macroafricaintel | Call me Mr President

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

On 12 December, a “president” would have been inaugurated in Mombasa, Kenya. At least, that was the plan. But the president of where or what? Because just weeks before, one was sworn-in. His name is Uhuru Kenyatta. And he looks nothing like the one that could have taken another oath of “office” this week. I have been at my wits’ end trying to fathom what Kenyan opposition leader Raila Odinga was trying to achieve by committing what could on the face of it have been deemed a treasonable offence. Mr Odinga lost to President Kenyatta in the August elections which was annulled by the Supreme Court over irregularities. As he did not participate in the second one, which incidentally was validated by the court, it beggars belief on what legal basis his purported presidential inauguration would have stood upon. With some reflection and after reading commentaries here and there, I came around to an understanding of what he might have been trying to achieve. A man could call himself anything. If I wrote in this column that I am the “president” of this page, who is to query me? Some companies entitle their chief executive “president”, for instance. In Nigeria, the head of the Senate is what again? Mr. President. But is Bukola Saraki, the president of the Nigerian Senate, the president of Nigeria? Surely not. So Mr Odinga might actually be on to something I thought. Since he is almost assured of the support of about half the Kenyan population, designating himself as “president” of some assemblage, a “peoples’ assembly”, say, might just do the trick of getting on the nerves of his rival in the presidential palace. In a nutshell, what Mr Odinga had planned today may actually have passed the test of legal scrutiny. At least, so I thought; until a press release by his party over the weekend postponing the swearing-in stated he would have been inaugurated as “President of the Republic of Kenya.” Say we ignore this about-face. Let us also assume he was not about to be foolhardy to the point of actually declaring himself the President of Kenya. With some creativity, he could actually get away with something close to the real deal.

Much ado about a title
Going around the country as the “president” of “something” that everyone knows represents about half of Kenya could actually be the perfect revenge from the scion of a family forever at odds (and always at the losing end it seems) with the Kenyattas. A good analogy can be found in China a long time ago. While Deng Xiaoping was the de facto leader of China in the late 1970s and for most of the 1980s, he was never officially head of state. At one point, the only title he had was that of honorary chairman of the China Bridge Association. Even then, he was able to wield tremendous power. Mr Deng proved the point that power is not so much about the title as it is about legitimacy. It seems to me Mr Odinga’s plan should be to hold on to the half of Kenya that he is now almost sure would pledge fealty to him if he asked. That way, as he and his party “resist” and ask for electoral reforms, they would be able to sustain the current momentum until the next elections. Mr Kenyatta and his men are not likely to sit idly by while he does this, though. Opposition strategist, David Ndii, was recently arrested by the authorities, likely in the hope that incriminating evidence would be found against him, Mr Odinga and the other principals of the National Super Alliance (NASA). As Mr Ndii recounts after his release on bail, they did not succeed.

Catch-22
Had the “president” been sworn-in today as planned, the president (which one now?) would have had little choice but to arrest and prosecute him for treason. Until the postponement was announced, I came to the resolution that perhaps Mr Odinga reckoned it would not be such a bad idea to be in the news in that manner. After all, he has been in prison before. In the event, attention would be drawn from whatever potential good Mr Kenyatta might be doing for the people towards the likely spectacle of a treason trial. He could still do some sort of oath-taking within the confines of the freedoms of association, expression and so on. But when the swearing-in eventually takes place, if ever, how should Mr Kenyatta respond? If he arrests and prosecutes Mr Odinga, the subsequent drama would be a tremendous distraction. If he does nothing, Mr Odinga would increasingly look presidential. Maybe it should end with the postponement.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/call-mr-president/

macroafricaintel | Africa FX Monthly – Dec-17

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for the PDF version

Currency   1 month

(29 Dec 2017)

3 month

(28 Feb 2018)

6 month

(31 May 2018)

12 month

(30 Nov 2018)

South African Rand (USD:ZAR) 14.0 13.6 13.3 13.1
Nigerian Naira (USD:NGN) 361.0 365.0 350.0 315.0
Ghanaian Cedi (USD:GHS) 4.5 4.6 4.1 3.7
Kenyan Shilling (USD:KES) 103.0 103.5 103.1 102.5
Ugandan Shilling (USD:UGX) 3,637 3,631 3,630 3,640
Tanzanian Shilling (USD:TZS) 2,237 2,231 2,235 2,230
Ethiopian Birr (USD:ETB) 27.5 27.8 28.1 28.6
Mauritian Rupee (USD:MUR) 33.7 33.1 33.3 33.5
Namibian Dollar (USD:NAD) 14.0 13.6 13.3 13.1
Botswanan Pula (USD:BWP) 10.5 10.3 10.1 10.0
Zambian Kwacha (USD:ZMW) 10.1 9.9 9.7 9.5
US Dollar Index (DXY) 93.0 92.7 94.1 93.3

macroafricaintel Weekly | 27 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for PDF version

Date Data / Event Period Forecast Previous
27 Nov Ghana Policy Rate, % 21.0 21.0
30 Nov South Africa PPI, % yy (mm) Oct 2017 4.8 (0.5) 5.2 (0.7)
29 Nov South Africa M3, % yy Oct 2017 5.9 6.7
29 Nov South Africa PSCE, % yy Oct 2017 6.3 5.6
30 Nov Kenya CPI, % yy (mm) Nov 2017 5.1 (0.1) 5.7 (-0.6)
30 Nov Uganda CPI, % yy (mm) Nov 2017 4.5 (0.4) 4.8 (0.3)
30 Nov Zambia CPI, % yy (mm) Nov 2017 5.4 (0.5) 6.4 (0.4)

macroafricaintel | African central banks to close year cautiously

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Over the course of this business week (starts 20 November), central banks of the largest regional economies on the African continent would decide on interest rates. They are likely to keep them unchanged. Even as inflation has been slowing gradually in Nigeria, it remains high. And it is primarily driven by food inflation. Improved agricultural production on the back of a good harvest is expected to moderate prices over time. Besides the authorities are currently marketing a Eurobond that could be as much as $5.5 billion if everything goes well. It is not likely the Central Bank of Nigeria (CBN) would like to be seen making decisions other than ones that are data-dependent. In any case, CBN governor Godwin Emefiele has signalled the benchmark rate would stay pat at 14 percent for the remainder of 2017, with potential cuts next year when inflation would have slowed considerably.

For South Africa, the rand went into a tailspin lately, rising above the psychological 14.0 level for much of the past two weeks, as rumours persist about the desire of the Jacob Zuma-led government to make higher education free, amid well-known financial constraints. With a pliable finance minister at the helm, it is also now widely believed President Zuma has successfully ‘captured’ the Treasury. So even, as annual consumer inflation likely slowed to 4.8 percent in October, from 5.1 percent earlier, it may accelerate in November and December on the back of rand weakness and volatility. The headline would probably be no more than 5 percent by year-end, though; within the 3-6 percent inflation target band of the South African Reserve Bank (SARB). Over a 12-18 month horizon, consumer inflation would probably slow to 3-4 percent, however. Under different circumstances, this could justify a rate cut. However, the November monetary policy committee (MPC) meeting, the last this year and one just weeks before a tense leadership contest in the ruling African National Congress (ANC) party, require the SARB to exercise the utmost restraint. And even as the SARB pretends not to be perturbed by market moves, it does pay attention to the inflationary impact of rand weakness and volatility; and indeed the political noise that tends to be the trigger lately. A balanced outcome would thus be for the benchamark rate to remain unchanged at 6.75 percent.

And for Kenya, ongoing troubles related to a controversial presidential election rerun boycotted by the opposition, mean the Central Bank of Kenya (CBK) would need to continue exercising caution. It has shown much dexterity throughout the impasse thus far, though, as the shilling has remained largely stable. And inflation has been slowing; came out at 5.7 percent in October from 7.1 percent in the prior month. More importantly, inflation expectations suggest the headline would likely come out much lower in coming months; about 4.5 percent in December, say, and plausibly less than zero percent in Q2-2018 due to base effects. Even so, it would be better if it kept its benchmark rate unchanged at 10 percent at this meeting with a view to easing policy when the political situation improves.

Politics, politics, politics
The elective conference of South Africa’s ruling ANC party in December is on everyone’s minds. Mr Zuma’s rhetoric about the preferred candidate by the business community has not been comforting. The president has all but mentioned his deputy, Cyril Ramaphosa, in name when making accusations about the presence of western-backed traitors in the ANC. Judging from his countenance and body language, Mr Zuma is likely to do everything in his power to block Mr Ramaphosa from replacing him. Turns out, though, Mr Ramaphosa is leading in support from the party’s branches, whose delegates to the conference would elect the next party president. Many reckon if Mr Ramaphosa wins, he would move swiftly against Mr Zuma in a bid to replace him as head of state much sooner. Should his rival and Mr Zuma’s ex-wife, Nkosazana Dlamini-Zuma win, however, it is highly probable Mr Zuma would retain his position till it expires in 2019. To further this goal, it is believed Mr Zuma might fire Mr Ramaphosa as deputy president in the coming weeks. Ironically, this could actually boost Mr Ramaphosa’s chances.

In the Nigerian case, all indications suggest President Muhammadu Buhari would be seeking a second term in office; after ill-health hitherto increasingly made it unlikely he would do so. His recent activities point to a full campaign mode. He visited the southeastern part of the country recently; albeit to campaign for his party’s candidate at elections in one of the states there. But that only provided cover for his visit; he seemed reluctant to embrace the region hitherto. He and his aides vehemently deny this, of course. His defence rings hollow in the face of his actions, however. His inner circle is very exclusive. A recently announced ambitious N8.6 trillion budget for next year also has political coloration. Put simply, the political cycle is in full steam. There are thus risks of fiscal slippages as the administration rushes to show it has been doing well. Recently announced plans to appoint more ministers are not necessarily borne out of a desire for efficiency as they are about dishing out patronage. Such behaviour tends to cascade down to lower levels of government, with negative effects for the fiscus.

Leading opposition figure in Kenya, Raila Odinga, who recently returned from an American trip amidst police-induced chaos, has been leading the charge for secession in the western and coastal areas. Political motivations inform the recent ratcheting up of tensions in this regard. Besides, Mr Odinga is advocating the estalishment of a Peoples’ Assembly via a proclamation of parliament, where the ruling Jubilee party, which is averse to the proposal, has a majority. Continued protests and tight security measures have been stifling business activities and would definitely weigh on economic growth in the fourth quarter of this year. A ruling by the Supreme Court on 20 November on petitions about the conduct of the presidential election rerun could either ease or heighten tensions. In the past, the outcome would have been expectedly one that would not cause much disruptions. After a bold landmark ruling cancelling the first poll in August, the court’s judgement could go either way. With such political dynamics about in these key African countries, it makes sense for their central banks to be on guard.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/african-central-banks-close-year-cautiously/

macroafricaintel Weekly | 20 Nov [Update*]

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for PDF version

*Update includes Nigeria GDP growth forecast; data scheduled for release on 20 November.

Date Data / Event Period Forecast Previous
20 Nov Nigeria GDP, % yy Q3 2017 0.8 0.6
21 Nov Nigeria Policy Rate, % 14.0 14.0
22 Nov Zambia Policy Rate, % 10.0 11.0
22 Nov South Africa CPI, % yy (mm) Oct 2017 4.8 (0.3) 5.1 (0.5)
23 Nov South Africa Policy Rate, % 6.75 6.75
23 Nov Kenya Policy Rate, % 10.0 10.0

macroafricaintel Weekly | 20 Nov

By Rafiq Raji, PhD
Twitter: @DrRafiqRaji

Click here for PDF version

Date Data / Event Period Forecast Previous
21 Nov Nigeria Policy Rate, % 14.0 14.0
22 Nov Zambia Policy Rate, % 10.0 11.0
22 Nov South Africa CPI, % yy (mm) Oct 2017 4.8 (0.3) 5.1 (0.5)
23 Nov South Africa Policy Rate, % 6.75 6.75
23 Nov Kenya Policy Rate, % 10.0 10.0

macroafricaintel | Africa FX Monthly – Nov 2017

By Rafiq Raji, PhD

Click to download PDF version

Currency   1 month

(30 Nov 2017)

3 month

(31 Jan 2018)

6 month

(30 Apr 2018)

12 month

(31 Oct 2018)

South African Rand (USD:ZAR)   14.0 13.6 13.3 13.1
Nigerian Naira (USD:NGN)   361.0 365.0 350.0 315.0
Ghanaian Cedi (USD:GHS)   4.5 4.6 4.1 3.7
Kenyan Shilling (USD:KES)   104.0 103.5 103.0 102.5
Ugandan Shilling (USD:UGX)   3,657 3,653 3,650 3,640
Tanzanian Shilling (USD:TZS)   2,247 2,241 2,245 2,240
Ethiopian Birr (USD:ETB)   27.5 27.8 28.1 28.6
Mauritian Rupee (USD:MUR)   34.7 34.1 34.3 34.5
Namibian Dollar (USD:NAD)   14.0 13.6 13.3 13.1
Botswanan Pula (USD:BWP)   10.5 10.3 10.1 10.0
Zambian Kwacha (USD:ZMW)   9.9 9.7 9.5 9.0
US Dollar Index (DXY)   95.0 94.7 96.1 95.3