Africa Today’s main economic and political developments across the continent

LAGOS (Capital Markets in Africa): While this week’s CPI print in South Africa changed the discussion from whether the Sarb will cut in September to by how much, other smaller central banks seem to be well ahead of the curve. North of the border, Botswana’s central bank has recently implemented its second 25-bps policy rate cut this year. Another cut is expected in 2024. Meanwhile, Rwanda, too, has implemented a second-consecutive policy rate cut, with another expected before year-end. In contrast to these efforts to ease pressure on households, Egyptian consumers are facing electricity price increases of up to 50%. Egyptian authorities are following through on promises made to the IMF. These latest adjustments follow a 15% increase in fuel prices and a massive 300% hike in bread prices.

Angola
Forex reserves remain stable amid pressure on kwanza: Despite renewed currency weakness, Angola’s foreign reserves are holding up and the moderation in money supply growth could signal a turning point in the unrelenting rise in inflation. 

Botswana
Central bank cuts policy rate again despite rising inflation
Botswana’s central bank voted to lower its key policy rate to 1.9%. Easing supply-side inflationary pressures and fears of a significant economic slowdown due to lower diamond production supported this decision. We anticipate another 25-bps reduction in the policy rate in December.

Egypt
More price hikes will hurt consumers’ pockets: Egyptian authorities are pressing ahead with subsidy reductions to appease the IMF. Authorities decided to raise electricity prices by between 14.45% and 50%, which followed a 15% increase in fuel prices and a massive 300% hike in bread prices in June.

Rwanda
Kagame’s new cabinet. On Wednesday, August 21, Rwanda’s new cabinet was sworn in. President Paul Kagame has retained Edouard Ngirente as prime minister, as well as 27 other ministers. He made only three new appointments. The cabinet will be tasked with running Mr Kagame’s government smoothly and making good on his election promises. 
Second consecutive rate cut, more to come: As expected, the Rwandan central bank decreased its benchmark interest rate by 50 bps to 6.5% from 7.0% at its latest Monetary Policy Committee (MPC) meeting. The cut comes on the back of inflation hovering around the central bank’s midpoint target range of 2%-8% in recent months. We expect headline inflation to average 2.6% this year and believe there is scope for another rate cut this year as cost pressures are largely expected to remain muted.

Senegal
New committee to review contracts, no policy declaration yet: Senegal’s Prime Minister Ousmane Sonko announced on Monday, August 19, that he had set up a special committee to review government contracts with foreign firms to look for opportunities to review the agreements to the state’s benefit. Institutional politics is an obstacle to the prime minister’s long-awaited policy declaration.

South Africa
MKP lays out organisational structure, mission: South Africa’s official opposition, the uMkhonto we Sizwe Party (MKP), held a rare press conference on Thursday, August 22. The party laid out its new leadership structure and team, unveiling high-profile defector from the Economic Freedom Fighters (EFF), Floyd Shivambu, as its national organiser. The MKP reiterated its opposition to the government of national unity (GNU) and its commitment to the so-called ‘progressive caucus’ in Parliament.

Contact author:
Jacques Nel, Head of Macro – jnel@oxfordeconomics.com