Rwanda says GDP growth expected to rise in 2024, still below 2022 figure

Reuters News

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Rwanda’s economy is expected to grow 6.6% in 2024, up from this year’s figure of 6.2%, the finance minister and central bank governor told the International Monetary Fund in a letter.

In February, Finance Minister Uzziel Ndagijimana had forecast economic growth of about 7.5% for the East African country in 2024 and 2025. The economy grew 8.2% in 2022.

“We foresee a temporary softening of economic growth, driven by needed tighter fiscal and monetary policies,” Ndagijimana and Central Bank Governor John Rwangombwa said in the Nov. 29 letter, made public late on Monday.

“On the demand side, private consumption and investment are expected to be the main growth drivers in the medium term as fiscal consolidation ensues.”

In November, Rwanda’s central bank held its key lending rate at 7.5%, saying it saw inflation falling towards its target range of 2% to 8% by year-end.

External factors could cloud the outlook for growth, however, Ndagijimana and Rwangombwa said.

“A further deepening of geopolitical fragmentation, another spike in global energy, food, and fertiliser prices, or a steeper decline in trading partners growth would weigh on the outlook,” they said. 

Nigeria inflation at 28.20% y/y in November – statistics office

Reuters News

A customer counts money inside a textile shop in Idumota Market, in Nigeria’s commercial capital of Lagos, Nigeria February 11, 2019. REUTERS/Nyancho NwaNri – RC1A016FA600

Nigeria’s annual inflation rose to 28.20% in November from 27.33% in October, its bureau of statistics said on Friday.

Consumer credit market in SA sees modest improvements in Q3 2023

Bizcommunity.com

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The statistics of Eighty20’s Q3 2023 Credit Stress Report have been released.
It is early days, but the economic and credit indicators from quarter three highlighted a shift in outlook for the first time in over a year.

Here are the top five indicators:


– Inflation eased further to 5.0% from 6.2% in the previous quarter.
– The unemployment rate dropped below 32% (31.9%), with the number of employed persons up by nearly 400,000.
– Consumer confidence and the leading indicator of the economy has moved upward.
– In the credit space, the percentage of loans in arrears has come down to 37.5%.

The rate of new defaults is coming down

The rate of new defaults (RND) (the proportion of outstanding loan balances that went into default during the quarter across all loan products), which has been steadily increasing since 2022 Q1, trended down this quarter with the exception of vehicle asset finance (VAF).

This is a welcome reprieve from the double-digit year-on-year growth in the RND witnessed over the last three quarters. The RND is at 2.51%, up 25% from 2.01% a year ago. Although the annual change in the rate of new defaults (CRND) remains high, it is down 1.3% on last quarter.

The CRND is an early warning sign for the state of credit in the country. All loan products except VAF saw a drop in the rate of new defaults QoQ, with new retail defaults down nearly 6%.

From an Eighty20 National Segmentation (ENS) perspective, it was only the Middle Class Workers who still experienced an increase in overall RND from last quarter, but only by 0.2%.

Unpacking movements in data is complex and there are a few possible explanations – not all of them are necessarily good:


– Hypothesis 1: Things are getting better – people are managing their finances, cutting back on spending and making payments on debt.
– Hypothesis 2: Things literally couldn’t get any worse – anyone who was going to default has already gone into default.
– Hypothesis 3: Credit providers have become significantly more risk averse in their lending and are therefore giving loans to people less likely to default.

The reality is probably a combination of all three factors.

“The hypothesis that people have become more responsible about their debt is reflected in the credit-card numbers. While balances are still growing across all segments albeit at a slower rate, new defaults are down QoQ by 2.1%.

“The four wealthier ENS segments have been relying on their credit cards to make it to the end of the month. As a result, overall credit balances are up more than 30% since Covid – by comparison, overall loan balances are up 20%, with retail- and unsecured loans up barely one percent,” says Andrew Fulton, director at Eighty20.

Year on year, total credit-card debt is up 9.5% but this is significantly lower than the double-digit growth experienced over the past two years – peaking at almost 15% in 2022 Q2. This drop in the rate of growth was seen across all ENS segments this quarter, with the Middle Class at 6.5% YoY growth and the Mass Credit Market at nearly 12% YoY growth.

Deeper dive into credit dynamics

Despite this slowing growth, the average credit-card loan balances for these segments are still twice their average monthly income. The average instalment to income ratio is the percentage of a person’s income that goes towards payments on all their loan products.

This ratio has continued to rise, but, as with credit-card debt, not as rapidly this quarter. However, we do still see the Middle Class with nearly three quarters of their income going to instalments, Heavy Hitters at 60% and the Mass Credit Market approaching 40%.

The small improvement in the RND and slowing growth in credit balances may also support the hypothesis that we have reached the bottom, with most credit-stressed South Africans already in default.

Furthermore, credit balances for Heavy Hitters and Comfortable Retirees have seen reasonable growth, while the Mass Market and Middle Class Workers have seen no growth in the value or volume of total loans over the past year.


– Of the R166bn growth in credit balances over the past year, 95% came from just two segments, the Heavy Hitters and Comfortable Retirees, with nearly two-thirds of the value coming from home-loan balances.


– Home-loan balances (up 9.1% on last year) are unlike other loan products in that nearly 99% of home-loan balances are held by only three segments: the Heavy Hitters (75%), Middle Class Workers (17%) and Comfortable Retirees (7%).


– The Heavy Hitter segment accounted for R90bn (10.8%) YoY growth in home-loan balances while Middle Class Workers’ balances remained flat, bringing the overall increase to R102.7bn.


– Nearly 750,000 people have entered the credit market this quarter for the first time, which is a return to pre-Covid levels. These individuals were responsible for nearly R8bn of the R29bn in new loans’ value this quarter.

Credit providers tightening their belts

In August, there was quite a lot of press regarding a slowdown in bank lending. It reflected that bank-lending growth decelerated in June to its most sluggish rate in the past year, reflecting financial institutions’ apprehension regarding stagnant economic growth and rising consumer debt.

This might account for the lack of credit growth we have been seeing in the lower-income segments. In their most recent trading updates, all the major banks have been speaking to elevated levels of credit impairments related to consumer banking. Banks pulling back on lending would also concentrate new debt in less riskier segments, resulting in the drop in QoQ new defaults.

“Regardless of the cause, for the first time in many months we have seen credit- and economic indicators move in a different direction. Given the year we’ve had, some joy towards the end is welcome,” concludes Fulton.

South African corporate social investment grows in 2023

Bizcommunity.com

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South African companies spent an estimated R11.8bn on corporate social investment (CSI) in the 2023 financial year, according to corporate responsibility consultancy Trialogue’s latest research findings.

The spend reflects an 8% nominal and 1% real increase from R10.9bn in 2022, on the back of post-Covid recovery, low economic growth and a challenging operating environment.

The findings, published in the latest annual edition of the Trialogue Business in Society Handbook, reflect a continued recovery in CSI expenditure, with more than half of surveyed companies (59%) reporting an increase in CSI spend, compared to 36% in 2021. About 60% of companies determined their CSI budget as a percentage of net profit after tax (NPAT), supporting the primary reason for increases and decreases in CSI as changes in corporate profits.

“South African companies, primarily driven by a moral imperative to influence positive social change, are increasingly positioning themselves to achieve systemic impact. Their CSI efforts are becoming more collaborative, and resources are being applied to research, networking and thought leadership in their development fields of interest. This is securing their voice on critical social issues and contributing to addressing the country’s social development challenges in the face of government budget cuts,” says Trialogue director Cathy Duff.

Education remains a priority CSI focus

Development sector priorities were similar to previous years, with three sectors – education, social and community development, and food security and agriculture – capturing the bulk of CSI expenditure.

Education remains the most popular cause for local companies. Although 2023 figures showed a decline in company support for education – down from 98% of companies in 2022 to 78% this year – the average spend increased from 44% of CSI in 2022 to 48% in 2023. Almost three-quarters of companies (74%) support social and community development, unchanged from last year, spending an average of 13% of CSI in this area. Food security and agriculture, which saw significant increases in support during the pandemic, was supported by 60% of companies in 2023 and received an average of 9% of CSI expenditure.

In contrast to US trends, where health and social services receive 25% of CSI spend on average, South African companies allocate an average of only 6% to health. Even fewer companies supported the sector this year, dropping from 43% in 2022 to 38% this year.

More than a third of South African companies (37%) claim to support environmental causes through their CSI, but this sector received just 3% of CSI spend on average. More companies supported the sports development, social justice and advocacy, and safety and security sectors in 2023, though the average CSI spend for each remains below 5%.

NPOs receive the bulk of CSI funding

Non-profit organisations (NPOs) remained the primary recipient of South African CSI, with 84%
of companies directing an average of 63% of their spend to NPOs in 2023. Surprisingly, the proportion of companies directing CSI funding to NPOs fell below 90%, even as the average contribution increased.

After NPOs, schools, universities, hospitals and other government institutions were the second most common funding channel, with 57% of corporates providing an average of 19% of expenditure towards them. Support of social enterprises increased from 17% of companies in 2022 to 28% in 2023, with social enterprises receiving an average of 5% of CSI expenditure.

Most companies were reluctant to engage in more progressive types of funding, with more than 69% indicating they would not provide funding for reserves, unrestricted funding or loans. However, 60% of NPOs reported receiving unrestricted funding from companies, and 39% received funding for reserves.

Fifty-three percent of companies reported non-cash giving in the form of products or services or volunteering time, while 83% of NPOs received non-cash donations.

Alignment of CSI with SDGs

Companies and NPOs are more likely to integrate the sustainable development goals (SDGs) into their strategies than the goals of the South African National Development Plan (NDP), with 63% of companies reporting integration of the SDGs, compared to 49% for the NDP goals.

Companies aligned with 5.6 SDGs on average. CSI programmes aligned most closely to SDG 4 (quality education), with 84% of companies reporting alignment. Sixty-three percent of companies aligned with SDG 2 (zero hunger), up from 43% in 2020. Corporate support for SDG 3 (good health and wellbeing), SDG 9 (industry) and SDG 7 (affordable and clean energy) decreased between 2020 and 2023.

NPOs were aligned with fewer SDGs, aligning with 3.9 on average. Like companies, most NPOs (71%) were closely aligned with SDG 4 (quality education), but 49% were then aligned with SDG 3 (good health and well-being) and 36% with SDG 1 (no poverty).

CSI operations and tech uptake

Most companies (71%) continue to manage at least some of their CSI internally, though 56% have a separate legal entity for this purpose. CSI most commonly reports to corporate affairs, with the median number of full-time CSI employees at three.

The technological revolution of the past year has witnessed limited uptake in South Africa’s CSI space. Only 35% of companies and 15% of NPOs have invested in AI for core operations, and only 10% of companies have invested in AI for CSI work.

Ghana inflation slows to 26.4% y/y in November – statistics agency

Reuters News

A man holds Ghana’s cedi notes in Accra July 3, 2007. Luc Gnago, Reuters

Ghana’s consumer inflation slowed to 26.4% year on year in November from 35.2% in October, the statistics service said on Thursday.

The cocoa, gold and oil-producing country facing its worst economic crisis in a generation is in talks with bilateral and commercial creditors to restructure its debts.

FG to implement new revenue formular in Q1 2024 — Nigeria

Nigerian Tribune

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Federal Government on Wednesday unveiled plans to commence the implementation of the new revenue-sharing formula in the first quarter of 2024.

The Chairman of the Revenue Mobilisation and Fiscal Commission (RMAFC), Muhammed Bello Shehu gave the indication during an interactive session on the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) held at the instance of the House of Committee on Finance, chaired by Hon James Faleke.

He said that he had briefed President Bola Tinubu about the expected changes.

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The chairman also noted that when approved, it will pass through the National Assembly for legislative action before its implementation.

”And I will assure this committee members that sometime next year, the commission will forward a new revenue allocation formula, first quarter to Mr. President and we believe that he will forward it to the National Assembly for you to do your job on this issue. That I can assure you sir and the members too,” Shehu said.

Shehu also revealed that between N3 to N6 trillion is being owed to the Federal Government by some agencies.

In his response, the Chairman of the House Committee on Finance, Faleke, said that he hopes the implementation comes quickly as “Where the Federal Government is having the lion’s share of revenue is not right.

“That’s why everybody is saying government, we have no money, no food, no this and that. As if it is the responsibility of the Federal Government to provide food.

“The Federal Government is just to create an enabling environment and good policies. If our Local Government system works well, we shouldn’t be having these impacts at all. I’m a product of Local Government and I know what I’m talking about.

“If our Local Government system works well, you don’t even know if the Federal Government exists or not. I’m sure we need to go back to that system.”

He also encouraged the chairman of the commission to bring the act setting up the Commission for amendment following an appeal by the chairman.

“The present Act does not give them the power, there’s no biting teeth and that’s why most agencies flaunt remittances.

“And so, I think you need to look into the act. We can look at it and amend it from our side. But we need to be aware that that act needs to be amended to make it more effective for better revenue for this country,” Faleke said.

Nigeria needs to curb inflation, stabilize forex to boost growth, says World Bank

Reuters News

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Nigeria still needs to control inflation and stabilise its foreign exchange market following currency reforms and the removal of a petrol subsidy, the World Bank said on Wednesday, to boost economic growth.

Nigerian President Bola Tinubu has embarked on the country’s biggest reforms in decades, including scrapping the popular but expensive petrol subsidy, unifying the country’s multiple exchange rates and putting measures in place to double tax revenue.

World Bank lead economist for Nigeria Alex Sienaert said during a presentation in the capital Abuja that the government still had work to do.

Siernaet said Nigeria should tighten monetary policy and phase out so-called ways and means borrowing and the development finance initiatives by the central bank, part of a series of unorthodox policies used by former central bank Governor Godwin Emefiele.

New central bank Governor Olawale Cardoso has already begun rolling back Emefiele’s policies.

He has adopted an inflation-targeting policy, ended all direct interventionist programmes, which he said blurred the lines with monetary policy, and begun clearing foreign exchange backlogs, estimated at $7 billion, that were owed to banks.

“We will be using inflation-targeting and we will ensure that the use of monetary policy actually cascades down and has an impact,” Cardoso said in response to Siernaet’s call.

South African business confidence index rises in November

Reuters News

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South African business confidence rose in November, as tourism and merchandise import volumes improved in month-on-month terms, data showed on Wednesday.

The South African Chamber of Commerce and Industry (SACCI) Business Confidence Index increased to 111.5 points in November from 108.6 in October.

Despite November’s increase, SACCI said in a statement that lingering economic challenges continued to drag on sentiment.

It pointed to fewer new vehicle sales, a volatile rand exchange rate and high real financing costs among factors negatively affecting business confidence in November compared to a year ago.

“The latest BCI suggests that the business climate and economic conditions didn’t provide the spark for increased confidence over the medium term,” SACCI added.

How Africa is becoming a global business giant

Africa Business

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If you ask people around the world which countries and continents are global leaders in business, most likely you’ll hear the United States, China, and European countries come up. However, a shift appears to be happening: Africa is starting to emerge as a real player in world commerce.

Because of its natural resources, younger population, and growing middle class, Africa is becoming an attractive option for investors and corporations. This article will explore some of the ways Africa is raising its profile in global business.

From hosting more summits and conferences to entrepreneurship and innovation, foreign direct investment, and regional integration, Africa is demonstrating a potential to drive economic growth and shape the future of the global economy.

Access to Worldwide Conferences/Meetings

Nobody will claim that Covid-19 was good for the planet. However, as happened during other unfortunate events in history, people learned to innovate and adapt, and managed to achieve progress nonetheless.

An example is the amount of medicine and technological advances that occurred during World War II. Nobody will ever say that war was a high point in world history. However, without it, we might not have discovered penicillin or sulfa drugs for many years thereafter.

The same might be said about Covid-19 and virtual meetings. Although Zoom and other video platforms existed well before the pandemic, when people had no option but to meet online it finally became mainstream.

Yes, this probably would have transpired eventually, but the pandemic definitely sped up the potential for international meetings to occur without having to meet in person.

Historically, Africa as a continent has not played a substantial role in national and international business gatherings. Now that many meetings and conferences are conducted virtually, access for African businesses to attend and host has never been more practical.

Many of the other advances discussed below may directly correlate with virtual meetings that have made connections so much easier.

Entrepreneurship and Innovation

Entrepreneurs are thriving in Africa. Many individuals have started businesses there. This entrepreneurial spirit has driven innovation across many fields, including technology, agriculture, healthcare, and renewable energy.

As a result, Africa is witnessing the emergence of successful startups and homegrown proposals that are not only solving local challenges but attracting attention on the global stage.

Foreign Direct Investment

Foreign direct investment (FDI) in Africa has risen in recent years. African nations attract significant FDI inflows worldwide with their natural resources, which has expanded consumer markets and improved business environments. In 2021, Africa saw $83 billion in FDI.

National and local governments are bringing in policies to encourage FDI and create a business climate by offering incentives and tax breaks. As the continent continues to attract foreign investors, it will strengthen its position in the global business arena, fostering economic growth and promoting sustainable development.

Regional Integration

Regional integration is playing a pivotal role in Africa’s involvement in commerce. African countries increasingly recognize the benefits of working together and fostering intra-African trade.

Initiatives such as the African Continental Free Trade Area (AfCFTA) aim to create a single broad market, promote the free movement of goods and services, and facilitate cross-border investments.

Africa is unlocking new business opportunities to expand individual countries’ operations across borders by eliminating trade barriers, harmonizing regulations, and enhancing regional infrastructure. One example of this is the number of ports on the western coastline of Northern Africa.

Historically, local and national economies struggled to maintain and run effective ports, but these are flourishing now that adjacent nations are contributing.

Infrastructure Development

Investments in infrastructure development are also transforming Africa’s business landscape. Governments and international partners are investing in transportation networks, energy projects, digital connectivity, and industrial zones.

Improved infrastructure facilitates the movement of goods and people, reduces transportation costs, and enhances overall business efficiency. Infrastructure development also creates employment opportunities, stimulates economic activities, and attracts domestic and foreign investments.

Projects such as ports, airports, railways, and power-generation facilities are crucial for Africa’s integration into global supply chains and its ability to attract multinational corporate partners. Cairo has seen a 23% increase in airline passenger traffic since 2019, and many other countries have begun to welcome more international travel.

Conclusion

Business across the planet is rapidly evolving. The traditional powerhouse nations will continue to dominate business, but other markets can take a seat at the table.

Africa is already showing it is ready to take advantage of the opportunity. The question becomes: How far can they go?

SEC seeks collaboration to enhance economic growth in Nigeria

Nigerian Tribune

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The Securities and Exchange Commission (SEC) has called for collaboration between the government and market participants to enhance market growth and facilitate economic development.

The Director-General of SEC, Mr Lamido Yuguda, made the call while addressing journalists at the 2023 conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) held in Lagos at the weekend.

Yuguda said synergy holds the potential of unleashing capital market prowess and paving the way for a prosperous future.

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According to him, achieving the objective necessitates an increased utilisation of market mechanisms and instruments to raise funds and stimulate economic advancement.

He pointed out that the commission would continue to introduce new ideas and policies that could support the development and regulation of a capital market that is dynamic, fair, transparent, and efficient to contribute to the nation’s economic development, noting that investors protection play a crucial role in the development and integrity of the capital market.

“Effectively harnessing the capital market for national. development entails a multi-faceted approach, these include deploying more infrastructure, fostering more public-private partnerships, establishing specialised entities like special purpose vehicles (SPVs), listing state-owned enterprises, issuing green bonds to support sustainable projects, and bolstering small and medium enterprises among others.

Yuguda, who was represented by the Executive Commissioner Operations, SEC, Mr Dayo Obisan, said by adopting these c approaches, government and market participants can create a dynamic capital market that attracts diverse investments, fuels economic growth and contributes significantly to national development goals.

He assured that the commission was poised to create an enabling environment and facilitate oversight and regulatory framework that would continue to deepen the market support development.

According to him, the revised capital market master plan underscored SEC’s commitment to deepening and. repositioning the financial market as a key driver of sustainable economic growth.

“The master plan which represents collective aspirations of the capital market community is focused on driving initiatives geared towards growing and deepening the market with the ultimate goal of accelerating the emergence of our dear country in the top 20 economies by the year 2025,” Yuguda said.

He, however, assured that the commission would remain committed to supporting efforts aimed at addressing the financial literacy and empowerment gap in society.

Also speaking at the event, the Deputy Director, SEC Lagos Zonal office, Mr John Briggs, urged the government to create infrastructure financing instruments that could facilitate servicing of obligations.

“We have encouraged a lot of infrastructure funds like sukuk, and green bonds and we are even talking about blue bonds to develop the market.

“The capital market has created the conducive environment to ensure a transparent and dynamic market which would continue to attract investment,” he said.

Earlier, the Chairman of CAMCAN, Mrs Chinyere Joel-Nwokeoma, said the yearly workshop was part of the association’s contributions to the development of the nation’s economy.

According to her, the forum had consistently served as an avenue for regulators, operators, and company executives to brainstorm on issues that affect the market and economy.

She said the theme of this year’s conference

‘Leveraging Capital Market in Financing The National Development Plan’ was predicated on the compelling need to properly execute the National Development Plan, with the capital market as the hub of medium- and long-term sources of finance.

“It’s no longer news that Nigeria, according to the World Bank, needs $3 trillion to close its infrastructure deficit with funding requirements estimated at between $100 billion and $150 billion annually in the next 10 years.

“The plan, introduced in 2021, aims to generate 21 million jobs and lift 35 million people out of poverty by 2025, thus setting the stage for achieving the government’s vision of lifting 100 million Nigerians out of poverty in 10 years.

“All these projections can only achieved, and challenges solved, through proper utilisation of the capital market by creating new asset classes and portfolio diversification. All hands must be on deck to address these challenges to achieve economic growth and development.”