Africa Beat for the week ended 15 September 2017

By Alexander Forbes Investments on Sep 19, 2017 in Africa Beat

Economic Update

Egypt – Inflation reduces in August

  • Consumer price index decreased in August after increasing sharply in the previous month, implying that inflationary pressures from recent reforms are easing amid currency appreciation
  • According to the Central Bank of Egypt (CBE), consumer inflation decreased to 31.9% y-o-y in August from 33% y-o-y in July
  • Inflation in July had increased sharply due to energy and electricity prices which were raised significantly as part of the International Monetary Fund reform programme
  • The main contributor to an increase in inflation in the month of August was due to the strengthening of the currency. The Egyptian pound appreciated by 1.6% against the dollar to E£ 17.59/$ from end-July till end-August, while logging a 2.3% year to date appreciation

Mozambique – Disinflation gathers speed in August

  • According to the National Institute of Statistics the consumer price index (CPI)  was 14.3% y-o-y in August and 16.17% y-o-y in July
  • The decrease in August’s inflation rate was led by four months of considerable decreases in which inflation fell by a cumulative 7.13% since April
  • Furthermore, CPI decreased by 0.02% m-o-m in August and the costs of food & non-alcoholic beverages sub-index negatively contributed 0.21% to the m-o-m decrease
  • Meanwhile, the housing, water, electricity & gas and transport sub-indices positively contributed 0.09% m-o-m and 0.08% m-o-m respectively in August

Nigeria – Food prices pressure persists

  • The consumer price index (CPI) was reported to be marginally lower last month
  • The headline figure was 16.01% y-o-y in August, compared to 16.05% y-o-y in July
  • Food price pressure remains high, although the food sub-index increased at a marginally slower pace to 20.25% y-o-y in August compared to 20.28% y-o-y in July (cereals, meat, fish, oils and fat had the highest price increases in August)
  • The CPI decreased to 0.97% in August compared to 1.21% in July

Ghana – Bank of Ghana increases minimum capital requirements

  • The Bank of Ghana has increased the minimum capital required from GH¢ 120m (around US$ 27 million) to GH¢ 400m (just over US$90 million)
  • The central bank increased the minimum capital requirement to support financial stability
  • According to the central bank, the change forms part of “a holistic financial sector reform plan to further develop, strengthen, and modernise the financial sector”

General News

Africa – Hungry children to increase to 3.3 million by 2025

  • According to a new report by the International Food Policy research institute, the amount of hungry children in Africa will increase by 3.3 million by 2025 if the current policy and investment trends continue
  • According to Joachim von Braun, Director General of the institute, “child malnutrition is on the rise in Africa and by 2025, hunger could be a daily reality for nearly 42 million children”
  • He further added that, “With significant changes in policy and investment priorities starting now, Africa could sharply reduce child malnutrition and come close to achieving the millennium development goal on time”
  • The report also mentioned that, poor governance, inadequate infrastructure, limited access to markets and low investments in agriculture contributed to the underperformance of Africa’s agricultural sector
  • Furthermore, robust policies and increased investments targeted to these areas could strengthen food security and decrease child malnutrition extensively across the continent
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Kenya – European Union spot checks show confusion and not conspiracy in elections

  • According to the European Union (EU), observers found certain technical problems but no evidence of vote-rigging in Kenya’s presidential election which occurred last month, this was based on casual tally checks from polling stations
  • The EU mentioned in a statement that, it had examined 1 558 randomly selected scanned polling station results forms from 82 electorates. A small percentage were unreadable, others had mathematical mistakes, and others were missing data or signatures
  • The EU findings come after the supreme court nullified Uhuru Kenyatta’s victory quoting irregularities in the tallying process
  • Raila Odinga supposed that the original vote was flawed by fraud and is threatening to boycott the re-run unless some demands are met, which include the resignation of key election board officials
  • However, the EU stated that it did not find anything demonstrating deliberate manipulation of the vote in the forms it had examined
  • Credible elections would improve Kenya’s role as East Africa’s richest economy and a stable Western partner in a region shook by conflict
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Africa – Kenya and Ethiopia could overtake Africa’s economic heavy weights in attracting investments

  • According to a report released by global risk consultancy, titled Africa Risk-Reward Index, Kenya and Ethiopia could soon surpass Africa’s economic giants such as Nigeria, South Africa and Egypt in the competition for investments
  • The report which was released in Johannesburg, noted that although Nigeria and South Africa have recovered, there are still some risks
  • Meanwhile, Ethiopia which is one of the fastest growing countries in the continent, outperformed all African countries in the survey. The country attracted US$ 3.2 billion foreign direct investment in 2016
  • Ethiopia’s economic growth averaged 10% between 2010-2015 and was 6.5% in 2016
  • Kenya had an average economic growth of 6% between 2010-2016 and is expected to be at 5.4% this year
  • Nigeria had a 1.6% economic growth and is predicted to be at 1.1% this year
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Sources:  NKC; iOL; Reuters Africa; African Independent

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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