Africa Economics Weekly

Africa Economics Weekly

SA’s recovery, all change in Tanzania

The latest hard activity figures suggest that South Africa’s economy started Q2 on a weak footing and, while there were signs of improvement in May, tighter containment measures are likely to have dampened activity this month. One consequence is that we doubt that the Reserve Bank will raise interest rates in the near term. Elsewhere, reports this week that Tanzania is planning to join the Covax facility to secure vaccines add to signs of a broader improvement in policymaking under the new president, and bode well for the country’s growth prospects.

18 June 2021

Africa Economics Weekly

Filling gaps: vaccine supply in SSA & electricity in SA

Leaders of G7 nations meeting this week are ramping up efforts to provide more vaccines to the developing world, which – along with the prospect of larger supplies from China – could give a lift to struggling inoculation campaigns and economic recoveries in Africa. Meanwhile, South Africa announced further steps to address its chronic electricity supply problem that has long weighed on the economy, but the measures will probably take some time to bear fruit.

11 June 2021

Africa Economics Weekly

SA tightens virus curbs, Ghana surprises with rate cut

The recent tightening of containment measures to curb South Africa’s third virus wave will probably not be as damaging for the economy as earlier rounds of restrictions. Even so, the prospect of further waves and other headwinds will weigh on the recovery. Meanwhile in Ghana, policymakers delivered a surprise interest rate cut this week, but that is unlikely to be followed by further easing in Ghana or elsewhere in the region.

4 June 2021
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Africa Economics Weekly

Naira devalued for real, utility deals in Ethiopia & SA

Policymakers in Nigeria appear to have bowed to pressure to devalue the official exchange rate, which will probably improve the public finances and help unlock multilateral financing. That said, a unified and fairly valued naira is unlikely to follow any time soon. Meanwhile, Ethiopia’s ambitious reform agenda seems to be faltering on nearly all fronts. In South Africa, troubled electricity provider Eskom was a source of good news this week for a change, but power cuts are likely to remain a threat to the economic outlook.

Africa Economics Weekly

Nigeria’s debt plans, SA wages, Africa summit in Paris

External borrowing plans put forward by Nigeria’s president this week would leave the debt position even more vulnerable to falls in the naira. In South Africa, signs that the government is opening the door to a public sector wage rise were met with a calm response in local financial markets, but any further slippage would risk a more serious backlash. Meanwhile, African leaders gathered in Paris to revitalise recoveries and, while proposed initiatives are laudable, implementing them will be much harder.

Africa Economics Weekly

SA rand, third wave risks, power problems

The South African rand has been a star performer amongst major EM currencies so far this year, but we think that it will suffer one of the biggest losses against the US dollar by year-end. Meanwhile, South Africa is suffering from a renewed rise in COVID-19 cases and another slow response from policymakers would risk renewed strains on the health system and the need for tighter restrictions, keeping activity depressed. Adding to the downside risks facing the economy, plans to secure emergency power are at risk of being derailed. Poor rains mean that power problems are also afflicting Côte d’Ivoire and Ghana and disrupting the processing of key cocoa exports.

14 May 2021

Africa Economics Weekly

(Pe)Ace out, budget balancing act in SA, vaccine patents

The suspension of Ace Magashule, the Secretary General of South Africa’s ruling ANC party is likely to go some way in strengthening the hand of President Cyril Ramaphosa in an intra-party fight. But the president still faces a mountain of challenges. And while South Africa's budget deficit came in smaller than expected in the last fiscal year, Finance Minister Tito Mboweni still has his work cut out to stabilise the debt ratio in the face of political pressure mounting against austerity plans. And the US moving to back the waiver of vaccine patents is a step in the right direction to ramp up supplies, but plenty of hurdles remain for Africa’s inoculation campaigns.

Africa Economics Weekly

India-Covax-Africa channels, price pressures in SA

India’s unabating second virus wave risks further delays to vaccine exports through the Covax initiative to much of Sub-Saharan Africa, which would set back economic recoveries further. South Africa seems somewhat insulated from these risks though. Meanwhile, although producer price inflation in South Africa has risen sharply, businesses don’t seem to be passing on higher input costs onto consumers.

30 April 2021
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