Africa

Uganda’s chief legal officer urged the Finance Ministry to refrain from renegotiating the terms of a $200 million Chinese loan as it is able to meet its debt obligations, Bloomberg News reported. The agreement signed in 2015 with the Export-Import Bank of China to fund the expansion of the Entebbe Airport came with several contentious clauses, including one that could see the lender take ownership of the facility in the event of a default.

South African Airways (SAA) said an amended business rescue (BR) plan for its low-cost subsidiary Mango was approved at a meeting of creditors on Thursday, paving the way for the airline to seek an equity partner, Reuters reported. "According to the BR practitioners the process to secure a successful bidder, inclusive of concluding the relevant acquisition agreements, is anticipated to be completed by the end of March 2022," SAA said in a statement. Business rescue is a form of bankruptcy protection in South Africa.

South Africa’s Government Employees Pension Fund, the biggest investor in Eskom Holdings SOC Ltd. debt, said there were significant hurdles to a proposal that its bonds be converted to equity to help rescue the struggling power monopoly, Bloomberg News reported. The initiative, which has been backed by the country’s biggest labor unions, was first examined by the Public Investment Corp., which manages most of the pension fund’s investments, but the GEPF has not been formally approached about a potential swap, its investment chief said.

The International Monetary Fund on Tuesday said that it was precluded from providing financial support to Zimbabwe due to its "unsustainable debt and external arrears," and any lending arrangement would require a clear path to a comprehensive restructuring of the African country's external debt, Reuters reported. The IMF said that its staff completed a virtual mission to Zimbabwe from Oct. 16 to Nov. 16, and noted "significant" efforts by authorities there to stem inflation, contain budget deficits and reserve money growth.

Kenya’s debt service costs, which are expected to surge by 22% this fiscal year, are set to rise even further as the East African economy’s currency sinks to all-time lows against the dollar, Bloomberg News reported. Kenya’s Treasury expects to spend a record 1.17 trillion shillings ($10.4 billion) in the year through June on loan repayments, equivalent to about two-thirds of its revenue, according to the parliament’s budget office. This will be compounded by a 2.6% depreciation by the Kenyan shilling so far this year, after the currency fell to 112.06 per dollar.

Tanzania’s central bank is targeting lenders’ employees deemed responsible for approving non-performing loans in a bid to crack down on losses and boost credit to the private sector, Bloomberg News reported. An employee who issued loans fraudulently or without following due procedures will face legal action, Bank of Tanzania Governor Florens Luoga said in a statement. The central bank “will blacklist the concerned employees and bar them from being employed in any bank or financial institution operating in Tanzania,” Luoga said.

The International Monetary Fund said on Thursday it was continuing to engage on a technical basis with Ethiopia despite a worsening conflict in the country, but given uncertainty, it has not begun discussions on a potential IMF financing program, Reuters reported. IMF spokesman Gerry Rice told a news briefing that the Fund is watching developments closely in Ethiopia, as well as in Sudan. It is too soon to tell how political developments related to a late October coup will affect Sudan’s request for debt relief and potential IMF disbursements in 2022, Rice said.

Kenya’s shilling depreciated to its weakest level against the dollar on record as increased demand for foreign exchange added pressure on the currency of East Africa’s largest economy, Bloomberg News reported. The shilling weakened as much as 0.3% to 111.63 per dollar before paring the loss to trade at 111.49 by 5:00 p.m. in the capital, Nairobi. The shilling depreciated for a fifth straight month in October, its worst stretch of losses in a year, according to data compiled by Bloomberg.

Zambia hopes to secure a support programme from the International Monetary Fund by the end of the month, the country's Finance Minister Situmbeko Musokotwane said on Tuesday, Reuters reported. "Zambia's debt problem is a huge problem," Musokotwane said during a webinar. "By the end of this month we should reach a staff level agreement with the IMF". Zambia - one of the world's largest copper producers - became Africa's first COVID-era sovereign default last year although the problems had been building for years due to chronic government overborrowing.

Thirteen East African economies are projected to collectively expand by 4.1% in 2021 from 0.4% last year, supported by a global recovery, according to an African Development Bank report, Bloomberg News reported. East Africa is the only region on the continent to have avoided a recession in 2020, thanks to agriculture, sustained public spending on large infrastructure projects, and increased regional economic integration, according to an AfDB report published on Thursday.