Africa Beat for the week ended 13th October 2017

By Alexander Forbes Investments on Oct 17, 2017 in Africa Beat

 

Economic Update

Ethiopia – Central Bank devalues exchange rate 

  • The National Bank of Ethiopia’s vice governor, Yohannes Ayalew has confirmed that the central bank will devalue Ethopia’s Birr exchange rate by 15%.
  • The vice governor stated that the aim of the devaluation is to boost exports, which have been contracting.
  • The central bank has also raised benchmark interest rates from 5% to 7% with the aim of mitigating the inflationary pressure stemming from the devaluation.
  • The Birr has always been tightly managed, with the exchange rate being devalued three times in 2009, followed by another 17% evaluation in September 2010.
  • This monetary framework, however, perpetuates a poor external liquidity position, and reduces the country’s resilience against shocks and ability to honour external obligations.

Ghana – Inflations dips slightly in September

  • The consumer price index (CPI) fell slightly from 12.3% y-o-y in August to 12.2% y-o-y in September.
  • The slight decrease came as a result of the non-food inflation decreasing by 0.6% to 14.0% y-o-y, aided by lower readings on the water and electricity sub-indices.
  • Food inflation, however, rose from 7.4% y-o-y in August to 8.1% y-o-y in September, driven mainly by fish and seafood.

Mauritius – Inflation eases for a third consecutive month in September

  • According to the figures released by Statistics Mauritius, consumer price index (CPI) fell to 3.5% y-o-y in September from 4.6% y-o-y in August.
  • The two biggest contributors to this reduction were food and non-alcoholic beverages sub index which fell by 2.8% m-o-m and the transport sub-index which decreased by 1.2% m-o-m.

Ghana – S&P revises outlook on credit rating to positive

  • S&P Global Ratings (S&P) affirmed the country’s long term and local currency issuer default ratings at “B-“, with a revised outlook from stable to positive.
  • S&P highlighted that the “B-“ rating continues to reflect the country’s weak public finances with interest payments amounting to over 30% of government revenues.
  • Substantial debt stocks held by state owned entities could pose a contingent liability to the government and were therefore highlighted as risk.
  • S&P noted that the country has made progress in addressing the risks, by sticking to the fiscal deficit targets despite weak fiscal revenue performance and also introducing a legally binding cap on fiscal deficits by the end of this year.

Morocco – S&P affirms rating at investment grade

  • S&P Global Ratings (S&P) affirmed Morocco’s short and long-term foreign and local currency issuer default ratings at “BBB- “with a stable outlook.
  • It was noted that the stable outlook balances the rating agency’s expectation of further fiscal consolidation and declining external pressures against downside risks to Morocco’s economic growth prospects emanating from domestic challenges.
  • S&P predicts that Morocco’s economy will expand by 4.5% in 2017 (which was revised upwards from the previous forecast of 3.5%) as a result of a significant improvement in the agricultural sector as well as robust growth in the industrial and services sectors.
  • S&P expects Morocco to continue to develop the industrial sectors of automotive, aeronautics, electronics, and renewable energy, helping to attract further foreign direct investment which will support overall economic growth.
  • According to S&P, the rating could be downgraded if economic growth prospects worsen or if the government deviates substantially from its structural reform agenda and fiscal consolidation path.

General News

Africa – Alternative assets: the fun side to investing

  • Investing in art, cars, and other collectables is fast catching in Africa as investors are looking for more creative ways to diversify their portfolios, this is according to Bongani Khulu of Barclays Africa.
  • According to the Africa Wealth Report 2017 which is  issued by AfriAsia, noted that collectables, wine, and classic cars are an increasingly popular way of high net worth individuals to store their wealth, with the collectables category growing from 0.6% in 2006 to 1.1% in 2016.
  • The report also stated that between 2006 and 2016, classic car prices rose by 180%, this marked the best performing asset class for high net worth individuals over this period.
  • Click here >>

Companies Expanding In The Rest Of Africa

Africa – Hilton to add 29 hotels to its chain in Africa over five years

  • Hilton Worldwide plans to spend US$ 50 million over the next five years to renovate and rebrand 29 hotels in Africa according to the company.
  • One property will open in the Kenyan capital Nairobi by the end of this year and another in the Rwandan capital Kigali in 2018.
  • The expansion comes on the back of a report by the United Nations World Tourism Organisation that stated that the tourism in Sub-Saharan Africa grew by 11% in 2016.
  • Hyatt hotels and resorts also stated that they will be opening six new hotels in Africa by 2020.
  • Click here >>

Sources: NKC and CNBC Africa

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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