Economic disruption from uneven currency trading in Nigeria and continued electricity shortages in South Africa are set to hold back overall growth across sub-Saharan Africa this year, a Reuters poll of economists found on Thursday.
Since commodity prices collapsed four years ago, the region has largely missed out on the global economic recovery, with growth failing to return to rates seen in previous years and set to remain subdued.
The survey, taken in the past week, shows Nigeria, Africa’s most populous country and largest economy, is expected to grow 2.4 percent this year and 2.8 percent next year. South Africa, the number two economy on the continent, will grow 1.3 percent this year and 1.7 percent in 2020.
The 2019 forecasts for the two countries, which together drive around half of the wider region’s growth, are both 0.1 percentage points lower compared to the last survey for Nigeria in January and March’s poll for South Africa.
“Tepid growth in South Africa is one reason why we expect that growth across Sub-Saharan Africa will remain disappointing in 2019,” said John Ashbourne, an economist at Capital Economics in London.
Creaking infrastructure at South Africa’s state power utility Eskom is taking longer to fix than economists previously thought. Rolling power cuts as it struggles with capacity shortages threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.
In Nigeria, multiple currency exchange rates designed to deal with dollar shortages following a slump in global oil prices in 2015 have undermined its economy.
Ashbourne said that keeping the naira artificially strong in 2015 prevented the economy from adjusting to lower oil prices.
“The foreign exchange system was improved in 2016, when the Bank partially devalued the official rate and launched a new, ‘Nafex’ rate, now used for 70-80 percent of transactions. But it remains complex and open to abuse,” he said.
South Africa’s economy expanded 0.8 percent last year while Nigeria’s economy grew 1.9 percent, its fastest pace since the recession two years earlier.
The economists surveyed expect South Africa’s key interest rate to remain at 6.75 percent until next year while a separate Reuters poll last month suggested Nigeria’s central bank will wait until May 2020 before cutting its main rate by 25 basis points to 13.75 percent.
Ghana is forecast to grow 6.2 percent, faster than January’s survey suggested. Some analysts expect the exporter of cocoa, gold and more recently oil to be the top performer this year.
Growth in East Africa’s biggest economy Kenya is seen slowing to 5.8 percent growth in 2019, compared to a government estimate of 6.1 percent for 2018. The World Bank is more cautious and has warned growth could slow to 5.7 percent due to dry weather patterns.
The International Monetary Fund last week cut its growth projection for sub-Saharan Africa this year to 3.5 percent from 3.8 percent in October. The World Bank is again more pessimistic, with a 2.8 percent forecast.
A separate survey this month showed yield-hungry investors will trade risky emerging market currencies cautiously against the dollar this year despite the Federal Reserve’s recent dovish stance, though there is still demand for them.
Standard Chartered Africa research head Razia Khan expects the Fed’s more dovish tilt to have a positive impact on sub-Saharan African economies in the months to June, allowing stronger domestic recoveries. However, she was cautious about the likelihood of new easing cycles.
Despite claims by the Independent National Electoral Commission (INEC) that the results of the 2019 presidential election were not on its servers, Atiku Abubakar, the presidential candidate of the opposition Peoples Democratic Party (PDP) has insisted there were results from INEC’s server showing he won in the presidential election.
Atiku, during his submission to the presidential election tribunal, gave the “unique MAC address and Microsoft product ID of the INEC server” from which the results were obtained.
In the results declared by INEC from the 36 states and the federal capital territory (FCT), Buhari polled 15,191,847, while Atiku came second with 11,262,978 votes.
Atiku, in his petition submitted at the tribunal, claimed he garnered a total of 18,356,732 votes to defeat Buhari, who, according to him, polled 16,741,430 votes.
The electoral body had in its response to the petition of the PDP and Atiku at the Presidential Election Petition Tribunal, stated that the result of the election was never transmitted or collated electronically, adding that the results being paraded by Atiku was fabricated and not from its website.
However, in response to INEC’s claim, Atiku and the PDP in a statement released Tuesday said the address of the server from which the results were obtained are unique to INEC.
“The Servers from which the said figures were derived belong to the first Respondent (INEC). The figures and votes were transmitted to the first Respondent’s Presidential Result’s Server 1 and thereafter aggregated in INEC_PRES_RSLT_SRV2019, whose Physical Address or unique Mac Address is 94-57-A5-DC-64-B9 with Microsoft Product ID 00252-7000000000-AA535. The above descriptions are unique to the 15t Respondent’s Server,” they said.
“There is no conjecture in the votes and scores in the table pleaded by the Petitioners. The figures are factual. The Spokesperson for the 2nd Respondent’s Campaign Organization openly admitted that the data in question was in the first Respondent’s Server when he wrote and submitted a petition to the Inspector General of Police and the Director General of the Department of State Services (DSS) asking the Security agencies to investigate the 2nd Petitioner herein for allegedly hacking into the Server of the 1St Respondent and obtaining the data in question.
“Specifically, Mr. Festus Keyamo, SAN, the Spokesperson of the 2nd Respondent claimed in the said petition that it was the first Petitioner who smuggled the data into the Server,” PDP added.
Atiku and the PDP also alleged that the INEC chairman “committed grave errors in the final collation exercise” for the election by “falsely crediting” some persons with political parties, including “Okotie Christopher, Reverend Dr. Onwubuya and Ojinika Jeff Chinze.”
“The grave errors referred to in paragraphs 4 and 5 above were under the hands and signature of the first Respondent’s Chairman, (who was also the Returning Officer) in the conduct of the final collation of the results of the Presidential Election,” they claimed.
“The Petitioners state that the final results as declared by the first respondent are those that were transmitted online to the website of the first Respondent (www inecnigeria.org),” PDP insisted.
No nation that consumes above its production capacity can ever have a strong, reliable and dependable economy with a corresponding strong currency.
Nigeria is an abject consumer nation in the midst of plenty, practicing a lazy consumer federalism that gravitates around a broke father Christmas presidency and where states governed by disingenuous, squander-manic and mostly intellectually barren Governors hold sway.
I love the clamor for resource control and fiscal federalism in Nigeria because it would open the doors to access to opportunities for prosperity for citizens if administered with transparency and accountability, but looking at the history of some of those who are championing it, I get agitated and deeply troubled that they are in it to advance a cause for themselves and their selfish interests against the overall good of the people with them as drivers if awarded without strict control mechanisms that would make it impossible for anybody or group of persons to abuse for personal gains.
Some of Nigeria’s economic policies are unfortunately repressive for Nigerians with creative ingenuity but favorable to new colonizing forces led by China coming into Africa to poison Africans with their fake products for massive profits and so, are in need of urgent rethink for the immediate good of this generation and the long term good of the country and her future generations unless we have agreed to be slaves in perpetuity in our land especially with the way we choose our leadership.
Every vote we sell to a leadership misfit without the passion, compassion and the patriotic zeal to serve Nigeria has an ominous implication on her future and the future of her people, no matter how much it satisfies our immediate need without looking at the big picture”.
Mr. Itohoimo Udosen
An e-commerce platform, Jiji has announced the acquisition of OLX in Ghana and four other counties in Africa.
The details of the deal was made available via a statement by Naspers on Wednesday.
Consequently, OLX users in Ghana would be directed to Jiji marketplace in a transaction backed by one of Jiji’s cornerstone investors, Digital Spring Ventures.
According to the statement, both companies have also reached an agreement to acquire the other OLX businesses in Nigeria, Kenya, Tanzania, and Uganda, subject to regulatory approvals.
The statement noted that all users of the sell-and-buy classifieds websites of OLX Nigeria, OLX Ghana, OLX Kenya, OLX Tanzania, and OLX Uganda would be redirected to Jiji.
The Chief Executive Officer and co-founder of Jiji, Anton Volyansky, while making comment on the deal, said, “Users will always come first for us. We warmly welcome OLX’s customers to the Jiji family and we look forward to our new customers joining Jiji on its …online shopping experience.”
OLX shut down business in Nigeria last year February while it maintained its online marketplace as workers were laid off.
The Federal Government of Nigeria recently projected key assumptions in running the 2019 budget.
Director-General, Budget Office of the Federation, Mr. Ben Akabueze, rolled out the figures for the key assumptions during a public hearing on the Medium Term Expenditure Framework (MTEF)
The hearing was organised by the House of Representatives Joint Committee on Finance, Appropriation, Aids, Loans and Debt Management headed by Babangida Ibrahim, yesterday, in Abuja.
Akabueze said the 2019 budget is expected to run at nominal Gross Domestic Product, GDP, of 139.65 trillion and 3.01 percent of GDP growth.
He noted that other key assumptions of micro-framework of the budget are based on a projection of 2.3 mbpd oil production, oil price benchmark of $60pb, exchange rate of N305 to a dollar, 9.98 inflation rate and 119,28 trillion nominal consumption.
Similarly, Economic Recovery Growth Plan (ERGP) also projected oil production at 2.4mbpd, oil price benchmark of $50pb, exchange rate of N305 to a dollar, 13.39 inflation rate, 106, 03 trillion nominal consumption, 126, 36 trillion nominal GDP and 4.5 percent GDP growth rate.
“As at the end of 2018, Federal Government aggregate revenue was N3.96 trillion, which is 55 percent of the budget and which is higher than the 2017 revenue,” he said.
While explaining the parameters, he placed oil revenue at N2.32 trillion, 77 percent of budget and 64 percent higher than 2017; Company Income Tax, CIT, of N637, 25 billion, 80 percent of budget and 1.7 percent higher than 2017 and Customs Collection of N303, 91billion, 94 percent of budget and 16 percent higher than 2017.
He added that “Notwithstanding the softening in the international oil prices in late 2018, the opinion of most reputable oil industry analysts is that the downward trend is not necessarily reflective of the outlook for 2019.
‘’Currently, the average Brent oil price projection for 2019 by 32 different institutions with relevant expertise is still about $69/b,’’ he explained.
He mentioned that President Muhammadu Buhari had directed the Nigerian National Petroleum Corporation (NNPC) to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.
Guaranty Trust Bank (GTB) has resisted attempts to take over its branch by Innoson Group of companies.
Innoson and GTB have had a long running case over alleged indiscriminate charges on Innoson’s account with the bank.
Following GTB’s show of resistance, Innoson warned that the bank’s resistance amount to contempt of the court order, and vowed to invoke the full weight of the law against GT bank.
At Ogui road branch of GTB in Enugu, on Monday, officials prevented Innoson and its team of lawyers and security personnel from executing the seal order.
There was a mild drama as customers made panic withdrawals.
Bank manager of the Ogui road branch told Innoson lawyers and security men that they should not seal the bank, and argued that the order the court gave was execution order to pay Innoson its money but not to seal the bank.
“The court did not tell you to seal our bank, what they gave was an execution order to pay him his money. If they gave you order to seal it let us see the paper from court which orders you to do so.
“We are not above the law. Everybody knows that Supreme Court is the apex court in the land, once they say it that’s final, but we have not seen the paper from the Supreme Court that gave the order, and until we see that, we will not allow you to seal our bank.” the branch manager said.
Innoson’s head of communications, Cornel Osigwe however said that it’s next line of action would be contempt charge against the bank for obstructing court’s execution order.
Osigwe said “This goes to show the character of the company that we’re dealing with. The character of the company that has failed to obey court judgement, the character of the company that has consistently used kangaroo style and method as their bank relationship management to their best customers.
“We’re a law abiding company, the writ of Fifa execution was carried out by the court bailiff through due process of the law. We shall commence contempt proceedings against the Branch manager and the Managing Director. Nobody is bigger than the court in Nigeria.”
One can easily assume that international investors are deterred from investing in Africa given the growing need to weather a global financial crisis, which has been distorted by Brexit, rising geopolitical tensions, tightened global liquidity conditions, leveraged loans and sketchy debts that continue to riddle bank systems, idiosyncratic governments and the bond yield curve that is trending toward inversion.
However, this is not the case. Conversely, the global financial crisis and the desperate search for growth, yield and solvency has led investors to pay more attention to emerging markets in Africa, and in particular frontier markets with favourable growth paths, moderate debt levels and high returns on investment.
The stock markets across Africa have reportedly exceeded a market capitalization of USD 100 billion and are substantially larger than those in Central Europe and Russia in the mid-1990s, when they first opened up to foreign investors. According to the International Monetary Fund, the African markets have been a strong bull run and shown a compound annual growth of 3.5% in 2018 and are projected to pick up to 3.9% in 2019.
There are many factors that make the African continent an attractive destination for institutional investors, such as the economic prospects, a favourable demographic profile, high urbanisation and the rise of the African consumer. The acceleration in growth has also been driven by cyclical improvements and supported by favourable regional conditions.
These favourable conditions include the restoration of oil production in Algeria, Angola and Nigeria, the improved external financing conditions, the moderate increase in commodity prices, surging foreign direct investments and the narrowing current account deficit in certain jurisdictions. In Ethiopia and Nigeria, this growth has been spurred by partial privatisation of state-owned companies and high commodity prices, respectively.
Contrary to the images that would previously conjure up at the mere mention of Ethiopia, the country has made commendable economic progress in reducing poverty and improving living standards. While the market outlook continues to be somewhat subdued for Ethiopia, due to dynamics that were historically hampered by poor government policies and state-owned monopolies, foreign exchange shortages, and weak prices for traditional exports, Ethiopia has displayed economic growth potential. In the last quarter of 2018, the International Monetary Fund's World Economic Outlook Report predicted Ethiopia to be the fastest growing frontier economy in Africa with 8.5% growth, thereby far outstripping the growth of advanced economies.
Ethiopia's economic growth has been driven by an increase in industrial activity and the availability of domestic and foreign investments in certain industries such as infrastructure, manufacturing and telecommunications. The reduction in its current account deficit to 6.4% of the real gross domestic product in 2017/2018, the flexible exchange rate regimes and the various attempts to bring inflation back on target have all supported Ethiopia's economic growth. In addition, the current Prime Minister's reform agenda is driven by a strategy to shift the engine of economic activity to private sector development while allowing the public sector to be consolidated into such development.
For instance, the Ethiopian Government has accelerated its efforts to bolster network expansion and improve the hardware capabilities and infrastructure of its state-owned telecommunications company, Ethio Telecom, which boasts over 60 million mobile subscribers and 18 million internet users. To this end, the Ethiopian Government has reportedly opened-up Ethio Telecom's assets and shares, for acquisition by local and foreign investors as part of a multi-billion dollar investment. This investment is aimed at accelerating fixed broadband and internet penetration and ultimately, fast-tracking the development of Ethio Telecom's infrastructure. Although the telecommunications monopoly seems to be the main prize, because of its protected market and the absence of competitive broadband services, other major state-owned companies facing partial privatisation in 2019 include Ethiopian Airlines, Ethiopian Shipping and Logistics Services Enterprises and Ethiopian Electric Power.
Turning to Nigeria, the upgraded forecast reflects improved prospects for Africa's most populous nation and the growth of its real gross domestic product is projected to increase to 2.3% in 2019. Although the sharp recovery of oil prices and various portfolio outflows have provided some relief to Nigeria's 1.5% annual contraction and technical recession recorded in 2016, the country's improved economic growth still falls short of the levels seen during the commodity boom of the 2000s.
Although crude oil and gas products accounted for over 94.4% of Nigeria's foreign exchange earnings in 2018, Nigeria is under immense pressure to introduce reform policies in order to adjust to the global pursuit of sustainable energy alternatives, which include solar energy, wind power and geothermal energy. The Nigerian economy's vast dependence on its crude oil and natural gas resources also makes it vulnerable to oil discoveries in other African countries, the global push towards technologies that promote energy sustainability and fluctuating commodity prices. The extent to which the Nigerian economy moves towards its near-term development aspirations will depend on the success of its import substitution policies, the fast-paced implementation of structural reforms and economic diversification of non-oil economic indicators.
In order to address Nigeria's economic diversification and growth, the federal government launched the Economic Recovery and Growth Plan (ERGP) in April 2017. The ERGP is a medium term all-round developmental initiative for the period 2017-2020, focused on restoring economic resurgence and building a globally competitive economy. Some of the objectives of the ERGP include stabilising the macro environment, increasing non-oil revenue generated from the agricultural sector, improving transportation infrastructure, driving the industrialisation of small and medium-sized enterprises and ensuring sufficiency in energy and petroleum products.
Although there have been challenges in achieving the ERGP objectives, positive results are already manifesting in key economic indicators. For instance, the Nigerian economy has witnessed an increase in non-oil revenue generated from the agricultural sector, which has reportedly shown a steady growth of 18.58% in the last quarter of 2018 and contributed 14.27% to the nominal gross domestic product. In addition, the ERGP task team has launched a number of agricultural projects such as the commissioning of the West African Cotton Company Limited rice mills in Argungu, Kebbi State, with a production capacity of 120,000 metric tonnes, geared towards enhancing productivity in the agricultural sector. According to the most recent data published by Nigeria's National Bureau of Statistics, other non-oil sectors that are contributing to Nigeria's economic growth include trade, telecommunications, mining and quarrying, real estate services, finance and insurance and construction.
Evidently, there is great investment potential across the African continent and the outlook on African countries remains positive despite the reported downgrades for the global economy.
Itumeleng Mukhovha, an associate in the Corporate/M&A practice at Baker McKenzie in Johannesburg
Figures made available by the Central Bank of Nigeria, CBN, have shown that the country’s foreign exchange reserve has hit a six months high at $44.14 billion as at Thursday.
The external reserves have gained over $1.8bn since February 28, when it dropped to its 2019 low of $42.296bn.
The reserves had risen slightly from $43.116bn on December 31, 2018, to $43.174bn on January 31, 2019, only to fall to $42.296bn at the end of last month.
It would be recalled that the external reserves rose to a high of $47.865bn on May 10, 2018. It however plunged to $41.523bn on November 22 from $44.305bn on September 28.
This is coming just as the United States’ President, Donald Trump’s tweet cussed another price upset in the crude oil market.
Trump had on Thursday, called for the Organisation of the Petroleum Exporting Countries to boost oil production to lower the price of the commodity.
“[it is] very important that OPEC increase the flow of oil. World markets are fragile; price of oil getting too high. Thank you!” Trump wrote in a post on Twitter.
Immediately after the tweet, the US crude oil futures fell by more than $1 to $58.33 a barrel and Brent futures were down by more than $1 to a session low of $66.76 per barrel, News reported.