A growth in lending created a 10 per cent rise in first half pretax profit at Kenya’s Equity Group Holdings plc, according to the latest financial statement.

The Group’s chief executive officer, James Mwangi said he was confident the government would remove a cap on lending rates, further boosting demand for credit.

The cap, introduced in 2016 to curb high interest rates on loans, prevents banks from charging more than four percentage points above the central bank’s benchmark lending rate, currently 9 per cent.

The move has resulted in borrowers perceived as too risky being locked out of the market, squeezing economic growth, Mwangi told investors on Thursday.

“We are very optimistic (it will be removed). The pains of this interest capping have been a big challenge,” Mwangi said.

“The interest cap has done its last breath.”

The finance ministry proposed removing the cap in June, saying it had starved small businesses of credit. However, some lawmakers have vowed to block the repeal.

Equity, which also operates in Uganda, Tanzania, South Sudan, Democratic Republic of Congo and Rwanda, made a first half pretax profit of KShs17 billion Kenyan shillings ($165 million), with interest income up 9 per cent to KShs27.7 billion.

Net loans to customers rose 17 per cent to KShs320.9 billion, topping the group’s target of 10 to 15 percent, Mwangi said.

He attributed the growth to new distribution channels, including mobile phone lending apps.

Equity’s banking business in Kenya, where it is the biggest lender by customers, provides the bulk of profits. Regional businesses contributed 18 percent to the first half total, unchanged from the same period last year.

The net interest margin dipped to 8.0 per cent from 8.2 percent the year before, while the bad debt ratio rose to 8.6 per cent from 8.4 percent, but held well below the Kenyan industry average of 12.7 per cent, Equity said.

Customer deposits jumped to Ksh458.6 billion from 393.69 billion the year before, while total assets rose to Kshs638.7 billion from KShs542.02 billion.

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Africa’s poorest countries saw little to no progress on average in improving the quality of their policy and institutional frameworks in 2018, according to the World Bank’s annual Country Policy and Institutional Assessment (CPIA) released today.

The average CPIA score in Africa’s 38 International Development Association (IDA)-eligible countries in 2018 remained unchanged at 3.1 on a scale of 0 to 6, with some areas of social policy seeing improvements while macroeconomic management weakened.

The rule of law, accountability and transparency, and the quality of public administration remained major areas that impede the efficient use of public resources across the region.

This year’s CPIA Africa report takes a closer look at debt management, as the median government debt-to-GDP ratio reached 54.9  of GDP in 2018, an 18.5 percentage-point increase since 2013. At the same time, the share of foreign currency bonds in total external debt increased by 10 per cent while the shares of debt owed to commercial and non-Paris Club creditors rose by 5 percentage points since 2010, and sovereign bond issuances have increased rapidly.

“Some African countries are at risk of mortgaging their people’s futures in favor of today’s consumption,” said Albert Zeufack, Chief Economist for Africa at the World Bank. “When countries spend most of their revenue servicing debt, fewer resources are left for education, health, and critical services for their people. This stops progress in its tracks.”

Taken together, the increase in debt levels paired with the shift of external debt toward more market- based, more expensive, and riskier sources of finance have increased debt vulnerabilities substantially among IDA countries in Sub-Saharan Africa. The report recommends that countries improve their debt management capabilities and systems, which can enhance transparency and help stabilize the economy in the long-term.

Rwanda continues to top the CPIA ratings both in Africa and around the globe with a score of 4.0, followed in the region by Cabo Verde (3.8) and Kenya, Senegal, and Uganda (all at 3.7). South Sudan remained the lowest-scoring country on the CPIA with a score of 1.5.

Fragile countries in Sub-Saharan Africa improved slightly in the areas of gender equality, human development, and environmental stability, which bodes well for their ability to tackle the drivers of conflict and exclusion.

In fact, fragile countries in Africa saw stronger performance in social inclusion than fragile countries in other parts of the world. Non-fragile IDA countries in Africa performed on par with their global peers overall, with the notable exception of social inclusion policies, where they underperformed especially on the issue of gender equality.

“Improvements in social inclusion and service delivery have historically been crucial elements of countries’ transitions out of fragility, so even modest steps count,” said Gerard Kambou, Senior Economist and Lead Author of the CPIA report. “African countries, fragile and non-fragile, need to keep the focus on gender, education, health, climate, and governance issues alongside macroeconomic management if they want to see true and lasting progress.”

The report recommends that Africa’s IDA countries accelerate business regulatory reforms to support private sector development and improve domestic revenue mobilization in addition to strengthening their debt management. The report team plans to hold discussions on this year’s results and recommendations in several African countries in September 2019.

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Diverse array of opportunities across the whole oil and gas value chain – event to offer exclusive insight into national hydrocarbon strategies and bidding rounds

A report released by Africa Oil Week and Menas Associates about what lies in store for Africa’s oil and gas industry has concluded that, on balance, the continent’s economic performance is promising, particularly as global oil markets finally recover from their 2015-2016 lows. Africa’s proven oil and gas reserves respectively account for 7.5 per cent and 7.1 per cent of global totals.

Experts predict that 2019 and beyond will see deep offshore exploration and mega gas finds, with the development of trans-continental pipelines, gas-to-power initiatives and refining potential.

The report delves into major trends for 2019, including political transitions and regional integration through the African Continental Free Trade Agreement (ACFTA) which promises to reduce barriers to intra-African trade, facilitate the movement of people and strengthening Africa’s prominence on the world stage.

A rosy picture is painted for natural gas as global consumption rises. Africa’s gas production grew by 8 per cent between 2017 and 2018 – largely out of Egypt.

In terms of opportunities, sub-Saharan Africa’s two largest producers of oil, Nigeria and Angola are expected to launch bidding rounds this year. Equatorial Guinea, Uganda, Gabon and Congo Brazzaville have ongoing rounds, Ghana launched its first licensing round at the 2018 edition of Africa Oil Week, and Madagascar is hoped to offer a number of blocks this year.

Africa Oil Week will feature two days dedicated to national showcases and bidding rounds at their upcoming event with 16 countries – including Côte d’Ivoire, Equatorial Guinea and Mozambique –presenting their national hydrocarbon sector to Africa Oil Week’s audiencer

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