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IMF approves Rwanda’s Policy support instrument
KIGALI – The Executive Board of the International Monetary Fund (IMF) today completed the seventh and final review under Rwanda’s Policy Support Instrument (PSI) and approved a new three-year PSI.
In completing the review, the Board approved the authorities’ request for a waiver for non-observance of the continuous assessment criteria related to the ceiling on contracting non-concessional borrowing (NCB).
The Executive Board took note of Rwanda’s cancellation of the current PSI, which was scheduled to expire in January 2014. The IMF’s framework for PSIs is designed for low-income countries that may not need financial assistance, but still seek IMF advice, monitoring, and endorsement of their policy frameworks. Members’ programs under PSIs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners.
The authorities’ program aims to lay the foundations for strong and inclusive growth, with a strong emphasis on economic transformation; rural development; productivity and youth employment; and accountable governance, supported by macroeconomic stability and improved public financial management. Rwanda’s program will build on the progress made under the previous PSI-supported program and is aligned with the objectives of the new economic development and poverty reduction strategy.
The Executive Board approved a three-year PSI for Rwanda on June 16, 2010. On June 17, 2013, the Executive Board completed the sixth review and approved an extension of the PSI by seven months to end-January 2014.
Following the Executive Board’s discussion of Rwanda, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
“The Rwandan authorities are to be commended for the strong implementation of their economic program under the Policy Support Instrument. Prudent and inclusive policies, good governance, and support from development partners have contributed to sustained economic growth and poverty reduction.
“Going forward, fiscal policy will need to focus on domestic revenue mobilization to finance the authorities’ ambitious development goals. Aligning spending with available resources and judicious selection and financing of investment projects will minimize risks to the budget. It will also be important to strengthen debt management capacity and follow a prudent approach to new borrowing to entrench long-term fiscal and debt sustainability. The central bank will need to closely monitor rising inflationary pressures and adjust the policy stance as needed while maintaining exchange rate flexibility. Efforts to increase financial inclusion and bolster the regulatory and supervisory frameworks should also be accelerated.
“The authorities’ new poverty reduction strategy aims to sustain high and inclusive growth. The authorities should maintain their commitment to prudent policies and pursue their broad reform agenda to tackle structural impediments. In particular, further reducing the costs of doing business and addressing infrastructure deficiencies would support economic diversification, foster private sector development, and broaden the export base. The renewed focus on integration at the East African Community level should help in this regard. Finally, continued emphasis on policies that will further assist poverty reduction efforts is welcome.”
Rwanda’s economic performance over the last decade has been an economic success story. Its macroeconomic performance has generally outperformed its peers in the region. Prudent fiscal and monetary policies geared toward maintaining macroeconomic stability, coupled with a strong emphasis on building institutional capacity, promoting good governance, and creating a business friendly environment, contributed to low inflation and average annual economic growth in excess of 8 percent over the last decade. Public debt remained modest and reserve buffers kept the economy resilient to shocks.
However, Rwanda faces some key vulnerabilities, including its high dependence on donor aid, low government revenue, narrow export base, and weak infrastructure, with resulting high costs of doing business that arise from relatively high energy and transport costs. For example, recent economic developments have been strongly influenced by the suspension and delays of aid flows last year, and their eventual resumption this year.
Reflecting the slowdown in the first half of the year, growth for 2013 is projected to be 6.6 percent. For 2014, growth of 7.5 percent is projected, supported by a recovery in agriculture and a pick-up in services. Headline inflation is projected to rise to 6.5 percent by end-2013, reflecting rising food prices because of a relatively poor second harvest.
The objectives of the new PSI program are centered around four key pillars:
Private sector development: Strong private sector development is an important pillar of the authorities’ economic transformation strategy. In this regard, the government intends to continue its investment program in strategic infrastructure to reduce the cost of doing business while deepening its reforms to continue improving the business environment.
Exports promotion: The new export strategy is aimed at increasing export earnings through broadening of the export base. The strategy focuses on a limited number of products with a view to diversify into non-traditional exports that are particularly agro-based while taking advantage of traditional exports to extend production and add value.
Domestic resource mobilization: In view of the important investment spending that is needed, one of the main priorities will remain creation of fiscal space through accelerated domestic resource mobilization and rationalization of spending.
Financial sector development: Financial sector development is the fourth pillar of the program. Financial inclusion is seen as a means to further ensure connection of the population to the market while increasing monetization of the economy. The financial reforms and the strengthening of capital markets are expected to allow mobilization of cheaper resources and support private sector investment.
The need for stronger regional collaboration, government-private sector synergy, and innovative market solutions to unlock Africa’s economic potential has been brought to the fore.
Group CEO of the Nigerian Exchange Group Plc (NGX Group), Temi Popoola, shed light on the transformative potential of Africa’s capital markets at the launch of the Ethiopian Securities Exchange (ESX).
The NGX Group’s strategic investment in ESX underscores its leadership in advancing Africa’s capital market infrastructure. “The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape,” Popoola stated. “ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth.”
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Expounding on NGX Group’s investment rationale, Popoola highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation. “Our partnership transcends traditional investment parameters,” he explained. “It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development.”
Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation. He emphasized the importance of responsible market opening to attract local and continental capital. “By following this path, Ethiopia can become a financial hub in Africa,” he remarked.
Prime Minister Abiy Ahmed lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization. “Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X. “This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity.”
CEO of the Ethiopian Securities Exchange, Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group. “We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said. Kassahun also emphasized the value of NGX Group’s expertise in shaping ESX’s growth and success.
Drawing from NGX Group’s six decades of experience, Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities. “With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
The Office of the Auditor-General of the Federation has uncovered financial irregularities amounting to ₦514 billion in the 2021 operations of the Nigerian National Petroleum Company Limited (NNPC Ltd).
The revelations were contained in a comprehensive audit report highlighting non-compliance and internal control weaknesses within Ministries, Departments, and Agencies (MDAs) during the 2021 financial year.
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Breakdown of Infractions
The audit detailed four major financial discrepancies within NNPCL:
“Irregular Deductions: A total of ₦343.64 billion was deducted from domestic crude oil sales at source without proper documentation.
“Sinking Fund Deposits: ₦83.66 billion, categorized as miscellaneous income, was retained in a sinking fund account.
“Unauthorised Refinery Deductions: ₦82.95 billion was deducted from federation revenue purportedly for refinery rehabilitation.
“Unsubstantiated Payments: ₦3.75 billion was flagged for transactions related to petrol sales that lacked proper verification.
The Auditor-General’s report stated that these financial activities violated the 1999 Constitution and the Financial Regulations Act of 2009, underscoring significant lapses in compliance with statutory guidelines.
According to the report, NNPCL generated ₦484.73 billion from domestic crude oil sales in March and May 2021.
However, ₦343.64 billion was deducted for various purposes, including “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Maintenance.”
The deductions were made unilaterally by NNPCL without adequate documentation or justification.
Additionally, the report flagged ₦50 billion of the net payable amount for May 2021 as unaccounted for, creating a significant gap in the federation’s revenue.
“Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that the sum of ₦484.73bn was the gross amount generated for the sale of domestic crude for the months of March and May 2021.
“The sum of ₦343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, the reasons for the deductions could not be justified by the management.”
On the unremitted ₦50 billion from May 2021, the report noted: “In the month of May, the net payable that could have been remitted ought to have been ₦127.075bn, but only the sum of ₦77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account, which has remained unaccounted for.”
The report attributed these anomalies to weaknesses in NNPCL’s internal control systems, warning of the risks they pose to public funds.
It read, “The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation revenue, diversion of public funds, or misapplication or misappropriation of funds.”
The success of the maiden edition of the Lagos Shopping Festival (LSF), Africa’s first 72-hour non-stop commerce and entertainment event has been credited to the Governor of Lagos State, Babajide Sanwo-Olu.
This is the view of Managing Director/Chief Strategist of Chain Reactions Africa Ltd, Israel Jaiye Opayemi, one of the main organisers of the event.
According to Opayemi, though Chain Reactions Africa conceptualised the event, the festival could be rightly described as the Governor’s baby and owes its success to his leadership. “Firstly, the Lagos Shopping Festival could not have come to fruition if the Governor did not buy into our audacious plan when we first presented the idea to him during the Covid-19 pandemic in 2020. Secondly, it was the Governor’s exemplary leadership of the project as its Chief Marketing Officer which attracted the buy-in of key sponsors like Zenith Bank, Tolaram Group, First Bank Plc, and Guinness Nigeria Plc,” Opayemi revealed.
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While the duo of Zenith Bank and First Bank provided their bank on wheel platforms for buyers at the Lagos Shopping Festival, they also supported the Vendors with special Point of Sale Machines with which to process payments from buyers. The banks were also seen marketing their diverse banking products to guests within the shopping arena.
For Tolaram, it was a time to support the citizens and give back to society. Guests at the Lagos Shopping Festival were freely given some of the products of the group such as PowerOil, Indomie and Kellogg’s packaged into goodie bags and given out to prospective buyers at the shopping arena. The Children’s Arena was however activated by Indomie with the children entertained by Santa Claus within a well-equipped arena manned by the Indomie Brands team and the Lagos State Safety Marshalls. The children were daily treated to free Indomie meals daily and given various gifts to go home with.
On its part, Guinness Nigeria came through as the real life of the Nigerian party by organizing product sampling activation for the teeming guests at the festival using brands such as Singleton, Johnnie Walker, Ciroc, Don Royale and Captain Morgan to deliver pleasant experiences to guests aside from Guinness and Malta Guinness.
While unveiling the identity of the festival last month, Governor Babajide Sanwo-Olu had thanked the management of Zenith Bank Plc, Tolaram Africa Group, Guinness Nigeria Plc and First Bank of Nigeria for supporting the idea of a Lagos Shopping Festival, describing it as a value addition on the state’s tourism calendar and the overall efforts to grow the State’s GDP. The Governor further said, “I must specially acknowledge your pioneering sponsorship role. It is easy for a corporate sponsor to jump on the sponsorship band wagon of an already established festival and fund it. But you are supporting the maiden edition of this Lagos Shopping Festival with us. The competition is watching you now. Do not build this brand with us and yield the space for the competition to take over. I do hope you would all commit long term to this brilliant initiative.”
On his part, Girish Sharma, CEO Guinness Nigeria Plc, expressed enthusiasm for the initiative. “Lagos is the commercial heartbeat of Nigeria and Africa’s entertainment capital, and the Lagos Shopping Festival captures its essence. We see opportunities in this initiative because it is a creative fusion of commerce and entertainment. This partnership reflects our dedication to fostering economic opportunities and support the nation’s vibrant entertainment industry.”
A first-of-its-kind, the festival was a convergence of commerce and entertainment, bringing together buyers and sellers in the MSME ecosystem, and hordes of fun-seekers who were entertained with thrilling performances by A-list entertainers, including Adekunle Gold, Wande Coal, Teni, Young Jonn, BNXN, Ayo Maff, SB Live and EmmaOMG. The list also included some of Nigeria’s most sought after DJs such as DJ Neptune, DJ YK Mule, DJ Baddo while Gbenga Adeyinka the 1st and Larry J dished out rib-cracking comedy performances.
Held from 23rd to 25th Day of December 2024, at the iconic Mobolaji Johnson Arena, Onikan Stadium, Lagos, the Lagos Shopping Festival saw thousands of fans throng the main venue and select Lagos malls during the three-day period to bag the latest bargains from local and top global brands.
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