macroafricaintel | Hope rises as GERD tensions ease

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

In about mid-June, Ethiopia’s new youthful prime minsister Abiy Ahmed and host, Egyptian president, Abdel Fattah al-Sisi, came out of a meeting in Cairo with unusual optimism and mutual confidence that suggested erstwhile tensions on the $4 billion 6,000MW Grand Ethiopian Renaissance Dam (GERD) being built on the River Nile would perhaps no longer be a source of concern to investors and all. What changed? Mr Ahmed. In the little time that he has had in office thus far, he has done quite a bit to ease tensions in the restive Oromia region, the part of Ethiopia he hails from, released political prisoners, extended an olive branch to neighbouring Eritrea, relations with which have been sour for ages, and so on. There is certainly huge optimism about Ethiopia at the moment. The country’s banking and telecommunications sector, sought after for years by international investors, if liberalised as increasingly expected, could easily put to rest perennial troubles with foreign exchange supply and much needed jobs. In this regard, Lemma Senbet, chief executive of Nairobi-based African Economic Research Consortium is “cautiously optimistic.” That is probably the current Egyptian sentiment to statements by Mr Ahmed at the press conference after his meeting with Mr Sisi in Cairo such as this: “We will take care of the Nile and we will preserve your share and we will work to increase this quota and President Sisi and I will work on this”. With the River Nile flowing downstream to Egypt from Ethiopia via Sudan, the land of the pharaohs – which also has a big dam of its own on the Nile, the 2,100 MW Aswan High Dam – could potentially lose more from the likely reduced flow of the river that the GERD would cause. And with water increasingly scarce, Egyptian authorities could hardly afford even the slightest threat to what has been a source of livelihood for their people for millennia. Even as “Egypt [was] increasingly being compelled to accept the reality of the GERD, and thus [likely already focusing] on negotiating to limit the dam’s downstream impacts rather than opposing its existence outright”, like Jordan Anderson, sub-Saharan Africa risk analyst at London-based IHS Markit, a research firm, suggests, mistrust between the two sides made progress difficult hitherto.

One-man risk necessitate international mediation
Egyptian authorities were becoming increasingly frustrated in fact: “There is a need to accelerate the pace of negotiations after some three years or more have passed since the signing of the preliminary agreement in Khartoum and things have remained frozen,” Egyptian foreign minister Sameh Shoukry told reporters in late April (according to Reuters). The Egyptian view was that Ethiopia was deliberately dragging its feet in what had become longwinded talks that seemed to achieve little else but buy Ethiopia time. Its fears were not unfounded. In addition to the advantages Ethiopia clearly enjoys already, once the dam is completed, it would be in an even stronger negotiating position. Sudan, on the other hand, seemed more agreeable to the Ethiopian side early on. This is not surprising. There are more benefits for it from the dam than are troubles. Sudanese authorities are excited about the power that would be transmitted to its grid from the dam, for instance. Naturally, both countries have found it easier to cooperate; agreeing to develop the Port Sudan in early May and establish a joint military force to protect the GERD. Understandably, warmer relations between Ethiopia and Sudan became increasingly worrying for Egypt. With the recent rapprochement between the Ethiopian and Egyptian sides, however, that would no longer be the case, it is hoped.

Despite better relations, Egypt likely still desires some international mediation. When it first mooted the idea, it suggested the World Bank. Hailemariam Desalegn, the Ethiopian prime minister at the time, would have none of it. Not that he minded getting technical help from the Bretton Woods institution. But with the negotiation advantages Ethiopia clearly enjoyed, it probably did not seem rational to him for his country to cede control to any external institution, even the World Bank. Still, despite the uneasy relations at the time, Egypt and Ethiopia did manage to be as constructive as possible. To this end, both countries signed a political and diplomatic consultation agreement in January. And fears hitherto that Egypt might have a contigency military solution have certainly now receded. IHS Markit’s Anderson explains why it is highly unlikely it would go to such lengths: “The Egyptian government is unlikely to isolate itself internationally by taking any kind of unilateral military action against the GERD, and it also lacks the military capacity to make such an operation probably successful.”

The immediate priority is to agree modalities for filling the dam’s reservoir – which could start as early as July during the Nile flood season – and how to ensure dams downstream in Sudan and Egypt would not be overly constrained. Both downstream countries also want water from the river to be amply available for irrigation and myriad other uses during any filling period on the one hand, and when once filled, water would be released from the reservoir, unconditionally and as needed, for their benefit during difficult periods; a prolonged drought, say. A resolution between the parties at their meeting in mid-May suggests they are likely to agree more than than they disagree from now on. They plan to meet more regularly, at least; every six months in fact. A joint fund to build infrastructure in the three countries is also planned. A compromise has also been reached on differences over the introductory technical report by BRL Group, a French water consultancy, on the potential downstream impact of the GERD: a new one by a team consisting of members from the three countries has been contracted. This is not ideal, of course. A scientific evaluation hardly needs the distraction of the politics around its deliverable. It certainly highlights the necessity of a neutral international arbiter in the process to ensure even decisions as supposedly straightforward as appointing an independent scientific team would not be enmeshed in needless politics. Refreshingly, the Egyptian government has begun to take confidence-building measures of its own. As a goodwill gesture to Mr Ahmed, thirty Ethiopian prisoners were released from Egyptian jails in June. The deep-seated emotions of Egyptians to the Nile remain nonetheless. Take the unprecedented move by Mr Sisi of asking Mr Ahmed to swear before the Egyptian people during his visit in June that he would protect their interests. Mr Ahmed did not hesitate: “I swear to God, we will never harm you”. He probably meant every word. But is it a promise he can keep? Already, he faces resistance from the erstwhile ruling Tigray elite. To free Andargachew Tsige, a prominent opposition figure on death row for about four years hitherto, Mr Ahmed threatened to resign in response to resistance by them. He has also been ruffling feathers within the military establishment; members of which enjoy wideranging influence over the Ethiopian economy. With fast-paced reforms by Mr Ahmed already chipping away their fabled tight grip, it is probably only a matter of time before their currently restrained grumblings boil over; especially as the security establishment is believed to have entered into a tacit agreement with Mr Ahmed for the maintenance of certain rigidities – one of which is likely to be the GERD negotiations – in exchange for supporting his candidacy for prime minister. The importance of international mediation cannot be overemphasized.

An edited version was published by African Business magazine in July 2018

#Africa #Markets | 17 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares gain on US-China trade talks, lira recovers
  • Turkish lira maintains gains but seen vulnerable
  • Shanghai shares barely unchanged near 2 ½-year low

Oil Markets

  • Oil prices fall amid fears over global economic growth
  • Brent crude oil futures down 5 cents at $71.38 a barrel (0050GMT)
  • US WTI crude futures down 4 cents to $65.42 a barrel

Precious metals

  • Gold inches up, but set for biggest weekly fall in 15 months
  • Spot gold up 0.3 pct at $1,177.38 an ounce (0047GMT)
  • US gold futures unchanged at $1,184 an ounce

Grains

  • Soybeans ease after rally, wheat supported by tightening world supplies
  • Most active CBOT wheat futures nearly unchanged at $5.61-3/4 per bushel (0113GMT)
  • Most active corn futures down 0.3 pct at $3.78-1/2 per bushel
  • Most active soy futures down 0.4 pct at $8.93-1/2 per bushel
  • Most active rice futures unchanged at $10.46 per hundredweight

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

  • SADC summit continues in Windhoek, as heads of state arrive for key 2 days of summit

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

  • Arson at Libyan pipeline causes fire, no significant damage – NOC
  • Egypt central bank keeps overnight interest rates steady
  • Ugandan lawmakers, others charged with treason over stoning of Museveni
  • No handshakes, no helmets in eastern Congo city preparing for ebola
  • South African rand surrenders gains as economy concerns weigh
  • Africa Crude – Diffs steady, India said to buy Nigerian at tender
  • Egypt finalising details of long-term Hamas-Israel truce – source
  • Afraid of no one and ready for a long strike, union leader tells Implats
  • South Africa’s Truworths creates COO role to boost sales as FY profit falls
  • Investors pulled $1.4 bln from emerging markets last week – IIF
  • Egypt to sell 610 mln euros in euro-denominated t-bill auction
  • South Africa’s Ramaphosa to appoint inquiry into $130 bln state pension fund
  • Gold Fields boss says not resigning after South Africa minister’s rebuke
  • US concerned about irregularities in Tanzania’s local elections – embassy
  • Most African currencies under pressure; in week ahead
  • Mali president Keita wins landslide election; faces uphill struggle
  • Somali president names new military chief in security services revamp
  • Zimbabwe court to hear election challenge on August 22
  • Kenya’s Arm Cement CEO says to leave post, to stay as board member
  • South Africa’s MTN has no plans to sell stake in online retailer Jumia
  • KCB Group to finalise Imperial Bank deal in September
  • MTN Nigeria signs 200 bln naira loan to expand network
  • South Africa union says ready to sign Eskom’s wage offer
  • Tencent shares hit by profit drop, freeze on new game approvals in China
  • South Africa’s Gold Fields posts flat H1 profit as Chile costs bite
  • After Kaombo, Total doubles down on African oil
  • Angola aims to boost oil output with new block sale agency
  • Gold Fields suffering under poor management – South Africa mines minister
  • South Africa’s Standard Bank H1 profit up 5 pct
  • South Africa’s Exxaro H1 profit lifts boosted by coal performance
  • Kenya’s KCB Group H1 pretax profit rises 16 pct

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

#Global #Markets | 17 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1)

CALENDAR
08:00 Turkey Consumer Confidence 
08:30 Australia RBA Ellis Speech 
09:00 Poland Employment Growth YoY 
10:00 Euro Area Core Inflation Rate YoY Final 
10:00 Euro Area Inflation Rate MoM 
10:00 Euro Area Inflation Rate YoY Final 
13:30 Canada Core Inflation Rate YoY 
13:30 Canada Inflation Rate MoM 
13:30 Canada Inflation Rate YoY 
14:00 Russia Unemployment Rate 
15:00 US Michigan Consumer Sentiment Prel 
15:00 US Michigan Consumer Expectations Prel 
15:00 US Michigan 5 Year Inflation Expectations Prel 
15:00 US Michigan Inflation Expectations Prel
NEWS
Singapore NODX Rises More than Expected in July 
South Korea Unemployment Rate Edges Up to 3.8% 
US Stocks Rebound on Thursday 
Egypt Leaves Key Policy Rate on Hold in August 
Colombia Consumer Confidence Weakens in July 
Most European Stocks Gain 
El Salvador Inflation Rate Quickens to 5-Month High of 1.06% 
Cape Verde Inflation Rate Highest Since 2013 
Ivory Coast Industrial Output Rises the Most in 4 Months 
Serbia Current Account Gap Widens in June 
US Building Permits Rise More than Expected in July 
US Philadelphia Manufacturing Index Falls in August 
US Jobless Claims Fall for 2nd Straight Week 
Italian Shares Plunge on Thursday

Source: Trading Economics, Macroafricaintel Research

#Africa #Markets | 16 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian shares hit 1-yr low on Turkey, China worries
  • MSCI Asia ex-Japan hits lowest since Aug 2017
  • Tencent’s earnings shock sour investor sentiment

Oil Markets

  • Oil edges up as China, US set for talks to resolve trade disputes
  • Beijing to send delegation to Washington in late August
  • But oil market sentiment remains cautious overall
  • Weak Asian markets start to eat away at crude demand
  • Brent crude oil futures up 0.6 pct at $71.17 per barrel
  • US WTI crude futures up 0.2 pct at $65.11 per barrel

Precious metals

  • Gold prices sink to 19-mth low amid strong dollar
  • Spot gold down 0.8 pct at $1,164.71 an ounce (0055GMT)
  • US gold futures down 1.1 pct at $1,172.7 an ounce

Grains

  • Corn eases for second day on supply pressure
  • Most active CBOT wheat futures up 0.1 pct at $5.52 per bushel (0112GMT)
  • Most active corn futures down 0.1 pct at $3.75-1/2 per bushel
  • Most active soy futures up 0.2 pct at $8.70-1/2 per bushel
  • Most active rice futures down 0.1 pct at $10.32 per hundredweight

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

  • SADC summit continues; heads of state meet 17-18 August

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

  • South Africa’s Transnet CEO and officials face suspension – chairman
  • Israel lets food, commercial goods back into Gaza as Egypt seeks truce
  • Arbitration move by South Africa’s Eskom threatens to delay wage deal
  • Egypt to export gas starting January, says minister – El Watan
  • Egypt to offer shares in new cement plant on stock market – president
  • Ugandan MP beaten up after president’s convoy stoned – opposition
  • Tullow Oil expects to hit full output capacity at Ghana TEN field by 2020
  • Soccer – Nigeria’s Moses announces international retirement
  • Former Gunvor employee to take plea deal in Congo bribery case – lawyers
  • Tunisian tourism revival drives economic pickup in second quarter
  • Africa Crude – Trade slows ahead of October loading programmes
  • Nigerian stocks extend losses as emerging markets tumble
  • South Africa’s parliament considers tougher anti-smoking bill
  • Kenya’s Java House signs coffee and tea export deal with Chinese company
  • South African rand slumps after Moody’s warning, stocks tumble
  • Algeria signs gas supply deals with Spain, Italy’s Eni – Sonatrach CEO
  • South Africa hikes sugar import duties to protect local industry
  • South Africa’s ANC chairman wants state to seize land from those with over 12,000 hectares
  • South Africa dollar bonds fall after Moody’s warning
  • Marked for demolition? Ugandans on pipeline route fear land loss
  • Kenya central bank to hold its next rate-setting meeting on Sept 24
  • Nigeria inflation dips in July but remains above single-digit target
  • Morocco needs more reforms before new currency liberalisation, bankers say
  • Moroccan insurer Wafa Assurance warns on first-half profits
  • South Africa retail sales up 0.7 pct y/y in June
  • First-half diamond sales down 16 pct at Botswana’s Okavango
  • Egypt sells 610 mln euros in euro-denominated t-bill auction
  • Zimbabwe’s Mnangagwa moves to stop Chamisa’s election court challenge
  • Kenyan shilling holds steady against the dollar
  • South Africa’s economic recovery to be “weak and choppy” – cbank
  • South Africa’s VAT hike had muted inflation impact – cbank
  • Egypt unemployment rate falls to 9.9 pct in Q2 – CAPMAS
  • South Africa’s 2018 growth to be “much lower” than initial forecasts – cbank

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

#Global #Markets | 16 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1)

CALENDAR
05:00 Malaysia GDP Growth Rate QoQ 
05:00 Malaysia GDP Growth Rate YoY 
05:30 Netherlands Unemployment Rate 
09:00 China FDI (YTD) YoY 
09:00 Norway Norges Bank Interest Rate Decison 
09:30 UK Retail Sales MoM 
09:30 UK Retail Sales YoY 
09:30 UK Retail Sales ex Fuel MoM 
09:30 UK Retail Sales ex Fuel YoY 
10:00 Euro Area Balance of Trade 
13:30 US Housing Starts MoM 
13:30 US Building Permits MoM 
13:30 US Building Permits 
13:30 US Housing Starts
NEWS
Australia July Jobless Rate Falls to Near 6-Year Low of 5.3% 
Japan Imports Rise Sharply in July 
Japan Trade Balance Swings to Deficit in July 
US Stocks Tumble on Renewed Turkey Concerns 
US International Treasury Purchases Rise Sharply 
Argentina Inflation Slows Down to 3.1% MoM 
Colombia Economic Activity Gains Steam in June 
Colombian Q2 GDP Growth Strongest in 2 Years 
Israel Inflation Rate at Near 1-Year High of 1.4% 
European Shares Close Sharply Lower 
Dominican Republic Inflation Rate Slows to 4.43% in July 
Russia Industrial Output Growth Accelerates in July 
US Crude Oil Inventories Fall Unexpectedly 
Botswana Inflation Rate Unchanged at 3.1% in July

Source: Trading Economics, Macroafricaintel Research

#Africa #Markets | 15 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Global Markets

  • Asian stocks retreat as Turkey worries weigh, dollar buoyant
  • MSCI Asia-Pacific index down 0.8 pct, Nikkei drops 0.4 pct
  • Turkish woes linger; safe-haven dollar rise to 13-mth high
  • Stronger dollar pressures commodities, gold hits 18-mth low

Oil Markets

  • Oil prices fall on rising US crude inventories, darkening economic outlook
  • US crude stocks down by 3.7 mln barrels to 410.8 mln – API
  • World trade growth peaked in January – analysts
  • Brent-crude oil futures down 0.4 pct at $72.14 per barrel (0021GMT)
  • US WTI crude futures down 0.5 pct at $66.70 per barrel

Precious metals

  • Gold prices slip to 18-mth low on sturdy dollar
  • Spot gold down 0.1 pct at $1,192.11 an ounce (0110GMT)
  • US gold futures down 0.1 pct at $1,199.1 an ounce

Grains

  • Soybeans edge lower as ample global supplies weigh
  • Most active CBOT wheat futures down 0.3 pct at $5.40 per bushel (0134GMT)
  • Most active corn futures unchanged at $3.76-1/2 per bushel
  • Most active soy futures down 0.1 pct at $8.78-1/2 per bushel
  • Most active rice futures down 0.3 pct at $10.17 per hundredweight

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

  • Nigeria inflation data for July expected [fcst. 11.0% yy, prev. 11.2%]
  • South Africa retail sales data for June due [fcst. 2.0% yy, prev. 1.9%]
  • Bank of Namibia interest rate decision today; likely unchanged at 6.75%
  • SADC summit ongoing
  • Nigeria legislature, though in recess, may be one to watch today

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

  • Congo deploys experimental ebola treatment as cases rise
  • Nigeria’s acting president orders overhaul of controversial police unit
  • Nigerian police detain journalist for not revealing source, paper says
  • Sudan hit by bread shortages as currency crunch escalates
  • Africa Crude – Overhang keeps Nigerian cargoes under pressure
  • Mali president claims election victory amid fraud accusations
  • Nigeria’s GT Bank sees 10 pct loan growth this year
  • South Africa’s rand rebounds as Turkey-led rout eases, stocks falter
  • Mali president won election, count by his camp shows – spokesman
  • Malta lets rescue ship dock after EU states agree to take migrants
  • South Africa’s Ramaphosa appoints acting chief prosecutor after court ruling
  • Lazard drafting plan to bolster balance sheet of South Africa’s Eskom – sources
  • Nigeria’s state oil company considers refinery partnerships
  • EU observers saw irregularities but no fraud during Mali vote
  • Bank of Ghana plans to prosecute executives of failed banks
  • Uganda police arrest three MPs after stones thrown at Museveni’s convoy
  • Uganda shilling strengthens as interbank demand ebbs
  • As forgivenesss sweeps Ethiopia, some wonder about justice
  • Nigeria’s total debt rose to 22.37 trln naira by H1, debt office says
  • South Africa’s Gold Fields plans to cut jobs in mine restructuring
  • South Africa’s Ramaphosa proposes new sovereign wealth fund – party officials
  • Soccer – Nigeria and Ghana could face bans over interference – FIFA
  • South Africa’s mines minister concerned about Gold Fields job cuts
  • Ethiopia frees on bail police suspected of negligence in PM rally blast
  • South Africa’s mining output up 2.8 pct y/y in June
  • Kenyan shilling little changed, activity subdued
  • South Africa probes state attorneys as Ramaphosa graft crackdown widens
  • Ugandan drugmaker Cipla prices IPO at 256.5 shillings per share
  • Congo starts using experimental mAB114 ebola treatment
  • Ethiopia plans to build new airport in Oromia region – Fana

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

#Global #Markets | 15 Aug

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

(GMT+1)

CALENDAR
05:00 Indonesia Balance of Trade 
08:00 Turkey Unemployment Rate 
09:00 China FDI (YTD) YoY 
09:00 Nigeria Inflation Rate YoY 
09:30 UK Core Inflation Rate YoY 
09:30 UK Inflation Rate MoM 
09:30 UK Inflation Rate YoY 
13:30 US Unit Labour Costs QoQ Prel 
13:30 US Nonfarm Productivity QoQ Prel 
13:30 US Retail Sales Ex Autos MoM 
13:30 US NY Empire State Manufacturing Index 
13:30 US Retail Sales MoM 
14:15 US Industrial Production YoY 
14:15 US Industrial Production MoM
NEWS
Australia Wages Rise 2.1% YoY for Third Quarter 
Australia Consumer Sentiment Slumps in August 
US Stocks Rebound on Tuesday 
Colombia Trade Gap Narrows Only 0.8% YoY in June 
Colombia Imports Rise 11.9% YoY in June 
Colombia Industrial Output Grows the Least in 3 Months 
Colombia Retail Sales Rise More than Expected in June 
Euro Hits 13-Month Low 
Ukraine GDP Growth Highest in 1-1/2 Year 
Armenia Leaves Monetary Policy Unchanged 
US Import Prices Unchanged in July 
US Export Prices Unexpectedly Fall 0.5% MoM in July 
India Posts Largest Trade Gap in Over 5 Years 
Irish Residential Property Prices Rise 12% in June

Source: Trading Economics, Macroafricaintel Research