Economy

ACCRA (Capital Markets in Africa) – The government of West Africa’s second-biggest economy — its budget already stretched by interest costs that consume about a third of its revenue — is piling on debt to cover the liabilities of failed lenders and settle arrears dating back 20 years. It was left with little choice but to issue bonds to save an industry the International Monetary Fund sees as a financial-stability threat. “If you don’t intervene then you…

JOHANNESBURG (Capital Markets in Africa) – South African President Cyril Ramaphosa had hopes of lifting economic growth to 3 percent in 2018. Economists think that goal is even more unattainable than before. Average gross domestic product will be 1.4 percent this year, according to the median prediction by 22 respondents in a Bloomberg survey, which takes place monthly. This less than the 1.5 percent forecast in the July poll and is the fourth consecutive reduction in the outlook,…

LAGOS (Capital Markets in Africa) – South Africa’s fiscal consolidation will be slower than the government estimates because of weak economic growth and a higher public-sector wage bill, Moody’s Investors Service said. Moody’s sees the country’s fiscal deficit at about 4 percent of gross domestic product in the year through March 2019, the company said in an emailed statement Wednesday. That compares with the state’s February budget forecast for a 3.6 percent gap. “Growth this…

JOHANNESBURG (Capital Markets in Africa) Anchoring South African inflation expectations at 4.5 percent will help contain price growth and limit the need for the Reserve Bank to hike interest rates, Governor Lesetja Kganyago said. Lower inflation expectations are good news, Kganyago told lawmakers in Cape Town Wednesday. The main risks to price growth are the rand, oil costs and wage increases, and the impact of higher value-added tax has been more muted than expected, he said. While the central…

LAGOS (Capital Markets in Africa) – Nigerian inflation decelerated for an 18th straight month as food prices climbed at the slowest rate since March 2016. The annual inflation rate dropped to 11.1 percent in July from 11.2 percent in June, the Abuja-based National Bureau of Statistics said on Twitter Wednesday, matching the median of estimates in a Bloomberg survey. The slowdown in inflation could reverse in the second half of the year as the government releases funding for…

LAGOS (Capital Markets in Africa) – China has lent and will lend huge sums to African countries, creating concerns they are becoming too indebted. But rather than Chinese activity, which is increasingly a good thing for Africa, the bigger debt risk comes from Eurobonds issuance. Lending from China has risen, partly due to the Belt and Road Initiative. A narrower focus of this lending to support infrastructure projects will lift the continent’s debt-servicing capacity in…

JOHANNESBURG (Capital Markets in Africa) – An index tracking South African manufacturing activity rose for the first month in three in July, but this was tempered by a lowering of expectations for future business conditions. The purchasing managers’ index compiled by the Stellenbosch-based Bureau for Economic Research and Absa Bank Ltd. climbed to 51.5 in July from 47.9 in June. A reading above 50 indicates growth in the factory sector. This is the highest reading since May…