Grim budget in SA, Nigeria’s FX buzz and debt woes

South Africa’s emergency budget highlighted that the government plans to turn to harsh austerity to try to deal with the legacy of higher debt, but this is unlikely to be politically sustainable in the long run. Nigeria’s debt problems are of a different kind – and both public and private debts are a growing concern. Meanwhile, the unification of the main exchange rates seems to be all talk but no action at this stage.
Virag Forizs Emerging Markets Economist
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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.

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CBN maintains interest rates and disruptive FX rules

Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and will probably continue to do so over 2021-23. And the central bank’s insistence on maintaining a strong currency using disruptive foreign exchange rules is likely to come at an increasingly high economic cost.

17 September 2021

Africa Economics Update

SA to struggle to get back on economic feet after July hit

South Africa’s hard activity data for July underscored the severe blow to the retail and manufacturing sectors from violent unrest and tighter virus restrictions. While much of the hit has probably unwound more recently, weak growth momentum increases the risk of a contraction in GDP over Q3 as a whole.

15 September 2021

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Africa Data Response

South Africa Manufacturing PMI (May)

The rise in South Africa’s manufacturing PMI in May points to an improvement in underlying economic conditions in the sector, but we think that the recovery will  be held back by key headwinds including another virus surge, slow vaccine rollout, power cuts and austerity.

1 June 2021

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.

28 May 2021

Africa Economics Update

CBN keeps inflation-fighting tools on the shelf

Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting, opting to emphasise the fragile nature of the economic recovery over elevated inflation. With price pressures likely to ease, we think that monetary policy settings will remain unchanged over our forecast horizon.

25 May 2021
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