Can SSA's Biggest Economies Join The 2nd Monetary Easing Cycle?

Friday, September 20, 2019   / 03:00PM / United Capital Research 

Lately, global central banks are becoming increasingly accommodative with fears of a global economic slowdown gaining momentum. First, the European Central Bank (ECB) delivered its first rate cut in 2019, easing policy rate from -0.4% to -0.5%, and relaunched its bond-buying program in order to support the Eurozone's faltering economy. Similarly, the U.S Federal Open Market Committee delivered its second 25bps rate cut in less than 2months.

In Africa, the two biggest economies in the Sub-Sharan Africa region, Nigeria and South Africa, despite battling with sluggish growth, seemed reluctant to join the second round of the easing exercise. For South Africa, oil market volatility and its direct impact on energy prices continue to pressure headline inflation, thus, compelling the reserve bank to hold its key policy rate unchanged at 6.5% on Thursday, 19th Sept. 2019. Similarly, Nigerian MPC which is currently holding its policy meeting is broadly expected to keep rates unchanged but for a different reason. Nigeria's need to continue to attract Foreign Portfolio Inflows to ease pressure on the exchange rate is seen as a major concern amid increasing uncertainty in the global space.

While both economies are in dire need of faster output growth, the current structure of both markets constrains the likelihood of a more accommodative monetary policy in the absence of reforms.

Top African Stories

• Tanzania plans to extend its gas pipeline network: Tanzania said on Monday it planned to construct a 30-km pipeline to extend the country's natural gas supply network from the capital Dar es Salaam to the nearby town of Bagamoyo to provide cheaper energy for factories and households there. Read more
• South African miner Exxaro buys remaining 50% stake in wind farm JV: South African miner Exxaro Resources Ltd said on Tuesday it acquired the remaining 50% stake in its wind farm joint venture for 1.55 billion rand ($105.56 million) as it looks to expand its energy business. Read more
• Uganda says its power generation capacity will jump 55% by year-end: Uganda's electricity generation capacity is set to jump by 55.5% in December when a Chinese-financed hydropower plant and other, smaller projects are commissioned, the east African country's energy minister said. Read more
• S.Africa's Transnet signs manganese export deal with Kalagadi: South Africa's state-owned freight company Transnet said on Tuesday it had signed a 3 billion rand ($203 million) deal with miner Kalagadi Manganese to export 1 million tones a year of manganese.  Read more
• Ghana, Ivory Coast to introduce cocoa production ceiling: Ghana and Ivory Coast, the world's top cocoa producers, are looking at introducing a cocoa production ceiling to support global prices and discourage overproduction. Read more

Looking Forward

Angola

Aug-19 Net Reserves - September 25th 

Sep-19 Policy Rate Decision - September 27th 

Egypt

Jun-19 Production Index MoM - September 25th

Jul-19 Trade Balance -  September 30th

Ghana

Jul-19 M2 Money Supply - September 30th 

Senegal

 Q2-19 GDP Report- September 23rd 

Mauritius

 Q2-19 GDP Report - September 30th

Morocco

Policy Rate Decision - September 24th

Q2-19 GDP Report - September 30th

Nigeria

Q2-19 Current Account - September 27th

Aug-19 Private Sector Account - September 30th 

South Africa

Aug-19 Trade Balance - September 30th 

Aug-19 Private Sector Credit - September 30th 

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