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Reports of the end of Nigeria’s costly fuel subsidy scheme are greatly exaggerated. We expect that fuel distributors will require another costly bailout in 2016, which will add to Nigeria’s wide budget deficit. … Nigeria: Fuel subsidy issue still …
15th January 2016
South African mining output did not contract as sharply as was predicted in November, but the weakness of the economy will still put pressure on the SARB to slow its hiking cycle. Even so, with the rand under pressure, we expect that the Bank will hike …
14th January 2016
In this Watch we outline our key views on African currencies in 2016. First, we expect that both the Angolan kwanza and Nigerian naira will be devalued. Second, we expect that the rand will weaken sharply, ending the year at around ZAR18/US$. We also …
13th January 2016
The sharper-than-expected decline of South African manufacturing output in November suggests that GDP growth will disappoint in Q4. Worse, it seems that the hobbled manufacturing sector has not been able to capitalise on the weak rand. … South Africa …
12th January 2016
Nigeria’s cumbersome FX restrictions are strangling economic growth in the country, and are unsustainable given growing pressure on the naira. We expect that the authorities will be forced to devalue the naira in the first half of 2016. … Nigeria: …
6th January 2016
Nigeria’s 2016 budget, presented to parliament yesterday, relies on overly optimistic economic assumptions, although at least the focus on raising capital spending marks a welcome change. … Nigeria: 2016 budget looks too …
23rd December 2015
The South African currency and local equities plunged in December when a botched cabinet reshuffle by President Jacob Zuma caused investors to question the country’s governance. The self-induced crisis provided grim finale for a year that has been …
22nd December 2015
Widespread corruption has long impeded economic growth in Kenya. But while a recent wave of scandals has demoralised some, we believe that the frequent revelation of government malfeasance is a tentative sign that the country’s oversight bodies are doing …
18th December 2015
A recent series of unexpected cabinet reshuffles – in which South Africa had three finance ministers in four days – has dented the political and economic credibility of President Jacob Zuma. The rand fell by over 5% when respected finance minister …
14th December 2015
The surprise removal of South Africa’s respected finance minister has caused investors to reassess their views of South Africa’s struggling economy. Talk of an emergency rate hike is probably overdone, but it does look like inflation and interest rates …
11th December 2015
Growth in Sub-Saharan Africa’s two largest economies (Nigeria and South Africa) will remain depressed in 2016 but we expect better performances from the region’s smaller markets. Nigeria’s oil-focused economy has been battered by low crude prices and the …
The surprise removal of Finance Minister Nhlanhla Nene is a very worrying development. Mr. Nene was a rare advocate of fiscal discipline, and his sacking adds to a string of increasingly autocratic decisions by President Jacob Zuma . Further debt …
10th December 2015
Retail sales were surprisingly buoyant in October, but we do not believe that this is sustainable. We expect that South Africa’s economy will continue to perform poorly in 2016. … South Africa: Retail sales cannot support growth …
9th December 2015
Data released this morning showed that South Africa’s current account deficit widened in Q3 as a result of higher domestic spending. … South Africa Current Account …
8th December 2015
The South African Chamber of Commerce and Industry (SACCI) business confidence index retreated to near its historic low in November, providing yet another sign that expectations of an improvement in business conditions are fading. … South Africa Business …
3rd December 2015
South Africa’s November Manufacturing PMI fell to a six year low, and - while there is a possibility that the figure could be revised - we believe that monetary tightening and slow growth have dampened firms’ expectations. … South Africa Manufacturing PMI …
1st December 2015
This Friday South Africa will host the sixth Forum on China-Africa Cooperation (FOCAC), a triannual summit jointly convened by China and the Africa Union. The forum will be Africa’s highest-profile diplomatic meet-up this year, and is being presented as …
30th November 2015
It’s been a bad month for Nigerian markets as local stocks have declined further, reaching their lowest level since February. The latest leg down appears to have been triggered by the central bank’s decision to cut interest rates, despite strains in the …
27th November 2015
The Central Bank of Nigeria cut its key policy rate in a surprise move today, the latest signal that Governor Emefiele sees slow growth, rather than the slow-burning balance of payments crisis, as Nigeria’s key economic challenge. The Bank’s …
24th November 2015
South Africa narrowly avoided a technical recession in Q3, but this will provide little comfort for an economy were anaemic growth is becoming entrenched as the new normal. Growth for the year as a whole will probably fall below our once-bearish …
Oft-repeated claims that an African “middle class” will propel economic growth in the region confuse cause and effect. Most estimates of the size of the region’s middle class rely on poorly drawn definitions, and we believe that this vague term obscures …
23rd November 2015
Over the past month central banks in South Africa, Ghana, Zambia, and Mozambique have all hiked interest rates. These countries’ domestic situations all vary, but each is facing a combination of high inflation and a weakening currency. The Ghanaian cedi …
20th November 2015
The SARB’s decision to hike its key interest rate from 6.00% to 6.25% showed that the Bank is alarmed at the prospect of persistently high inflation in the context of disappointing growth. The prospect of impending Fed tightening will have also played a …
19th November 2015
September’s retail sales figures were weaker than expected, supporting our belief that recent strong growth in the consumer sector is unsustainable. But today’s figures do at least suggest that the economy returned to growth in Q3, avoiding a technical …
18th November 2015
South African inflation accelerated to 4.7% y/y in October in what we believe is the beginning of a sharp inflationary spike. While tomorrow’s rate decision will be close, we expect that the SARB will hike interest rates by 25bp. … South Africa Consumer …
GDP figures for Q3 support our long-held view that Nigeria’s 2015 economic performance will be far worse than is commonly expected. Growth in Sub-Saharan Africa’s largest economy was just 2.8% in Q3, only a touch above the disastrous 2.4% reported in Q2. …
17th November 2015
While the Central Bank of Kenya held its key interest rate at 11.50% today, we expect that the Bank will be forced to raise rates by 100bp in early 2016 as inflation picks up and Fed tightening puts pressure on the shilling. … Kenya: CBK holds rates, hike …
The Bank of Ghana’s surprise interest rate hike reflects fears that above-target inflation is becoming entrenched. Tight monetary policy will be painful, but the Bank provided the first hint that rates may be cut next year if inflation falls back. We …
16th November 2015
The pledge to cut Ghana’s fiscal deficit by 2.0%-pts of GDP next year will be welcomed by investors, but may prove difficult to achieve in the context of slow growth in the commodity-dependent economy. … Ghana: 2016 budget targets will prove difficult to …
13th November 2015
Investors are likely to welcome the long-delayed appointment of a federal cabinet in Nigeria. But the newly-appointed ministers face an up-hill battle to revive the economy, and it isn’t clear how much influence the new appointees will have. … Nigeria: …
11th November 2015
Today’s manufacturing output figures were sharply above consensus, and show that the economically crucial sector returned to growth in September. This is a welcome sign, and supports our view that the SARB will hike rates next week. … South Africa …
10th November 2015
The Bank of Zambia’s decision to hike rates by 300bps was a predictable response to last month’s inflation surge. And with the currency likely to remain under pressure, further hikes remain possible. … Zambia: Currency crisis prompts sharp rate …
3rd November 2015
The sharp fall in South Africa’s October manufacturing PMI supports our view that the country’s manufacturing sector will struggle over the coming months. … South Africa Manufacturing PMI …
2nd November 2015
Despite the steep fall in oil prices and a very weak economic growth, we expect that Nigeria’s budget deficit will remain relatively contained in 2015 and 2016. As we explain in this Watch , however, this is largely the result of a government shutdown …
29th October 2015
The high yield of Ghana’s new eurobond provides yet more evidence that market sentiment towards African dollar debt has turned. Equity and currency markets, meanwhile, performed poorly across the region, with the notable exception of South Africa. … …
28th October 2015
Peaceful elections held earlier this month in Cote d’Ivoire and Tanzania were welcome signs of improving institutions in both countries. While final results haven’t been announced yet, the fact that Cote d’Ivoire’s vote passed peacefully is a particularly …
27th October 2015
The South African government’s newly-revised macroeconomic forecasts announced in today’s medium-term budget policy statement seem more plausible than those in February’s budget. Even so, the expectation that the public debt-to-GDP ratio will stabilise …
21st October 2015
Last month’s weaker-than-expected South African inflation reading, of 4.6% y/y, coming alongside the recent rally in the rand, makes next month’s Reserve Bank rate decision a close call. But with inflation set to rise above the Reserve Bank’s target range …
The Bank of Uganda’s decision to hike its policy interest rate by a further 100bp, to 17.0%, today appears to be a response to the sharp pick-up in inflation in September. The bulk of the monetary tightening cycle has probably now happened, but with …
20th October 2015
Data released today showed that Nigerian inflation continued its slow grind higher last month, reaching 9.4% y/y, its strongest rate in over two years. Given the previous slide in the naira and the potential shortages created by restrictions on access to …
14th October 2015
Manufacturing and mining output figures for South Africa released today were both weaker than the figures reported last month. The downbeat data support our view that growth will remain weak over the remainder of 2015. … South Africa Mining & …
8th October 2015
The latest Mo Ibrahim Index reports that progress on improving governance in Sub-Saharan Africa is stalling at a regional level. Some states, however, have continued to make progress – including many of the continent’s largest economies. … Africa: …
6th October 2015
The response of Nigerian policymakers to falling oil prices has only worsened their country’s economic slump. Africa’s largest economy is now on the cusp of a self-induced economic crisis. … Nigeria: Bungled policy response plunges economy into …
5th October 2015
The second consecutive below-50 PMI reading provides more evidence that the strong manufacturing output figures reported for July were a blip and that the sector remains mired in slow growth. … South Africa Manufacturing PMI …
1st October 2015
The Kenyan economy received two pieces of good news today, with figures showing that inflation remained stable in September and economic growth picked up in Q2. We believe that the country, a net commodity importer, will be a key regional outperformer in …
30th September 2015
Speculation regarding a sharp economic slowdown in China has raised worries about the impact on African economies. We believe that these fears are overdone, for three key reasons. First, the prospects for growth in China remain much more positive than is …
African financial markets mostly performed poorly over the past month due to a combination of foreign shocks and botched domestic policy responses. We are increasingly worried about the risk of an economic and financial crisis in Nigeria. … Global …
28th September 2015
The past month has seen a raft of very bad news from key African economies. New government figures show that growth slowed in Q2 in Ghana and that South Africa’s economy actually contracted. Forward-looking indicators in Uganda continued to slide as a …
Worries about slowing growth in China and tightening monetary policy in America have dented some of the optimism surrounding African economies. But the consensus is still far too bullish about the continent’s prospects over the short term. We see growth …
24th September 2015
A string of grim growth figures led South Africa’s MPC to pause its gradual tightening cycle today. We had expected a hike at this meeting, and still think that accelerating inflation and a depreciating rand will force the committee to hike rates by 25bp …
23rd September 2015
