The Editorial Team |

Nigeria’s Refusal to Devalue Naira Seen Likely to Fail, Again

LAGOS (Capital Markets in Africa) – Four years after Nigeria tried and failed to stop its currency from collapsing, Africa’s biggest crude producer is again reacting to this oil crisis the same way it did in the recent past. It worked out badly then as oil revenues, which account for 90% of foreign-exchange earnings, failed to rebound in time — leading to a depletion in the central bank’s firepower to defend the naira. It will…

The Only Question on South African Rate Cut Is ‘How Much?’

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JOHANNESBURG (Capital Markets in Africa) – The debate around South African interest rates has now moved from whether the central bank will cut on Thursday to by how much. Of 21 economists in a Bloomberg survey, 11 predict a 50 basis-point reduction, while the balance expects the rate to be lowered by 25 basis points. Forward-rate agreements show traders have switched from pricing in a less than 50% chance of a 25 basis-point cut three…

Ghana Deals at Risk as Virus Threatens Insurance Revamp

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ACCRA (Capital Markets in Africa) – The spread of the coronavirus threatens to slow efforts by Ghana to overhaul its insurance industry as companies race to boost their capital levels. “It will certainly have an impact,” Seth Eshun, head of supervision at the West African nation’s National Insurance Commission, said. “Because of Covid-19 there’s a slowdown in general economic activity, which implies that companies’ ability to generate revenue and make savings will be affected.” Insurers…

Can They Pay? Ballooning EM Yields Pose a $413 Billion Question

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LAGOS (Capital Markets in Africa) – Emerging-market sovereign bonds tumbled as the prospect of billions of dollars in stimulus packages threatened to flood the market with new debt, and in some cases undermine already fragile finances. The extra yield developing nations need to pay to borrow dollars from abroad has doubled since the start of the year to 629 basis points — the highest since the global financial crisis. The prospect of a wave of…

Nigeria Central Bank Covid-19 Stimulus to Reach $2.7 Billion

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LAGOS (Capital Markets in Africa) – Nigeria’s central bank will bolster its support to manufacturing and other key sectors of the economy by 1 trillion naira ($2.7 billion) to counter the fallout of the coronavirus outbreak. The bank will provide a 100-billion naira loan to health authorities as Africa’s most populous nation tries to contain the spread of the new virus, it said in a statement on Wednesday. The central bank will increase efforts “in…

South Africa Is Told to Use $11 Billion Jobless Fund for Coronavirus

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JOHANNESBURG (Capital Markets in Africa) – South Africa’s biggest labor organization and the nation’s main business lobby are pushing the government to find a way to utilize an unemployment fund with assets of about $11 billion to fight the effects of the coronavirus outbreak. The Congress of South African Trade Unions and Business Unity South Africa, or Busa, told the government at a meeting on Monday that it must find ways to use the Unemployment Insurance…

Banks Soar as Goldman Calls Stocks Attractive After Plunge (1)

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LAGOS (Capital Markets in Africa) – Banks rallied on Friday morning after Goldman Sachs said stocks were starting to appear attractive after a 41% sell-off, with investors accounting for lower interest rates and a much higher probability of recession. A “zero percent interest rates scenario appears fully priced in,” analyst Richard Ramsden wrote in a note upgrading Morgan Stanley to buy from neutral and U.S. Bancorp to neutral from sell. The market may now believe “low rates for a protracted period of time…

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