February comes to an end and it is now official, the shortest month of the year has revolved around South(ern) Africa… At least in terms of number of events having an impact on sentiment. Something else is also official: Ghana remains the best performer year-to-date followed by Nigeria.
President Cyril Ramaphosa reshuffled his cabinet on Monday. Nene is back as Finance minister after his firing made JSE tumbled back in December 2015. Pravin Gordhan who replaced Nene as Finance minister is back as Public Enterprises minister. Malusi Gigaba, Zuma’s last Finance Minister, returns as Home Affairs minister. The new cabinet is a sound compromise exercise bringing back investor’s favourites in key economic positions while keeping some room for the faction of the ANC allied with former President Jacob Zuma. In addition, the new cabinet removes ministers with clouds of corruption and mismanagement surrounding them. On Wednesday S&P cut the credit rating for Eskom to CCC+ from B- , citing liquidity concerns and insufficient government support that could trigger a default. As we previously mentioned, Eskom is a key risk for South Africa’s economic recovery. As Public Enterprises minister, it now belongs to Gordhan to address concerns regarding Eskom. In other news, data showed a bigger than expected trade deficit in January following the sharp fall of exports of major commodities and machinery. The much firmer rand also played a role in the slower export sales. However, the fact that the deficit was bigger than expected also demonstrates high anticipation for 2018. The JSE lost 1.65%.
Zimbabwe’s mine minister wants the country to play a key role in the electric vehicle trend as a top 10 supplier of lithium. According to Winston Chitando, the country could address 10 to 20% of the global demand for lithium. The ZSE lost 1.11%.
The drought impacting Southern Africa has led to the expansion of food deficit in Botswana. In the recently ending cultivating season, drought cut the land of planted crops by 75%. Botswana’s minister of Agriculture stated that some crops planted in parts of the country are dried up. Botswana’s main food import partner has already declared a national disaster over the drought. The BSE shed 0.03%.
Kenyan statistics office reported that Kenya’s year-on-year inflation reached 4.46% in February down from 4.83% in January. The NSE gained 0.27%. Its close neighbour, Uganda, saw year-on-year inflation fall to 2.1% in February from 3% the previous month, following a decline in the price of sugar, bread and some cereals. The USE gained 0.86%.
Ghana is in a race to boost its revenues and is taking measures to ensure it does. The country announced its willingness to tighten control of the gold it exports. Several measures are discussed among which a process to weigh and value locally the gold produced and the passing of legislation to incentivise local refinery of the gold output. The GSE lost 0.80%.
Namibia’s central bank expects the economy to grow 1.4% in 2018 after contracting 0.6% in 2017. The improvement is essentially expected to arise from a recovery in the construction sector which weigh on the economy in 2017. Growth is expected to reach 2.1% in 2019. Air Namibia situation has also weigh on growth. Air Namibia, the country’s state-owned airline is facing debacle as severe cash shortages have been made worse by the recent decrease of government funding. Namibia has been lowering spending to fend off ratings downgrades. The NSX lost 1.07%.
