{"id":3575,"date":"2021-04-01T00:00:00","date_gmt":"2021-04-01T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2021\/04\/01\/africa-on-track-for-post-covid-recovery\/"},"modified":"2021-04-01T00:00:00","modified_gmt":"2021-04-01T00:00:00","slug":"africa-on-track-for-post-covid-recovery","status":"publish","type":"post","link":"https:\/\/azafinance.com\/africa-on-track-for-post-covid-recovery\/","title":{"rendered":"Africa on track for post-Covid recovery","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Africa on track for post-Covid recovery<\/strong><\/h2>\n\n\n\n

After the region\u2019s first recession in over 25 years,\u00a0sub-Saharan Africa shows signs of steady recovery, according to the World Bank’s \u201cAfrica\u2019s Pulse\u201d\u00a0report published this week.\u00a0Data from the last two quarters of 2020 point to a pick up in economic activity that prompted the World Bank to\u00a0revise its original forecast of a 3.3% decline in GDP during 2020 to 2%. For this year, the World Bank has revised its growth forecast by 0.2 percentage points\u00a0compared with\u00a0its October 2020 projection. It now expects to\u00a0see a growth of\u00a0between 2.3%\u00a0and 3.4%\u00a0in 2021, depending on the policy measures adopted by countries in the region and the international community.\u00a0<\/p>\n\n\n\n

The upgraded forecasts reflect the\u00a0positive impact from containment measures, vaccine rollouts, and a faster-than-expected recovery in commodity prices and agricultural growth. Nevertheless, recovery is being hampered by new and more transmissible coronavirus variants, which appear to be more contagious than\u00a0during\u00a0the first wave, the persistence of social distancing restrictions on business and trade, and the limited scope for additional fiscal support. The effectiveness of coordinated international policy responses will be key to the region\u2019s sustained recovery.<\/p>\n\n\n\n

Naira\u00a0holds firm amid CBN restrictions<\/strong><\/h2>\n\n\n\n

The Naira\u00a0held steady in a range of\u00a0482\u00a0to\u00a0486\u00a0to the dollar on the parallel market\u00a0against\u00a0480\u00a0to\u00a0485\u00a0at the end of last week. Market liquidity\u00a0has\u00a0thinned\u00a0out\u00a0as Central Bank of Nigeria policies have restricted FX inflows into the market in the face of\u00a0huge appetite for dollars.\u00a0On\u00a0the I&E window, the currency fell to 412 but recovered since to 408.67. In the absence of any new policy announcements, we expect the Naira to continue in this relatively rare stable mode\u00a0for the coming week,\u00a0hovering around 480-490 levels\u00a0on\u00a0the parallel market and 408-420 level\u00a0on\u00a0the\u00a0I&E window.\u00a0<\/p>\n\n\n\n

Bank of Ghana injections fail to hold Cedi\u00a0<\/strong><\/h2>\n\n\n\n

The Ghanaian Cedi weakened to as low as 5.8150\u00a0to the dollar\u00a0from 5.7582 at the end of last week, even as the\u00a0Bank of Ghana continued\u00a0injecting\u00a0$50m\u00a0into the market\u00a0through\u00a0its\u00a0fortnightly\u00a0FX forward auction programme.\u00a0We expect the currency to weaken further towards\u00a0the\u00a05.85 level,\u00a0as the market remains highly liquid, with little or no demand appetite for the local currency.<\/p>\n\n\n\n

Rand rallies amid Easter lockdown, spurred by Biden<\/strong><\/h2>\n\n\n\n

The Rand gained 1.8% from 15.03\u00a0to the dollar\u00a0at\u00a0last Friday’s close\u00a0to 14.75. President Cyril Ramaphosa imposed additional measures to\u00a0prevent a Covid-19 third wave,\u00a0banning\u00a0the\u00a0sale of alcohol and restricting religious gatherings over the four-day Easter weekend, while\u00a0commending pharmaceutical company Aspen, which has set up a manufacturing plant in Eastern Cape to produce the Johnson & Johnson vaccine. More than half of the capacity of the \u201cworld-class\u201d plant,\u00a0which can produce 300 million doses a year,\u00a0has been committed to Africa, Ramaphosa said.\u00a0During the past year, South Africa has had over 1.5m coronavirus infections and more than 52,000 recorded deaths from\u00a0Covid-19.

President Joe Biden\u2019s proposed\u00a0$2 trillion infrastructure spending package\u00a0contributed to dollar weakness and\u00a0relative\u00a0Rand strength as inflationary pressures build in the US.\u00a0We project a 14.70 to 15.10\u00a0range for the Rand in the short term\u00a0as inflationary pressures\u00a0remain subdued at home.\u00a0<\/p>\n\n\n\n

Senegal suffering lower remittances\u00a0<\/strong><\/h2>\n\n\n\n

Senegal’s recent protests have\u00a0highlighted\u00a0simmering frustrations about\u00a0sluggish economic activity and unemployment in the West African state, which have been compounded by a year of coronavirus restrictions.\u00a0Since the beginning of 2020, the coronavirus pandemic has significantly changed the country’s economic outlook.\u00a0The francophone West African country \u2013 with an estimated GDP of $24.4bn last year and a population of\u00a016.8m people \u2013 witnessed average economic growth of 6.38%\u00a0between 2014 and 2019, according to\u00a0the\u00a0International Monetary Fund.\u00a0The IMF estimates that the economy expanded by 1% last year, and it is in the process of revising down its forecast of 5.2% growth for this year because of the global impact of the Covid-19 second wave.\u00a0The pandemic not only hit the hospitality and tourism industries but also slashed foreign remittances, which represent about 10% of the country’s GDP, according to the World Bank.\u00a0About two million people have fallen into poverty since the onset of the coronavirus crisis, the\u00a0Forum for African Alternatives, a think tank, reported on March 18.\u00a0<\/p>\n\n\n\n

Suez reopening relieves pressure on Pound<\/strong><\/h2>\n\n\n\n

The Egyptian Pound traded steady at 15.70 to the dollar, level with last Friday’s close,\u00a0as traffic resumed in the Suez Canal. The world breathed a sigh of relief on Tuesday as the container ship blocking the canal was finally freed.\u00a0Finance Minister Mohamed Maait\u00a0said\u00a0this week\u00a0that\u00a0Egypt\u2019s forthcoming budget targets a\u00a05.4%\u00a0economic\u00a0growth rate\u00a0this year,\u00a0a\u00a06.6% budget deficit, and a primary surplus of 1.5%. The nation\u2019s debt-to-GDP ratio is set to decrease to 88.1%\u00a0this year from\u00a090.4% of GDP in June 2019\u00a0and\u00a0108% of GDP in June 2017, according to the Ministry of Finance.\u00a0We project the Egyptian pound to hold around the 15.70 level in the coming days.<\/p>\n\n\n\n

Shilling climbs as Kenya holds rate at 7%<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling\u00a0appreciated to\u00a0109.45\u00a0to the dollar\u00a0from 109.75\u00a0at last week\u2019s close as\u00a0the Central Bank of Kenya retained its benchmark lending rate at\u00a07%\u00a0for the seventh meeting\u00a0in a row in the\u00a0face of rising inflationary pressure and surging Covid-19 cases. The International Monetary Fund board is due to decide on Kenya’s $2.4bn\u00a0loan request, Central Bank Governor Patrick Njoroge\u00a0said at the\u00a0Monetary Policy Committee\u00a0briefing Tuesday, adding that he\u2019s confident the Fund will disburse\u00a0the first tranche of $314m\u00a0next week.<\/p>\n\n\n\n

Fitch Ratings affirmed Kenya’s\u00a0foreign-currency credit rating at B+ with a negative outlook.\u00a0While\u00a0the country\u2019s public finances\u00a0will\u00a0improve on the back of a swift\u00a0economic\u00a0recovery, as GDP returns to pre-pandemic levels in 2021, Fitch said its negative outlook reflects underlying weaknesses in public finances and the uncertain pace of planned fiscal consolidation. For several years, the government has passed budgets that contained medium-term plans to narrow the fiscal deficit, but which still left deficits substantially worse than similarly rated peers, Fitch said. The Covid-19 shock has further delayed potential consolidation and Fitch forecasts the general government fiscal deficit to reach 9% of GDP in the fiscal year ending June 2021, above the median of 7.1% for similarly rated countries.<\/p>\n\n\n\n

Uganda\u00a0and AfDB agree on financing for new expressway<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling traded flat at the 3660\u00a0to\u00a03670\u00a0to the dollar level,\u00a0supported by month-end interbank and corporate demand for Uganda\u2019s currency.\u00a0We expect\u00a0the\u00a0Shilling\u00a0to continue\u00a0trading in this broadly stable range.\u00a0Longer-term support should come from\u00a0a $229.5m\u00a0financing agreement\u00a0signed by\u00a0Uganda and the African Development Bank last week for phase one of the Kampala-Jinja Expressway. The link will help boost trade along the northern corridor, which links the country with its neighbours.\u00a0<\/p>\n\n\n\n

On Friday,\u00a0the Uganda Coffee Development Authority\u00a0reported\u00a0that the country\u2019s coffee exports between March 2020 and February 2021 totalled 5.56m\u00a0bags worth $511.2m,\u00a0up\u00a0from 4.74m\u00a0bags worth $459.47m the previous year, representing a 17%\u00a0increase in quantity and 11% rise in value.<\/p>\n\n\n\n

Weaker bias for Tanzanian Shilling<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling traded steadily\u00a0in the 2310\u00a0to\u00a02326\u00a0to the dollar range,\u00a0slightly weaker than\u00a0the range of\u00a02310\u00a0to\u00a02324 at last week\u2019s close.\u00a0Tanzania\u2019s late president, John Magufuli,\u00a0was buried\u00a0last Friday in his ancestral home of Chato.\u00a0We expect the\u00a0Shilling to weaken in the coming week due to end-of-month dollar demand from importers and manufacturers, and as\u00a0the economy adapts to\u00a0the change of\u00a0leadership\u00a0under new President\u00a0Samia Suluhu Hassan.\u00a0

Issued\u00a0by\u00a0AZA. This Newsletter is produced as a service to our clients. It is prepared by our dealing professionals and\u00a0is based on their understanding and interpretation of market events. AZA cannot\u00a0be held responsible for any losses of whatever nature sustained as a result of action taken based on comments contained in this publication.<\/em><\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"

Africa on track for post-Covid recovery After the region\u2019s first recession in over 25 years,\u00a0sub-Saharan Africa shows signs of steady recovery, according to the World Bank’s \u201cAfrica\u2019s Pulse\u201d\u00a0report published this week.\u00a0Data from the last two quarters of 2020 point to a pick up in economic activity that prompted the World Bank to\u00a0revise its original forecast […]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3576,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[278,249,22,296,204,205,206,207,316,209,308,26,27,365,32,363,364,354,396,298,299,34,397,217,300,218,357,301,192,231,33,302,252,366,398,257,303,304,182,358,359],"class_list":["post-3575","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fx-insights","tag-africa-covid19","tag-africa-debt","tag-africa-foreign-exchange","tag-africa-forex","tag-african-currencies","tag-african-currencies-forex","tag-african-currencies-naira","tag-african-currencies-vs-dollar","tag-cedi-vs-dollar","tag-covid-19-africa","tag-covid-19-kenya","tag-egypt","tag-egyptian-pound","tag-egyptian-pound-vs-dollar","tag-ghana-cedi","tag-ghana-cedi-in-dollar","tag-ghana-cedi-rate","tag-kenya-2021","tag-kenya-maize-ban","tag-kenyan-shilling-rate","tag-kenyan-shilling-vs-dollar","tag-naira","tag-naira-4-dollar","tag-naira-after-lockdown","tag-naira-rate","tag-naira-rate-covid-19","tag-naira-usd-liquidity","tag-naira-vs-dollar","tag-rand","tag-rand-range","tag-rand-rate","tag-rand-vs-dollar","tag-senegal","tag-senegal-economy","tag-senegal-protests","tag-tanzania","tag-tanzanian-shilling-rate","tag-tanzanian-shilling-vs-dollar","tag-uganda","tag-ugandan-election","tag-ugandan-shilling-election-rate"],"acf":[],"gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/comments?post=3575"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3575\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3576"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}