July 12 2017


Against increasing speculation about the health of Nigerian President Muhammadu Buhari, 74, in London. Vice-President Osinbajo claimed, after visiting the President in London, that his health is improving quickly and that he will return home shortly to resume his duties. 

Meanwhile, days after rejecting the idea of Nigeria increasing its international borrowing to cover its 2017 spending programme and instead relying on domestic financing, finance minister Kemi Adeosun reiterated the plan to increase government tax revenues via a voluntary asset and income declaration scheme. Declarations and tax payments until December 31 will face no tax penalties or judicial sanctions.

Following downbeat manufacturing and consumer confidence readings earlier in the week, today saw some positive news from South Africa with May mining output rising by a stronger-than-expected 3,6% y/y after a downwardly revised 1.6% increase in April. The rise was driven by iron ore and diamond production while platinum output fell. Mining production, which accounts for 8% of GDP, declined during 2016Q4, but has risen for each of the last five months.

Industrial production in Tunisia declined by 2.9% y/y in April of 2017, following a 0.7% dip in May. Although industry output has fallen for 6 months in a row, we still expect rising agricultural output, phospate output and tourist inflows to drive a pickup in GDP growth to 2.1% in 2017 after a 1.1% print last year. 

In contrast, industry output in Ivory Coast rose by 5.5% in the year to April, down from a 7.6% rise in March. 

Headline inflation in Namibia continued its downward trend since peaking at 8.2% in January with a 0.2pp dip in June to 6.3% print in May. 

Business:  A mooted plan to end the recession and  jump-start recovery in South Africa by finance minister Malusi Gigaba includes the partial privatisation of state-owned firms such as South African Airways and the power company Eskom. Meanwhile, global brewing company, South African Breweries have announced a $221m project to expand packaging capabilities in Gauteng. 

Another day, another $4bn spend for Nigeria's Dangote Industries. Yesterday, Group Executive Chair, Mr. Edwin Devakumar announced  plans to invest over $4.5bn into boosting agricultural output across the continent. Today he has moved onto the cement industry with a promise of another $4bn to increase production capacity from an annual 45m tonnes to 80m by 2020. Chinese company Shangdong Ruyi Technology announced plans to invest $600m in developing the textile industry in the Kano state.

In praising President Lungu for a swathe of projects aimed at diversifying the economy away from its reliance on copper exports, including cement and cable-making production, Zambia's Association of Mine Suppliers and Contractors has appealed to "the President to consider awarding 20% of the projects to local suppliers and contractors". 

July 12 2017

Economics: After Kenya's cap on interest commercial lending rates, is Malawi next? Certainly, there is considerable disquiet following last week's 4pp cut in the policy rate by the Reserve Bank of Malawi from 22% to 18%. Despite the sharp decline in the rate at which commercial banks can borrow from the central bank, several influential commentators, including former RBM Governor, Perks Ligoya and Consumers Association of Malawi executive Director have argued that the commercial lending rate of around 27% is excessive. The issue has also attracted the attention of parliament with the chairperson of the Budget and Finance Committee, Rene Chiphiko, noting that the Committee plan to raise the matter with the RBM. 

Senegal, Ghana and Mozambique saw falls in headline inflation during June. Annual consumer price growth in the former slowed for the third month in a row to 1.4%, which is a 7-month low, while the inflation rate in Ghana fell to 12.1%, the lowest rate since September 2013, from May's 12.6%. Inflation in Mozambique saw its inflation rate decline to 18.1% y/y from 20.45% the previous month. Prices also declined by 1.2% m/m following a 0.38% drop in May.

Following yesterday's news that manufacturing output in South Africa declined by 0.8% in May from an upwardly revised 4.2% decline in April, today's FNB/BER Q2 consumer confidence index showed that sentiment dipped to -9 from -5 in Q1.

Despite concerns about Kenya's twin deficits and political risks in the run-up to next month's election, Fitch Ratings upheld Kenya's B+ sovereign rating with a negative outlook. 


Business: The Dangote group of Nigeria cutting  have announced further plans to expand into boosting agricultural output across the continent with over $4.5bn investments over the next two years including, sugar, rice and dairy farming. President Lungu of Zambia announced that Zambia Consolidated Copper Mines Investment Holdings and China's Sinoconst plan to construct a $548m cement plant in Ndola in order to help diversify the economy away from copper production. The plant is planned to be completed by 2020 with a daily output of 5000 metric tonnes. Bamburi Cement of Kenya, the country's largest cement producer, plans a $40m expansion of its plant at Athi River which will increase annual output by 900k metric tonnes. 

July 11 2017


Economics: Kemi Adeosun, the Finance Minister of Nigeria, cast doubt on the willingness of the government to cover its reported $7.5bn 2017/18 budget shortfall via more borrowing from multilateral lenders including the World Bank and African Development Bank or international debt markets. Instead, she said the nation should look towards domestic sources of financing. She noted "We cannot borrow anymore, we just have to generate funds domestically to fund our budget."


The IMF estimate that economic growth in Tunisia will rise to 2.3% this year on the back of a pickup in activity in the tourist inflows and mining activity. 

More worrying activity news from South Africa where annual manufacturing output dipped by 0.8% in May from an upwardly revised 4.2% decline in April (which was still the fastest pace of decline since for nearly 3 years). On a monthly basis output slipped by 0.3%. The trade deficit in Senegal widened from 135.9 bn CFA in April to 165.8 bn in May while that in Morocco narrowed to 1060.1 mn Dinars in June from 1323.7 in May. 

Business: Cameroon agrees $52m loan from Deutsche Bank of Spain towards improving electricity transmission. South Africa has joined the Tripartite Free Trade Area (TFTA) which aims to boost trade and development between 19 SSA nations. Botswana has signed an agreement to receive £2m from Italy aimed at increasing renewable energy supply. The interest rate cap in Kenya, set at 4pp above the benchmark interest rate, has not only pressed on commercial lending but may have led to around 2000 job losses. President Magafuli of Tanzania announced tighter restrictions on mining companies, including higher royalties and a 16% minimum government stake.

July 10 2017

Economics: Despite its negligible magnitude, the increase in annual headline inflation from 27.8% in May to 27.8% in June provided some vindication for the July 6 200bps hike in the key policy rate, to 18.75%, by the Central Bank of Egypt. Elsewhere, inflation softened for the fourth consecutive month in Rwanda falling to 9.4% y/y. Annual price growth also declined again in Tanzania to 5.4%. According to the IMF, the improved macroeconomic fundamentals following the softening of oil prices has increased the Morocco's country's readiness to introduce a flexible exchange rate. 

Business:  Saudi Arabia's Fund for Social Development has granted Burkina Faso $43m for improving road and water provision. The World Bank has provided $50m towards increasing off-grid renewable power access in Rwanda

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