Africa

Africa Economics Weekly

Africa Economics Weekly

FX orthodoxy in Nigeria? Strikes in SA, Ethiopia’s conflict

Comments by Nigeria’s vice president endorsing a more market-based exchange rate regime reflect growing concern about the distortionary effects of the current FX system, but there is no evidence that key officials backing the existing currency arrangements are also shifting tack. In South Africa, ongoing industrial action in the steel industry will probably dampen manufacturing output in Q4, in another hit to the recovery in the sector and the wider economy. Finally, escalating tensions in Ethiopia raise the spectre of more severe strains in the balance of payments.

15 October 2021

Africa Economics Weekly

Signals from the SARB, Nigeria’s humdrum budget

The South African Reserve Bank’s (SARB’s) Monetary Policy Review published this week put monetary policy normalisation back in the centre of attention, and it now seems that policymakers are unlikely to stand pat for much longer. We now expect the first rate hike in January, but we still think that the tightening cycle will be slower than investors are pricing in. Meanwhile in Nigeria, budget plans for 2022 suggest that the country’s fiscal problems will persist.

8 October 2021

Africa Economics Weekly

Debt data disclosures, SA fiscal buffer evaporating

Reports suggesting that many developing countries, including some in Africa, have larger external debts to China than officially reported reinforce concerns about a lack of transparency. At the very least, debt restructuring talks will get tougher. Meanwhile, in South Africa, the public finances have almost certainly taken a turn for the worse since the rosy outturn in the second quarter.

1 October 2021
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Africa Economics Weekly

Vaccine tides turning in SSA? Evergrande reverberations

This week brought the prospect of an improvement in Sub-Saharan Africa’s vaccine supplies, but the region is still likely to struggle to catch up with the rest of the world in the global vaccination race. Meanwhile, although we expect the fallout from the Evergrande saga to be limited, the region’s metal producers like South Africa are exposed to weakness in China’s property sector. Finally, there has been some momentum towards a debt restructuring deal for Ethiopia, but this will probably be difficult to thrash out.

Africa Economics Weekly

‘BIG’ push in SA, FX distortions in Nigeria, tourism woes

Momentum behind proposals for a basic income grant (BIG) in South Africa appear to be building, suggesting that the authorities are leaning towards providing more fiscal support. Elsewhere, Nigeria’s unorthodox foreign exchange policy seems to be disrupting activity but the chances of policymakers reversing course are very low. Finally, a recent virus wave in the highly-vaccinated island nation of Mauritius has dampened its recovery prospects, but other tourism-dependent economies in Africa will probably fare even worse.

Africa Economics Weekly

Good and bad news from SA, Tanzania gets IMF support

Data this week showed that South Africa recorded robust GDP growth in Q2, but there was little time to celebrate as a slump in manufacturing output in July has raised the risk of a contraction over Q3. Elsewhere, Tanzania secured financing from the IMF this in a further sign of good start by the new president, Samia Suluhu Hassan. Finally, the sharp fall in the birr this year drove Ethiopia’s inflation rate to 30.4% y/y in August. Currency weakness and the growing threat of an all-out civil war have increased the risk of a sovereign default.
CE Spotlight 2021: The Rebirth Of Inflation? We’re holding a week of online events from 27th September to accompany our special research series. Event details and registration here.

Africa Economics Weekly

Zambia’s new president off to a good start, SOEs in SA

Zambia’s newly elected president has wasted no time to push to restore macroeconomic stability, and reassure investors. But recent concerns about hidden debts could pose a risk to the debt restructuring process. In South Africa, reports suggest that the authorities are adopting a harder line on state-owned enterprise bailouts, but we think that it will be a case of not all SOEs being created equal.

Africa Economics Weekly

Rising political risks in Ethiopia, SA GDP revision’s pros?

An internal political conflict in Ethiopia is escalating with an all-out civil war no longer a remote prospect. Strains in the country’s already fragile balance sheet are growing and a messy sovereign default is a real risk. And in South Africa, this week’s GDP revisions may have lowered the government debt-to-GDP ratio, but the outlook for the public finances has not improved.

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