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SARB hawkishness continues, no rate cuts in 2024 This week, the SARB published is biannual Monetary Policy Review , which showed a Bank less confident about South Africa’s disinflation trend and reiterated a desire to move to a lower inflation target. …
26th April 2024
Will the naira’s rebound last? The sharp recovery in the naira in recent weeks has been somewhat of a surprise and it has come at the expense of a steep decline in FX reserves. Without substantial improvements in the current account position or capital …
19th April 2024
Spectre of former President Zuma worries ANC The big news in South Africa this week was a court decision allowing former president Zuma to stand in the May elections, which has added another level of uncertainty to the vote. Opinion polls suggest that his …
12th April 2024
SA’s weak demand is holding back its recovery South Africa’s March PMI numbers were disappointing and support our view that, while the drags from loadshedding and austerity are easing, the recovery this year will be subdued. The ABSA/BER manufacturing …
5th April 2024
Zambia moves closer to full debt restructuring deal Zambia secured an debt restructuring deal with private bondholders this week. It looks like it has the seal of approval from official creditors, paving the way for the country to finally exit default. …
28th March 2024
SARB: will rate cuts ever come? The South African Reserve Bank (SARB) looks set to leave interest rates on hold at 8.25% next week and it now seems an easing cycle won’t begin until after May’s election, the outcome of which could even persuade the SARB …
22nd March 2024
Nigeria eyes up return to Eurobond market The Nigerian naira’s latest devaluation has taken it closer to fair value and, with investor sentiment towards Nigeria improving, the government is lining up a fresh Eurobond sale. That may help to plug the budget …
15th March 2024
South Africa’s struggling PGM producers Lower global metal prices are pushing South Africa’s major producers to contemplate cost-cutting which could lead to lower output and fewer jobs, adding yet another constraint to the modest pick-up in growth that we …
8th March 2024
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
1st March 2024
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
South Africa's Finance Minister Enoch Godongwana faces an uphill task in next week's Budget to convince investors that the government will be able to place the public finances on a sustainable footing. Mr. Godongwana will start his speech in parliament …
16th February 2024
SONA: Ramaphosa sets out policy plans South Africa’s President Ramaphosa delivered his State of the Nation (SONA) on Thursday. His speech celebrated the 30 th anniversary of the transition to democracy and laid out the ANC’s policy agenda ahead of the …
9th February 2024
Naira plunges again, is the policy shift back? This week the naira dropped for a second time in eight months, contradicting months of claims by officials that the currency will witness a revival. The hope is that this new found policy pragmatism extends …
2nd February 2024
Takeaways from the SARB meeting The South African MPC’s fears expressed at this week’s meeting about an inflation resurgence look overdone. Even so, with fiscal risks high ahead of the election, officials will continue to tread cautiously. At the …
26th January 2024
SARB to stay on sidelines until after the election? Remarks by South African Reserve Bank (SARB) Governor Kganyago this week have increased the risk of rates staying higher for longer, particularly if fiscal risks build ahead of the election. Governor …
19th January 2024
South Africa climate efforts at risk from power plan South Africa’s draft energy plan presented bad news to those concerned about loadshedding and the commitment to reducing greenhouse gas emissions. South Africa’s Integrated Resource Plan (IRP) set out …
12th January 2024
Nigeria spending up, but no more deficit financing This week, Nigeria signed its 2024 budget into law. Spending is projected to be higher than originally anticipated, although officials are signalling that it will be financed by higher revenues rather …
5th January 2024
Zambia secures latest IMF tranche as debt talks drag Zambia received the latest $187m tranche of its IMF deal this week as it continues to make progress with its fiscal performance despite a tough external backdrop. This may help to push long-running debt …
22nd December 2023
Ethiopia restructuring like to drag on after default Ethiopia’s sovereign default appears imminent after the government missed a coupon payment on its 2024 $1bn Eurobond. The prominence of Chinese and private bondholders on the continent continue to …
15th December 2023
Kenya jacks up rates to support the shilling Kenya’s central bank (CBK) delivered a chunky 200bp interest rate hike, to 12.50%, on Tuesday with officials making clear that the move was an effort to support to the shilling. The statement said that “there …
8th December 2023
SA's public debt risks a problem for banks? The key takeaway from the South African Reserve Bank’s latest Financial Stability Review released this week is growing concern about local financial institutions’ holdings of government bonds – what the report …
1st December 2023
Zambia and Angola hikes, Nigeria resists High inflation is pushing some African economies to return to monetary tightening but Nigeria has resisted so far. We doubt this will last. Inflation rose again in Nigeria, Angola and Zambia last month as currency …
24th November 2023
CBN poor communication harming credibility CBN Governor Cardoso’s press remarks this week highlighted his continued ambition to restore confidence in and the credibility of the Bank. But so far an action that would help – a clear strategy to stabilise the …
17th November 2023
Kenya 2024 Eurobond risks fall back Kenya’s partial payment of its $2bn Eurobond will improve its chances of avoiding a sovereign default next year. Extra IMF funds and an improved balance of payment position will also help, but sticking with austerity …
10th November 2023
AGOA conference begins as Uganda kicked out Officials are discussing the future of a key US-Africa trade act at a conference in Johannesburg that started today. Uganda is already set to lose duty-free access to the US which, although not a major blow, is …
3rd November 2023
Food prices risk delaying Africa interest rate cuts Inflation across Africa has been falling back recently, but persistent food price pressures pose a threat to policymaker’s ambitions to start cutting interest rates. The SARB’s Deputy Governor Fundi …
27th October 2023
Africa’s debt challenges look set to continue Sovereign debt restructuring discussions between Zambia and Ghana and their bilateral creditors have been encouraging. But the next challenge is talks with private lender, which may prove lengthy. Zambia …
20th October 2023
Ghana rate cuts more likely as inflation falls Annual inflation in Ghana eased again to 38.1% y/y over September which gives the central bank some leeway to consider cutting rates at its next meeting. The drop in inflation last month was down from 40.1% …
13th October 2023
Nigeria: labour strike averted at a cost Nigeria avoided a potentially disruptive workers’ strike this week after the government made a late offer of short term relief measures, but these risk adding to fiscal and inflationary pressures. Unions had called …
6th October 2023
SA's avian flu outbreak unlikely to sway the SARB South Africa is in the midst of a severe avian flu outbreak which, coming alongside the effects of loadshedding, has prompted fears of shortages and higher prices for eggs and chicken meat. But this is …
29th September 2023
Nigeria's fuel subsidy unexpectedly returns The recent pick-up in oil prices will provide welcome hard currency income for Nigeria. But high oil prices and a weak naira also signal the return of the fuel subsidy. As a major oil exporter, Nigeria benefits …
22nd September 2023
South Africa’s fiscal rule talk Reports emerged this week that, in a bid to keep investors on side amid a worsening budget position, South Africa’s Treasury is proposing to establish a new “fiscal anchor”. Even so, a looser fiscal stance still seems an …
15th September 2023
Policy mistakes risk being repeated in Nigeria Recent interventionist actions from Nigeria’s central bank and government have heightened our fears that growing political pressures are undermining policy reforms. This could see Nigeria’s inflation and …
8th September 2023
Coup contagion? The military coup in Gabon this week, coming so shortly after a coup in Niger, has raised further concerns about political instability and institutional frailty in the region. Soldiers removed Gabon’s president, Ali Bongo, from power on …
1st September 2023
South Africa fiscal concerns build Growing concerns about the direction of South Africa’s public finances have caused the yield curve to steepen as risk premia have risen, a trend that may continue as next year’s election approaches. Short-dated local …
25th August 2023
Nigeria resorts to sticking plasters Continued naira weakness and fuel price concerns have prompted Nigeria’s government to undertake some short-term fixes that threaten to result in renewed vulnerabilities further down the line. This week, Nigeria’s …
18th August 2023
Nigeria’s naira gap evidence of Buharinomics Two months on from the naira’s devaluation, the gap between Nigeria’s official and black market exchange rates is widening again. This suggests that the CBN is, once again, propping up the naira and adds to the …
11th August 2023
Nigeria flirting again with unorthodox economics Comments from Nigeria’s president and potential cabinet members this week reinforced our fears that there has not been a clean break from Buharinomics. Justifying the removal of fuel subsidies, President …
4th August 2023
Central Bank of Nigeria’s reluctance to hike This week, the CBN’s policy rate hike of 25bp underwhelmed markets, presenting further evidence that Nigerian policymakers are trading off growth concerns with their inflation mandate. The MPC chose to hike …
28th July 2023
Food supply concerns mount The near-term outlook for global food security and prices has continued to worsen. Following the recent news that we are entering El Niño, this week saw the collapse of the Black Sea Grain Deal as well as India ban the export of …
21st July 2023
Stage 6 loadshedding returns with a vengeance Cold weather in South Africa prompted officials to return to Stage 6 loadshedding this week, threatening a fresh hit to the economy. We doubt that concerns about the inflationary impact of power cuts will …
14th July 2023
The El Niño weather pattern is on its way and threatens to hit agricultural production across much of Africa over the coming months, curtailing GDP growth, pushing up inflation and dealing a fresh blow to fragile balance of payments positions. There’s …
7th July 2023
Kenya: Thugge makes his mark Kenya’s central bank hiked interest rates by 100bp, to 10.50%, at an unscheduled meeting this week. The move was pinned on an increase in inflation in May, but more than anything it seems to be a strong attempt by new governor …
30th June 2023
Zambia secures deal with official creditors This week saw Zambia edge closer to getting a debt restructuring over the line, but an agreement with official creditors suggested that there remain sticking points when it comes to negotiations with China. …
23rd June 2023
This week’s plunge in the Nigerian naira marked the latest positive step by President Bola Tinubu as he seeks to overhaul the economy, but there are still plenty of reasons to be cautious that this policy shift marks a clean break from the Buhari-era. A …
16th June 2023
Agriculture dampened SA growth in Q1 South Africa’s Q1 GDP figures released this week revealed a big drag from the agricultural sector. Some of the factors that weighed on output (namely the weather) are likely to prove temporary but, even so, confidence …
9th June 2023
Nigeria: subsidies slashed, naira nerves? In a positive early move, Nigeria’s President Bola Tinubu removed fuel subsidies in his first week in power. But it looks like the fiscal savings will be spent, leaving public debt on an upwards trajectory. And …
2nd June 2023
SA: rising risk premia threaten high for longer rates One new threat to the inflation outlook that the South African Reserve Bank highlighted at its policy meeting on Thursday was a higher country risk premium which is fuelling downward pressure on the …
26th May 2023
SA: threat of AGOA loss no disaster, but unwelcome Allegations that South Africa has supplied arms to Russia has led to calls for the country to lose preferential trade access to the US via the African Growth and Opportunities Act (AGOA). As it happens, …
19th May 2023
It’s been a week to forget for South Africa, in which fears emerged that the improvement in the public finances is stalling and concerns about (even more) intense loadshedding surfaced. That was topped off by allegations that South Africa supplied weapons …
12th May 2023
