Africa Beat for the week ended 06th October 2017

By Alexander Forbes Investments on Oct 10, 2017 in Africa Beat

Economic Update

Kenya – S&P affirms credit rating, maintains outlook & Moody’s puts credit rating on review

  • The credit ratings agency affirmed Kenya’s sovereign credit rating at “B+” while the outlook has been maintained at stable
  • The agency said that the Supreme Court’s ruling to nullify the presidential election results shows signs of improving judicial independence and checks and balances among the arms of government
  • On the other hand, Moody’s has placed Kenya’s sovereign credit rating on review for a downgrade
  • The decision to put the rating on review is due to unfavourable fiscal dynamics and uncertainty related to the current political environment, with the latter feeding into the former

Malawi – Central bank decides to maintain benchmark interest rate

  • On 28 September, the Reserve Bank of Malawi (RBM) decided to keep the benchmark interest rate at 18%, while the liquidity reserve requirement was maintained at 7.5%
  • The central bank noted that it needs to keep inflation firmly on a downward path and to remain in single digits
  • The RBM also cited that global economic growth is also expected to strengthen marginally to 3.5% in 2017, from 3.1% in 2016

Namibia – Weak credit growth reflects sluggish economy and tighter purses

  • According to the Bank of Namibia, the private sector credit extension (PSCE) growth moderated in August, driven by weaker demand for credit by the household sector
  • The PSCE growth slowed to 5.9% y-o-y in August from 6.6% y-o-y in July
  • However, total corporate sector credit extension increased by 6.0% y-o-y in August, up from a 5.0% y-o-y in July
  • In contrast, growth in credit extended to households slipped to 6.4% y-o-y in August from 8.3% y-o-y in July

Uganda – MPC surprises with another policy rate cut

  • On 3 October, The Bank of Uganda (BoU) decided to reduce interest rates further following the most recent Monetary Policy Committee
  • The benchmark interest rate has been cut by 50 bps to 9.5% – reaching a new record low and bringing the cumulative reduction in the policy rate to 750 bps since March 2016
  • The MPC notes that the private sector credit growth remains sluggish, while GDP growth is projected to remain below potential GDP growth this year

General News

Zambia – Budget speech delivers predictable fiscal consolidation but throws no real punches

  • The Finance Minister, Felix Mutati, delivered the budget address for the 2018 fiscal year (FY, January – December), entitled “Accelerating fiscal fitness for sustained inclusive growth, without leaving anyone behind”
  • The budget largely draws from the Economic Stabilisation and Growth Programme, which rests on the following five pillars:
  • economic diversification and job creation
  • the reduction of poverty and vulnerability via targeted social spending
  • the reduction of development inequalities relating to infrastructural development challenges and financial exclusion
  • human skills development and
  • establishment of a conducive governance environment via policy, regulatory and structural reforms
  • Some researchers say that the budget delivered no real surprise and very little to get excited about

Companies Expanding In The Rest Of Africa

Sub-Saharan Africa – Netflix partners with Kwesé to grow penetration

  • Kwesé and Netflix have launched a long-term partnership for Sub-Saharan Africa, leveraging on Kwesé’s pan-African reach to help make it easier for African consumers to enjoy Netflix
  • As part of the partnership, Kwesé will develop partnerships with telecoms operators across Sub-Saharan Africa to distribute Kwesé TV and Netflix
  • Kwesé Play streaming box is the first set-top box in Africa to officially include Netflix service
  • This deal further cements Kwesés’ claim to be Africa’s source for the best in international and African programming
  • Click here >> 

Domestic Unrest

Cameroon – Deaths on day of separatist protests

  • The Anglophone activists which includes outright separatists, who have been mobilising for the independence of the English-speaking regions, intensified on 1 October
  • The government deployed an impressive security contingent to the region to contain the protests, making it difficult for marches to even take place at all
  • This occurs after all meetings of more than four people in the South-West and North-West regions were banned
  • Reuters reported a death toll of at least eight people due to this ongoing protest action

Somalia – Al Shabaab attack leaves seven dead

  • Islamist al-Shabaab militants attacked a checkpoint in Somalia’s Puntland region which killed at least seven people
  • Al-Shabaab has launched a string of attacks on Somalia’s capital Mogadishu and other areas controlled by the federal government in a bid to oust the Western-backed authorities and impose the group’s interpretation of Islamic law
  • Attacks are relatively rare in Puntland, which has its own government and security forces patrolling its territory
  • Puntland is also home to a splinter group of al-Shabaab that has sworn allegiance to Islamic State
  • Click here >>

Sources: NKC, African business communities, IOL

Alexander Forbes Investments

Alexander Forbes Investments

Alexander Forbes Investments was established in 1997. We are a forward-thinking and trusted global investment provider, with roots in Africa. In pursuit of certainty we set out to understand our retail and institutional clients’ circumstances and risk tolerance to set clear goals. Our adaptive investment approach, called Living*Investing allows us to maximise opportunity and minimise risk at every stage of the investment cycle.

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