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Africa Chart Book

Africa Chart Book

Fiscal positions largely going from worse to bad

Fiscal positions across Sub-Saharan Africa have been a persistent source of concern since the onset of the pandemic – and in some cases, even before. And the commodity price moves resulting from the war in Ukraine will be unfavourable for public finances in most countries. The cost of subsidising fuel, fertiliser or food products is set to rise sharply. On top of this, recent floods in South Africa and a severe drought in East Africa will probably prompt a fiscal response as the authorities step in to support relief and reconstruction efforts. And we think that policymakers will loosen the fiscal purse strings ahead of upcoming elections in Kenya and Angola. The bottom line is that sovereign balance sheets in the region are unlikely to improve as quickly as many hope for.

28 April 2022

Africa Chart Book

War in Ukraine: a varied impact across Africa

Spillovers from the war in Ukraine will have a varied impact across Sub-Saharan Africa. Large oil producers such as Nigeria and Angola are benefitting from the surge in global oil prices but, for the rest of the region, it is worsening their terms of trade. That is a cause for concern for countries already running large current account deficits, such as Kenya, particularly given that external financing conditions have tightened at the same time. The Ghanaian cedi has been a notable casualty among African currencies, further fuelling concerns about its fragile public finances. Meanwhile, with higher commodity prices adding to inflation pressures and the Fed turning more hawkish, central banks may tighten monetary policy more quickly.

31 March 2022

Africa Chart Book

Mixed market reaction in Africa to Russia-Ukraine war

Elevated commodity prices on the back of the Russia-Ukraine crisis will almost certainly add to inflationary pressures across Sub-Saharan Africa. High prices for energy, metals and agricultural products that African countries export seem to have shielded most currencies in the region from sinking amidst a deterioration in risk appetite. But there are some signs of stress. In particular, the Ghanaian cedi has weakened sharply and its sovereign dollar bond spreads have widened, further increasing its public debt vulnerability. EM Drop-In (Thur. 3 March, 15:00 GMT) We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.

28 February 2022
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Africa Chart Book

Omicron waves in the rear view mirror

Waves of the Omicron variant that spread across the region in December have subsided sharply in recent weeks. And timely survey and mobility data point to a smaller hit from these latest waves compared with previous ones. But the good news will probably be in short supply going forward. Low vaccination rates mean that the region remains vulnerable to future virus waves. What’s more, other headwinds are likely to grow. We expect commodity price moves to turn increasingly unfavourable. And policy support will be thin on the ground with officials pursuing austerity and/or shifting to tighten monetary policy.

Africa Chart Book

Emerging virus waves clouding recoveries beyond SA

Much attention has been devoted to the Omicron-fuelled fourth COVID-19 wave ripping through South Africa but cases have picked up elsewhere in Sub-Saharan Africa as well, with especially sharp rises in Nigeria and Namibia. There are early signs of virus waves taking hold in Kenya and Ghana too. But so far African policymakers are following their peers in South Africa with a “wait and see” approach before tightening economically-damaging restrictions on activity. Were healthcare systems to come under strain, governments’ hands may be forced and past form suggests that stringent containment measures pose the biggest risk to economic recoveries in Kenya, Rwanda and Uganda. Meanwhile, tourism-dependent economies will probably suffer either way. Even if travel restrictions are rowed back, any green shoots in tourism sectors are likely to wither amid virus concerns. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

Africa Chart Book

Omicron shines spotlight on low vaccine coverage

The emergence of the Omicron strain of COVID-19 reinforces the need to boost vaccine coverage in Sub-Saharan Africa from current low levels. Most countries have administered at least one vaccine dose to less than 20% of their populations. The South African authorities’ initial response to the ‘Omicron threat’ was to urge the take-up of vaccines, rather than tightening containment measures. And so long as vaccine coverage is low, the risk of intermittent curbs on activity to relieve strains in health care sectors will linger with future virus waves and variants. Achieving such vaccine coverage will probably take some time even as Africa’s vaccine supplies – including from China and India – look set to increase over the coming quarters.

Africa Chart Book

Hope on vaccines, but still a long way to go

COVID-19 vaccine coverage remains pitifully low across much of Sub-Saharan Africa, with less than 10% of populations having received at least a first dose in most countries. But there are signs that things may be slowly turning a corner. The rate of vaccination has picked up in recent weeks and there are growing hopes that this trend will continue as the supply of vaccines to the continent improves. That said, there is still a long way to go to reach the high vaccine coverage achieved in other parts of the world. What’s more, even as supply improves, other hurdles such as logistical challenges and vaccine hesitancy may still hinder progress. In the meantime, the region will remain vulnerable to fresh virus outbreaks and the threat of tighter restrictions will continue to cast a cloud over the economic outlook.

Africa Chart Book

Debt restructuring talks inching forward

The threat of messy outcomes to Sub-Saharan Africa’s debt problems seems to have diminished recently. In Zambia, the new administration vowed to tackle debt problems and press on with restructuring talks under the G20’s Common Framework. And Ethiopia, another participant in the programme, held its first creditor meeting as a political crisis reignited debt concerns. Even so, debt restructuring negotiations will not be smooth sailing, especially following recent revelations that Zambia’s debt owed to China may be substantially larger than officially reported. And elsewhere, debt problems may come back to bite down the line. While immediate risks in South Africa and Ghana are low, policymakers will need to undertake large fiscal consolidation to stabilise public debt-to-GDP ratios.

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