Kenyan government takes steps to halt shilling’s slide; Senegal shows reduction in trade deficit

Nigerian Naira (₦) 

Compiled by Ikenga Kalu

The naira continued to lose ground against the U.S. dollar and has fallen to USD/NGN 975 from the 955 recorded last week. 

On September 15, 2023, President Bola Tinubu nominated Olayemi Cardoso, a former executive at Citibank, to take over the reins at the Central Bank of Nigeria, three months after erstwhile governor Godwin Emefiele was suspended by the present administration. 

Nigeria’s inflation surged to 25.8% in August from 24.08% recorded in the month of July, driven by the combined effects of the subsidy removal on fuel prices and the naira devaluation in the central bank-regulated FX window. 

We expect the naira to depreciate further, given the continued demand for the available FX in the country. As the currency nears the unprecedented and dreaded USD/NGN 1,000 mark, we might see further attempts by the central bank to curtail the currency’s slide. 

Further reading:  

Reuters — Nigeria inflation rises to 18-year high in August ahead of rates decision

Nairametrics — Cardoso faces naira, inflation, interest rate hurdles

Ghanaian Cedi (GH¢)

Compiled by Sakina Seidu

This week, the GHS remained stable, spanning USD/GHS 11.55 to 11.60 levels.

Finance Minister Ken Ofori-Atta is reopening the Domestic Debt Exchange Programme (DDEP) once again with the promise of a more liquid bond for investors. This is the third time he’s opened the program, an indication of the government’s need to lighten the ever-growing domestic debt burden. Meanwhile, Ghana continues to hold onto the position of being the highest owing country to the International Monetary Fund (IMF) within the African continent. Currently, the Special Drawing Right (SDR) stands at $2.227 billion. We expect this to grow by $600 million by the end of year 2023.

As we approach December, the cedi might lose its value as forex in the market continues to dwindle.

Further reading:  

Myjoyonline — Cedi expected to remain stable against dollar this week

Myjoyonline — Ghana retains 1st position as Africa’s highest borrower from IMF

Business Ghana — Government reopens DDEP to increase participation – Finance Ministry

South African Rand (R) 

Compiled by Alex Barmuta

The South African rand started the new week trading at USD/ZAR 18.9587 — marginally down compared to last week’s open of 19.0449. The rand has managed to build up some momentum and was trading at around 18.75 as of Wednesday afternoon before back to 18.90 levels on Thursday. 

Inflation data released on Wednesday, September 20, 2023, by Stats SA, showed a slight increase of 0.1% in the month of August in comparison to July. Despite this, the general consensus among panelists is that interest rates are likely to remain on hold on September 21, 2023. Going abroad, the United States Federal Reserve has held key interest rates unchanged.
Looking ahead, we can expect the USD/ZAR rate to continue trading in the 18.75-19.00 range. 

Further reading:  

Businesstech — Good times for inflation in South Africa are over: Nedbank

Egyptian Pound (EGP)

Compiled by Mitchell Diedrick

The Egyptian pound remained relatively stable against the U.S. dollar over the past week, closing out trading at USD/EGP 30.83 on Friday and trading around USD/EGP 30.85 as of Wednesday.

With inflation remaining a key concern for the Arab nation of Egypt, a recent analysis released by Bloomberg showed that Egypt is the second most likely country to enter into a debt crisis, only surpassed by Ukraine, which is at war. Egypt is also set to announce the presidential election timetable this coming Monday.

Looking ahead, we can expect the EGP to continue trading relatively stable against the U.S. dollar.

Further reading:  

Daily News Egypt — Egypt to announce presidential election timetable on Monday

Kenyan Shilling (KSh)

Compiled by Terry Karanja

This week, the Kenyan shilling is trading between USD/KES 147.05 and 147.35 which is a depreciation against the dollar from last week’s levels of 146.70. The demand for U.S. dollars from energy and manufacturing companies has pushed the shilling down despite measures put in by the government to support it, such as buying oil using shilling to eliminate the demand for dollars in the oil market. In an analysis released last Friday by Moody,  the global credit rating agency reported that the proposed measures to increase taxes like the value-added tax from 16% to 18% and to increase excise duty on products like alcohol will be met by strong political and social resistance. Moody said the proposed tax measures in the medium-term strategy will negatively affect the purchasing power of households, which will have a general effect on the economy. We might see the shilling weaken further in the coming days with the high demand.

Further reading:  

The Star — Moody’s faults Kenya’s tax plan, says too ambitious

Ugandan Shilling (USh)

Compiled by Yadhav Panday

USD/UGX traded at 3,745.00 on Wednesday, September 20, 2023, up 0.54% from last Friday. Looking ahead, we expect the USD/UGX to decrease because Uganda has begun rehabilitating key access routes to oilseed projects in 81 locations in an effort to boost its dwindling edible oil exports.

The country is looking into ways to boost its dwindling edible fats and oils export earnings, which fell from Ush1.05 trillion ($281.1 million) in the same period last year to Ush 338.2 billion ($90.5 million) in July 2023.

Further reading:  

The East African — ​​Uganda starts initiatives to revive declining edible oil production

Tanzanian Shilling (TSh)

Compiled by Kristin Van Helsdingen

The Tanzanian shilling closed at its all-time weakest level against the U.S. dollar on Friday at USD/TZS 2,509. The shilling has strengthened since and is currently trading at 2,505, moving quite closely with the U.S. dollar over the week.

Continued fuel shortages combined with a shortage of foreign reserves and an ever-increasing budget deficit continue to put pressure on rising inflation and the value of the shilling.

We can expect ongoing pressure on the shilling in the week ahead. The Bank of Tanzania will continue to try and maintain its level against the U.S. dollar at USD/TZS 2,504. However, we expect the currency pair to rise to as high as USD/TZS 2,510.

Further reading: 

IPP media – Inflation, capital hobble Tanzania’s economy 

West African CFA Franc Region (XOF) 

Compiled by Yashveer Singh

In the first half of 2023, Senegal’s trade deficit shrunk, as reported by the Director of Economic Forecasting and Studies. This was primarily due to a higher increase in exports (+2.8%) compared to imports (+0.5%). During this period, Senegal imported goods valued at 3,377.7 billion FCFA, while its exports amounted to 1,766.6 billion FCFA. As a result, the trade deficit stood at 1,611.1 billion FCFA, which was a slight improvement from the 1,643 billion FCFA deficit recorded during the same period in 2022, showing a year-on-year improvement of 31.19 billion FCFA.

The increase in imports was driven by higher purchases of crude petroleum oils (+296.2 billion FCFA), “vehicles, transport equipment, and automobile spare parts” (+53 billion FCFA), and “edible fruits and vegetables” (+4.2 billion FCFA). However, this rise was partially offset by decreased purchases of other petroleum products (-210 billion FCFA), “wheat and meslin” (-31.3 billion FCFA), “machines, appliances, and engines” (-27 billion FCFA), and rice (-9.1 billion FCFA).

On the export side, the overall increase was primarily due to strong performances in shipments of petroleum products (+63.2 billion FCFA), cement (+31.2 billion FCFA), mineral and chemical fertilizers (+31.2 billion FCFA), and fresh vegetables (+6 billion FCFA). 

Further reading:  

Sikafinance – Senegal: The trade balance deficit improves to 1,611 billion FCFA in the first half of 2023

Central African CFA Franc Region (XAF)

Compiled by Yashveer Singh

Cameroon generated a total of CFA60.6 billion in waste tax revenue over the three-year period from 2020 to 2022, according to data from the General Directorate of Customs. The tax collection amounts were CFA 12.5 billion in 2020, CFA 15.8 billion in 2021, and CFA 32.2 billion in 2022. Initially set at 0.5% of the taxable base for all imported goods in the 2019 budget law, this tax rate was doubled to 1% in the 2022 budget law, resulting in a significant increase in revenue that year.

However, despite this revenue, it falls short of meeting the financial needs of decentralized local authorities (CTDs) responsible for cleaning up Cameroonian cities. A decree issued in July 2023 mandates that 17.5% of the annual budget should be allocated to the urban communities of Yaoundé and Douala for waste removal and treatment.

If we assume that the CFA 60.6 billion collected over the three years was collected in a single year, the urban communities of Douala and Yaoundé would only receive CFA 10.6 billion. Nevertheless, a 2016 World Bank study cited by Jean-Pierre Ymele, general manager of Hygiène et Salubrité du Cameroun (Hysacam), stated that the Cameroonian capital alone required a minimum of CFA 15 billion annually for proper garbage collection, and this figure is likely to have increased substantially by 2023 due to population growth.

Further reading:  

Business in Cameroon — Waste tax generate CFA60.6bn in 2020-22, short of needs


Issued by AZA Finance, this Newsletter is produced as a service to our clients. It is prepared by our dealing professionals and is based on their understanding and interpretation of market events. AZA Finance cannot be held responsible for any losses of whatever nature sustained as a result of action taken based on comments contained in this publication.

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