The Tanzanian shilling has rallied to a ten-month high against the US dollar, with the Bank of Tanzania (BoT) quoting it at trading at Sh2,513.09 per dollar yesterday as it extended gains that began in early October.
According to BoT Governor Emmanuel Tutuba, this upward trend is expected to continue until February 2025, driven by increased exports, tourism growth, and reduced imports, with the currency appreciating from Sh2,721.68 per dollar on October 4 to Sh2,716.48 and Sh2,620.57 by October 23 and November 23 respectively.
The currency's strength is attributed to multiple factors, including the Export Guarantee Scheme launched in June 2023, which has boosted agricultural exports and domestic production, along with increased trade volumes and reduced imports of certain products.
Financial analysts highlighted the importance of exports in building economic resilience, while noting that gold price increases have enabled the shilling to recover recent losses, though they cautioned that the government must carefully manage fiscal policies to maintain the currency's value.
Elsewhere, Uganda's moneylenders have unanimously rejected the government's new 2.8 percent monthly interest rate cap, with the Association of Money Lenders in Uganda (AMLU) arguing the restriction is unfair and could drive them out of business, particularly when compared to financial institutions that charge up to 17 percent monthly.
The cap, introduced through Legal Notice Number 21 of 2024 by Finance Minister Matia Kasaija, limits interest rates for Tier 4 Microfinance Institutions and Money Lenders to 33.6 percent annually, effectively allowing only Shs2,800 in interest for every Shs100,000 lent.
In related news, Kenya's Treasury has introduced two significant tax proposals - the Tax Laws (Amendment) Bill, 2024, and Tax Procedures (Amendment) (No.2) Bill, 2024 - aimed at addressing fiscal deficits through expanded tax bases and improved compliance.
Key changes include extending royalty definitions to software distribution, increasing digital service provider tax from 1.5% to 3%, and introducing a 15% minimum tax for entities with global revenues above 750 million euros.
The bills offer some relief through increased tax-free limits on meals, non-cash benefits, and pension contributions, while implementing structural changes like standardized electronic tax invoices.
However, concerns arise over potential impacts on business operations, particularly regarding software import costs and digital economy growth.
The proposals follow the controversial Finance Bill 2024 and reflect the government's challenge in balancing revenue needs with business-friendly policies while aligning with international tax standards.
Still in Kenya. The population with active financial savings has decreased for the first time since 2009, dropping to 68.1 percent in 2024 from 74 percent in 2021, according to the latest FinAccess Household Survey conducted by the CBK, KNBS, and FSD Kenya.
The decline breaks a 15-year growth trend, with 90.5 percent of respondents citing financial constraints and 18.2 percent reporting income loss as primary reasons for halting savings, even as credit uptake continues to grow, reaching 64 percent in 2024 from 60.8 percent in 2021.
The survey reveals that savings are primarily driven by immediate needs, with 35.6 percent saving for daily expenses and 27.7 percent for emergencies, while formal institutions remain the preferred savings channel for 51.9 percent of Kenyans.
This trend is further evidenced by Sasra data showing an 18.6 percent increase in dormant Sacco members to 1.45 million by December 2024, reflecting the economic challenges facing Kenyans, though women continue to show higher participation in informal savings networks at 29.5 percent compared to men at 17.3 percent.
Finally, The Central Bank of Egypt (CBE) has rolled out a service that enables instant international remittance transfers directly into Egyptian bank accounts.
The service, which operates 24/7 through Egypt's Instant Payment Network (IPN), follows a successful pilot phase in June and has already attracted multiple licensed banks to participate, offering immediate access to funds for recipients at any Egyptian bank.
Building on the success of the InstaPay platform, which has amassed over 11.5 million users since its March 2022 launch, this initiative aims to reduce cash dependency.
The CBE anticipates service adoption, with transaction volumes expected to surpass EGP 2.7 trillion by 2024.