Thursday, June 20, 2024

Ethiopia debt service pause contingent on IMF deal by March 31, 2024 – Paris Club

Ethiopia’s agreement with its bilateral creditors, other than China, to suspend debt payments until 2025 could be voided if the country does not secure an International Monetary Fund (IMF) loan by March 31, 2024, the Paris Club of developed creditor nations said.

The debt service standstill for 2023 and 2024 applies to loans agreed before November 10 and will see suspended payments repaid from 2027 to 2029 after a grace period from 2025 to 2026, the Paris Club said in a statement, noting that the deal was reached on November 23rd.

Ethiopia’s economy is under pressure from double-digit inflation and foreign currency shortages, 13 months after the federal government and forces from the northern Tigray region signed a truce to end a two-year civil war.

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The government requested a debt rework in early 2021 under the G20’s Common Framework restructuring process, but progress was initially delayed by the conflict.

“This debt standstill… will provide time-limited liquidity relief ahead of discussions on a wider debt treatment,” said the Paris Club, which is staffed by French Treasury officials and acts as a secretariat for bilateral creditors.

“Those discussions will gain momentum as soon as the Ethiopian authorities and the IMF have agreed the parameters for an IMF program.”

If Ethiopia does not get an IMF staff-level agreement by March 31, the official creditor committee “reserves the right to declare the suspension null and void”, the Paris Club said.

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The Paris Club said 10 of its members were on Ethiopia’s official creditor committee, which is co-chaired by France and non-Paris Club member China.

The IMF did not immediately respond to a request for comment, but a spokesperson in November said the deal provided “welcome relief to acute balance of payments pressures in the near-term.”

“Discussions with the authorities on IMF support for their economic reform program are ongoing,” they added.


IFC launches ESG Program in Ethiopia

IFC has formally launched a new program promoting environmental, social, and governance (ESG) best practices in Ethiopia, dubbed the Integrated ESG program, aiming to boost sustainable business growth and private sector investment in the country with a focus on the banking, manufacturing, and agribusiness sectors.

The program—IFC’s first focused on ESG in Ethiopia—will work with private sector actors to better understand and adopt ESG standards and codes of conduct. It will also support banking and financial market regulators, including the Central Bank of Ethiopia and the Ethiopian Stock Exchange, to improve their capacity to integrate, monitor and enforce ESG requirements.

Currently, there are limited ESG requirements for the financial sector, and with the imminent launch of the Exchange, ESG reporting will be a key consideration for companies looking to list.

As part of the program, IFC signed partnership agreements with the Accounting and Auditing Board of Ethiopia (AABE), the Addis Chamber of Commerce and Sectoral Association (AACCSA) and the Ethiopian Bankers Association (EBA) to develop Ethiopia’ first ESG Code and sector specific guidelines.

“Sustainability is critical for companies, their customers, surrounding communities, broader stakeholders, and the environment,” said Madalo Minofu, IFC’s country manager in Ethiopia. “Strong ESG practices and regulations are crucial to supporting the development of stronger, more sustainable businesses, and creating more jobs and opportunities in Ethiopia.”

Brook Taye (PhD), director general of the Ethiopian Capital Market Authority, stated that the Integrated ESG program plays a key role in readying Ethiopian companies for sustainable and inclusive growth.

“The program will be instrumental in understanding and addressing current gaps in ESG practices and is poised to play a pivotal role in shaping the future landscape of Ethiopia’s capital market,” Brook said.

IFC is a global leader in setting ESG standards for the private sector, with a proven track record and a globally developed corporate governance methodology for assessment.

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Over the past five years, IFC has invested and mobilized more than USD 105 million to support Ethiopia’s agribusiness, manufacturing and financial sectors.


Ethiopia’s leather industry poised to benefit from AfCFTA market, says UNECA

The United Nations Economic Commission for Africa (UNECA) has highlighted the immense market opportunities that the African Continental Free Trade Area (AfCFTA) presents to Ethiopia’s leather industry.

UNECA’s African Trade Policy Centre (ATPC), in collaboration with the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) and the Ethiopian Leather Industries Association (ELIA), organized a workshop in Addis Ababa to discuss the potential and challenges associated with the AfCFTA for the Ethiopian leather sector.

The workshop brought together various stakeholders to explore the advantages offered by the AfCFTA to Ethiopia’s leather industry, identify existing challenges, and provide a platform for resolving them.

With Ethiopia being home to Africa’s largest livestock population, it enjoys a plentiful supply of raw materials for the leather sector.

According to UNECA, the leather industry has significant potential to boost export revenues, create job opportunities, empower women economically, and contribute to the country’s overall development. As a State Party to the AfCFTA, Ethiopia’s leather products gain access to a vast and expanding market of over 1.4 billion people, with reduced trade barriers and duties.

The workshop, organized as part of ATPC’s pilot project to collaborate with the private sector, aimed to support successful implementation of the AfCFTA Agreement.

Stephen Karingi, director of ECA’s Regional Integration and Trade Division, emphasized Ethiopia’s resource endowment and its history of producing processed leather products, positioning the country as a potential competitive player in the emerging African single market.

Tages Mulugeta, representing Ethiopia’s Ministry of Trade and Regional Integration, highlighted the transformative potential of AfCFTA for trade governance in Africa and stressed the significant opportunities available to Ethiopia in the leather industry.

The workshop drew over 40 participants, including representatives from Ethiopian government agencies, the private sector, international organizations such as FAO, UNCTAD, and UNIDO, as well as regional stakeholders.


Flooding in Ethiopia displaces thousands, causes extensive damage

Since late October, an estimated 1.5 million people in Ethiopia have been affected by severe flooding, resulting in over 600,000 people being displaced, as reported by the Office for the Coordination of Humanitarian Affairs (OCHA).

The floods have caused significant destruction to crops, livestock, and critical infrastructure, with houses, shops, schools, and agricultural lands submerged. Furthermore, the rise in waterborne diseases such as cholera, malaria, and dengue fever has added to the health risks faced by the affected population.

Adding to the challenges, the Horn of Africa has been grappling with five consecutive seasons of severe droughts, leaving many communities vulnerable.

Recognizing the urgency of the situation, Resident and Humanitarian Coordinator Ramiz Alakbarov, along with the head of the Ethiopian Disaster Risk Management Commission, UN representatives, and NGO partners, recently conducted a visit to the flood-affected areas to assess the situation on the ground and explore ways to enhance relief efforts.

While the UN and its partners are supporting the government’s response by providing essential aid such as food, shelter, water, sanitation, and logistical support, the assistance provided thus far falls short of meeting the growing needs.

In addition to addressing immediate humanitarian concerns, there is a pressing need for increased funding to help communities adapt to climate change and build resilience.

The Humanitarian Response Plan for Ethiopia has called for nearly USD four billion this year, but it remains only one-third funded, with USD 1.3 billion secured so far.

Urgent action is required to bolster logistical capacity and secure additional funding in order to address the immediate and long-term challenges faced by flood-affected communities and support their adaptation to a changing climate.


ECA convenes member states to strengthen development planning processes

Development planning experts from countries across Africa concluded a Peer-Learning Workshop to exchange ideas on strengthening development planning processes in support of the implementation of SDGs and Agenda 2063. The workshop, organized by the Macroeconomics and Governance Division of the ECA, was also attended by development partners and representatives from various divisions within the Economic Commission for Africa (ECA).

The workshop, held in Addis Ababa, was designed as a platform for the experts to discuss emerging issues in development planning and map solutions to these issues, share experiences and best practices in the development planning process, take stock of the utility and efficacy of the ECA’s Integrated Planning and Reporting Toolkit (IPRT) Platform, and discuss ways in which ECA can improve its support to member states.

Adam Elhiraika, the director of the Macroeconomics and Governance Division at ECA emphasized the significance of development planning in the context of resource utilization, mobilization, allocation, monitoring, and reporting.

The State Minister of Planning and Development of Ethiopia, Nemera Gebeyehu, stressed the importance of development planning and appreciated the ECA for facilitating a platform for cross-country learning.

He noted that the platform will enable Member States to assimilate best practices from one another, taking into account the specificities of their respective contexts. His Excellency moreover requested ECA to adapt the implementation of the IPRT to align with the unique circumstances of each country.

In their feedback, the Member States and development partners indicated a strong desire for the workshop to occur frequently, and to involve participants from more Member States.

Member States that had used the IPRT emphasized the efficacy of the tool and highlighted its superiority in comparison to other tools previously utilized, generating much interest among countries that had not yet adopted the tool.


Nairobi to host Digital and Technology Week

Nairobi is preparing to host the eighth edition of the Digital and Technology Week from December 4 to 6, 2023, organized by Go Gaga Experiential.

The event aims to provide industry insights, explore emerging trends, and drive growth within the digital and technology sector. Attendees will include corporations, government entities, media outlets, and technology companies from both local and international backgrounds.

The conference will focus on the impact of digital technologies on society and will cover topics such as digital marketing, fintech, cybersecurity, and innovation.

Rita Njuguna, co-founder and director of Go Gaga Experiential, emphasized the positive effects of digitization and technology on the economy and livelihoods.

The adoption of digital technologies in Kenya has improved access to information, education, healthcare, and other services, benefiting lives and contributing to economic development.

Since its inception, the Digital and Technology Week has seen active participation from over 800 companies, engaging more than 1000 thought leaders and attracting over 1500 attendees.

Despite Kenya’s leadership in digital transformation on the continent, Norah Muthoni, CEO of Go Gaga Experiential, highlighted the challenge of low digital literacy levels, particularly in rural areas, hindering inclusive digital transformation and participation in the digital economy.

According to Accenture’s Africa GDP Forecast, Kenya leads in digital transformation, with its digital economy contributing 7.7 percent to the GDP. The report also predicts that by 2025, Kenya’s digital economy will contribute approximately Sh1.4 trillion, equivalent to 9.24% of the GDP.

(The Standard)

Somalia’s economic growth hindered by shocks, but outlook improves

Somalia’s economic growth has been severely impacted by recurrent shocks, including a prolonged drought and global commodity price surges. The drought devastated crops, livestock, and exports, leading to food and water shortages and causing many people to flee their homes. As a result, GDP growth slowed to 2.4 percetn in 2022 from 3.3 percent the previous year.

However, the World Bank projects a gradual improvement in Somalia’s economic outlook, with GDP growth expected to reach 3.1 percent in 2023 and 3.8 percent by 2025.

These improvements are likely to result in modest per capita income growth. The completion of reforms for Heavily Indebted Poor Countries (HIPC) is expected to further enhance growth prospects, but significant risks such as climatic shocks, security threats, and global economic shocks remain.

The World Bank emphasized the importance of continued reform and an enabling environment for foreign investment in achieving inclusive economic growth and prosperity.

Despite economic challenges, Somalia’s public finances have strengthened due to ongoing reforms, enabling increased expenditure on social programs and grants. Ongoing economic governance reforms have positioned the country favorably to achieve the HIPC Completion Point.

Water management is a critical focus for Somalia’s transition from fragility, with access to water playing a central role in human development, urban development, job creation, and long-term economic growth. Effectively utilizing water resources and prioritizing water in the integrated economic policy is crucial for Somalia’s resilience and prosperity.

(APO Group)

AU moves to recover Africa’s ‘stolen’ assets

The African Union (AU) has officially adopted the Common Africa Position on Asset Recovery (Capar) during the 45th AU Advisory Board Against Corruption meeting in Arusha, Tanzania.

Capar is an instrumental framework for recovering stolen assets from Africa.

The AUABC Executive Secretary, Charity Nchimunya, stated that Capar is already fully operational and is a critical step in combatting illicit financial flows and preventing the transfer of assets out of the continent.

Capar’s mandate, endorsed by the AU in 2020, is to identify stolen assets from Africa held abroad and facilitate their recovery in collaboration with anti-graft bodies in countries with high levels of corruption.

The mechanism will operate on four pillars: asset detection and identification, asset recovery and return, asset management, and cooperation and partnership.

It aims to assist in repatriating and effectively managing Africa’s assets for the benefit of its citizens while respecting member states’ sovereignty and domestic laws. With Capar in place, the AUABC has developed recovery guidelines, offering hope for the return of stolen treasures hidden in foreign banks. Cooperation among countries is seen as crucial to recovering and restoring these assets.

 (The EastAfrican)

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