Treasury Secretary Henry Rotich calls for changes in Kenyan banking sector
In light of three bank failures in the past eight months, Kenya’s Treasury Secretary Henry Rotich has recently revived proposals that call on banks to increase their safety buffers and allow the government greater oversight into their management. His proposed amendment to current banking laws would compel banks to “increase their core capital fivefold by 2019 to 5 billion shillings ($49 million),” according to Bloomberg. Some experts contend that such a law would effectively curtail the number of smaller banks—which are unable to meet these requirements—and lead to mergers and acquisitions that would consolidate the “overbanked” sector. An estimated 24 of 44 banks licensed in Kenya would currently be unable to meet these new capital requirements, reports the Daily Nation. At the same time, supporters of the proposal argue that these reforms would enable to government to better monitor the fewer, stronger banks and also reduce borrowing costs, as larger banks could leverage their size to offer more competitive interest rates on loans. A critic of the proposal, Central Bank Governor Patrick Njoroge, has argued that he would prefer that “natural consolidation” occur in the banking sector instead.
African stakeholders prioritize agriculture, climate resilience
This week, and under the cloud of drought over southern Africa, a number of climate change and agricultural commitments were launched to tap into Africa’s great agricultural potential as well as create climate resilience. Given that the majority of African laborers—70 percent—work in agriculture, but the continent spends $35.4 billion each year importing food, agricultural investments could be a boon to the region. Indeed, just this week, the World Bank released a report on Malawi’s stagnating growth, mostly due to a lack of agricultural resilience.
On June 27, the African Development Bank announced a $24 billion investment into its agricultural implementation plan known as Feed Africa. The bank will do so through “equity, quasi equity, debt and risk instruments to catalyze investments at scale from the private sector and with co-financing from traditional donors and new players.” Feed Africa, one of the bank’s top five priorities under its new leadership (the “High 5”), is estimated to cost over $315 billion dollars over the next 10 years, but bank staffers are hopeful that it will have returns of $85 billion per year. Also this week, the Food and Agriculture Organization (FAO) and the African Union (AU) launched a program aimed at ending hunger it the Horn of Africa, including Djibouti, Ethiopia, Kenya, Somalia, South Sudan, and Uganda. It is hoped that a regional approach will better be able to tackle climate-related challenges such as drought. The project, which is in line with the Comprehensive Africa Agriculture Development Program (CAADP) priorities, begins with a budget of $350,000.
On June 28, Kigali hosted more than 500 African climate change experts, carbon market players, policymakers, and project developers for the Africa Carbon Forum to discuss solutions to climate change challenges and identify opportunities for successful interventions. Right now, Africa has pledged to cut gas emissions by 80 percent by 2030, a target that many experts find difficult to reach without raising climate financing commitments (which currently are 4 percent of the total). Other participants noted that climate goal implementation must continue to keep the Sustainable Development Goals in mind, while others emphasized the role of the private sector in reaching them.
Michelle Obama takes a trip to Africa to discuss girl’s empowerment and education
This week, Michelle Obama travelled to Liberia, Morocco, and Spain. As part of her Let Girls Learn initiative, the first lady engages with young women around the world about the importance of girls’ education. Launched in 2015 by the White House, the initiative—in collaboration with the U.S. Department of State, USAID, the Peace Corps, and the Millennium Challenge Corporation (MCC), among other U.S. government agencies—aims to address the challenges girls face in attaining quality education. Currently, 62 million girls (half of whom are adolescents) worldwide are not in school.
Monday, the First Lady visited a leadership camp for girls in Liberia, where she urged teenagers to prioritize their schooling. Liberia is one of the most affected places in terms of girls’ lack of access to education. UNESCO data shows that 63 percent of primary school-age girls are currently out of school, one of the highest rates in sub-Saharan Africa, second only to South Sudan. The Ebola epidemic accentuated the challenges young girls face in attaining quality education. In parallel with the First Lady’s visit, USAID pledged $27 million in funding for Liberia’s Let Girls Learn branch.
For more information on girls’ education, please check out a blog by our CUE colleagues Christina Kwauk and Amanda Braga titled Supporting local leaders to let girls learn.