Business
Kenya’s economy enters Africa’s top 10 after GDP rebasing
Kenya’s gross domestic product was estimated to be 25 percent bigger after the authorities changed the base calculation year to 2009 from 2001, sending the east African nation into the continent’s top 10 economies.
Economic output was calculated to be 4.76 trillion shillings ($53.4 billion) in 2013 after the rebasing, up from 3.8 trillion shillings ($42.6 billion), the minister for devolution and planning, Anne Waiguru, told a news conference on Tuesday.
That takes Kenya up to ninth in Africa’s GDP rankings from 12th, above Ghana, Tunisia and Ethiopia but below oil-producing Sudan based on a World Bank table for 2013.
The rebasing exercise means debt levels fall as a proportion of GDP, a closely watched ratio, and could give the government some leeway for more borrowing to help finance its plans to build new transport links and repair creaking infrastructure.
But revising the estimated size of GDP does not change Kenya’s ability to repay additional loans nor does it mean it has more income to spend on development in a nation where many people are poor, roads are potholed and power supply is scarce.
“This gives us a little bit of welcome breathing space … not an opportunity to open the cash register,” said public policy and economic analyst Robert Shaw.
As with other rebasings in Africa, the move takes into account structural and other economic changes, such as new technology, and updates the base year for prices.
Kenya’s GDP revision follows the far more dramatic rebasing earlier this year of Nigeria’s economy when it changed the base year from 1990 to 2010 and, as a result, vaulted above South Africa to become Africa’s biggest economy.
Kenya’s rebasing was less pronounced because the gap with 2001 and the new base year of 2009 was shorter.
Changes in assessing agriculture, manufacturing and real estate accounted for most of the GDP rise. Technology and related fields are now treated as a standalone sector, taking into account a vibrant industry in Kenya, which has pioneered mobile telephone payments systems and exported the idea across Africa and beyond.
The economy could also get a further boost in a few years when commercial oil production is expected to start.
With the rebasing, economic growth was revised to 5.7 percent in 2013, up from the previous estimate of 4.7 percent, a figure that had been below expectations and was partly blamed on a spate of militant attacks and a decline in tourism.
MIDDLE INCOME NATION
“The new numbers are credible and they constitute an important improvement in the economic and statistical knowledge base for Kenya,” Diariétou Gaye, the World Bank’s country director for Kenya, said, adding that a World Bank team joined other experts conducting a peer review of the rebasing exercise.
Based on a debt figure of 2.4 billion shillings released in August after Kenya’s heavily oversubscribed, maiden Eurobond, the debt-to-GDP ratio falls to about 50 percent from 57 percent previously, according to a Reuters calculation.
But economists said a lower ratio did not mean the government was any better positioned to take out more loans.
“Debt service capacity and export growth, neither of which is expected to be substantially revised, are much more important when it comes to being able to take on more debt,” Razia Khan, London-based Africa economist at Standard Chartered Bank, said before Tuesday’s announcement.
With a population of about 44 million people, the new GDP figure implies economic output per capita stands at more than $1,200. That would push Kenya onto the bottom rung of middle income states, according to the World Bank’s $1,045 to $12,746 band.
A higher income ranking means it might not benefit from some aid designed for the poorest countries, economists say.
Conversely, investors may be more attracted to a nation with a population that has more cash to spend, although many investors have already factored that into their calculations.
“If you look at the kind of investment flow already attracted by Kenya, the implicit assumption is that investors already treated it as a middle income country,” said Khan.
The new status and a bigger economy have no direct impact on the lives of ordinary Kenyans, who are frustrated by poor roads and services. “The potholes are still there,” said analyst Shaw.
BUSINESSDAY-
The national oil company of the Republic of Congo, the Société Nationale des Pétroles du Congo (SNPC) and Dangote Petroleum Refinery & Petrochemicals (DPRP) are discussing a strategic partnership aimed at strengthening the Republic of the Congo’s supply of refined petroleum products.
The parties also have on the agenda, advancing regional energy cooperation and industrial integration across Africa, Biztellers can report.
SNPC Managing Director, Maixent Raoul Ominga, who led a delegation from his country on a visit to the DPRP, described the facility as a strategic asset for Africa and expressed the national oil company’s interest in developing a long-term partnership with Dangote.
“We have visited this remarkable refinery, which represents a major industrial achievement for Africa. The Republic of the Congo has refining capacity and we are keen to explore strategic cooperation that will help strengthen the supply of refined petroleum products while creating value for both organisations,” Ominga said.
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Discussions between both organisations, he said, focused on opportunities for collaboration in refining, petroleum products supply, energy security, industrial development, and knowledge sharing.
He praised the Dangote Group for demonstrating that Africa can successfully finance, build and operate world class industrial infrastructure, describing the refinery as an important milestone in the continent’s industrial transformation.
Ominga also commended the Group’s investments in the Republic of the Congo, particularly in the cement sector, noting that they have strengthened local industrial capacity, expanded production and improved access to construction materials.
On his part, President and Chief Executive of Dangote Industries Limited (DIL), Aliko Dangote, reaffirmed the Group’s commitment to Africa’s industrialisation through value addition, regional partnerships and investment across the continent.
“We are for Africa, not just Nigeria. Tell us what you need, and we will see how we can work together,” Dangote said.
He noted that the refinery has established a new benchmark for fuel quality in Africa by producing petroleum products that meet the highest international specifications, while improving access to cleaner fuels and reducing the continent’s dependence on imported refined products.
In the same vein, the Vice President, Oil and Gas, DIL, Devakumar Edwin, outlined the Group’s long term expansion strategy, which will increase its total refining capacity to 2.1 million barrels per day, comprising 1.4 million barrels per day in Nigeria and a planned 700,000 barrels per day refining complex in Kenya to serve East African markets.
He also disclosed plans by the Group to invest an additional US$46 billion between 2026 and 2028 across its refining, cement and fertiliser businesses as part of its drive to accelerate industrialisation across Africa.
The engagement underscores the shared commitment of SNPC and the DPRP to deepen African energy cooperation, strengthen regional value chains and promote greater self sufficiency in refined petroleum products as the continent advances towards enhanced energy security and increased intra African trade.
Also present at the meeting were Group Executive Director, Commercial, Oil and Gas, DIL, Fatima Aliko Dangote; Adviser to the President of the Republic of the Congo, Peggy Ndongo and advisers to the SNPC Managing Director, Aymar Ebiou and Norbert Mabiala.
As part of efforts to protect Nigeria’s oil revenues and energy infrastructure, the Nigerian Navy recently recovered approximately 22,870 litres of suspected illegally refined Automotive Gas Oil (AGO) in Rivers State.
It was gathered that the value of the seized petroleum product is put at about N39 Million.
The seizure, carried out under Operation Delta Sentinel, is part of an ongoing security intervention designed to disrupt illicit petroleum supply chains which the Navy says continue to undermine government earnings and legitimate operators in the oil and gas sector.
According to the Navy, personnel of Nigerian Navy Ship (NNS) SOROH acted on intelligence reports and intercepted a wooden boat transporting 36 sacks of suspected illegally refined diesel in the Orashi Forest area of Okolomade Community, Abua/Odual Local Government Area of Rivers State.
In a media statement, Director of Information, Nigerian Navy, Captain Abiodun Folorunsho, revealed that further aerial surveillance and ground searches uncovered an additional 45 sacks of the product concealed under vegetation and inside ponds, bringing the total recovery to 81 sacks containing about 22,870 litres of AGO.
Navy Captain Forunsho stated that the operation highlights the growing use of intelligence and surveillance technology by security agencies to tackle crude oil theft and illegal refining activities, which industry stakeholders say contribute significantly to production losses, environmental degradation and reduced government revenue.
According to him, disrupting the logistics networks supporting illegal refining operations is critical to improving transparency in the petroleum value chain and safeguarding investments in Nigeria’s oil-producing region.
“The recovered products and the wooden boat used for transportation were handled in line with established anti-crude oil theft procedures.
Meanwhile, the Chief of Naval Staff, Vice Admiral Idi Abbas, reaffirmed the commitment of the service to sustain intelligence-driven operations aimed at dismantling criminal networks involved in oil theft and protecting the nation’s strategic economic assets.
Business
Tanzania, Dangote Group Explore Multi-Billion-Dollar Investments in Infrastructure, Energy, Fertiliser
President Samia Suluhu Hassan of Tanzania has held high level talks with President and Chief Executive of Dangote Industries Limited, Aliko Dangote, on a major expansion of the Group’s investments in Tanzania.
Biztellers reports that the discussions focused on transport infrastructure, fertiliser production, power generation, ports and regional trade.
The meeting, held at the State House in Dar es Salaam, reaffirmed the long-standing partnership between Tanzania and the Dangote Group while opening discussions on a new phase of investments aligned with the country’s industrialisation and economic transformation agenda.
Speaking after the meeting, Dangote said Tanzania remains one of Africa’s most attractive investment destinations, noting that the Group had identified several strategic sectors capable of delivering significant economic value.
“We have identified areas that can deliver significant value for Tanzania, and we are ready to work together to develop them for our mutual benefit,” he said.
The discussions covered a broad range of projects, including port development, the construction of a 40-kilometre concrete access road to support port operations, development of a special trade zone, a proposed 2,000-megawatt coal fired power plant, a urea fertiliser plant and transport infrastructure linking Mtwara with Mbamba Bay in southern Tanzania.
Dangote also explained the commercial and technical considerations behind the Group’s decision to locate its planned East African refinery in Lamu, Kenya, while extending an invitation to the Government of Tanzania to participate in the investment.
President Samia welcomed the Dangote Group’s continued confidence in Tanzania and directed relevant ministries and government agencies to commence detailed technical discussions on the proposed investments in line with the country’s legal, policy and development priorities.
She also appointed the Minister of Planning and Investment to coordinate the strategic partnership with Dangote Industries Limited, with both sides expected to begin formal negotiations in the coming days.
A Tanzanian government delegation led by the Minister is expected to visit Nigeria to advance discussions and develop implementation frameworks for the proposed projects.
According to a statement from the Directorate of Presidential Communications, the Government remains committed to strengthening partnerships with the private sector as part of efforts to mobilise productive investment, accelerate industrialisation, promote technology transfer, and create sustainable employment opportunities.
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Dangote Industries already operates one of Tanzania’s largest industrial investments through its US$500 million cement plant in Mtwara, which has an annual production capacity of three million tonnes and supplies both the domestic market and neighbouring countries.
The latest engagement deepens the partnership between Tanzania and the Dangote Group and reinforces the company’s position as one of Africa’s leading private sector investors driving regional industrialisation, infrastructure development, and economic integration.
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