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About bankelele

Writing on banking, finance and investments in East Africa. Email bankelele_at_hotmail.com, Instagram: Bankelele, Twitter: @Bankelele.

Agro-ecology Explained

This week there was a Webicafe session arranged by the Route to Food Initiative on Agro-ecology. Route to Food has championed a petition in Kenya’s Parliament calling for the removal of harmful chemical pesticides that are sold in the country.

The session featured two experts; Dr David Amudavi of the Biovision Africa Trust and Nicholas Syano of the Drylands Natural Resources Centre (DNRC). Biovision Africa works with smallholder farmers in 13 counties to disseminate useful and practical scientific information through various channels, and they also have a program with the African Union working with 35 partners in 9 countries. The DNRC works with 800 farmers in Makueni county, training them on and sustainable agricultural practices such as indigenous plants and rainwater harvesting.

The organizations are all trying to ensure farmers can work with nature to achieve food security. This is at a time small scale farmers, who produce most food for the country, are most affected by climate change and get the least support from the Government.

Excerpts:

  • Agro-ecology is not a new concept. Agro-ecology is as old as agriculture. It borrows a lot from indigenous knowledge of agricultural practices, and it is only the term that is new.
  • Agro-ecology is not organic farming. Indeed, organic is just one of the ways in which farmers can apply agro-ecology practices, which all seek to promote the use of alternatives such as minimum tillage, conservation agriculture, crop-rotation, manure, inter-cropping, mulching, permaculture, agroforestry, and organic – that can all improve soil health and fertility through less, or no, use of chemical inputs in food production.
  • Agro-ecology as a science looks at how plants and animals get manipulated by man to stimulate production and consumption. There is a balance in the interaction of plants, animals and humans – and anything harmful to any of the three, or the environment, is not acceptable in agro-ecology.
  • Agro-ecology means food security: If you compare communities that rely on agro-ecology and those on monoculture, the ones that engage in diversified farming are more resilient to economic shocks – and governments should direct more research there to ensure food security and sustainable agriculture.
  • Challenges include low awareness and funding. Agro-economy can feed the nation., but agriculture gets a tiny share of the national budget devoted to research funding and even smaller for agro-ecology (estimated 2% of agricultural funding). Currently, most-research funding goes to mono-culture, industrial-based, crop farming that is also supported by political voices. This is compounded further by a lack of data on the uptake of agro-ecology. as well as people who can write well about agro-ecology.
  • In agro-ecology, if you plant trees, grow as many varieties of trees. In Makueni, DNRC has re-planted trees that had vanished – lost varieties of fruit, dry land species and nitrogen-fixing trees. They also plant acacia that grows very fast and is useful for honey farming and charcoal. Individual farmers bring in their small honey harvests and the organization sells them as a collective and share the money out. They also make green charcoal in a special kiln using pruned acacia wood. Over the last decade, DNRC has planted Moringa trees – and with the outbreak of COVID this year, they have seen great demand for Moringa seedlings, oil and powder.
  • One good agro-ecology practice is to have African farmers use seeds adapted to local conditions. These can be sold, re-used, and exchanged while avoiding some monopoly seed laws that restrict what farmers can do with their seeds and multinational intellectual property disputes.

AfDB 2020 annual meetings

The abbreviated annual meetings of the African Development Bank (AfDB) Group ended this week after just three days, a slimmed-down virtual event, compared to the meetings last year in Malabo.

The Governors of the bank, representing 54 African and 27 non-regional member countries, dealt with statutory matters and approved the accounts of the bank for 2019, and reviewed its performance and the auditor reports. The Governors also commended the bank for its measures to work through COVID and while also providing flexible support to countries through the COVID-19 Rapid Response Facility of up to $10 billion.

During the year there will be a focus on infrastructure finance and quality health care and collaboration with the African Union and regional economic blocs to fast-track the African Continental Free Trade Area which was postponed from July this year, and will now kick off on January 1, 2021. Another initiative that will be supported will be the G-20 debt relief effort, recognizing that many African countries will go in to recession for the first time in twenty-five years as they tackle lockdowns, weaker tax revenue, and increased emergency health expenses.

2020 Annual Meetings Day 2 – Best of

The main highlight of the AfDB meetings was the election of the President, which saw Dr. Akinwumi Adesina re-elected for a second term with 100% of the delegate votes. The USA appears to have been the main opponent of his re-election, and their comments calling for the bank to ensure cost-effective management, review its use of resources and strengthen oversight & governance were contained in the final communiqué released by the Bank at the end of the meetings.

The next AfDB Annual Meetings are planned to take place in May 2021 in Accra Ghana. They will be hosted by the new Chairperson of the Bank, Mr Ken Ofori-Atta, Ghana’s Minister for Finance who took over from Ms Niale Kaba, the Côte d’Ivoire Minister of Planning & Development after she stepped down at the end of her term this week.

Swearing in ceremony of President-elect Dr. Akinwumi Ayodeji Adesina

EDIT September 1: Dr. Akinwumi Adesina was sworn in to start his second term as President of the African Development Bank Group.

Absa Kenya absorbs Covid hit

Absa Kenya reported their June financial results, continuing the thread of banks taking being impacted by the reduced business activity and increased credit risks occasioned by COVID-19.

Kenya’s fifth-largest bank with Kshs 392 billion ($3.62 billion) in assets saw its deposits and loans higher than 8% last June and a pre-provision profit of Kshs 8.6 billion for the half-year.

However, the bank increased its provisions for bad loans threefold due to COVID-19 impacts and IFRS9 guidelines from Kshs 1.6 billion to 5.3 billion. This resulted in a net profit before tax and exceptional items of Kshs 3 billion, down from Kshs 6 billion last June, with a further one-time charge of Kshs 1.7 billion as the cost of completing the transformation from Barclays to Absa in the first half of the year.

During COVID, the bank had focused on helping its customers manage their livelihoods and has restructured 56,000 loan accounts, worth Kshs 57 billion, 28% of the loan book. COVID-19 has hit across the sector and commercial banks in Kenya have restructured a combined Kshs 844 billion of loans, 29% of the industry’s total. Absa’s bad loans are now at 8% compared to 13.1% average for the banking sector in June 2020.

AfDB plan virtual annual meetings for 2020

In just over a week, the African Development Bank Group (AfDB) will stage its 2020 annual meetings from Abidjan, Cote d’Ivoire which is the headquarters city of the bank.

The 55th annual meeting of the Group will run from August 25 to August 27. They had initially been planned to happen in May 2020. But because of the surge of coronavirus infections and travel bans across the continent, they were postponed.

The 2019 annual meetings were held in Malabo, Equatorial Guinea and saw thousands of guests, including Presidents, bank governors, finance ministers, and representatives of civil society, media, policy, and the private sector descend on the island of Bioko for a week of engagements.

But this year, as with all major global events, delegates will instead meet virtually and online. The 2020 meetings will feature a reduced schedule that will focus on closed statutory meetings of the Governors of the Bank who represent 54 African countries and 27-non-regional members of the Group.

A key agenda item will be the election of the President of the AfDB. Nigeria’s Akinwumi Adesina has served one term as President and is up for re-election. He is the only candidate, so far, and has the support of many countries including host Cote d’Ivoire and his native country. Last month he was vindicated by the findings of both a board investigation and an independent panel of international experts that investigated allegations in a whistleblower complaint. 

There will also be the annual meeting of the African Development Fund,  and some familiar sideline events, such as the African Banker awards.

Some notable nominees include the Access acquisition of Diamond Bank, the Airtel Dual Listing and the  MTN Nigeria IPO for deal of the year (Equity) and the Access Bank green bond for deal of the year (Debt). Also the Acorn Green Bond, Nouakchott port financing, Port of Maputo, and the Tanzania standard gauge railway are all in contention for infrastructure deal of the year.

Covid hits profits at Kenyan banks

After a long quiet period, banks results for the second quarter of 2020 have started tricking in. This week saw four large banks – KCB, Cooperative, Stanbic and NBK all publish their June results, showing the impact of COVID-19 that started to be felt after the first quarter of the year. 

The bank rankings are (1) Kenya Commercial Bank – Kshs 730 billion assets, (4) Cooperative Bank – 505 bn, (7) Stanbic Kenya – 350 bn, and (11) National Bank – 119 bn which is now a subsidiary of KCB

Extracts:

  • There has been less banking and economic activity: Stanbic was the first to flag this in its quarter-one results. KCB’s half-year results showed branch tellers handled 20% fewer transactions compared to 2019. There was also a 20% reduction in ATM transactions, while the number of mobile transactions did not increase significantly despite fee waivers. 
  • There was a decline in mobile loans advanced at KCB from Kshs 103 billion to 90 billion.
  • There has been extensive restructuring of loans. KCB has restructured Kshs 101 billion, Co-op 39 billion, and Stanbic 38 billion.
  • IFRS-9 is being set aside as the world grapples with recovering from COVID. While KCB’s provisions were up Kshs 8 billion, after absorbing National Bank, and their non-performing assets increased from 8% to 13%, bank provisions have not increased significantly. 
  • Growth in deposits at large banks, a flight to safety, has not been matched by an increase in lending to customers. There has been much faster growth in deposits than with loans, that has ended up in higher treasury bills and liquidity at banks. 
  • Reduction in profits: KCB half-year profits were down 40% compared to 2019, while Stanbic’s were 36% lower. 
  • The banks are seeing improvements now that the economy has opened up and travel restrictions were lifted in July 2020, all helping the manufacturing, floriculture and tourism sectors.