Africa Beat for the week ended 17 November 2017

By Alexander Forbes Investments on Nov 21, 2017 in General


Economic Update

Egypt – Central bank leaves interest rates unchanged

Egypt – Central bank leaves interest rates unchanged

  • After a Monetary Policy Committee (MPC) meeting, the discount and seven day repo rates were left unchanged at 19.25%
  • The overnight deposit and lending rates were maintained 18.75% and 19.75% respectively
  • Inflation eased in August, which influenced the MPC to leave rates unchanged for the third consecutive meeting
  • The MPC decided to loosen monetary policy due to inflationary pressure easing, in order to stimulate private sector activity and investment
  •  The Egyptian economy has been largely driven by consumption and in order to sustain economic growth, investment-driven growth is necessary

Angola – In “mild recovery” but macroeconomic challenges remain

  • The International Monetary Fund (IMF)recently visited the third largest Sub-Saharan African economy and noted a recovery in the economy, with a growth rate of 1.1% in 2017
  •  The IMF met with government officials and were happy with their six month economic plan known as “Plano Intercalar”
  • The plan is centered around goals in upping the efforts of fiscal consolidation, introducing greater exchange rate flexibility and improving governance
  •  The fall in oil prices has hindered the country’s rapid growth as it was a major source of revenue for the government but the new president Joao Lourenco has pledged to get the economy back on track
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Botswana – Inflation slows further in October

  • The central statistics office released October reports which showed that Consumer Price Inflation (CPI) remained unchanged on a m-o-m basis but reduced from 3.2% to 3.0% y-o-y
  • The Bank of Botswana noted that inflation rates should remain stable and lie within the target band of 3% – 6%
  • The CPI rate has been below 4% over the past two years while bank rates have hovered between 5% and 6%
  • Malawi – Inflation decreases slightly in October
  • The October reports were released by the National Statistics Office, which showed a slight reduction in inflation from 8.3% y-o-y in October compared to 8.4% in September
  • The urban and rural price inflation rates for October were 8.1% y-o-y and 8.7% y-o-y respectively
  • Consumer Price Inflation was recorded at 1.5% m-o-m in October Compared to 3.8% m-o-m in September
  • Inflation reached single digit number in August for the first time since December 2011 and has been slowing to date

Zimbabwe – Inflation spiked in October

  • Headline inflation rose to 2.24% y-o-y in October as compared to 0.78% y-o-y in September
  • Inflation levels in main sub-indices remained muted during mid-2017, causing the government to introduce $US 300m bond notes as stand-by liquidity
  • One of the causes for the sharp increase in inflation were caused by rumors that the Central bank was running low on foreign currency reserves, which led to people buying products in fear of shortages
  • Other sources suggest that the inflation rates have been underestimated relative to the actual figures

General News 

Kenya – Airways narrows pretax loss

  • Cost cutting has helped Kenya Airways to reduce first-half losses by 20% and will resume flights to New York in 2018
  • The airline is part-owned by Air France KLM, which completed  a $US 2 billion debt restructuring deal as a turnaround plan for the airline
  • The airline reported a pretax loss of 3.77 billion Shillings for the first half of the year to September
  • Kenya Airways is looking to fly to more international destinations as it currently flies to 53 destinations of which most are African countries
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Senegal – new airport opens after 10-year saga

  • The new airport is set to open on 7 December 2017 with a price tag of $575 mill and will be part of the largest airports in Africa
  • The new airport inhabits 4500-hectares of land in the rural area of Diass, which will allow for more air traffic than before
  • A contract has been awarded to French firm Lagardère Travel Retail, to occupy 1000 square meters of duty-free stores on site
  • The deals begun in 2007 and fell by the wayside at the back of the Global Financial Crisis; 10 years later construction has been completed
  • Locals are set to benefit from the increase in the number of visitors via the airport
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Companies Expanding In The Rest Of Africa

Ethiopian – Airlines to link Buenos Aires, Argentina with Africa

  • Ethiopian Airlines has finalized preparations to start five weekly flights to Buenos Aires, Argentina, as of 8 March 2018
  • Buenos Aires is the world’s capital of Tango which is home of centurion old buildings and a vibrant cultural scene
  • Argentina is one of the largest economies in Latin America and  Buenos Aires is the second largest city in South America with a population of over 13 million
  • This new link will provide efficient connections to their network in Asia, the Middle East, and Africa
  • Click here >>

Domestic Unrest

Zimbabwe – President Robert Mugabe defies demands to quit as Zimbabwe’s leader

  • The ZANU-PF party and hundreds and thousands of protestors called for President Mugabe to resign as the party leader
  • President Mugabe was unhinged by the call and came out on television vowing to preside over the next party’s congress in December
  • Sources told Reuters that President Mugabe would use the congress in December to announce his resignation
  • ZANU-PF gave president Mugabe 24 hours to step down or face impeachment
  • Emmerson Mnangagwa  was named as the newly elected leader of the ZANU-PF
  • Click here >>

Sources: NKC, African business communities, CNN, Reuters

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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