Africa Briefs

13 February 2020 | Economics

Uganda to borrow big from China

Uganda will borrow up to 108.5 million euro from a Chinese lender to fund construction of three roads that are key to plans to begin oil production in the East African country.

Along with others in Africa, Uganda has received large credit lines from China in recent years as part of the Asian giant's so-called Belt and Road Initiative, aimed at rebuilding the old Silk Road connection with Asia, Europe and beyond.

Construction of the so-called oil roads would accelerate efforts to commence crude oil production in Uganda, which has failed to take off 14 years after crude reserves were discovered in the country's west.

The money will be borrowed from China's Industrial and Commercial Bank of China, according to a statement issued by the government that listed decisions taken at a cabinet meeting on Monday.

Uganda's public debt, the IMF calculates, is expected to hit the key benchmark of 50% of GDP as early as the 2021/22 financial year. – Nampa/Reuters

Nigeria considers Eurobond issue

Nigeria is considering a Eurobond sale of between US$2.8 billion and US$3 billion to help partially fund its 2020 budget after president Muhammadu Buhari wins approval from parliament, the adviser to the country's finance minister said on Tuesday.

Nigeria's Eurobond plan comes after West African neighbour Ghana sold a US$3 billion Eurobond last week that was five times oversubscribed as investors seeking high-yields demand debt despite the impact a coronavirus outbreak in China could have on its major trading partners in Africa.

Buhari signed a record 10.58 trillion naira (US$35 billion) budget for 2020 into law last December, paving the way for a likely return to the international debt market as Nigeria struggles to shake off the impact of a 2016 recession it emerged from the following year.

Nigeria's budget assumes a deficit of 1.52% of the estimated gross domestic product - representing around 2.18 trillion naira (US$7.13 billion) to be financed through foreign and domestic borrowing.

The West African country has been borrowing to fund growth after the 2016 recession slashed income and weakened its currency. In December, ratings agency Moody's downgraded Nigeria's outlook to negative from stable, citing increased risk to government revenue. – Nampa/Reuters

Chinese eyes power plant on the Nile

A Chinese firm has applied to Ugandan authorities for a licence to develop a US$1.4 billion hydropower plant that could potentially expand the country's generation capacity by 40% according to a regulatory official and papers seen by Reuters.

The firm, POWERCHINA International Group Limited (PIGL), wants to develop the Ayago Hydroelectric Power Station, located on a section of River Nile between the lakes Kyoga and Albert, according to its licence application.

The Ayago power plant will have a capacity of 840 megawatts (MW) and, when successfully developed, would be Uganda's largest power plant.

The Karuma hydroelectric dam, upstream of Ayago and due to be completed early this year by China's Synohydro Corporation, is currently Uganda's largest power project.

Uganda is one of the six countries that signed the 2010 Cooperative Framework Agreement (CFA) that allows upstream Nile basin countries to develop projects along the river without Egypt's consent as it was in a previous colonial-era agreement on use of Nile waters. – Nampa/Reuters

Algeria's public debt rises to 45% of GDP

Algeria's public debt rose to 45% of gross domestic product at the end of last year from a level of 26% in 2017, and the country's economic situation is "delicate", prime minister Abdelaziz Djerad said on Tuesday.

Addressing lawmakers, Djerad blamed mismanagement and corruption during the past years for worsening financial problems in the OPEC-member nation, pledging to overcome the situation through reforms.

"Our country has experienced catastrophic mismanagement in recent years which led to the squandering of its wealth," Djerad said. The government will carry out "deep reforms to get the country out of this critical political and economic situation," he said.

Algeria has been under financial pressure after a fall in energy earnings and foreign exchange reserves amid growing demands from the country's 43 million people to improve living standards.

Several senior officials and prominent businessmen have been jailed on corruption charges since the eruption of mass protests that ousted veteran president Abdelaziz Bouteflika who sought a fifth term in office. – Nampa/Reuters

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