A new credit scheme in Nigeria, Rwanda/UK asylum plan and e-mobility policy in Kenya

Welcome back to the Vault.

This week’s edition covers interesting policy developments in Nigeria, Rwanda, Kenya, and Ethiopia. Highlights include Nigeria’s new credit program, UK/Rwanda asylum kick-off, and Kenya’s e-mobility policy.

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Nigeria’s new credit program has bold objectives but concerns are stark

To fulfil one of his campaign promises, the Nigerian President has launched a consumer credit scheme and set up the Consumer Credit Corporation (“CrediCorp”) to manage the initiative. President Bola Ahmed Tinubu has also appointed the 36-year-old former Microsoft software engineer, Uzoma Nwagba, as CrediCorp’s pioneer Chief Executive Officer.

  • The main driver of the credit scheme is to give qualified Nigerians (greater) access to credit to enable more people to afford houses, cars, financing for their businesses and other socio-economic activities, as is the case in some advanced societies.
  • The government seeks to cultivate a culture of financial responsibility and reallocate finance towards productive and growth-oriented enterprises.
  • The scheme is structured into several phases. It will initially be offered exclusively to civil servants before being extended to the public. The CrediCorp, in collaboration with financial institutions, will oversee the implementation of this policy.
  • The President has expressed the belief that a functional credit system will help to reduce incidence of corruption, especially in the public sector.

CrediCorp is tasked with addressing structural barriers that hinder consumer credit access in Nigeria, including limited credit information, difficulty assessing creditworthiness from incomes, and high costs of credit. To incentivise financial institutions to extend credit to consumers and mitigate the risk of default, CrediCorp will offer credit guarantees.

The potential benefits include enhanced financial inclusion, reduced disparities in access to financial services, increased credit availability for SMEs and entrepreneurs, curbing of predatory lending practices associated with informal lending, etc., there are key concerns with the policy move.

There is presently, however, insufficient framework for operation of the scheme and no indication that funds have been disbursed to the willing financial institutions, but CrediCorp has already asked interested persons to apply for the credit. There is also no information on the form of security the government intends to take from the applicants, as it offers itself as a guarantor. If the government does not take any security and yet stands as a guarantor, this could potentially be another drainpipe of much-needed funds.

Editor’s Note – Look out for our Policy Brief on the Consumer Credit Scheme for more information on the scheme, as well as our recommendations.

UK-Rwanda Asylum plan set to commence in July

After months of judicial and legislative tussles, King Charles has assented to the UK parliament’s legislation to send illegal immigrants to Rwanda, paving the way for implementation. In November 2023, the United Kingdom Supreme Court found some sections of the initial law to be objectionable, but changes have now been made to address the identified shortcomings. Under the revised policy, asylum seekers will not be deported from Rwanda to an unsafe country.

Over 20,000 illegal immigrants enter the UK annually. As one of Prime Minister Rishi Sunak’s main political promise is to discourage illegal immigration, clearing the legal hurdles to the plan of moving illegal immigrants to Rwanda will be celebrated as a win by the administration.

  • The asylum system will cost the UK £3 billion annually and 8 million per day in processing costs.
  • Rwanda will receive 169,000 pounds for each migrant that is relocated to the country, which is £63,000 more than the cost of keeping them in the UK. Britain has paid Rwanda £200 million.

The first group of migrants is set to be relocated to Rwanda in July. This influx could have various implications for Rwandans and the local economy, particularly on local employment and the housing market.

Rwanda presently faces an unemployment rateof 15%, with youth unemployment reaching 20%. The arrival of more people into the country could exacerbate the existing challenge of job availability for young people and worsen the housing shortage in key areas.

Kenya unveils draft electronic mobility policy and offers incentives to stakeholders

The Kenyan government has released its draft national e-Mobility policy, said to be in line with Kenya’s National Climate Change Action Plan (NCCAP) 2023–2027, the Long-Term Low Emission Development Strategy (LT-LEDS) 2022–2050, and the Updated Nationally Determined Contribution (NDC). It also introduced green number plates for electric vehicles (EVs).

This policy aims to address critical issues within the Kenyan EV industry, including low investment, inadequate legal and regulatory frameworks, limited budgetary allocation for incentives, and lack of coordination among government bodies, county governments, and industry partners. To tackle these challenges, the draft policy outlines several strategic objectives and corresponding measures. These include promoting e-mobility adoption, stimulating local manufacturing and assembly of EVs, enhancing infrastructural capacity, and improving local technical capacity and skills in the sector.

Key incentives being offered include:

  • discounted parking rates and priority parking spaces for EV buses;
  • fiscal measures to engender the development and installation of EV public charging infrastructure;
  • waiver of vehicle registration fees for EVs; and
  • import duty, excise duty, and VAT exemptions for EV parts over a specified period.

By addressing these critical issues and implementing strategic measures outlined in the draft policy, the Kenyan government hopes to accelerate the adoption of e-mobility and pave the way for a sustainable and eco-friendly transportation future.

Kenya has committed to reducing greenhouse gas emissions, and therefore, in the Updated Nationally Determined Contributions (NDC), Kenya committed to abating GHG emissions by 32% by 2030 relative to the business-as-usual (BAU) scenario of 143 MtCO2eq. View the draft policy here.

Data Vault:  Nigeria’s foreign reserves have fallen by over USD 1 billion in April

Nigeria’s foreign exchange reserve declined from US$33.4 billion on April 3, 2024, to US$32.1 billion as of April 26, 2024. This decline can be partly attributed to several monetary actions taken by the Central Bank of Nigeria to address the depreciation of the Naira in the FX market such as FX swap transactions and debt repayment.

Movement in Nigeria’s Foreign Reserve

Source: Central Bank of Nigeria

What we are also following

We’re also tracking some events in the news, and how they may affect the decisions of policymakers.

Nigeria | Nigeria pushes forward on AI through Partnership

Just a week after developing an initial draft of its National AI strategy, the Minister in charge of communications and innovation announced key partnership for initiatives aimed at accelerating the development of AI in Nigeria. These initiatives include Nigeria AI Collective, Nigeria’s Computing Infrastructure Pilot Nigerian Multilingual Large Language Model, and relaunch of National Centre for Artificial Intelligence and Robotics (NCAIR).

Federal Government plans to finalize National Intellectual Property Policy

Last Friday, the Nigerian Copyright Commission disclosed the government’s plan to complete its national intellectual property (IP) policy and strategy. According to the agency, this policy will serve as a blueprint with the aim to create a contemporary and effective legal framework to unlock Nigeria’s creative and innovative potential.

Ethiopia | EU restricts visas for Ethiopians

The European Union has announced that it will restrict visas for Ethiopian nationals due to the Ethiopian government’s failure to cooperate in repatriating citizens who stay in the EU illegally. The decision reflects the EU’s concerns about the increasing number of illegal immigrants entering the EU, with approximately 380,000 individuals arriving illegally last year, the highest since 2016.

The restrictions include eliminating visas for multiple entries, non-waiver of visa fees for Ethiopians with diplomatic and service passports and extending visa processing time currently from 15 days to 45 days.

Kenya | New amendment mandates that Finance Bill must be in by April 30

The Statute Law (Miscellaneous Amendments) Bill, 2024, which introduces revisions to 16 Acts of Parliament, including the Public Finance Management Act, has become law. The amendment to the Public Finance Management Act requires the Cabinet Secretary for the National Treasury to submit the Finance Bill to the National Assembly by April 30, aligning with legal provisions and judicial rulings.

Other amendments to various Acts are aimed at streamlining processes, such as aligning remittance dates for training levies with PAYE remittance and adjusting VAT regulations to support local industries and clean energy initiatives. For low-income households, supply of gas meters has been exempted from VAT, in a bid to improve their access to clean energy.

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