Africa: Another close election and mixed signs from Egypt and Nigeria

LAGOS (Capital Markets in Africa) – With the dust not yet settled on Kenyan elections, political analysts’ plates will be thrown another meaty election with Angolan polls set to take place next week. Polling suggests it is going to be a close race, and we could see the first change in government since Angolan independence — if the ruling MPLA allows for this change, that is. In Egypt, communication from the CBE suggests its change in leadership is part of a broader shift towards a more liberal policy environment. In Nigeria, rising domestic fuel prices despite falling international oil prices is an ominous sign of a government running out of tarmac just before election time.

Angola: Opposition to test MPLA’s stranglehold on power
General elections in Angola on August 24 are set to be a major test of the long-ruling People’s Movement for the Liberation of Angola (MPLA) and incumbent President João Lourenço. The National Union for the Total Independence of Angola (Unita) will contest the polls as part of a loose opposition coalition for the first time and is expected to make significant gains. But the odds are heavily stacked against them, and the MPLA will not hesitate to use state institutions to their advantage.

Cameroon: Food price pressures drive up the overall index
Cameroon’s consumer price index (CPI) inflation accelerated in H1 2022, especially during Q2. The key driver was rising food prices caused by the ongoing conflict between Russia and Ukraine.

Egypt: A bumpy week, but a shift in economic policy emerges
On Thursday, August 18, the Central Bank of Egypt went ahead with its fourth Monetary Policy Committee meeting despite the resignation of the central bank governor, Tarek Amer, a day earlier. Key policy rates were left unchanged, but a shift in economic policy emerged in the latest monetary policy statement.

Ethiopia: The journey to peace drags on, threats of a conflict escalation
The complex process to bring the conflict in the northern Tigray region to an end dragged on this week. The government says it has made “several attempts to peacefully resolve the conflict”, but fresh accusations from the Tigray People’s Liberation Front (TPLF) rebel group that federal forces have been attacking its positions pose a risk of derailing the process.

Ethiopia is making progress towards financial sector deepening with the introduction of micro savings and overdraft- and credit services aimed at low-income consumers. The collaboration between state-owned entity Ethiopia Telecom and a local banking partner, Dashen Bank, may portend a deepening trend towards strategic partnerships to reach socioeconomic and financial goals.

Ghana: Central bank steps in to curb inflationary pressures
In an effort to curb inflation from spiralling totally out of control, the MPC of the Bank of Ghana called for an emergency meeting on Wednesday, August 17. The outcome was another 300 bps increase in the bank rate and a 3 ppts rise in the reserve requirement.

Morocco: Unemployment drops in Q2 thanks to services
The High Planning Commission’s (HCP) unemployment numbers for Q2 2022 show a drop in the unemployment rate to 11.2% overall; the lowest since the start of the Covid-19 pandemic. There was strong job creation in the services sector, but jobs were lost in agriculture as a result of the drought weighing on farming activity.

Mozambique: Economy steams ahead in Q2 2022
Economic growth in Mozambique has increased for the sixth-consecutive quarter in Q2 2022 and achieved the best growth rate since Q2 2018. We currently forecast real GDP growth to accelerate to 3.4% in 2022 from 2.2% in 2021, but the latest GDP figures will prompt us to raise our projection closer to 3.8% in the next forecast round. Mozambique’s exports of fossil fuels and aluminium products rockets higher in Q2 2022, driving the current account to its lowest deficit since Q4 2019.

Nigeria: Fuel price spike in July worsens inflation fears
The Nigerian premium motor spirit price rose sharply in July 2022 as government subsidies failed to contain rising fuel costs. The average price of fuel in Nigeria increased by 8.0% m-o-m to N190.0/litre in July, while oil prices fell from an average of $122.7pb to an average of $111.9pb during that month. This rise in domestic fuel costs is ascribed to dwindling oil revenues, which constrains the government’s ability to keep fuel subsidies flowing.

On Wednesday, August 17, the national electricity grid crashed following industrial action taken by the National Union of Electricity Employees (NUEE). Members of the NUEE, working for the Transmission Company of Nigeria (TCN), downed their tools in protest against recent changes made to industrial policy in the sector. While the union has reportedly suspended the strike, further power outages are likely as the government continues to negotiate with the NUEE.

Source: Oxford Economics Africa