Banking

JOHANNEBURG (Capital Markets in Africa) – Who’s afraid of a weaker rand? Not the South African Reserve Bank, according to a new study examining the pass-through of currency fluctuations to inflation. The authors set out to find out why the correlation between the exchange rate and price growth has weakened in the past two decades, which coincided with South Africa adopting an inflation-targeting policy. They conclude that the central bank’s credibility is the main determinant. “Improving monetary-policy…

LAGOS (Capital Markets in Africa) – The Nigerian central bank is “in the mood” for tightening and will increase its main interest rate if inflation doesn’t slow, Deputy GovernorJoseph Nnanna said. “Every member of the Monetary Policy Committee is certain that the monetary policy rate should increase if inflationary pressures build up,” Nnanna said Monday, speaking on the sidelines of a conference in the resort city of Sharm El-Sheikh in Egypt. “Our intention is to ensure that the…

NAIROBI (Capital Markets in Africa) – Kenyan credit costs that prompted the introduction of interest-rate caps last year have remained high despite the government’s efforts, according to the central bank. Authorities in East Africa’s biggest economy instituted a 400 basis-point rate cap above the prevailing benchmark measure for commercial loans last year with the view to making credit more affordable. Instead, banks now lend only to the least risky clients and the government. “Some of the structural…

NAIROBI (Capital Markets in Africa) – Safaricom Plc accused Kenya’s telecommunications regulator of failing to enforce investment requirements for smaller competitors in return for their licenses, meaning the market share of East Africa’s biggest listed company went unchallenged. Kenyan lawmakers are studying a report by U.K.-based advisory group Analysys Mason that found Safaricom to be a dominant player in mobile money and mobile communications. It recommended the company open up its mobile-money platform known as M-Pesa to…

JOHANNSBURG (Capital Markets in Africa) – South African banks face another wasted year for earnings growth as the euphoria that greeted Cyril Ramaphosa’s ascendancy to the presidency fades with the reality of the challenges facing the economy. The country’s largest lenders start reporting first-half results from next week against the backdrop of tax hikes, record gasoline prices, stubbornly high unemployment and an economy that is showing little sign of recovering after shrinking in the first quarter. While banks have…

ACCRA (Capital Markets in Africa) – Ghana’s banking regulator said it created a new lender through a merger of five insolvent banks as the country issued 5.8 billion cedis ($1.2 billion) in bonds to clear their debt. Bank of Ghana revoked the licenses of Unibank Ghana Ltd., Royal Bank Ltd., Beige Bank Ltd., Sovereign Bank Ltd. and Construction Bank Ltd., GovernorErnest Addison told reporters Wednesday in the capital, Accra. The lenders were among the smallest of Ghana’s…

LAGOS (Capital Markets in Africa) – Bitcoin evangelists preach that the virtual currency will one day supplant the dollar. UBS says they may have to wait a while since it can’t be considered money or even a viable asset class yet. For Bitcoin to replace U.S. money supply — paper bills, coins, travelers’ checks and the like — its price could need to hit nearly $213,000, or its network’s processing capabilities would need to dramatically improve, a…