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Snapshot on the African Economy as @ 200123

Jan 20, 2023   •   by United Capital Research   •   Source: United Capital   •   eye-icon 216 views

Anglophone West Africa
 

Nigeria

  • According to the National Bureau of Statistics (NBS), headline inflation eased to 21.3% y/y in Dec-2022, following ten consecutive months of increase, from 21.5% in Nov-2022. Notably, food inflation, the major component of the CPI basket, slowed to 23.8% (vs 24.1% in Nov-2022). On the other hand, core inflation accelerated for the ninth consecutive month to 18.2%, primarily due to rising global energy costs.
  • On a monthly basis, consumer prices rose by 1.7% m/m, the most in four months, after a 1.4% increase in the previous month. The m/m rise is due to a sharp increase in demand, usually experienced during the festive season and an increase in the cost of production.
  • The Senate President, Ahmad Lawan, has declared that the Senate is ready to approve the N23.7tn debt restructuring request made by the President, Major General Muhammadu Buhari (Retd.),  in Dec-2022.
  • The Central Bank of Nigeria (CBN) has injected $15.3bn into the economy between Jan to Oct-2022 to stabilise the value of the naira. This was obtained in the banking sector regulator’s monthly and quarterly economic reports on foreign exchange market developments. The reports noted that $4.9bn, $4.8bn and $4.2bn were injected into the economy during the first, second and third quarters, respectively, while $1.5bn was injected in Oct-2022.


 Ghana

  • According to the finance minister, the government has extended the deadline for its Domestic Debt Exchange (DDE) program from 16-Jan to 31-Jan to allow more engagements with institutional and individual investors. Despite pushbacks, it is believed that the International Monetary Fund (IMF) board will approve Ghana’s $3.0bn extended credit facility program in Q1-2023.
  • According to the Ghana Statistical Service (GSS), Producer Price Inflation (PPI) slowed to 52.2% y/y in Dec-2022 compared to a 78.1% y/y increase in Nov-2022. This deceleration is due to the rapid appreciation of the Ghanaian cedis until mid-Dec following the staff-level agreement for the $3.0bn IMF support package earlier in the month. On a monthly basis, producer prices fell by 13.3%.
  • The Ghana Stock Exchange (GSE) has approved a request by the Ghana Association of Banks to extend the deadline for lenders to file their 2022 audited financial statements to 30-Apr because talks with the government about the debt exchange program have affected the finalisation of statements.
  • The Public Utilities Commission has raised Ghana’s power tariff by 30.0% after taking into account exchange rate movements, inflation and the weighted average cost of gas.

 
Francophone West Africa (WAEMU)
 

Senegal

  • The International Monetary Fund recently approved the disbursement of c.$216.0mn to Senegal, as the nation’s fiscal accounts continue to remain under increasing strain, also affected by weaker external demand, rising food and energy prices, tightening financial conditions, and the dollar appreciation.


 East Africa

 

Kenya

  • According to the Central Bank of Kenya, remittance inflows grew by 8.0% y/y to $4.0bn in 2022, with the US remaining the largest source of remittances in Kenya. In addition, central bank Governor Patrick Njoroge said East Africa’s largest economy might grow by as much as 6.2%,
     compared to an estimated 5.6% in 2022.
  • According to auction manager, Tea Brokers East Africa, the average price of tea declined to $2.2/kg at the last auction in the Kenyan port city of Mombasa from $2.3/kg at the first auction of 2023. About 74.0% of the 14.4mn kg on offer was sold.
  • Treasury Secretary Njuguna Ndung’u revealed that the nation collected Shs952.6bn in taxes in the six months through to Dec-2022, up 10.0% y/y. The collection is 46.0% of the entire year target of Shs2.1bn. In addition, Kenya spent Shs503.8bn, or 53.0% of exchequer earnings, on debt repayments.
  • The secretary further revealed that the gross domestic borrowing was Shs253.9bn, and the government received foreign loans and grants of Shs177.9bn in the period, compared to a target of Shs349.3bn.
  • According to media reports, Kenya’s High Court has ordered Safaricom Plc and the central bank to suspend the reintroduction of charges for transactions between mobile money wallets and bank accounts pending the outcome of a consumer lawsuit.
  • Media reports also revealed the East African Community’s Council of Ministers to determine the location of the East African Monetary Institute. The Institution will allow member states to harmonise their fiscal and monetary policies, introduce a common currency in about
     three years.


 Rwanda

  • According to Bloomberg reports, the Rwanda Government’s asylum policy faces further delays after the High Court allowed an appeal against its legality.
  • The country's agricultural export board revealed that the average price of Rwandan coffee sold for export fell by 14.0% w/w. The board said that coffee beans sold for an average price of $6.2/kg, down from $7.2/kg the prior week. The country exported 28.5 metric tons
     of coffee for $177,130 compared with 37.7 tons sold for $270,684 the week prior.


 Tanzania

  • According to Tanzania’s central bank, it’s working toward a "phased, cautious and risk-based" introduction of a digital currency for the East African nation.
  • Ashatu Kijaji, the Minister of Investment, Industry and Trade, revealed that Tanzania's government had banned the importation of salt to boost the domestic market for locally produced products. 

 
Uganda

  • According to Perez Wamburu, Uganda’s project coordinator, Uganda terminated a deal with a Chinese contractor (China Harbour Engineering Company) to build a $2.3bn railroad after it failed to secure Beijing’s financial backing for the project. The East African nation has been in talks with Yapi Merkezi to take over the project’s development and expects the Turkish company to submit an expression of interest in weeks.
  • The IMF concluded the second and third reviews under the Extended Credit Facility arrangement for the nation during the week.The IMF executive board granted a waiver of non-observance of a performance criterion on the Ugandan central bank’s net international reserves. The approval of the $240.0mn loan brings aggregate disbursement-to-date to $625.0mn.
  • According to media reports, the cabinet approved a license for the construction of the $4.0bn East African Crude Oil Pipeline, a 1,443-kilometer conduit from Uganda’s oil fields to Tanzania’s Tanga port on the condition that it secures all other required consents and permits.

 
Southern Africa
 

South Africa

  • According to Statistics South Africa (SSA), the country’s consumer prices rose 7.2% y/y in Dec-22, down from 7.4% y/y in Nov-22. Consumer prices rose 0.4% m/m vs 0,3% m/m in Nov-22. Core CPI rose 4.9% (vs 5.0% in Nov-22)
  • Also, the country’s retail sales rose 0.4% y/y in Nov-22, down from 0.7% y/y in Oct-22. Seasonally adjusted retail sales rose 1.1% m/m compared to a 0.3% rise in Oct-22.
  • Data from SSA revealed that the country’s mining production fell 9.0% y/y in Nov-22 vs 11.0% y/y contraction in Oct-22. Also, gold production fell 4.6% y/y in Nov-22 vs revised -6.6% y/y in Oct-22. Similarly, Platinum Group Metals (PGM) production fell 22.0% y/y vs revised -33.8% y/y in Oct-22.
  • MTN Group Ltd. plans to start a dispute resolution process if talks with Ghanaian authorities over a $773.0mn back-tax bill the company received last week fail. In a statement from MTN, the Ghana Revenue Authority sent the company a claim for the 2014-18 period, implying MTN under-declared its revenue by 30.0%.
  • In a Bloomberg survey, economists forecast the South African economy to grow by 2.2% in Q4-2022. The South African Reserve Bank (SARB) benchmark rate was also expected to hit 7.5% in Q1-23 (currently at 7.0%). The country is estimated to have a 45% probability of entering a recession.
  • Duncan Pieterse, a Director-General at the National Treasury, disclosed that the Government has requested a $1.0bn development policy operation loan from the World Bank. This is in its effort to avoid tapping capital markets for funding.
  • The South African National Energy Regulator has granted Eskom Holdings SOC Ltd. an 18.7% tariff hike in 2023-24, in contrast to the 32.0% requested by the company.


 Angola

  • According to a summary of Dec-22 crude oil production released by OPEC, Angola produced 1,134.0 kb/d (vs 1,092.0 kb/d and 1,050.0 kb/d in Nov-22 and Oct-22 respectively). Also, the country plans to export in excess of 923.0 kb/d in Mar-23 (vs 1.1 mb/d in the Feb-23 final plan).
  • Fitch Ratings has affirmed Angola’s long-term foreign currency debt rating at B-. Also, Its Long-Term Issuer Default Rating and Long-Term Local Currency Issuer Default Rating was affirmed at B-. The outlook remains positive.
  • According to the Instituto Nacional de Estatistica, Angola’s national consumer price rose 13.9% y/y in Dec-22 vs 15.2% in Nov-22. Luanda CPI rose 13.1% y/y vs 14.6% in Nov-22.


 Zimbabwe

  • The Reserve Bank of Zimbabwe (RBZ), at the weekly auction, cleared all outstanding foreign currency payments following improved US Dollar supply. The RBZ expects this to sustain financial stability and stabilise foreign exchange.
  • Zimbabwe’s gold coins, introduced in Jul-23, now trade for more than $2,000.0/oz. each. The RBZ introduced the coins to cease the fall of the Zimbabwean dollar.
  • In 2021, according to government data, Zimbabwe imported $60.0mn of grain a month from Ukraine.
  • Zimbabwe and Zambia have approached the African Development Bank (AfDB) to assist in financing the construction of the 2,400.0MW Batoka Gorge hydroelectric power project. The development is along the Zambezy River on the border between both countries.


 Zambia

  • The government has expressed its interest in a 15.0% stake in the Lobito oil refinery, a $4.0bn project that Angola plans to build. The financial feasibility study for the 200.0 kb/d refinery is to be completed by Jun-23. Construction is scheduled to start in Q4-2026.
  • According to President Hakainde Hichilema, Zambia and the United Arab Emirates (UAE) have signed a $2.0bn agreement to build solar plants in the country. The project is estimated to increase Zambia’s generation base by over 50.0%. The joint venture between Zambia’s state-owned power utility, Zesco, and a UAE government-owned renewable energy company, Masdar, targets the development of 2,000.0MW solar power projects.
  • Maamba Collieries Limited (MCL) has completed its scheduled maintenance work on one of its two 150MW units at the coal-fired thermal power plant and has since resumed operations at full capacity.

 
Central Africa
 

Democratic Republic of Congo (DRC)

  • According to Congolese President Felix Tshisekedi, Rwanda’s alleged support for armed groups in eastern Democratic Republic of Congo is blocking economic development in the region.
  • As disclosed by Reuters, the Democratic Republic of Congo is in the process of securing an agreement on overhauling $6.0bn of an infrastructure-for-minerals deal with Chinese investors this fiscal year 2022.
  • Also, the FG expects to reach an agreement by Apr-2023 for financing up to $1.0bn from the IMF’s Resilience and Sustainability Trust.
  • According to a statement distributed by the state-owned Societe Nationale des Petroles du Congo, the shutdown of operations of La Congolaise de Raffinage (Congo’s Refinery) is scheduled to continue until 2-Mar-2023. The shutdown is part of a six-yearly halt to overhaul production units and perform regulatory tests.


 Cameroon

  • The Cameroonian government, in its 2023 Finance Act, announced it is cutting diamond and gold export duties by 50.0%. The fees will now be 5.0% of the FOB value of the ore to be shipped instead of 10.0%.
  • Last year, Cameroonian banana exporters shipped a total of 216,103 tons of fruits to the international market. Compared to the overall 198,634 tons exported in 2021, this makes an increase of 8.0% year-on-year.
  • In Dec-2022, the Cameroonian government offered an interest rate of 4.11% on its fungible treasury bills (BTAs) on BEAC’s public securities market. According to the latest BEAC monthly stats report, this is the highest rate the country has offered on this market in many years compared to the usual 3.0%.
  • However, the report highlighted that although the country has raised the cost of its BTA operations over the period under review, Cameroon remains the CEMAC country with the lowest debt on the market.
  • The brewing industry in Cameroon is forecast to suffer a setback in the first quarter of 2023 after the upturn in Q4-2022. The reason, BEAC said in its recent Business Climate Forecast, is the "decline in demand for drinks, reflecting the low purchasing power of consumers after the end-year celebrations.
  • The volume of new loans granted within the CEMAC region increased by CFA350.2 bn y/y over the first six months of 2022.
  • According to official data published by the BEAC, the overall volume stood at CFA3.4tn at the end of Jun-2022, up 11.5% from CFA3.1tn at the end of Jun-2021. This substantial increase, BEAC says, is owed to the resumption of economic activities in the post-pandemic period.
  • The Cameroonian Customs Administration (DGD) is expecting the newly introduced cocoa beans export tax to generate between CFA20.0bn and CFA25.0bn this year.
  • The export of raw cocoa beans is subject to an autonomous exit duty at a rate of 10.0% of the FOB value. According to the 2023 Finance Bill, this rate is 2.0% for cocoa beans exported to industrial free points or similar systems.
  • The EU Commission announced in a recent statement that it is banning the export of fishery products from Cameroon. The red card was issued because the Commission considered the efforts made by the Cameroonian government to control illegal fishing as weak.

 

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