Nigeria and South Africa: A Reason to Worry?

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Friday, December 06, 2019   / 03:00PM / United Capital Research / Header Image Credit:  @NigeriaGov

 

Earlier in the week, two African giants - Nigeria and South Africa - dominated the regional economic headlines. In South Africa, data from StatisticsSA showed that overall economic activity was underwhelming in Q3-19 as real GDP (seasonally adjusted and annualised) declined by 0.6% q/q - its second q/q decline in 2019 (Q1-19: -3.1% and Q2-19: +3.2%). Notably, only four of the ten sectors that make up the GDP, grew on a quarterly basis. This was weighed by the constant load shedding, weak business confidence and policy uncertainty.

 

Elsewhere, Moody's cut its outlook on Nigeria's B2 rating, which is five steps into junk territory, from stable to negative amid mounting external and fiscal risks. Specifically, the global credit rating agency noted the country's vulnerability to capital flows reversal amid its growing reliance on short-term foreign portfolio investors to fund FX reserves.


 In all, we believe these outcomes will give both country's monetary and fiscal authorities a reason to worry. For South Africa, the broad-based nature of the economic moderation will be the biggest concern. Meanwhile, authorities in Nigeria will need to access the impact of the rating outlook downgrade, to its likely return to the international debt market in 2020.

 

Top African Stories

  • Bankruptcy Protection No Sure Remedy for South African Airways: A decision to place South African Airways into bankruptcy protection is no guarantee the airline will be able to keep operating -- that's if the experience of other financially distressed companies is anything to go by. Read more
  • Uganda says it has reached deal on tax dispute, paves way for Tullow stake sale: Uganda said it had reached a deal with international oil firms on a tax dispute, clearing the way for Britain's Tullow Oil to revive plans to sell a stake in its assets and allow the firms to move to a final investment decision. Read more
  • Botswana's Minergy puts UK listing plans on hold: Botswana coal miner, Minergy, has put on hold plans to list on London's junior AIM stock market as coal prices have tumbled in the southern African market while uncertainty surrounding Brexit has weighed on decision making. Read more
  • Commercial International Bank Egypt seeks to buy small Kenyan bank: Egypt's Commercial International Bank is looking to buy a controlling stake in Mayfair Bank, one of Kenya's smallest banks, Kenya's competition authority said. Read more
  • Nigeria's Senate passes record 10.59 trillion naira budget for 2020: Nigeria's Senate passed a record 10.59 trillion naira ($34.72 billion) budget for 2020, paving the way for a likely return to the international debt market next year as the country struggles to shake off the impact of a recession. Read more
  • Uganda to borrow 600 million euros to plug 2019/20 budget deficit: Uganda plans to borrow 600 million euros ($661 million) from international banks to plug a hole in its 2019/2020 budget after domestic revenue collections fell short by 9%, amid delays in implementation of some planned taxgenerating measures.  Read more

 

Looking Forward

 

Angola

Nov-19 Inflation Report - December 12th

 

Ghana 

Nov-19 Inflation Report - December 11th

 

Kenya

Q3-19 GDP Report - December 31st

Dec-19 Inflation Report - December 31st

 

Morocco

Q3-19 GDP Report - December 16th

Monetary Policy Rate Decision - December 17th

Nov-19 Inflation Report - December 20th

 

Nigeria

Nov-19 Trade Balance - December 10th

Nov-19 Inflation Report - December 15th

 

South Africa

Nov-19 Inflation Report - December 11th

 

Mauritius 

Nov-19 Inflation Report - December 6th

Nov-19 Gross Reserves - December 6th 

 

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