East African Business Notifier

Few terms in economics are as ideologically loaded as “free trade.” Advocate it nowadays, and you are likely to be regarded as an apologist for plutocrats, financiers, and footloose corporations.  Defend open economic borders, and you will be labeled naive or, worse, a stooge of the Communist Party of China who cares little about human rights or the fate of ordinary workers at home. As with all caricatures, there is a grain of truth in the anti-trade stance. Growing trade did contribute to rising inequality and the erosion of the middle class in the United States and other advanced economies in recent decades.  If free trade got a bad name, that is because globalization’s boosters ignored its downsides or acted as if nothing could be done about them. This blind spot empowered demagogues like Donald Trump to weaponize trade and demonize racial and ethnic minorities, immigrants, and economic rivals. Nor is antipathy to trade the province only of right-wing populists. It also inc...

Inflation targeting is widely regarded as the best approach to monetary policy, including for small, open economies.  Pioneered by   New Zealand and Canada   in the early 1990s – and quickly adopted by Australia, Sweden, and the United Kingdom, and then Iceland and Norway, among others – it is credited with having dramatically lowered the level and variability of inflation wherever it has been consistently applied.  Lower and predictable inflation has, in turn, proved conducive to better economic performance, helping to prevent the large shifts in income distribution that can follow from unexpected inflationary surges (at least until the COVID-19 pandemic struck). It is not difficult to see why inflation targeting has had this effect. The approach forces the central bank to focus squarely on price stability in ways that earlier policy strategies did not.  It thus offers transparency with respect to monetary-policy goals and the measures needed to achieve them, a...

The East African Business Council (EABC) participated in the 1st Regional Steering Committee for Market Access Upgrade Programme (MARKUP) II in Arusha. The programme aims to drive the economic development of the East African Community through increased sustainable intra-African and EU Africa trade. In collaboration with the East African Community (EAC) Secretariat, the International Trade Centre (ITC), and the European Union, EABC's MARKUP II initiative seeks to address challenges faced by MSMEs, particularly concerning low awareness of export procedures, food safety, standards, and high compliance costs. In his opening remarks John Bosco Kalisa, CEO of EABC, underscored the significance of the initiative, emphasizing the pressing challenges faced by MSMEs and the collaborative effort to address them. He highlighted the program's aim to foster sustainable growth and job creation by reducing trade barriers, increasing awareness, and establishing market linkages across various se...

The Uganda Investment Authority and the Bank of Uganda have taken their awareness workshop on affordable financing for small businesses and commercial farmers to the southwestern district of Rukungiri. The workshop focused on the central bank’s two financing facilities: the Small Business Recovery Fund (SBRF) which targets micro, small and medium enterprises’ recovery from the adverse effects of the Covid pandemic, and the Agricultural Credit Facility (ACF) that targets commercial farmers. The Governor of Bank of Uganda, Dr. Michael Atingi-Ego, in a speech read for him by the Executive Director Finance, Richard Byarugaba, said although small businesses are key to Uganda's economic growth, their major constraint is access to affordable credit, hence the creation of the two funds – SBRF and ACF. The Governor said the Agricultural Credit Facility, totaling 800 billion shillings, is for MSMEs to acquire things equipment for farming, post-harvest handling & value addition, amongst o...

We have entered a period of intensifying geopolitical rivalries and conflicts. Russia’s war on Ukraine is now in its third year; the Israel-Hamas conflict could still become a regional war; and the deepening cold war between the United States and China may yet turn hot over Taiwan sometime this decade. If Donald Trump wins the US presidential election in November, the world will be even further destabilized. And yet, these risks have had only a limited effect on economies and markets so far. Might that soon change? While the Russia-Ukraine war remains as brutal as ever, its global effects are likely to be more modest. The risks of direct NATO involvement or the use of tactical nuclear weapons by Russia are lower today than they were at earlier points in the war.  Equally, while the war initially produced a  spike  in energy, food, fertilizer, and industrial-metal prices, even Europe – the most heavily affected region – has absorbed the shock with only a modest growth slow...

The European Central Bank recently   reported   its first annual operating loss since 2004. Its losses for 2023 amounted to €1.3 billion ($1.41 billion), following the release of €6.6 billion from its provision for financial risks.  In its accounting treatment of this loss, the ECB is relying on the same misleading fudge as the US Federal Reserve Board, which has conjured up a “deferred asset” category to deal with excessive losses. As the ECB  press release  explains, this loss “will be carried forward on the ECB’s balance sheet to be offset against future profits.” This means that a loss was entered as a positive asset, even though the sensible alternative would have been to enter it as negative retained earnings in the shareholders’ equity section on the liabilities side of the balance sheet.  Total net equity – the sum of paid-up capital, any amounts held in the financial-risks and general-reserve funds, the revaluation accounts, any accumulated losses ...

One of the fastest growing economies in the world is rolling out the red carpet for international investors this May.  The Sovereign Wealth Fund of Djibouti (Fonds Souverain de Djibouti) has today announced the dates for its upcoming Djibouti Forum - Gateway of Opportunities, taking place the 12 to 14 May at the Djibouti Palace Kempinski. “This inaugural Forum will showcase the potential and investment opportunities of Djibouti as well as the African continent.  It will bring together CEOs, investors and developers to foster collaboration amongst like-minded individuals, catalyse strategic investments for the whole subregion, and facilitate dialogue between the Fund and the institutional investment community,” says S overeign Wealth Fund of Djibouti CEO, Dr Slim Feriani. Recent investments in ports and logistics, hospitality and renewable energy provide a blueprint for investors. The country’s 2035 plan provides a clear roadmap and under the leadership of H.E. Ismail Omar...