Friday, May 20, 2022 / 10:34 AM / by United Capital Research / Header Image Credit: United Capital
Anglophone West Africa
Nigeria
- Earlier this week, the National Bureau of Statistics (NBS) released inflation data for the month of April, showing that headline inflation rate surged 90bps to 16.8%, from 15.9% recorded in March-2022. The surge in inflation was driven by both food and core inflation as both sub-indices rose 117bps and 26bps respectively. The inflation print of 16.8% was ahead of industry forecast of 16.4% and our in-house forecast of 16.7%
- According to latest data compiled from the Central Bank of Nigeria (CBN) on banks’ deposit and lending interest rates, average maximum lending rate fell to 26.6%, a five-year low, despite surging inflation.
- In what is a sign of waning investments in Nigerian oil and gas sector, rig count in Nigeria has fallen further relative to OPEC and global rig counts. According to media reports, Nigeria’s rig count stands at 11.
- According to data from the CBN, Nigeria’s Q1 trade deficit rose by 175%, hit $764m creating further need for external debt. The CBN's governor's plan to reduce the import bill in Q1 2022 was compromised as the Dangote refinery which could have boosted local petroleum product manufacturing is still underway.
- According to the Cocoa Farmers Association of Nigeria (CFAN), Nigeria aims be the highest sustainable cocoa producing country in the World in the year 2027 rivaling Ghana and Ivory Coast plans to introduce living income differential payments to agricultural workers to boost sustainable crop production volumes.
Ghana
- The Central Bank of Ghana’s Governor, Ernest Addison announced the start of a bulk gold purchase programme locally to raise the gold component of its reserves and strengthen the Cedi currency without increasing inflation.
- According to the Deputy Minister of Works and Housing, Abdulai Abanga, work is in progress on the 46 projects of the National Flood Control Programme to address the challenge of perennial flooding and are expected to be completed May 2023.
- Last week, Ghana Statistical Service (GSS), reported that Ghana’s Producer Price Inflation (PPI) rate for April 2022 was 31.2% with the manufacturing sub-sector recording the highest y/y PPI rate of 38.6%, followed by the mining and quarrying sub-sector with 35.2%. The utility sub-sector however, recorded the lowest y/y PPI increase of 1.1%.
- Following the reduction in fertilizer subsidy by the Ghanian government from 50.0% to 15.0%, the General Agricultural Workers’ Union (GAWU), warned against low agricultural output and corresponding food inflation in 2023.
Francophone West Africa
Ivory Coast
- Annual inflation in Ivory Coast fell to 4.0% in Apr-2022, from 4.5% in Mar-2022. However, the m/m reading paints a completely different picture as this figure accelerated from 0.1% to 0.4% over the same period, reflecting the decline in y/y headline inflation was driven by a high base from the prior year.
- Ivory Coast alongside Ghana will begin publishing the premium paid by chocolate-makers and cocoa merchants for high-quality cocoa monthly in a bid to achieve greater transparency and a minimum floor price for the benefit of farmers.
East Africa
Kenya
- The Energy and Petroleum Regulatory Authority (EPRA) announced fuel prices will rise by Sh5.5 due to increased landed costs of fuel. In Nairobi, a litre of petrol will retail at Sh150.1; diesel at Sh131.0 and kerosene at Sh118.9.
- The newly commissioned 27.1km Nairobi expressway is set to be a major boost to the Kenyan economy. When it officially opens later this month, it is estimated to cut travel times by 2 hours 40 minutes. The eight-lane elevated dual carriageway was constructed and will be operated by China Road and Bridge Corporation (CRBC), under a public-private partnership. Motorists intending to use the road are required to pay toll fees.
Uganda
- Uganda’s economy is set to expand by 3.0% - 4.5% levels in the fiscal year ended June. This is on the back of the easing of covid -19 related restrictions and post covid increase in demand.
- Prevailing effects of the East African drought resulted in the agricultural sector recording shorter harvest periods. Coffee exports declined significantly by 24.0% y/y with the exports valued at $70.1mn.
Tanzania
- Tanzania reported that its current account deficit worsened in Q1-2022 due to surge in prices of key imported commodities and increased demand for capital goods which inflated the import bill.
- The government has signed a loan agreement worth $125.0mn from the African Development Bank (AfDB) for clean water and sanitation projects in the capital city of Dodoma primarily for financing the construction of water storage and treatment facilities. It would also be used for preparing transmission and distribution systems to aid water supply for sanitation, irrigation, fisheries and industrial use.
- The Tanzanian Meat Board via its Registrar, Dr Daniel Mushi during a press brief asserted that Tanzania exported 9,000 metric tonnes of meat products to the Middle East, with Qatar accounting for 40.0% of exports during the 2020/2021 fiscal year. This earned the country $36.0mn in foreign exchange.
- Cereal post-harvest loss which amounts to an estimated 30.0% of the annual harvests might be a thing of the past because of the eight newly constructed storage silos with a total capacity of 501,000-tonnes. The project was financed by $55.0mn in soft loans from the Polish government and $12.0mn from the Tanzanian government.
Mozambique
- The Mozambique government has sealed a three-year agreement with the International Monetary Fund (IMF) on an Extended Credit Facility to make available $456.0mn for the country, to 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. The first instalment of $91.0mn will be available immediately.
Southern Africa
South Africa
- South Africa's benchmark Consumer Price Index (CPI) rose by 5.9% in April, unchanged from March, but is expected to surge past the 3.0% - 6.0% target range of the South African Reserve Bank (SARB).
- The SARB hiked interest rates by approximately 50bps bringing rates to 4.75%, the highest in the past six years because of the rising inflation levels coupled with the inflationary risks posed by a weaker rand. Also, more hawkish stance by the US Federal Reserve and European Central Bank reducing the allure of the local securities to the foreign investor community prompted the need for rate hikes.
- Furthermore, SARB’s growth forecasts would likely be scaled back from the current 2.0% levels, on the back of the recent floodings in the KwaZulu Natal region, the second largest contributor to the country’s GDP
Angola
- Last week, Angola’s finance minister announced an upward review of the country’s economic growth (GDP) forecast upwards for this year, now anticipating an expansion of 2.7% due to the increase in oil prices.
Zambia
- Zambia's sovereign bank on the 19th of May, maintained its current lending rate at 9.0%. This was tied to the declining inflation levels which were at 11.5% in April versus 13.1% in March.
Zimbabwe
- The Reserve bank of Zimbabwe (RBZ) lifted the temporary suspension of lending service by banks except for financial institutions under investigation for lending malpractices
Central Africa
Cameroon
- Insurance companies in Cameroon show preference for government bonds over term deposits. According to the president of the Association of Insurance Companies of Cameroon (ASAC), insurers are breaking term deposit contracts in commercial banks, to subscribe to the bond issue ending on May 25, 2022
Democratic Republic of Congo (DRC)
- The Minister of Hydrocarbons of the Democratic Republic of Congo, H.E. Didier Budimbu Ntubuanga and the African Energy Chamber represented by Chairman, NJ Ayuk met in Luanda, pledge to work together to secure investment in DRC Energy to tap into significant potential across the entire energy spectrum and value chain of the country.