macroafricaintel Weekly | 24 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for PDF version

Date Data / Event Period Forecast Previous
27 Sep South Africa PPI, % yy (mm) Aug 2018 6.1 (0.5) 6.1 (0.6)
28 Sep South Africa M3, % yy Aug 2018 6.0 6.0
28 Sep South Africa PSCE, % yy Aug 2018 5.5 5.4
28 Sep Kenya CPI, % yy Sep 2018 5.1 (0.4) 4.0 (0.3)
28 Sep Kenya GDP, % yy Q2 2018 5.8 5.7
28 Sep Zambia CPI, % yy (mm) Sep 2018 8.2 (0.4) 8.1 (0.3)
28 Sep Uganda CPI, % yy (mm) Sep 2018 3.6 (0.7) 3.8 (0.9)

#Africa #Markets | 24 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares wobble as China cancels trade talks with US; oil rallies
  • Markets in Japan, South Korea, China closed for holiday
  • Investor focus on Sino-US trade war, Brexit, Fed meeting
  • US tariffs on $200 bln Chinese imports take effect
  • MSCI ex-Japan falls, E-minis for US stocks a tad weaker

Oil Markets

  • Oil rises as markets tighten ahead of iran sanctions
  • US crude inventories at lowest level since 2015
  • Tighter US market comes ahead of new Iran sanctions
  • Brent crude futures up 1.2 pct at $79.74 per barrel (0036GMT)
  • US WTI crude futures up 1.1 pct at $71.52 a barrel

Precious metals

  • Gold inches down on firm dollar as China halts trade talks
  • Spot gold down 0.2 pct at $1,196.51 (0039GMT)
  • US gold futures largely unchanged at $1,201.1 an ounce

Grains

  • Soybeans slumps nearly 1 pct as China cancels trade talks with US
  • Most active CBOT wheat futures down 0.1 pct at $5.21-1/2 per bushel (0030GMT)
  • Most active corn futures down 0.3 pct at $3.56-1/4 per bushel
  • Most active soy futures down 0.8 pct at $8.40-3/4 per bushel
  • Most active rice futures unchanged at $9.88 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Kenya interest rate decision today [fcst. 9.0%, prev. 9.0%]
  • Ghana interest rate decision today [fcst. 17.0%, prev. 17.0%]
  • UN general assembly in focus as heads of state arrive New York city
  • Protests expected in Liberia today over missing central bank funds
  • Inconclusive Osun state elections in southwest Nigeria could become subject of litigation at tribunal even before planned supplementary polls on Thursday; to be in focus all week

Key African events or data releases over the weekedn & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Rebel attack in Congo ebola zone kills 18
  • Nigerian maritime agency identifies nationalities of 12 abducted ship crew
  • Tanzania ferry death toll rises to 224, ship’s manager detained
  • Tripoli clashes leave 115 dead, 383 injured – health ministry
  • In Nigeria, Shell’s onshore roots still run deep
  • Two car bombs explode in Somali capital, one dies
  • Pirates kidnap 12 crew members from Swiss vessel in Nigerian waters – ship operator
  • Africa’s nomadic herders help, not harm, land and planet – UN
  • US military says US airstrike kills an estimated 18 Somali militants
  • Libya’s AGOCO resumes 3,000 bpd production at abandoned well in Messla
  • Nigeria oil unions threaten nationwide strike over Chevron dispute
  • Morocco extradites ex-priest to face abuse charges in New Mexico
  • Nigeria’s central bank withdraws Skye Bank’s operating licence
  • Zimbabwe’s new finance minister says ‘fiscal shock’ needed for reform
  • Why weeds could provide an answer to Cape Town’s water worries
  • Africa Crude – Unipec snaps up Sonangol spot cargoes
  • Congo central bank revises 2018 GDP estimate down to 4.1 pct from 4.2 pct
  • Congo confirms evboal case at Ugandan border
  • Tunisia’s weakened premier unlikely to push reform as polls loom
  • France to press Mali to implement peace deal with rebels
  • Chad names fourth fiance minister in a year
  • Moroccan dairy and water duo feel the impact of boycott campaign
  • US may aid Liberia in search of missing millions
  • Travellers wait as fighting shuts runways in Libya
  • South Africa rhino poaching drops sharply but hundreds still being killed
  • South Africa’s Life Healthcare not ruling out return to India after Max disposal
  • South Africa’s Ramaphosa outlines stimulus plan for ailing economy
  • Kenya’s president signs finance bill with contested new taxes into law
  • Kenyan shilling steady amid flat importer appetite
  • Morocco’s CPI drops to 1.7 pct y/y in August
  • South Africa’s NUM union signs wage deal with AngloGold
  • South Africa to reallocate $3.5 bln of budget to revive economy – Ramaphosa
  • South Africa’s Clicks CEO to retire, names insider as successor

N.B. Full stories of above headlines are available on Reuters

#Global #Markets | 24 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1)

CALENDAR
08:00 Switzerland Current Account 
09:00 Germany Ifo Current Conditions 
09:00 Germany Ifo Expectations 
09:00 Germany Ifo Business Climate 
11:00 UK CBI Industrial Trends Orders 
12:30 Turkey Business Confidence 
12:30 Turkey Capacity Utilization 
13:30 US Chicago Fed National Activity Index 
15:30 US Dallas Fed Manufacturing Index 
16:00 Germany Bundesbank Wuermeling Speech 
00:50 Japan BoJ Monetary Policy Meeting Minutes 
01:00 US UN General Assembly 
06:35 Japan BoJ Kuroda Speech 
07:45 France Business Confidence
NEWS
Palestinian Trade Deficit Widens in July 
Bahrain Inflation Rate at 8-Month Low of 1.9% in August 
S&P Raises Republic of the Congo’s Rating to ‘B-’ 
S&P Revises Croatia’ Debt Outlook to Positive 
Moody’s Changes Montenegro’s Credit Outlook to Positive 
S&P Upgrades Latvia’s Credit Rating to ‘A’ 
Dow Jones Hits New Record on Friday 
Brazil Economy Adds 110.4K Jobs in August 
Colombia Economic Activity Loses Steam in July 
Angola Leaves Monetary Policy Unchanged 
UK Stocks Post Solid Gains 
Sterling Suffers Biggest Fall in Nearly 11 Months 
Ukraine Industrial Output Unexpectedly Falls in August 
US Output Growth Slows to 17-Month Low: Markit

Source: Trading Economics, Macroafricaintel Research

macroafricaintel | Tanzania – Recent banking trends & outlook

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

“I will not give any money to failing banks.” In typical style, President John Magufuli has adopted a no-nonsense approach to the troubles of the Tanzanian banking sector. In March 2018, he ordered the central bank not to rescue any failing bank. Mr Magufuli’s angst towards bankers is underpinned by his view that previous government bailouts for the sector of about 40 banks currently were squandered or misused. In any case, it has been about a year since the Bank of Tanzania (BoT) announced new capital rules for banks, as non-performing loans rose sharply. How have Tanzanian banks fared since then? NPLs continue to rise, hitting profits. As a proportion of total loans, NPLs rose by almost a percentage point to 11.7 percent in December 2017 from 10.6 percent six months earlier; a deterioration from what was already double the offical cap of 5 percent. Most recently, though, in April 2018, NPLs to gross loans stood at 11.3 percent. The central bank has been wielding the big stick to stem the tide. It shut down 5 community banks in early January; namely: Covenant Bank for Women, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank and Meru Community Bank. The January move brought the number of such banks closed to eight. While this is laudable, it is the domineering few big banks that probably require greater scrutiny and supervision. Tightening of controls on foreign exchange has also been weighing on banks’ bottomlines. Return on assets declined to 1.7 percent in April 2018 from 2.2 percent only a year before. Return on equity dipped as well; to 7.2 percent in April 2018 from 10.1 percent in April 2017.

Interest rates falling, PSCE still low
Unsurprisingly, bank lending to the private sector has slowed. In mid-December, the IMF highlighted reduced public spending and policy uncertainty as some of the reasons why. The central bank gives the sector a clean bill of health, however; reporting in June 2018 that “the banking sector remained sound, stable and profitable with levels of capital and liquidity generally above regulatory requirements.” As at end-April, the BoT put banks’ core capital to total risk weighted assets and off-balance sheet exposures at 18.7 percent; well above the minimum 10 percent. Also, liquid assets to demand liabilities was 39.1 percent in the same period; well above the minimum 20 percent. The BoT did highlight a palpable deterioration in NPLs. Some of the measures it has put in place to remedy the situation is an insistence that banks compulsorily use credit reference bureau reports for the appaisal of loans; in addition to other strategies it wants banks to develop to “strengthen credit application processing, credit management, monitoring and recovery measures.”

To the BoT’s credit, though, a joint World Bank/IMF financial sector assessment programme (FSAP) vindicated its position on the soundness and stability of the Tanzanian financial services sector. They note the country’s payments, clearing and settlement systems are operating efficiently. In this regard, the central bank has begun engagement with relevant stakeholders to develop a national switch. While still far off, once in place, the national switch would greatly reduce the cost of payment services. Also to this end, the BoT is licensing more payment service providers. There has also been an increase in transactions in the banking system on the back of an increasing adoption of digital channels. And the BoT continues to make efforts to reduce interest rates. In this regard, it cut its discount rate by 300 basis points to 9 percent in the period between July 2017 to April 2018. Yields on government securities have certainly followed suit; easing to about 4 percent in April 2018 from a little above 13 percent a year before. By and large, interest rates on commercial loans eased as well; albeit still high at about 17-18 percent. But it is an improvement from about 22 percent hitherto. Encouraged by easing measures by the BoT, which in addition to slashing its discount rate also reduced the statutory minimum reserve requirement, one bank cut its interest rate by half to 11 percent from 22 percent previously. Consequently, private sector credit extension (PSCE) should improve. Still, PSCE growth of almost 1 percent in April 2018 is an improvement from negative growth rates in late Q3-2017 and early Q4-2017. Total assets have also been growing steadily; up 5.3 percent year-on-year to 29.9 trillion shillings in April 2018.

Moody’s, a rating agency, is similarly optimistic. In a mid-March 2018 research note, it avers the Tanzanian “banking system will remain resilient, with improving operating conditions, solid capital and liquidity, despite asset quality and profitability pressure.” Christos Theofilou, vice president and senior analyst at Moody’s explains further: “We expect operating conditions to gradually improve as private sector businesses adapt to higher taxes and liquidity in the system improves with the payment of government arrears and more focus on infrastructure and development plans by the authorities.” Moody’s also assesses the country’s banks’ capital buffers as “among the strongest in sub-Saharan Africa and globally.” However, it acknowledges their declining profitability “due to lower interest income, reduced business activity and rising loan-loss provisions.” It also believes NPLs might rise some more “due to the continued, delayed impact from last year’s public sector job cuts, a corporate liquidity crunch and lower corporate margins following a crackdown on tax collection.”

More consolidation expected
On its part, the government has been tidying up its act in the sector, approving the merger of two of the banks it owns in mid-May; Twiga Bancorp and TPB Bank. It is part of a broader planned consolidation of state-owned banks. BoT deputy governor Bernard Kibesse explained the authorities’ thinking to the media thus: “We will see more mergers of government-owned banks until we remain with one or just a few banks owned by the government.” The central bank would like to see more consolidation in the sector: “We would like more mergers and acquisitions to take place between the existing banks in Tanzania, including those that are privately owned, so that we remain with a few efficient banks”, Mr Kibesse added. Key stakeholders in the sector seem receptive to the idea. In about mid-April, Ineke Bussemaker, chief executive of National Microfinance Bank (NMB), the country’s largest bank, told Reuters “if there is a coordinated effort to do a consolidation in the banking sector….NMB will play a role.” And Bussemaker, who took over as CEO in 2015 from a role at Rabobank in The Netherlands, which owns a 34.9 percent stake in NMB, is not just buying into the idea of the government, which has a 31.9 percent stake in NMB, it believes consolidation has become a necessity; with its chief executive telling Reuters further that “there are a number of small banks that are struggling with a relatively small capital base…[and thus]…forsee some consolidation in the sector.”

An edited version was published in the Q3 2018 issue of African Banker magazine

#Africa #Markets | 21 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian stocks extend recovery as trade worries take back seat
  • Nikkei hits 8-month high
  • Strong earnings outlook outweigh immediate worries on trade
  • Euro at 2 1/2-mth high vs dollar

Oil Markets

  • Oil prices mixed as Trump calls on OPEC to lower prices
  • US president Trump urges OPEC to lower prices
  • OPEC, its allies to gather on Sunday in Algeria
  • They are unlikely to discuss crude output increases
  • Brent crude futures up 5 cents at $78.75 a barrel (0424GMT)
  • US WTI crude futures down 8 cents to $70.24 a barrel

Precious metals

  • Gold rises on weaker dollar, heads for 1st weekly gain in four
  • Spot gold up 0.2 pct at $1,209.38 per ounce (0036GMT)
  • US gold futures up 0.3 pct at $1,214.30 an ounce

Grains

  • Soybeans edge lower, but set for biggest weekly gain in 5 weeks
  • Most active CBOT wheat futures down 0.4 pct at $5.22 per bushel (0109GMT)
  • Most active corn futures up 0.4 pct at $3.54 per bushel
  • Most active soy futures down 0.6 pct at $8.45-1/2 per bushel
  • Most active rice futures down 0.3 pct at $9.85 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • South Africa’s Ramaphosa to announce economic stimulus package today
  • 4th Bank of Uganda lecture today: “Beyond manufacturing: Structural change in Africa reconsidered”

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Tunisia’s main public sector union calls nationwide strike
  • Ugandan musician turned MP vows to continue “fight for freedom” against govt
  • At least 42 drowned in Tanzania’s Lake Victoria ferry sinking, death toll could top 200 – officials
  • Trump to meet Israel, Egypt, Japan leaders at UN next week – White House
  • Split South African central bank holds rates, exposing wider tensions
  • World bank disburses $500 mln loan to support Tunisia budget
  • Libyan oil firm to resume flights to Wafa oilfield after protest ends – field worker
  • Zambia says donor witholding nearly $34 mln over mismanagment
  • Ghana’s govt pulls planned 5-yr local currency bond
  • Uganda to deploy ebola vaccine if virus spreads from Congo
  • Eastern Libya follow Tripoli with quasi-devaluation to tackle black market
  • Gupta brother denies threatening to kill South African former minister
  • Egypt court frees Mubarak’s sons on bail in share-dealing case
  • South Africa’s ruling ANC retracts statement on monetary policy
  • Africa Crude – Nigerian diffs ease ahead of rising crude supply
  • METALS-Copper pulls back as economic growth worries return
  • Kenya assembly backs halving of fuel tax amid anger at living costs
  • Ghana’s Cocobod signs $1.3 bln syndicated loan for 2018/19 cocoa buying
  • Tanzania suspends US-funded family planning ads on radio, television
  • South Africa’s ANC economic head criticises statement issued by party on rate decision
  • Egypt inks $352 mln deal with Siemens to manage power stations
  • World Bank revises Zambia’s 2018 economic growth forecasts downwards; now sees it below 4 pct
  • Kenya speaker upholds parliament’s approval of 8 pct tax on fuel
  • Libya sets fee on currency transactions to tackle black market
  • South Africa’s ruling party urges central bank to help poor
  • Morocco’s Attijariwafa Bank first half net profit up 6.35 pct
  • Police take Ugandan opposition leader Kyagulanyi home after he returns from abroad
  • South Africa’s central bank leaves repo rate at 6.5 pct
  • Italian judge jails two in Nigerian oil graft case
  • Liberia passes landmark law to secure ancestral land rights
  • Oil and gas company SDX Energy confirms talks with BP to buy assets in Egypt
  • Ghana’s Cocobod in talks with international lenders for $300 mln medium-term loan
  • Africa-focused buyout firm DPI buy irrigation company CMGP for $100 mln
  • South Africa’s cabinet approves new mining charter
  • Plot, poison, or curse? Ebola rumours spread in Congo
  • Rocket Internet prepares IPO for African platform Jumia – sources
  • OPEC unlikely to agree official output increase in Algeria, but pressure mounts
  • South Africa’s Pick n Pay sees jump in HY profits
  • Ghana’s market women score win against forced eviction
  • Guards shut airport at Libyan Wafa oilfield – NOC
  • Mali eyes 3.4 pct budget rise for 2019 to tackle security problems
  • South Africa’s state pension fund invests $100 mln in Afreximbank
  • Kenyan shilling unchanged, expected strengthen
  • Uganda shilling unchanged as demand from energy, manufacturing slows
  • MTN shares rise after Nigeria says reviewing information to resolve $8.1 bln dispute
  • South Africa has no plans to return to international bond markets in 2019
  • South African man arrested for racist rant at Ramaphosa

N.B. Full stories of above headlines are available on Reuters

#Global #Markets | 21 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1)

CALENDAR
07:45 France GDP Growth Rate QoQ Final 
08:15 France Markit Services PMI Flash 
08:15 France Markit Manufacturing PMI Flash 
08:30 Germany Markit Services PMI Flash 
08:30 Germany Markit Manufacturing PMI Flash 
09:00 Euro Area Markit Services PMI Flash 
09:00 Euro Area Markit Manufacturing PMI Flash 
09:00 Spain Balance of Trade 
12:00 UK BoE Quarterly Bulletin 
13:30 Canada Retail Sales MoM 
13:30 Canada Inflation Rate MoM 
13:30 Canada Core Inflation Rate YoY 
13:30 Canada Inflation Rate YoY 
14:45 US Markit Manufacturing PMI Flash
NEWS
Macau Inflation Rate Slows Slightly to 3.32% in August 
Thailand Import Growth Accelerates Sharply 
Thailand Export Growth Slows 
Thailand Trade Balance Swings to Deficit in August 
Japan Manufacturing PMI Rises to 3-Month High 
New Zealand Tourist Arrivals Climb 5.4% YoY 
Paraguay Holds Interest Rate at 5.25% 
Dow Jones and S&P 500 Surge to New Highs 
Argentina Jobless Rate Highest Since 2007 
European Shares Close Higher on Thursday 
US Existing Home Sales Lower than Expected 
Eurozone Consumer Morale at Near 1-1/2-Year Low 
South Africa Leaves Interest Rate Unchanged at 6.5% 
Brazil Business Confidence Weakens in September

Source: Trading Economics, Macroafricaintel Research

#Africa #Markets | 20 Sep

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian markets follow global shares higher, trade war still in focus
  • MSCI Asia-Pacific ex-Japan index up 0.05 pct
  • Nikkei up 0.2 pct

Oil Markets

  • US oil prices climb amid drop in stockpiles, strong gasoline demand
  • Brent crude futures down 2 cents at $79.38 per barrel (0018GMT)
  • US WTI crude futures up 0.4 pct at $71.43 a barrel

Precious metals

  • Gold prices steady as easing trade concerns drag on dollar
  • Spot gold little changed at $1,203.86 per ounce (0106GMT)
  • US gold futures up 0.1 pct at $1,209 an ounce

Grains

  • Soybean prices edge down, linger near decade-low
  • Most active CBOT wheat futures down 0.1 pct at $5.22 per bushel
  • Most active corn futures down 0.1 pct at $3.45-1/2 per bushel
  • Most active soy futures down 0.1 pct at $8.29-1/4 per bushel
  • Most active rice futures up 0.8 pct at $9.88 per hundredweight

Key African events or data releases today
[Posts & comments at my Twitter handle @DrRafiqRaji]

  • Final day of South Africa’s COSATU congress today
  • Bank of Ghana to conclude MPC meeting today; announcement of decision on 24 Sep [fcst. 17.0%, prev. 17.0%]
  • South Africa interest rate decision [fcst. 6.5%, prev. 6.5%]
  • South Africa’s state capture inquiry continues
  • Uganda’s popular opposition politician BobiWine to return home from the US for medical treatment today; high tension palpable in Kampala
  • Kenya’s parliament to debate Kenyatta proposals for 2018 finance bill in test for “handshake” with opposition leader Odinga

Key African events or data releases yesterday & early a.m today
[Posted & commented on some headlines below at my Twitter handle @DrRafiqRaji]

  • Nigeria’s central bank says reviewing information to resolve $8.1 bln MTN repatriation
  • Libya imposes fee on hard currency transactions to bridge black market gap
  • Zimbabwe president reshuffles top ranks of civil service
  • Kabila candidate faces divided challenge in Congo presidential poll
  • Nigeria to suspend national airline project
  • Egypt “resilient” to emergingh market turbulence – minister
  • Coca-Cola moving ahead with takeover of Nigeria’s Chi juice
  • International court sentences Congo politician Bemba for witness tampering
  • Liberia loses $104 mln in central bank cash, bans 15 from foreign travel
  • Africa Crude – Nigerian programmes begin to emerge, Angolan allocations awaited
  • Burkina Faso arrests dozens for FGM in biggest crackdown yet
  • Egypt to sell around $5 billion in foreign currency bonds in coming months – finmin
  • Zimbabwe seeks $35 million to fight cholera outbreak
  • Italy court finds Saipem guilty in Algeria corruption case, acquits Eni
  • Zambia fires minister in charge of misused donor funds
  • Egypt to evaluate method of further state company sales in Jan – finmin
  • Egypt dealing with emerging market turbulence – finmin
  • Uganda bans rallies by supporters of opponent of Museveni
  • Kenya’s finance minister cuts 2018/19 govt spending by 1.8 pct
  • Zambia’s kwacha falls over size of country’s debt, aid freeze
  • Lower inflation eases pressure on South Africa’s central bank to match EM hikes
  • Amnesty says crackdown turns Egypt into an “open air prison” for critics
  • Naspers frees cash-rich Multichoice to take on Netflix & co
  • Nigerian military struggles against Islamic State of West Africa – sources
  • Algeria plans 1.5 pct spending cut next year – govt document
  • Johannesburg stock exchange looks to tighten listing rules
  • Kenyan shilling unchanged, draws support from charity flows
  • Ugandan shilling weakens as banks’ and manufacturing demand weighs
  • South Africa’s CPI slows to 4.9 pct y/y in August
  • South Africa’s Sasol, union begin talks to end strike
  • Kenyan president proposes tax hike on money transfer services – documents
  • Morocco plays cat and mouse with Africans headed to Europe

N.B. Full stories of above headlines are available on Reuters