PMI: As inflationary pressures continue unabated across the continent, businesses are having to contend with higher input costs across the board. The latest PMI data shows that in May, business conditions have deteriorated across the continent with output falling and general demand waning. 

Namibia: The latest data from the Hospitality Association of Namibia shows an improvement in National Occupancy rates. Room occupancy in April was recorded at 36.5% relative to 27.0% over the same period last year. 

SSA: Zambia has announced a 3.3% increase in pump prices on the back of rising oil prices. Earlier this week, South Africa, which has extended its fuel price relief, 

Kenya: Inflation has passed the 7% mark in Kenya, coming in at 7.1%y/y as food and fuel inflation continues to drive average prices higher. This is the highest print since February 2020. Cooking oil and wheat prices continue to increase in Kenya and will likely keep food inflation elevated for longer- currently food and non-alcoholic beverages is growing by 12.4%y/y.

Kenya: In line with our base case scenario, the MPC opted to increase interest rates by 50bp, raising the benchmark interest rate from 7.0% to 7.5%. The narrative for higher interest rates is similar to that of other economies and can be summarised as: rising global uncertainty on account of the Russia/Ukraine war; higher global interest rates and higher global inflation.

Egypt: Moody’s has changed Egypt’s outlook to negative from stable, whilst maintaining the sovereign rating at B2. The effects of the pandemic are having a devastating impact on the Egyptian economy as food inflation soars and as concerns around supply chain prevail.

he inflation deceleration trend continued in May as headline CPI printed 130bp lower at 10.2% from 11.5% in April.

Mozambique: During the first quarter of the year, the economy grew 4.1% as sectors such as hotels and restaurants, extractive industry, transport and logistics sector grew above 5.0% over the same period. Meanwhile, low growth was found in the public administrative levels, real estate and fishery which continue to growth by less than 1.0%. 

The Bank of Ghana opted to raise the main policy rate by a further 200bp, from 17% to 19%. The move was largely anticipated given the rising inflationary pressures in the economy.

Ghana: With inflation soaring past 20% and real policy rates turning negative, we expect the BoG to continue hiking interest rates in the near term. In our base case, we expect the Bank of Ghana to increase interest rates by 300bp over the next 12 months. 

Egypt: In our March inflation commentary, we mentioned that the upward trend in inflation was likely going to lead to a further hike by the authorities in Egypt. Inflation in April however edged to 13.1%, significantly higher than market expectations, as food inflation impacted the basket. 

Zambia: At the second sitting of the year, the monetary policy committe in Zambia opted to maintain the policy rate at 9%. The deceleration in inflation and the projection for it to trend lower towards the 6-8 % target range by the end of 2023 were highlighted as the main reasons behind the decision. 

Zambia: The central bank of Zambia will have to balance two key themes during its monetary policy meeting brief: inflation, which has been decelerating over the past few months and; the rising global interest rate environment.

Botswana: Botswana’s inflation moderated to 9.6% y/y in April (down from 10.0% y/y in March). The main contributors to the headline were the transport index, which accounted for 5.5ppt, utilities which made up 1.4ppt, food and non-alcoholic beverages (+0.8ppt) and miscellaneous goods and services (+0.7ppt). 

Wheat: India has instituted a ban of its wheat exports, a move that has sent global wheat prices higher amid an already tepid soft commodity environment. Price of wheat has escalated this year because of the Russia/Ukraine war and has been one of the key reasons for higher global inflation.

Inflation has accelerated to 19.4%y/y in Ghana at the end of March. The latest print is the highest ever seen over the past decade as food and fuel prices continue to surge. 

Namibia: We expect the central bank of Namibia to hike interest rates today by 25bps in line with regional movements. Namibia’s inflation has been relative subdued over the past few years hovering between 2% and 6% over the past 5 years. 

Egypt: The latest data shows annual inflation came in at 10.5% at the end of March as the effects of Russia-Ukraine war exacerbate conditions in the country. Price pressures continue in the country as inflation expectations rise amid higher food and oil prices. 

PMI: The impact of the Russia-Ukraine war has had an impact on the latest PMI numbers with several respondents across the continent noting the disruptions on supply and the rising prices of basic goods like fuel, 

Fuel and fertilizer: Inflation expectations are expected to lift as the second quarter of the year starts. While oil prices have hovered above the US$100 per barrel over the past few weeks, soft commodity prices have been on an increase. 

Kenya: First quarter survey of CEOs operating in Kenya indicated that there is general optimism about the business environment on account of relaxed covid-19 rules, government infrastructure spending, anticipated better weather conditions and the general economic recovery momentum. 

Zambia: Inflation for March continued on its disinflationary path as it eased to 13.1% from the 14.2% recorded in February. The moderation can be attributed to a slower pace of price growth for both the food and non-food segments

Mozambique: The monetary policy committee of Mozambique has opted to hike interest rates by 200bps, a sign that the central bank is concerned about inflation. Notably, the central bank targets single digit inflation – this hike suggests that the central bank is convinced that inflation would edge over 10% in the short to medium term.

Kenya: The monetary policy committee have opted to keep interest rates flat in Kenya given their broad view that the economy is on a path of recovery and inflation at the moment remains within its target range.

Mozambique:  The IMF team reached a staff-level agreement with the Mozambican authorities on a new arrangement under the Extended Credit Facility (ECF) for 2022-2025 to support sustainable, inclusive growth, and long-term macroeconomic stability. 

Commodity prices have continued to soar since the start of the war in Europe. While part of the gains were associated with the general sell-off, the recent gains in base metal prices is influenced by concerns around supply. 

The MoF indicated that Zambia was on path to reach an IMF board approval by mid-year. While we change our base case for board approval later in the second half of the year, we agree that overal momentum around Zambia’s fiscal and economic developments, is improving. 

Ghana: The Ghanaian authorities are expected to announce budget cuts later today to improve the fiscal trajectory of the country. Concerns have mounted over the past year regarding the authorities’ abilities to both contain expenditure and present credible revenue targets.

Egypt: Since the onset of the Russia-Ukraine war, Egyptian authorities have set in motion both fiscal and monetary policy changes. We saw similar swift responses from the authorities at the onset of the pandemic in 2020.

Ghana: Bank of Ghana has opted to hike the main policy rate by 250bps, raising it to 17% in an attempt to arrest inflation across the economy. The MPC has seemingly opted to frontload it hikes as opposed to taking a staggered approach towards its hiking cycle. 

The Bank of Botswana’s MPC maintained the bank rate at 3.75% at a meeting held on 24 February 2022. This decision was made against a backdrop of elevated levels of price growth, with risks being skewed to the upside

The ordered Russian military action on Ukraine has sent commodity prices soaring, including PGMs lift as well as safe-haven assets. 

Nigeria: The Russia-Ukraine tensions have persisted. 

Kenya: Kenya’s National Treasury released the Quarterly Economic and Budgetary review for 2021/22. The document noted that the economy had grown, on average, by 7.8% in the first three quarters of 2021.

he kwacha has gained ground over the past week, leading to a monthly gain of 3.6%

Nigeria: Real GDP growth came in at 3.40% y/y in 2021 as one of Africa’s largest economies recovered from the 2020 recession.

Monetary policy: The Bank of Zambia MPC opted to keep interest rates flat at the February meeting.

Botswana: Inflation kicked-off the year by printing a staggering 10.6% y/y in January (compared to 2.3% y/y in January 2021). The main driver of domestic price growth remains the transport index

Data from Mozambique’s statistics institute revealed that growth came in lower that we had expected in 2021, printing at 2.16% y/y versus our estimates of 2.50% y/y.

Inflation: The latest surge in oil prices, combined with higher regional maize price indicators relative to last year, will cause further price inflation. 

Base metals: Commodity prices have received a boost this week post the latest US CPI print. Inflation rose by 7.5% y/y in January, driving yields higher and leading to sizeable gains in commodities.

Inflation: Price pressures have continued to mount at the beginning of the year across various economies as supply-side factors elevate inflation. 

The Ministry of Finance and National Planning in Zambia released a white paper detailing its medium-term budget plan. Critically, the report shows that focus will primarily be on lowering the fiscal deficit (on a cash basis, excluding amortization) to -5.2% of GDP

Botswana: Finance Minister Peggy Serame delivered her maiden budget to parliament on 7 February 2022. 

As the second month of the year gains momentum, the cedi continues to weaken as dollar demand ramps up in Ghana and liquidity conditions tighten.

Mozambique: The Mozambican parliament has approved the 2022 budget, which shows a significant increase in government expenditure. This is likely to result in further widening of the budget balance, which we expect to widen from -10% of GDP in 2021 to -12.5% of GDP.

Kenya: The authorities have opted to introduce price cuts to electricity over the course of the next few months in a bid to alleviate pressures faced by both households and businesses. Over the past 12 months, 

Ghana: Ghana has introduced mandatory vaccinations for all travellers entering the country. The move comes at a time when the world is contending with a fourth wave.

Egypt: Both annual and monthly inflation slowed in November. On a year-on-year basis, the print came in at 5.6% vs 6.3% the month before while the monthly reading eased to 0.1% from 1.5%. 

Namibia: Yesterday the Bank of Namibia kept the repo rate unchanged at 3.75%. The MPC cited that the spreading of the omicron variant is a major risk of the nascent economic recovery.