Weekly Africa Update – 24-04-2023

Ghana
Finance minister Kenneth Ofori-Atta announced that the government expects to secure an International Monetary Fund (IMF) programme by the end of May. The IMF and government reached a staff-level agreement for a three-year, USD 3 billion Extended Credit Facility (ECF) in December 2022.

The final outstanding requirement for the funding arrangement is the receipt of assurances from bilateral creditors with regard to the state’s external debt restructuring programme. Ofori-Atta indicated that current engagements suggest these assurances will be provided before the end of April.

Kenya

Haron Sirima, the head of the Public Debt Management Office, said that the government is planning to return to the international debt market this year, after a two-year hiatus. Sirima said that the proceeds from the Eurobond issuance will be used to refinance a US$2bn Eurobond maturing in June 2024.

Kenya last raised USD 1 billion through the issuance of a 12-year Eurobond in 2021. Plans to issue a further USD 1 billion in 2022 were scrapped due to surging interest rates which had priced the Kenyan government out of the international debt market. Bloomberg data shows that the average premium on African debt over US Treasury yields is currently near 1,000 basis-points, highlighting just how high lending costs are in Africa. Global interest rates would need to fall before African sovereigns regain access to the international debt market.

Nigeria

Headline inflation rose to 22.0% year-on-year (y-o-y) in March from 21.9% in February. Inflation remained broad-based, with both food and core sub-indices climbing.

Core inflation rose by 1.0 percentage point (ppt) over the previous month to a record high of 19.9% y-o-y, mainly driven by the housing, water, electricity, gas and other fuel components of the inflation basket as well as transport prices. Food inflation also rose by 0.1 ppt to 24.5% y-o-y, driven by increases in prices of staples and higher energy input costs.

Exxon Mobil Corporation halted Nigeria’s oil production due to in-house union activity (a strike) but expect to resume production within a week as they strive to resolve the industrial action. This will affect terminal output in the Qua Iboe terminal for April 2023 by up to a 20% shortfall, should the strike persist for six days.

Tanzania

President Samia Suluhu Hassan’s efforts to lessen political hostilities, improve the business climate and come up with constructive engagements with the international community have had a positive outcome on Tanzania’s credit rating, with Moody’s Investors Service giving the country a rating of B2 with a positive outlook. In its regular country update, which was issued on Tuesday April 18, Moody’s attributed the positive outlook to lessened political risks in Tanzania, the country’s engagement with the international community and its structural reform agenda. Moody’s ranks Tanzania highly on the aspect of political risk due to low level of ethnic tensions and relative political stability, in contrast to what was in the past seen as the government’s history of policy unpredictability.

Source:  United Bank for Africa PLC