Africa Markets Podcast: Recent Episodes
Rand Merchant Bank
RMB's research offering spans across the fixed income, currency and credit markets to offer strategic insight to our clients across multiple sectors and markets.
Zambia: The statistics agency in Zambia reported first growth for 2022 at 2.4 q/q. Key contributors included Public Admin, ICT, Electricity, Accommodation and Real estate.
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Commodities: Over the past month, there has a been a significant decline in prices across most commodifies – fueled by fears of lackluster economic performance. The market is pricing in a recession as higher inflationary pressures erode production and chip away at discretionary spending.
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Côte d'Ivoire: Moody’s has affirmed Côte d'Ivoire’s sovereign rating at Ba3 and has changed its outlook from stable to positive. This is largely informed by the country’s prospects for growth between now and 2025 with GDP expected to print north of 7% according to the rating agency. In addition to strong growth and stable monetary policy, the rating agency expects fiscal conditions to continue to improve over the next few years.
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Namibia: Fitch ratings agency has opted to downgrade Namibia’s sovereign rating from “BB” to “BB- “on account of worsening twin deficits relative to its peers. Fitch expects the budget deficit (% of GDP) to come in at 7.6% in 2022, wider than the average budget deficit of “BB” rated economies of 5.0%.
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Egypt: The MPC opted to keep rates on hold as they wait to observe the impact of the year-to-date 300bp increase in interest rates. Lending rate remains at 12.5% while the deposit rate is 11.5%.
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Namibia: Room occupancy rates from the Namibia Hospitality Association of Namibia continue their upward trend, coming in at 39.4% during May. This is higher than the 36.5% recorded in April and the 25.7% recorded over the same period last year.
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Namibia: The latest FNB Namibia residential property report indicated that the House Price Index grew by 4.7% at the end of the first quarter of this year, down from 7.1% at the end of 2021, but unchanged compared to 1Q21.
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Botswana: The Bank of Botswana’s (BoB) Monetary Policy Committee (MPC) increased the Monetary Policy Rate (MoPR) by 50bps at a meeting held on 16 June 2022, effectively increasing the MoPR from 1.65% to 2.15%. Furthermore, repo and reverse repo operations will be conducted at the MoPR (2.15%).
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Namibia: The latest FNB Rental Index data shows that prices edged up by 0.6% at the end of March as rental activity picks up across the country. According to the FNB Residential Rental report, upward price action is seen across the properties with more than three bedrooms.
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Mozambique: Food and transport inflation seem to be the main protagonists in the latest inflation print which came in at 9.3% y/y in May, highest level since September 2017. The Russia-Ukraine war and its impact on global prices combined with general disruptions in supply has led to higher import demand into the country.
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China: Commodity prices have reacted negatively to the news of China reimposing some of the lockdown conditions that it had started to loosen a few weeks ago.
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Egypt: Egypt inflation remains above 10%, coming in at 13.5% in May. The index has soared on the back of higher food prices. Egypt has been impacted by Russia-Ukraine war which resulted in disruptions to trade globally but more importantly has curtailed wheat trade.
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Ghana: Inflation in Ghana edged 27.6% y/y in May as transport prices rose by 39.0%y/y, household equipment by 33.8% y/y, housing and utilities by 32.3% y/y and food by 30.1% y/y.
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Global: The World bank has revised its forecasts for 2022 global growth to 2.9% from its earlier expectations of 4.1% for the year. Necessitating the change is the Russia-Ukraine war and the subsequent economic impact across the world at a time when most economies were still recovering from the effects of the pandemic.
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PMI: As inflationary pressures continue unabated across the continent, businesses are having to contend with higher input costs across the board. The latest PMI data shows that in May, business conditions have deteriorated across the continent with output falling and general demand waning.
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Namibia: The latest data from the Hospitality Association of Namibia shows an improvement in National Occupancy rates. Room occupancy in April was recorded at 36.5% relative to 27.0% over the same period last year.
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SSA: Zambia has announced a 3.3% increase in pump prices on the back of rising oil prices. Earlier this week, South Africa, which has extended its fuel price relief,
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Kenya: Inflation has passed the 7% mark in Kenya, coming in at 7.1%y/y as food and fuel inflation continues to drive average prices higher. This is the highest print since February 2020. Cooking oil and wheat prices continue to increase in Kenya and will likely keep food inflation elevated for longer- currently food and non-alcoholic beverages is growing by 12.4%y/y.
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Kenya: In line with our base case scenario, the MPC opted to increase interest rates by 50bp, raising the benchmark interest rate from 7.0% to 7.5%. The narrative for higher interest rates is similar to that of other economies and can be summarised as: rising global uncertainty on account of the Russia/Ukraine war; higher global interest rates and higher global inflation.
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Egypt: Moody’s has changed Egypt’s outlook to negative from stable, whilst maintaining the sovereign rating at B2. The effects of the pandemic are having a devastating impact on the Egyptian economy as food inflation soars and as concerns around supply chain prevail.
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he inflation deceleration trend continued in May as headline CPI printed 130bp lower at 10.2% from 11.5% in April.
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Mozambique: During the first quarter of the year, the economy grew 4.1% as sectors such as hotels and restaurants, extractive industry, transport and logistics sector grew above 5.0% over the same period. Meanwhile, low growth was found in the public administrative levels, real estate and fishery which continue to growth by less than 1.0%.
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The Bank of Ghana opted to raise the main policy rate by a further 200bp, from 17% to 19%. The move was largely anticipated given the rising inflationary pressures in the economy.
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Ghana: With inflation soaring past 20% and real policy rates turning negative, we expect the BoG to continue hiking interest rates in the near term. In our base case, we expect the Bank of Ghana to increase interest rates by 300bp over the next 12 months.
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Egypt: In our March inflation commentary, we mentioned that the upward trend in inflation was likely going to lead to a further hike by the authorities in Egypt. Inflation in April however edged to 13.1%, significantly higher than market expectations, as food inflation impacted the basket.
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Zambia: At the second sitting of the year, the monetary policy committe in Zambia opted to maintain the policy rate at 9%. The deceleration in inflation and the projection for it to trend lower towards the 6-8 % target range by the end of 2023 were highlighted as the main reasons behind the decision.
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Zambia: The central bank of Zambia will have to balance two key themes during its monetary policy meeting brief: inflation, which has been decelerating over the past few months and; the rising global interest rate environment.
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Botswana: Botswana’s inflation moderated to 9.6% y/y in April (down from 10.0% y/y in March). The main contributors to the headline were the transport index, which accounted for 5.5ppt, utilities which made up 1.4ppt, food and non-alcoholic beverages (+0.8ppt) and miscellaneous goods and services (+0.7ppt).
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Wheat: India has instituted a ban of its wheat exports, a move that has sent global wheat prices higher amid an already tepid soft commodity environment. Price of wheat has escalated this year because of the Russia/Ukraine war and has been one of the key reasons for higher global inflation.
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Inflationary pressures in Namibia continue to be elevated as the April inflation print accelerated rapidly to 5.6% y/y from 4.5% in March 2022. This is the highest print observed since November 2018.
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Inflation: A weak currency, rising food and fuel costs are key factors currently driving the surge in average prices in Ghana. The latest headline inflation prints for April came in at 23.6% y/y, the highest reading recorded over the past 10 years. Food inflation, which accounts for 43.12% of the overall CPI weightings, increased by 26.6% y/y over the same period as the price of cereal and cereal products increased dramatically (see comments on global food and oil transport here
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Inflation: The first inflation print in the second quarter of the year continues to show a rise on average prices. Since the beginning of the quarter, oil prices have somewhat settled - trading between US$100 and US$110 per barrel.
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Mozambique: The IMF board has approved an Extended Credit Facility (ECF) to Mozambique worth 340.8mn SDR (US$456mn). According to the board, “The three-year arrangement will help support the economic recovery and policies to reduce public debt and financing vulnerabilities, creating space for priority investments in human capital, climate adaptation and infrastructure.”
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Currencies: As the year approaches the half year mark, year to date spot performance of the various African currencies has been split. On the one hand, despite dollar strength, the official naira rate and metical rate have slightly strengthened against the dollar.
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Botswana: Botswana’s economy rebounded by 11.4% in 2021 (compared to -8.7% in 2020), owing primarily to a significant recovery in the mining sector (29.9% y/y). The mining sector benefitted from a recovery in global diamond demand, and prices, coupled with the resumption of local copper mining activities (in 3Q21).
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Namibia: With a weak economic backdrop and rising cost pressures, the private sector in Namibia continues to struggle as can be seen with the poor credit growth. Borrowing from businesses and households is low – coming in at 2.1% at the end of March. Despite lowering interest rates during the onset of the pandemic, the market has struggled to gain momentum with credit growth averaging 2.5% over the past 12 months.
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Botswana: The Bank of Botswana’s (BoB) Monetary Policy Committee (MPC) hiked the policy rate by 51bp at a meeting held on 28 April 2022. This follows the implementation of reforms highlighted in the 2022 Monetary Policy Statement (MPS) aimed at improving Botswana’s monetary policy transmission.
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Zambia: Zambia’s Inflation rate for April was recorded at 11.5%y/y - 1.60ppt lower than the March print. The reduction can be attributed to reductions in both food and non-food categories which decelerated from 15.3% to 14.1% and 10.3% to 8.2% respectively over the same period. Inflation is at its lowest level since November 2019 on the back of base effects and currency appreciation which have outweighed rising global energy prices.
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Kwacha: The recent kwacha gains confirm our view that market sentiment is still a key driver for the currency’s performance. Relative to other economies on the continent, the Zambian economy is viewed positively despite facing the same global risks such as food and fuel inflation.
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Commodities: Global markets seem to be pricing-in risks around China’s economic growth momentum resulting in key commodity prices slipping in April. Price growth across most base metals will likely still be driven by supply chain constraints keeping prices more of less elevated.
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Côte d'Ivoire: Fitch has affirmed the country’s sovereign rating at “BB-” with a stable outlook for the economy. The rating affirmation is largely based on the confidence the agency has on the authorities to rein-in expenditure after the impact of the pandemic led to additional spending.
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Ghana: The economy bounced-back in 2021, recording 5.4%y/y, as the services industry spurred the recovery. GDP growth rates were broadly aligned with our expectation, coming-in only 0.2 ppt lower than what we had initially anticipated. Under the services industry, “Trade; Repair of Vehicles, Household Goods”, posted a strong recovery of 5.9% in 2021 versus a contraction of 2.9%y/y in 2020.
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Namibia: Despite an 8% increase in domestic fuel prices between February and March, Namibia’s March inflation print remained unchanged from February at 4.5% y/y. The month-on-month increase in fuel prices was counteracted by a marked slowdown in food prices from 5.4% y/y in February to 4.6% y/y in March, largely owing to disinflation in meat, fish, dairy, sugar, fruit, vegetable and non-alcoholic beverage sub-categories.
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Inflation has accelerated to 19.4%y/y in Ghana at the end of March. The latest print is the highest ever seen over the past decade as food and fuel prices continue to surge.
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Namibia: We expect the central bank of Namibia to hike interest rates today by 25bps in line with regional movements. Namibia’s inflation has been relative subdued over the past few years hovering between 2% and 6% over the past 5 years.
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Egypt: The latest data shows annual inflation came in at 10.5% at the end of March as the effects of Russia-Ukraine war exacerbate conditions in the country. Price pressures continue in the country as inflation expectations rise amid higher food and oil prices.
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PMI: The impact of the Russia-Ukraine war has had an impact on the latest PMI numbers with several respondents across the continent noting the disruptions on supply and the rising prices of basic goods like fuel,
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Fuel and fertilizer: Inflation expectations are expected to lift as the second quarter of the year starts. While oil prices have hovered above the US$100 per barrel over the past few weeks, soft commodity prices have been on an increase.
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Kenya: First quarter survey of CEOs operating in Kenya indicated that there is general optimism about the business environment on account of relaxed covid-19 rules, government infrastructure spending, anticipated better weather conditions and the general economic recovery momentum.
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Zambia: Inflation for March continued on its disinflationary path as it eased to 13.1% from the 14.2% recorded in February. The moderation can be attributed to a slower pace of price growth for both the food and non-food segments
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Mozambique: The monetary policy committee of Mozambique has opted to hike interest rates by 200bps, a sign that the central bank is concerned about inflation. Notably, the central bank targets single digit inflation – this hike suggests that the central bank is convinced that inflation would edge over 10% in the short to medium term.
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Kenya: The monetary policy committee have opted to keep interest rates flat in Kenya given their broad view that the economy is on a path of recovery and inflation at the moment remains within its target range.
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Mozambique: The IMF team reached a staff-level agreement with the Mozambican authorities on a new arrangement under the Extended Credit Facility (ECF) for 2022-2025 to support sustainable, inclusive growth, and long-term macroeconomic stability.
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Commodity prices have continued to soar since the start of the war in Europe. While part of the gains were associated with the general sell-off, the recent gains in base metal prices is influenced by concerns around supply.
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The MoF indicated that Zambia was on path to reach an IMF board approval by mid-year. While we change our base case for board approval later in the second half of the year, we agree that overal momentum around Zambia’s fiscal and economic developments, is improving.
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Ghana: The Ghanaian authorities are expected to announce budget cuts later today to improve the fiscal trajectory of the country. Concerns have mounted over the past year regarding the authorities’ abilities to both contain expenditure and present credible revenue targets.
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Egypt: Since the onset of the Russia-Ukraine war, Egyptian authorities have set in motion both fiscal and monetary policy changes. We saw similar swift responses from the authorities at the onset of the pandemic in 2020.
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Ghana: Bank of Ghana has opted to hike the main policy rate by 250bps, raising it to 17% in an attempt to arrest inflation across the economy. The MPC has seemingly opted to frontload it hikes as opposed to taking a staggered approach towards its hiking cycle.
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Namibia: We expect Namibia’s tourism sector to bounce back to pre-pandemic levels by 2023, in line with our expectations. We indicated last year, that the pace of the recovery in the sector will take time given low domestic vaccination rates and slow recovery in regional travel.
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Botswana: Botswana’s February headline inflation registered 10.6% y/y, unchanged from the January print. Also unchanged were the major contributors to the latest print, being the transport index, which accounted for 6.0ppt, utilities which made up 1.3ppt, food and non-alcoholic beverages (+0.9ppt) and miscellaneous goods and services (+0.7ppt).
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Namibia: Inflation in February remained relatively unchanged, declining only marginally to 4.5% y/y from 4.6% y/y in January. The slowdown from the previous month was observed in the main basket items namely food, alcoholic beverages and transport.
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Cedi: We continue to monitor the depreciation of the cedi as dollar demand increases amid an already tight liquidity environment. Despite central bank intervention, the cedi weakened over the past month given the broader sell-off caused by the Russia-Ukraine war.
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Mozambique: Moody’s has changed the outlook for Mozambique’s sovereign rating to positive from stable while affirming the country’s rating at Caa2. Fitch also recently affirmed the country’s rating at CCC
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Egypt: Inflation is on the rise across several parts of the continent, particularly in Egypt where higher food prices led to an 8.8% y/y increase in February. Over the past few months, inflation has steadily risen across this market in line with rising oil prices globally, with the recent increase in food prices likely to exacerbate the situation.
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Ghana: Ghana’s February headline inflation rate spiked to 15.7% from 13.9% in January, moving further above the central bank’s upper target band of 10% for a sixth consecutive month (note that the lower target band is 6%).
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Commodities: The London Metal Exchange (LME) suspended nickel trading yesterday, following an unprecedented surge in prices. The base metal piked by 250% in two days and was the result of industrial users of the metal and investors scrambling to buy contracts back after prices initiall rallied on the pack of supply concerns from Russia.
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Currencies: Market sell-off continues as the Russia-Ukraine war rages-on, leading to weakness across key African currencies. Liquidity challenges in certain key markets would likely exacerbate currency weakness over the next few weeks as the dollar gains in broader risk-off environment. So far this year, the shilling, kwacha, and cedi have been on the backfoot.
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PMI: The latest PMI data shows a broad increase in output from various countries after the lacklustre performance in January on the back of Omicron virus. In the key markets we track,
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Namibia: Private sector credit extension (PSCE) growth picked up to 2.7% y/y in January 2022 after reaching a 15 year low of 1.2% y/y in the preceding month. The increase was observed for both households and corporates – household credit growth increased to 3.2% y/y from 2.1% y/y in December 2021 while corporate credit growth increased to 2.0% y/y after contracting by 0.1% y/y.
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Egypt: Ukraine and Russia export more than a quarter of the world’s wheat. The geopolitical tensions and invasion of Russia into Ukraine has resulted in closed ports and disengaged logistics.
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Kenya: Kenya’s headline inflation for February surprised to the downside, printing at 5.1% y/y – lower than Bloomberg consensus figure of 5.7% y/y and January’s figure of 5.4% y/y.
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Zambia:Zambia’s energy regulator decided to increase fuel pump prices effective 1st March 2022 by an average of 10.4%. The revision will see petrol price increase from 19.84 to 21.96 kwacha per litre while diesel prices will increase from 18.93 to 21.54 kwacha per litre.
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Zambia: Headline inflation for February trended lower at 14.2% y/y, easing by 0.9 percentage points from the 15.1%y/y recorded in the previous month.
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The Bank of Botswana’s MPC maintained the bank rate at 3.75% at a meeting held on 24 February 2022. This decision was made against a backdrop of elevated levels of price growth, with risks being skewed to the upside
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The ordered Russian military action on Ukraine has sent commodity prices soaring, including PGMs lift as well as safe-haven assets.
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Nigeria: The Russia-Ukraine tensions have persisted.
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Kenya: Kenya’s National Treasury released the Quarterly Economic and Budgetary review for 2021/22. The document noted that the economy had grown, on average, by 7.8% in the first three quarters of 2021.
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he kwacha has gained ground over the past week, leading to a monthly gain of 3.6%
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Nigeria: Real GDP growth came in at 3.40% y/y in 2021 as one of Africa’s largest economies recovered from the 2020 recession.
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Monetary policy: The Bank of Zambia MPC opted to keep interest rates flat at the February meeting.
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Botswana: Inflation kicked-off the year by printing a staggering 10.6% y/y in January (compared to 2.3% y/y in January 2021). The main driver of domestic price growth remains the transport index
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Data from Mozambique’s statistics institute revealed that growth came in lower that we had expected in 2021, printing at 2.16% y/y versus our estimates of 2.50% y/y.
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Inflation: The latest surge in oil prices, combined with higher regional maize price indicators relative to last year, will cause further price inflation.
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Base metals: Commodity prices have received a boost this week post the latest US CPI print. Inflation rose by 7.5% y/y in January, driving yields higher and leading to sizeable gains in commodities.
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Inflation: Price pressures have continued to mount at the beginning of the year across various economies as supply-side factors elevate inflation.
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The Ministry of Finance and National Planning in Zambia released a white paper detailing its medium-term budget plan. Critically, the report shows that focus will primarily be on lowering the fiscal deficit (on a cash basis, excluding amortization) to -5.2% of GDP
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Botswana: Finance Minister Peggy Serame delivered her maiden budget to parliament on 7 February 2022.
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As the second month of the year gains momentum, the cedi continues to weaken as dollar demand ramps up in Ghana and liquidity conditions tighten.
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The latest PMI data reveals that most countries are starting the year on the back foot, with readings dropping on average by 2.9 index points.
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Oil: OPEC+’s decision to stick to its schedule of increasing supply by 400,000 barrels a day has not eased the market, with Brent crude prices still expected to lift over the next few weeks
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The value of Debswana’s rough diamond sales over the course of 2021 registered P38.1bn, 60.7% higher than in 2020 (P23.7bn).
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Despite historically low interest rates, credit extended to business and households in Namibia is growing at the slowest rate ever recorded over the past 15 years.
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The FAO Index, that tracks cereal prices, recorded a 12.4% y/y increase at the end of 2021 as food inflation decelerated during the final quarter of last year.
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Zambia: A deceleration in food inflation has led to the overall decrease in the headline inflation figure. Annual inflation in January recorded 15.1% y/y, down from 21.5% in January 2021.
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The Central Bank of Nigeria MPC made a unanimous decision to maintain the current monetary stance in view of the fragile economy that continues to recover since the events of 2020
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Diamonds: The bloomberg polished price diamond index is up 17.7% over the past year as demand for diamonds globally remains buoyant. In 2021, the recovery in the luxury segment continued unabated pushing up the prices of overall diamonds.
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Commodities: Despite dipping in prices in December, overall commodity prices are back on a path of recovery as global demand picks up. Covid-19 induced fears have seemingly dissipated from the market allowing for economic activity to resume unabated across the globe.
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Covid-19: Most economies seem to be easing from the fourth wave that started during the latter part of last year.
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Oil: The price of oil is expected to remain elevated in 2022 as demand globally rebounds amid restricted supply. Over the past year, despite being volatile on the back of covid-19, prices have been on a steady increase as economy’s lessen restrictions around covid-19 and as vaccination rates improve.
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Growth: The latest data on economic performance across the continent shows that the effects of the pandemic have broadly dissipated. 3Q21 data captures the period when delta variant was rampant and despite its direct effects on various households,
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Inflation: As brent crude oil hits record highs and as average regional food prices remain upwardly sticky, inflation pressures are likely not to ease substantially in 2022 across the continent.
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Currencies: As the year takes-off, most African currencies have started on stronger footing gaining 0.65% on average year to date. Since the onset of the pandemic, currencies seem to have stabilised reversing most losses experienced in 2020 and performing better than most emerging market currencies (see Figure 1).
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Mozambique: The Mozambican parliament has approved the 2022 budget, which shows a significant increase in government expenditure. This is likely to result in further widening of the budget balance, which we expect to widen from -10% of GDP in 2021 to -12.5% of GDP.
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Kenya: The authorities have opted to introduce price cuts to electricity over the course of the next few months in a bid to alleviate pressures faced by both households and businesses. Over the past 12 months,
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Ghana: Ghana has introduced mandatory vaccinations for all travellers entering the country. The move comes at a time when the world is contending with a fourth wave.
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Egypt: Both annual and monthly inflation slowed in November. On a year-on-year basis, the print came in at 5.6% vs 6.3% the month before while the monthly reading eased to 0.1% from 1.5%.
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Namibia: Yesterday the Bank of Namibia kept the repo rate unchanged at 3.75%. The MPC cited that the spreading of the omicron variant is a major risk of the nascent economic recovery.
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Côte d'Ivoire: Overall, export earnings from cocoa are expected to remain robust over the course of 2022 given the expectation of normal to above normal rainfall for the region.
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Ghana: The Ghanaian market continues to improve with the latest PMI figures coming in at 51.0 at the end of November. We indicated earlier this week that most economies have PMI numbers above the 50-neutral mark as demand resumes across the various economies.
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PMI: The latest PMI figures show that business activity and sentiment is generally positive towards the end of the year. Across Zambia, Mozambique, and Kenya, PMI figures are in expansionary territory printing 51.8, 52.0 and 53.0 respectively.
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Lawmakers have approved plans to increase spending by 5.4% in FY21/22. As a result, the authorities now see the fiscal deficit narrowing to 8.2% of GDP in the current fiscal year and narrowing to 6% in FY22/23.
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Nigeria: The PMI reading for November remained in expansionary territory, printing at 55 from 54.1 the month before
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Namibia: Credit to the private sector continued to grow at a slow pace of 2.9% y/y at the end of October
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Nigeria: Moody’s has changed Nigeria’s credit rating outlook from negative to stable while affirming the long-term issuer credit rating at B2.
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Covid-19: While active cases remain low in the region, there are signs that at fourth wave of covid-19 can be expected over the next month. Despite expectations of it, the new omicron mutation has added towards uncertainty on length and nature of the wave.
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Zambia: Inflation in November continued to decelerate as the reading came in at 19.3%y/y compared to 21.1% a month before. Zambia’s inflation trajectory continues to buck the regional trend of increasing price pressures simply because of base effects and the lagged impact of a strong currency in 2H21.
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Zambia: The MPC opted to hike rates by 50bp, lifting the policy rate to 9.0%. Key to the decision was the fiscal policy target which aims to have inflation taper to single digit territory by 2023.
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Zambia: The monetary policy committee is expected to keep interest rates flat during their last seating for the year. Key to their decision will be inflation, which has so far maintained its disinflationary trend in line with their forecasts.
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Namibia: Tourism activity continues to recover in Namibia with bed occupancy rates at 30.4% at the end of October. This is a significant improvement from last year’s average bed occupancy rates which came in at 13.7%.
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Nigeria: the economy grew by 4.03%y/y in 3Q21 compared to 5% in the previous quarter. The softness in the data is partly due to crude oil production which was down 6% in the quarter resulting in an overall decline in the sector by 10.7%.
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Ghana: The 2022 budget showed an aggressive fiscal consolidation, with the balance returning to the constitutional limit of no more than 5% of GDP expected by 2024.
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Mozambique: We expect the MPC to signal towards a higher interest rate environment as inflation hovers above the upper bound target of 6%. We noted that increases in food and alcohol prices, combined with higher costs of fuel and gas have led to inflation rising to 6.4% y/y at the end of October.
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Botswana: Botswana’s inflation rate jumped to 8.8% y/y in October, 0.4ppt higher than the September print. The primary contributor to this level of price growth was the transport index(4.5ppt), which received a prod from the recent fuel increases.
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Kenya: The Energy and Petroleum Regulatory Authority has opted to keep the prices of gasoline products unchanged for the December period. This is after the authorities opted to cut prices in October to offer support to consumers.
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Namibia: Inflation picked up modestly to 3.6%y/y in October from 3.5%y/y the month before. In keeping with the global trend, goods inflation at 4.5%y/y continues to outpace services inflation at 2.4%y/y as supplychain bottlenecks fuels this trend.
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Ghana: Like in the US, Ghana’s latest inflation print overshot inflation expectations (10.9% y/y) to print at 11% in October from 10.6% in September
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Mozambique: Inflation remains upwardly stick across the country coming in at 6.42% y/y at the end of October. The main protagonists for growth were food and restaurant inflation that came in at 12.23%y/y and 6.27%y/y, respectively over the same period.
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Mozambique: ENI expects construction to be completed later this year at its Coral FLNG operations, with production and export to begin mid next year.
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Nigeria: Data from the central bank shows that private sector credit extension continues to improve across the market.
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Egypt: FX reserves increased marginally increased by US$29m to US$40.8bn in October. Reserves continue to improve on account of foreign portfolio inflows into the country which now exceed pre-pandemic levels as offshore investors now own over US$30bn in assets.
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Ghana: The latest PMI figures point towards a slowdown in the economy, with the reading coming in softer at 51 in October vs. 52.6 a month before. While still in expansionary territory, the output sub-component came in at 50.5 vs. 53 in September.
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Egypt: The latest PMI figures point towards a slowdown in non-oil sector output on the back of supply-side bottlenecks. We have cautioned before that one of the negative externalities from covid-19 has been the impact on supply chains globally.
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Nigeria: Economic recovery continues to garner momentum in Nigeria, with the latest PMI figures indicating that output from various producers in the country is on the rise. In October,
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Egypt: True to expectation, the central bank kept interest rates unchanged for the eight consecutive meeting.
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Egypt: Front and center today will be the MPC decision were we expect interest rates to stand pat. While the trajectory of higher inflation (6.6% in September) will be concern, the committee will be cognisant that the high real interest rate has been supportive to the external accounts.
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Covid-19: BioNTech has signed deals with Rwanda and Senegal for the production of mRNA vaccines from mid-2022. Since earlier this year, discussions have been evolving around the potential production of vaccines (including covid-19 vaccines) in the continent.
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Nigeria: The central bank has committed to provide financial support to private sector companies based on the policy they have introduced that will run from the first of November.
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Mozambique: We see further upward pressure to Mozambique’s inflation profile as the energy regulator announced higher prices on petroleum products last week. On average fuel prices were increased by 9% while cooking gas is up 26%.
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Botswana: The Bank of Botswana’s (BoB) Monetary Policy Committee (MPC) maintained the bank rate at 3.75% at yesterday’s meeting.
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Namibia: The Bank of Namibia’s MPC yesterday kept interest rates unchanged at 3.75% on sluggish economic growth. We don’t foresee any changes to interest rate levels until 2H22 where we expect a 25bp increase, aligned with regional interest rate hikes.
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Namibia: We expect the MPC to keep interest rates flat at 3.75%, maintaining their current broad accommodative stance within the economy. Since their last seating, inflation has broadly moved sideways coming in at 3.5%y/y in September.
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Mozambique: The Council of Ministers in Mozambique have approved the proposal of the budget, now slated to be debated in parliament over the next few months.
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Côte d’Ivoire: Former president of Côte d’Ivoire, Laurent Gbagbo, has launched a new political party African People Party – Côte d’Ivoire (PPA-CI). The former president has stated that he plans to remain in politics for the rest of his life.
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Namibia: Inflation pushed higher in September to 3.5%y/y from 3.4% in August. In monthly terms, the print came in at 0.3% compared to -0.2% a month before, which was the lowest reading since September 2020.
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Ghana: True to form, annual inflation continues to increase, with the September print coming in at 10.6% y/y from 9.7% a month before. The latest print, a 14-month high, is now above the 10% — the upper threshold of the inflation target band.
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Mozambique: Latest inflation leading indicator suggests that the final quarter of the year could see inflation remaining persistently high in Mozambique. On an annual basis, the leading indicator is up 12.3%y/y at the end of September on the back of higher fuel prices and persistently high regional food prices.
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Mozambique: The leader of the Renamo Military Junta, Mariano Nhongo, was killed in combat by Mozambican security forces.
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Egypt: Urban inflation has rallied to 6.6%y/y in September on the back of higher food prices. The price surge was driven by the prices of food which shot up by 10.6%y/y. Over our forecast period (2021 -2023) we expect inflation to continue on a steady upward path, spurred by factors such as a pickup in economic activity, the recent adjustment to minimum wages and elevated commodity prices.
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Zambia: External bonds traded relatively well yesterday on comments by the vice president that the nation aims to reach a staff-level agreement with the IMF by the end of this year. It was also noted that external guaranteed and non-guaranteed debt stood at US$14.7bn, of which indebtedness to China is US$5.95bn.
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SSA economic growth: The World Bank has raised its SSA growth forecast to 3.3% for 2021 which is about 1ppt higher than its April forecast. Underpinning the revision is the sharp increase in commodity prices (the Bloomberg Commodity Index is up 31% year-to-date) and easing lockdown restrictions
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Zambia: The past week so the conclusion of talks between IMF and Zambian authorities. The next key milestone for the authorities will be the budget proposal.
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PMI: The index for Nigeria remains firmly above the 50-level benchmark, coming in at 52.3 in September indicating strong business confidence. Supporting the general positive business sentiment is the increase in new orders with firms increasing employment in some sectors.
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Kenya: The Kenya Revenue Authority has indicated that tax collected has come in better than what was initially targeted. Improvement in custom taxes have in part led to overall increase in total revenue collected.
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Zambia: September’s inflation slowed to 22.1%y/y - a 2.3ppt drop from the August reading. The main driver was the deceleration in food inflation which printed at 29.6% compared to 21.6% previously while non-food inflation also slowed sharply to 13.6% from 16.3%.
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Kenya: The president yesterday noted that existing power purchase agreements are under review. By his estimation, electricity tariffs could fall by as much as 30% over the next four months.
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Kenya: In line with market consensus, the central bank of Kenya opted to keep interest rates flat at 7.0%. Broadly speaking, we concur with the central bank narrative that remains tilted towards offering monetary policy support towards the recovering economy.
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Ghana: The central bank opted to keep interest rates unchanged at 13.50% as the current accommodative policy remains critical in supporting Ghana’s broader economic recovery targets.
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Namibia: The second quarter economic performance suggests that there are risks to our current 2021 growth estimates of 1.0%y/y. The economy grew by 1.6%q/q as several sectors bounced back from the devastating performance during the same time last year when the country was in lock down.
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Ghana: In the latest FX forward auction, the Bank of Ghana sold US$50m against demand of US$133m, suggesting continued pressure in the currency market. The demand for dollars from corporates has continued to ratchet up in the last few months, leading to the cedi losing 3% of its value in 2H21.
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Nigeria: The Nigerian Statistic Bureau revealed that firth of the workforce lost their jobs during the pandemic based on survey in the market. The survey results corroborate a broader theme impacting the continent - job losses in 2020 may have had a more permanent feature on the continent versus developed markets where employment figures are heading back to pre-pandemic levels.
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Kenya: Kenya’s High court, that had previously suspended a new minimum tax, has now declared the tax as unconstitutional. The tax change was among other efforts taken by the current government to improve tax revenue to the country.
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Namibia: FNB housing Index is up 9.6% y/y at the end of June, signalling a recovery in house prices across the market despite a weak economic backdrop.
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Egypt: True to expectation, the central bank left interest rates unchanged yesterday. The statement was neutral on the recent increases in inflation, citing base effects and muted core CPI. On growth, the committee noted the strong economic recovery, particularly the 2Q21 print of 7.7% which brought the full year FY20/21 growth to 3.3%.
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Nigeria: In keeping with consensus, inflation slowed to 17% y/y in August from 17.4% in July. With month-on-month inflation having printed at 1% compared to 0.9% a month before, the move seems to be driven more by base effects. We expect the trend lower to continue for the remainder of the year, but the pace of disinflation could be challenged by the weakening naira in the parallel market, which now trades at 562 to the dollar. This is markedly wider than the 412 in the I&E window.
The latest print cements our view that the bank rate will be left unchanged in the upcoming MPC meeting.
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Mozambique: We expect the central bank to keep interest rates at the current level. Since the last MPC meeting, inflation has remained above 5.0% — a rate we expected given the rising regional food prices, higher oil prices and weaker currency.
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Zambia: According to the ministry of finance’s Mid-year economic report, growth in the Zambian economy is slated to come in at 1.6%y/y in 2021. Underpinning their growth figures will be the performance of the key sectors of agriculture,
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Botswana: Botswana received support from the African Development Bank (AfDB) in the form of a US$137m loan to support its economic recovery efforts
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Egypt: for three consecutive months, annual inflation has increased now standing at 5.7%y/y in august from 5.4% in July. Generally, global food prices have been increasing alongside fuel costs as the scars of the pandemic fade.
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Ghana: Inflation for August surged to 9.7% from 9% y/y a month earlier. The main protagonist was food, which increased to 10.9% from 9.5% — in keeping with international trends where food prices continue to rise. Non-food prices rose by 8.7%, after climbing 8.6% in the prior month.
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DSSI: Mozambique, Kenya and Zambia are among several African countries that will be benefiting from a final extension of the Debt Service Suspension Initiative (DSSI). The extension runs from the 1st of July to the 31st of December.
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Mozambique: Coal production from Vale operations in Mozambique has increased by 92%q/q over second quarter of this year according to reports.
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Egypt: Despite remaining below the 50-neutral level, PMI data in Egypt edged higher in August coming in at 49.8 from 49.1 in July. The pick-up was on the back of improved demand across the market.
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Mozambique: The latest PMI reading dipped below the 50-neutral level, printing at 47.9 in August relative to 51.8 a month earlier.
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Zambia: As expected, the central bank held interest rates at 8.5% citing that while inflation was projected to remain above the bank’s target, it was on a downward trajectory.
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Zambia: We expect the central bank to increase interest rates during the MPC meeting. We maintain this view given the inflationary pressures across the economy.
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Mozambique: Second quarter growth came in at 1.97%q/q as tertiary sector services showed improvement across the economy.
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Covid-19: Several African countries will have to brace themselves for another infectious wave towards the end of the year on account of poor vaccination rates.
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Zambia: True to expectation, year-on-year inflation in August slowed to 24.4% from 24.6% a month earlier.
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Zambia and Nigeria data reseales: Anticipated data releases today include CPI from Zambia and GDP figures from Nigeria.
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Cote d’ivoire: Data collected by bloomberg shows that cocoa output has been improving in Cote d’Ivoire as better rains has led to bumper harvest.
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Mozambique: Data for the first half of the calendar year suggests that tax revenue has improved within the economy – mainly supported by the country’s megaprojects.
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Kenya: The country’s Court of Appeal has rejected government’s appeal to make fundamental changes to the constitution.
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Botswana: the finance minister yesterday raised the forecasted budget deficit to 3.6% in FY21/22 from a previous estimate of 2.9%.
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