While the US repatriates jobs and stirs trade uncertainty into a strong US Dollar, strong growth and low imported inflation, emerging Africa suffers, importing inflation and slowing growth.
With US Dollars in Zimbabwe now almost officially Zollars the conversion rate is anyone’s guess. Let’s hope the provisions are already in the books…
SSA CORE OUTLOOK: 1 TO 5 APRIL 2019
1 Apr: Reason for a pause in rates in Ghana and Uganda. The Bank of Ghana MPC surprised in January when it reduced its policy rate by a further 100bp (to 16.00%), taking cummulative cuts in the current cycle to 10pp. Although inflation (Feb: 9.2% y/y) is hovering around six-year lows, an argument for a more cautious approach from the Bank stems from the fact that credit growth has risen sharply recently (21.1% y/y in March). The Bank of Uganda last rate move as a 100bp hike last October. While the global financial conditions have eased, core inflation jumped to 4.6% in March tracking closer to the 5% medium term target. In South Africa, the Absa Manufacturing PMI and vehicle sales for March are due for release.
3 Apr: Sub-Saharan Africa Markit PMIs. The PMIs will give some insight into how business conditions shaped up in the first quarter of 2019. Readings for February were: Kenya (51.2), Ghana (51.3), Nigeria (53.3), South Africa (50.2), Uganda (54.4) and Zambia (50.4). Separately, Uganda is due to release Q4 balance of payments numbers today. The cummulative deficit over the first three quarters of 2018 jumped to US$1.7bn, largely due to strong import growth.
5 Apr: March FX reserves in South Africa and Mauritius. In February, SA’s gross reserves were close to the record high at US$50.8bn, including gold reserves of US$5.3bn. In Mauritius, official reserves stood at a relatively strong US$6.5bn in February, covering close to 11 months of imports. Today, Mauritius (Feb: -0.8% y/y) and Seychelles (Feb: 2.0% y/y) are also set to release March inflation numbers.
DISCLAIMER: CORE-LINES IS PRODUCED BY DUMISANI NGWENYA AND HIGHLIGHTS DATA AND EVENTS UPCOMING IN SELECTED COUNTRIES IN THE REGION. IT IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. FINAL DATES ARE DECIDED BY LOCAL AUTHORITIES. ALL RIGHTS RESERVED
Specialist Africa Consulting Services.
Africa Investment – Risk Checklist
Map the Strategy, Know the Process, Follow the Process
First key action
Discussion with the bank of choice in the country of the investment, with the local Treasurer and local head of Corporate Banking (to know banking procedures and the exchange control laws, and how to pay tax)
Second key action
Discussion with Country Centre or Office for the Promotion of Investment (to know the Process)
Third key action
Discussion with the lawyer of choice for company establishment (select from your bank’s panel of lawyers)
Fourth key action
Discussion with your auditor (to know about tax regulations)
Fifth key action
Discussion with the local Ministry owning your target investment sector
From the Treasurer of your bank in your target country enquire on:
1. Existence of exchange controls or limitations on the cross-border payment of money
2. Local rules in relation to transacting with a local customer in US Dollars (for example) as opposed to the local home currency
3. The liquidity in the foreign currency exchange market to enable timeous cross border payments
4. The availability of liquidity in foreign currency markets and products to hedge exposures
5. The availability of financing in the local currency and foreign currency and interest rates applicable
6. Government fees or prescribed bank margins imposed between foreign currency Buying and Selling rates
7. Controls over and withholding taxes on the foreign remittance of interest, fees and dividends
8. The exposure of the economy to prices of a single or few commodities
9. Existence of a well-developed legal and financial system
10. The ability and cost associated with exporting excess inventory from a country if sales do not materialise