{"id":3577,"date":"2021-04-09T00:00:00","date_gmt":"2021-04-09T00:00:00","guid":{"rendered":"https:\/\/staging.azafinance.com\/2021\/04\/09\/redouble-effort-for-post-covid-recovery-in-africa\/"},"modified":"2021-04-09T00:00:00","modified_gmt":"2021-04-09T00:00:00","slug":"redouble-effort-for-post-covid-recovery-in-africa","status":"publish","type":"post","link":"https:\/\/azafinance.com\/redouble-effort-for-post-covid-recovery-in-africa\/","title":{"rendered":"Redouble effort for post-COVID recovery in Africa","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Redouble effort for post-COVID recovery in Africa\u00a0<\/strong><\/h2>\n\n\n\n

Africa needs around $12bn\u00a0to procure and distribute sufficient numbers of COVID-19 vaccines to achieve adequate protection against the virus, the\u00a0World\u00a0Bank and IMF\u00a0said in a report at their virtual Spring meetings this week. The sum is about the same as the total official debt service payments deferred by 45 of the\u00a0world’s poorest\u00a0countries participating in the G20\u2019s Debt\u00a0Service\u00a0Suspension\u00a0Initiative (DSSI).\u00a0The\u00a0World Bank\u2019s latest biannual economic analysis, called the Pulse, reports that\u00a0economic growth in Sub-Saharan Africa contracted by\u00a0an estimated\u00a02%\u00a0last year,\u00a0closer to the lower\u00a0end\u00a0of its forecast\u00a0a year ago. One reason for relative resilience is the rapid adoption of digital technologies to boost productivity in\u00a0existing\u00a0jobs and\u00a0improve\u00a0employment opportunities,\u00a0particularly for women and youth.\u00a0To unlock the full benefits of a digital economy, the report recommends government policies to accompany growing investments in digital infrastructure,\u00a0such as a regulatory framework that fosters competition and innovation in telecommunications, provision of reliable and affordable electricity, investment in education, and upgrading the skills of informal workers.\u00a0While the World Bank also sees the\u00a0COVID-19 induced recession as less severe than earlier anticipated,\u00a0economic recovery will vary significantly across countries and sub-regions.\u00a0<\/p>\n\n\n\n

Rand\u00a0gains on positive economic data\u00a0<\/strong><\/h2>\n\n\n\n

The Rand strengthened from 14.62 against the dollar to 14.52 this week, supported by an array of positive economic data. South Africa\u2019s trade surplus\u00a0more than doubled\u00a0to R28.96bn in February from\u00a0R12.42bn in January, according to\u00a0the South African Revenue Service.\u00a0Exports\u00a0surged\u00a0by 16.5%\u00a0in February\u00a0on a month-on-month basis, mainly due to a 73% rise in sales of vehicles and transport equipment. Meanwhile, imports only rose by 1.6%, leading to the widening surplus.\u00a0In further positive data, the ABSA Manufacturing\u00a0Purchasing\u00a0Managers’ Index (PMI)\u00a0jumped to 57.4 in March\u00a0from 53\u00a0the previous month, exceeding the rise to 55 expected by most analysts,\u00a0as new sales and exports rose with the easing of coronavirus lockdown restrictions.\u00a0Naamsa and the Automotive Business Council\u2019s figures for March 2021 recorded 44,217 new vehicle sales,\u00a0a 31.8%\u00a0surge\u00a0in sales\u00a0from the same month last year (sales jumped by\u00a018.4%\u00a0between February and March this year). The improving economic data has spurred\u00a0an increased appetite\u00a0for\u00a0the\u00a0Rand,\u00a0and\u00a0we project\u00a0these gains will be\u00a0maintained in the coming days.<\/p>\n\n\n\n

Egyptian Pound climbs as debt and deficits fall<\/strong><\/h2>\n\n\n\n

The\u00a0Pound\u00a0appreciated slightly from\u00a015.72\u00a0at last\u00a0Friday’s close\u00a0to\u00a0trade at\u00a015.699\u00a0this week.\u00a0Finance Minister Mohamed Maait\u00a0said this week\u00a0that public debt fell to 88%, as of\u00a0June 2020, from 108%\u00a0three years earlier. He expects the total budget deficit to decline to 3.6% during the first half of FY 2020\/21, compared to 4.1% during H1 of FY 2019\/20.\u00a0The data will help steady trading of the\u00a0Pound in the coming days.<\/p>\n\n\n\n

Naira rates diverge amid ‘N5 for $1’<\/strong>\u00a0<\/h2>\n\n\n\n

The Naira strengthened on the parallel market, trading\u00a0in the\u00a0478\/485\u00a0to the dollar range\u00a0vs.\u00a0482\/486\u00a0at the end of last week while depreciating on the official\u00a0NAFEX\u00a0window, from N408.67\u00a0to 411\u00a0amid accumulated demand for dollars carried over from the long Easter break.\u00a0We expect the Naira to remain stable\u00a0on\u00a0the parallel market, hovering around\u00a0the\u00a0480\u00a0to\u00a0490 level,\u00a0as\u00a0the Central Bank of Nigeria’s\u00a0‘N5 for $1’ incentive scheme\u00a0encourages\u00a0FX flows to go\u00a0through banks. We see trading on the NAFEX window extending depreciation towards 435\u00a0in the short term.<\/p>\n\n\n\n

BOG injections insufficient to balance Cedi<\/strong><\/h2>\n\n\n\n

The Cedi weakened to 5.7827 this week from 5.7600. The currency continues its downward momentum, even\u00a0as\u00a0the\u00a0Bank of Ghana continues\u00a0injecting\u00a0$50m\u00a0into the market\u00a0through\u00a0its\u00a0fortnightly\u00a0FX forward auction programme. We expect the Cedi to weaken towards 5.7800 levels as the BOG\u2019s injections prove insufficient to balance demand for dollars.<\/p>\n\n\n\n

IMF’s big loan to Kenya creates a political storm<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling strengthened slightly to 108.15\u00a0this week\u00a0from 108.93\u00a0amid\u00a0reduced importer demand for dollars\u00a0on the back\u00a0of fresh lockdown restrictions to curb a new wave of COVID-19 infections.\u00a0The IMF announced on April 2 that Kenya would receive\u00a0a\u00a0KSh255bn\u00a0loan to support\u00a0its COVID-19\u00a0response\u00a0but said the country must address urgently its\u00a0debt vulnerabilities. Nearly\u00a0200,000 Kenyans have signed a petition pushing for the suspension of\u00a0the IMF\u00a0credit facility amid concerns over rising public debt.\u00a0The\u00a0IMF said its focus on raising tax revenue, controlling spending, protecting vulnerable groups, addressing weaknesses in state-owned enterprises, and strengthening the anti-corruption framework will\u00a0\u201csupport the next phase of the authorities\u2019 COVID-19 response and their plan to reduce debt vulnerabilities.\u201d\u00a0Usable foreign exchange reserves remained adequate at\u00a0$7.343bn\u00a0(4.51 months of import cover)\u00a0on\u00a0April 1.\u00a0The\u00a0Shilling is likely to benefit from reduced dollar demand from importers and increased inflows from offshore investors in the near term.<\/p>\n\n\n\n

Uganda’s COVID-19 vaccination rollout gathers pace<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling appreciated to 3,652\/3,662\u00a0this week\u00a0from 3,660\/3,670\u00a0levels amid\u00a0subdued dollar demand\u00a0over\u00a0the\u00a0long Easter weekend\u00a0period and\u00a0FX inflows from commodity exports.\u00a0Meanwhile, the country’s\u00a0fight against the COVID pandemic\u00a0is ramping up. A\u00a0senior official with the Ministry of Health said Uganda is scheduled to receive 2 million more doses of the AstraZeneca vaccine next month, enabling people who received the first dose to get a second one.\u00a0The country’s\u00a0COVID-19\u00a0infection rate is\u00a0falling and this should help\u00a0the economic recovery.\u00a0We expect the\u00a0Shilling to remain within range\u00a0with\u00a0only\u00a0slight movements for the immediate term.<\/p>\n\n\n\n

All change in Tanzania as Hassan begins COVID response<\/strong><\/h2>\n\n\n\n

The\u00a0Shilling remained at\u00a0the\u00a0same level as last week’s close, at 2310\/2324,\u00a0as dollar inflows matched the\u00a0demand from importers.\u00a0In an about-turn from her late predecessor,\u00a0President Samia Suluhu Hassan announced plans to form a technical committee to advise on the scope of\u00a0COVID-19 infections and how to respond to the pandemic.\u00a0In further signs of change, Hassan ordered media houses that had been shut down during the Magufuli era to be reopened and urged regional officials to encourage members of the public to express grievances without being intimidated.\u00a0The new President\u00a0said there is\u00a0a\u00a0need to regain investor trust in the country and bring back those who have shifted businesses to other countries due to\u00a0the\u00a0non-conducive business environment.\u00a0Hassan\u00a0directed the ministries and institutions responsible for investment and trade to remove all kinds of bureaucracy and desist from corrupt acts.\u00a0We expect a stable\u00a0Shilling in the coming week amid supportive foreign investment and FX inflows from mineral exports, including gold\u00a0and\u00a0agricultural products.\u00a0<\/p>\n\n\n\n

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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":"

Redouble effort for post-COVID recovery in Africa\u00a0 Africa needs around $12bn\u00a0to procure and distribute sufficient numbers of COVID-19 vaccines to achieve adequate protection against the virus, the\u00a0World\u00a0Bank and IMF\u00a0said in a report at their virtual Spring meetings this week. The sum is about the same as the total official debt service payments deferred by 45 […]<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":1,"featured_media":3578,"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-3577","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\/3577","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=3577"}],"version-history":[{"count":0,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/posts\/3577\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media\/3578"}],"wp:attachment":[{"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/media?parent=3577"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/categories?post=3577"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/azafinance.com\/wp-json\/wp\/v2\/tags?post=3577"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}