covid-19, coupled with supportive monetary and fiscal policies.

 

According to the Bank of Tanzania (BoT) monthly economic review for March, much of the growth was absorbed by mining, micro, small and medium enterprises as personal loans, trade and manufacturing activities.

 

Credit extended to the private sector and central government by the banking system, grew by 24.5 per cent in the year ending February this year compared with 6.9 per cent in February last year.

Personal loans accounted for the largest share of outstanding private sector credit, followed by trade, manufacturing and agriculture.

 

In the period under review, mining and quarrying attracted the highest credit than any other sector after posting a 25.1 per cent increase compared to 1.0 per cent in the same period last year and 10.9 per cent in the preceding month.

 

The personal loan increased by 24.3 per cent compared to 22.1 per cent of the corresponding period last year but slightly down by 24.6 per cent of the previous month.

 

The credit extended to trade activities rose by 18.3 per compared to a negative 11.4 per cent in the corresponding period last year and slightly down to 19.5 per cent in the previous month.

 

The credit to the manufacturing sector increased to 17.4 per cent in the reference period compared to a negative 4.9 per cent in the same period last year and 6.8 per cent registered in the preceding month.

 

Lending to agriculture activities was positive in the year ending February after recording 2.2 per cent compared to a negative 7.1 per cent in the corresponding period last year and a negative 4.8 per cent in the previous month.

 

Money supply growth was strong in February this year responding to accommodative monetary policy and private sector credit growth and is expected to be consistent with the target growth of 10 per cent for 2021/22.

 

The extended broad money supply (M3) grew by 17 per cent compared with 4.9 per cent in February last year.-Daily News.

 

 

 

Tanzania: Tic Touts Success of Investment Drive

THE Tanzania Investment Centre (TIC) announced on Wednesday that it has approved 85 investment projects between January and March this year, creating 12,191 job opportunities for Tanzanians.

 

TIC Executive Director, Dr Maduhu Kazi said in Dar es Salaam that the centre has registered impressive success in mobilising investment finances during the last three months and improving the image of Tanzania as a country to invest in.

 

He was presenting the centre's operations report on the third quarter (January-March 2022) of the fiscal year that started in July 2021.

 

"In January-March 2021, we approved 51 projects, which we are told have created 4,772 jobs.

During the same period this year we have approved 85 projects.

 

This is a 66.7 per cent increase com- pared to the work we done in similar period last year," Dr Kazi said

 

"This year's projects are projected to yield 12,191 job opportunities representing an increase of 155.47 per cent.

 

The 85 projects have a total value of 787.40 US dollars, while last year's 51 projects had a total value of 450.56 US dollars.

 

This year's project value of 787.40 US million dollars represents a 74.76 per cent rise in our performance," he added.

 

Dr Kazi also talked about four projects he described as important in strengthening the national economy and creating jobs.

 

The first project will be oil-to-gas project that will be executed by the Taqa Arabia Tanzania Limited and is expected to create 160 jobs.

 

It will produce gas for use by private, passenger, and heavy- duty trucks that are currently using petrol and diesel.

"The company will build 12 conversion centres in Dar es Salaam, to enable vehicles to switch from oil to gas. Two big centres will be completed between April and June, this year, and the project will have a 700,000-kilogramme annual gas production capacity," he explained.

 

Alotaib and Blak Bib Company Limited and Prime Cement are implementing two cement projects valued at 113 US dollars.

 

The projects are expected to produce 1,079,500 tonnes of cement a year and are projected to produce 1,097 direct jobs.

 

The third is an 11-million US dollars joint venture project between Tanzania and Canada which will set up an assembly plant in Kigamboni for HOWO vehicles.

 

It is expected to yield 320 direct jobs and will assem- ble 3000 units a year. The fourth will be edible oil project, valued at 42.68 million US dollars which will be executed by Organo Africa and it is expected to produce 700 direct jobs, with an annual production capacity of 182,000 tonnes.

 

The TIC Executive Direc- tor said the Centre has imple- mented a special programme for unearthing investment opportunities for Tanzanians along the Standard Gauge Railway (SGR).

 

He revealed that feasibility studies of eight projects have been completed with the sup- port of United Nations Development Programme (UNDP), namely projects in animal feed production, milk processing, preparation of base, land use plans and plots surveys, stone quarry, meat processing, live- stock fattening, parking facili- ties and pasture production. Dr Kazi also said the TIC took part in the Qatar, Doha Trade Symposium.

 

As a result, he said, 25 investors visited Tanzania between March 23 and 29th this year. TIC held tailor-made meet- ing with 24 companies between January and March this year and attended to 155 enquiries.

 

The centre also met mem- bers of the Tanzanian diaspora in Egypt and in Scandinavian countries. The TIC, he explained, held investment and trade symposia in Egypt (2) Kenya, Burundi, France, Belgium, Qatar, Turkey, South Africa and Algeria.-Daily News.

 

 

 

Tanzania: Big Boost for Agri Sector

PRESIDENT Samia Suluhu Hassan's call for commercial banks to lower interest on agricultural loans is paying off as more financial institutions are slashing lending rate to the sector to single digit.

 

Recently, President Samia made a plea for low interest rates to the agriculture sector when handing over 6,700 motorcycles to extension service officers in the capital city, Dodoma.

 

And NMB Bank Plc has heed the president's call as the bank slashed the lending rate to the agriculture sector to 9 per cent. Lowering the lending rate to agriculture is viewed as a fundamental step in supporting the government's grand plan to commercialise the sector and propel its contribution to economic growth.

The Sector contributes about 26 per cent to the Gross Domestic Product (GDP), 60 per cent to raw materials and 25 per cent of foreign currency.

 

Increasing affordable loans to the agriculture sector that employs over 70 per cent of the county's workforce is of paramount importance, according to agricultural stakeholders.

 

As per the Tanzania Banking Association (TBA), currently, the agriculture sector is accounting for less than 10 per cent of the loans portfolio mainly due to a lack of collateral.

 

It is from this backdrop that NMB Bank apart from cutting down the lending rate for the agriculture sector to 9 per cent also allocated 120bn/- more in loans for lending sectoral players in the whole value chain of farming, livestock keeping and fishing activities.

 

Speaking at the event to unveil the NMB initiative to lower lending rates to a single digit, Agriculture Minister Hussein Bashe said the talks with NMB on working closely with the ministry to transform agriculture have been fruitful.

The press briefing sought to announce the bank's agriculture financing plans and the investments it will be making to help sort out challenges facing the backbone of the national economy.

 

It also sought to announce issues agreed between the Ministry of Agriculture and NMB on how to revamp and modernise farming in the country.

 

Apart from concurring to increase the agriculture lending portfolio and reducing the price of the loans, NMB and the ministry agreed to address the challenge of post-harvest losses as a top priority.

 

He said the bank's move was in line with the aspirations of the recently launched "Agenda 10/30" agriculture renewal initiative that seeks to propel the sector's growth by 10 per cent come 2030.

 

It also augurs well with President Samia's aspiration to reduce interest rates on loans and promote credit intermediation.

"Now NMB becomes the second bank after CRDB, to peg the interest rate at less than 10 per cent.

 

You have however, gone an extra mile by agreeing to finance the construction of the warehouses, which will reduce the exorbitant storage costs our farmers currently incur to store their produce," he said.

 

He added: "Since the gov- ernment budgets alone are not enough, we have adopted the blending system to address challenges in the agricultural sector and that's why we have had long engagements with NMB to see how we can jointly sort out these issues," Revealing the developments here on Tuesday, NMB Chief Executive Officer Ruth Zaipuna said the agricultural lending interest rate was first re- duced by the bank to 10 per cent since quarter three of last year to make the loans more affordable.

 

"As of today, 80bn/-of the 100bn/- we had set aside for loan financing in the agricultural, livestock and fishing sectors has been borrowed but we have agreed with the Ministry of Agriculture to allocate more funds for agricultural credit," Ms Zaipuna said.

 

"From May 1, 2022, we will make available another 100bn/- for that purpose and we are reducing the interest rate from 10 per cent to a single digit of 9 per cent to attract more bor- rowers," she said.

 

Ms Zaipuna said NMB has initially allocated 20bn/- to help finance the construction of agricultural storage facilities across the country.

 

With that new line of credit, the funds NMB has allocated for affordable agricultural loans added up to 220bn/- since last October.

 

"It is, therefore, my hope that farmers, livestock keepers, fishers, traders and entrepre- neurs in this sector will capitalise on this opportunity to go for more affordable loans to boost their incomes and build our country," she noted.

 

Recently the bank revealed that in the past five years it had injected over 1.3tri/-into the farming economy which has also been used to finance supportive activities in the sector's value chain.-Daily News.

 

 

 

Uganda: Economy Stutters in March, Outlook Remains Positive

Kampala, Uganda — Released today, the index shows that conditions improved towards the end of the opening quarter of the year, with output, new orders and employment all rising again in March.

 

However, there are ongoing inflationary pressures and signs that this had acted to deter customers in some cases.

 

Ronald Muyanja, the Head of Trading, Global Markets at Stanbic Bank Uganda said, "The absence of restrictions related to the Covid-19 pandemic and signs of improving customer demand helped Ugandan firms to secure greater new order volumes and expand their business activity in March. But that said, there were some reports that rising prices had acted to dampen demand somewhat."

The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 indicate deterioration.

 

The monthly survey, sponsored by Stanbic Bank and produced by S&P Global, has been conducted since June 2016. It covers the agriculture, industry, construction, wholesale & retail and service sectors. The headline figure derived from the survey is the Purchasing Managers' Index (PMI) which provides an early indication of operating conditions in Uganda.

 

Ferishka Bharuth, Economist - Africa Regions at Stanbic Bank said, "Uganda's PMI still remains in expansionary Employment rises for third month running territory at 51.9 in March though lower than 55.7 in February. The absence of Covid-19 restrictions has supported some improvement in consumer demand, but rising prices seem to also have restrained demand. Higher prices were largely a function of increasing input costs, with companies increasing their selling prices for the seventh consecutive month."

Output increased across the industry, services, and wholesale & retail sectors, but fell in agriculture and construction. Advertising efforts, good quality products and demand improvements all acted to support a further increase in new orders during March. New business has now risen in eight successive months. As was the case with output, however, there were some signs that customers were finding it more difficult to finance orders.

 

In contrast to the picture for total new business, new export orders dropped at Ugandan companies at the end of the first quarter of the year. New business from abroad has now decreased in 18 of the past 19 months.

 

Higher prices were primarily the result of increases in purchase costs. Purchase prices continued to rise in March, with more than 41% of respondents signaling an increase in their costs of purchases during March. In particular, fuel was widely reported to have risen in price, while there were also mentions of higher costs for cement, ink, paper, soap, sugar, transportation and utilities. In turn, companies raised their own selling prices for the seventh month running.

 

Further increases in employment, purchasing activity and inventories were recorded in response to higher new orders, helping companies to keep on top of workloads

 

and deplete outstanding business.

 

Ugandan companies responded to higher new orders by taking on additional staff during March, the fourth time in the past five months in which job creation has been recorded. Agriculture was the only sector to buck the wider trend and post a decline in employment.

 

Companies remained optimistic that output will increase over the coming year, with close to 79% of firms expressing a positive outlook.

 

According to respondents, confidence reflected expected growth of new orders and hopes of greater stability in economic conditions and commodity prices.-Independent (Kampala).

 

 

 

Somalia Seeks to Kickstart Oil and Gas

Somalia is one of the last major unexplored petroleum frontiers globally. In the past, it attracted the attention of international oil and gas majors - ExxonMobil, ConocoPhillips, BP, Shell, Chevron and ENI all of whom held large concession agreements in the country. 30 years of a tragic civil war has led to a protracted hiatus in petroleum exploration in Somalia since then.

 

While capital expenditure in the oil and gas industry has been declining in recent years, according to the African Energy Chamber’s latest report, spending trends within Africa are expected to increase materially in 2022 and beyond. Somalia is well positioned to benefit given its large, prospective offshore basin, positive legal and regulatory developments and given the recent increase in oil prices.

 

The security situation in Somalia remains a concern, but offshore the situation regarding piracy has been transformed with no incidents reported in the UN Secretary-General’s latest report covering the period 1st November 2020 to 31 October 2021. The African Union Mission in Somalia (AMISOM) has supported the country’s government in the fight against al-Shabaab for the past 15 years with immense progress being made.  It has recently been agreed that this mission will be replaced by a new mission in place to the end of 2024.

 

Meanwhile, oil technologies, especially in offshore drilling, have significantly advanced. In recent years, rich oil and gas reserves have been discovered in neighbouring East African countries, including Mozambique, Uganda, Tanzania and Kenya.  However, up until now these potentially huge offshore discoveries have remained largely undeveloped.

 

Somalia has the chance to surpass the success of its neighbours. The country’s offshore waters may contain at least 30 billion barrels of oil reserves, according to Spectrum Geo, a company that conducted a seismic study of Somalia’s offshore basins in 2014-2015.

 

Since the central government was re-established in 2012, Somalia has created all the necessary legal frameworks to re-attract international investors. This was achieved under the guidance of respected international institutions, including the World Bank, the International Monetary Fund and African Development Bank to ensure compliance with global best practices.

 

The Petroleum Law, passed in 2020, established the Somali Petroleum Authority, a public body tasked with regulating the industry and attracting international investors to conduct exploration in the country. It includes representatives from the Federal Government and Regional member states that have the necessary qualifications to collaboratively oversee petroleum exploration and development.  It is wholly focused on increasing exploration to build a sustainable new industry for the people of Somalia, working with the international partners the country needs to build the industry.

 

In the development of the Petroleum Law, Somalia approved a Model Production Sharing Agreement that determines the rules for international petroleum companies to operate in the country. Investors can sign a 3-year exploration licence with the possibility of extension. If they make a discovery, they will submit a production program to the Somalia Petroleum Authority. Post the recovery of development and operating costs, investors share oil revenues with the Federal Government and Regional Member States.

 

In 2018, the Federal Government and Regional Member States signed a Revenue Sharing Agreement which provides that government revenue from petroleum operations and all associated taxes are shared between federal, regional and local governments in certain proportions. This equitable agreement constitutes a critical milestone and is a considerable achievement, given the legacy of civil war in Somalia.

 

In 2020, a legacy payment of $1.7m for 30 years of surface rental from Exxon and Shell was shared in accordance with the revenue sharing agreement. This was an important indication of Somalia’s commitment to transparency and honouring concession agreements signed before the civil war to ensure the long-term commitment of investors to Somalia.

 

Somalia is located in close proximity to the oil rich Gulf states and has similar geological characteristics to that of Kenya, Tanzania and Mozambique.

 

Whilst many of the world's leading oil and gas companies are increasingly committing themselves to energy transition, investment in new field development is absolutely critical to ensure energy security across the globe, particularly given the recent surge in international oil prices to over $100 a barrel.  Given the encouraging seismic data, an established petroleum authority and a determination to develop a flourishing industry for the benefit of its population, Somalia is well positioned to become the next exploration hotspot.

 

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2022

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

 

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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